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In a bid to meet the challenges in a more competitive market, King & Wood Mallesons’s Australian partnership has replaced its transitional lockstep remuneration system with a modified one.
The Australian arm of King & Wood Mallesons conducted a review of its partner remuneration system following its March 2012 merger with Chinese firm King & Wood (15 December 2012). It has decided to move away from a pure lockstep system to a modified lockstep.
The new system, which has a “bonus points” component in addition to lockstep points, will go live in January 2013. Partners will be assigned between 30 and 100 base points according to seniority, but can earn up to 130 points with the bonus points. Points will be reviewed annually.
“We have modified our partner remuneration model to introduce more flexibility, while still retaining the core elements of our lockstep structure. The amended model is supported by an improved partner review and feedback process,” said Stuart Fuller, King & Wood Mallesons’ global managing partner. “This was to best position the firm to meet the challenges and opportunities in the market.
“The changes we’ve introduced allow overall contribution to be reflected in remuneration outcomes at certain lockstep levels. This capability framework reflects the skills and behaviours that we believe are essential for delivering the best for our clients, and ensuring our people are developed into outstanding service providers and leaders,” Fuller added.
The Australian partnership of King & Wood Mallesons has shrunk over the past two years. In July 2011, the firm had 180 partners in Australia, but by July 2012, the number had reduced to 158. A number of junior to mid-level partners have left the firm to join smaller national firms, citing increasing billing pressure, high overheads and the rigid lockstep system as part of the reasons to move.
The changes to the firm’s compensation system also come at a time when its revenue has dropped significantly. According to the Australian business magazine BRW, the Australian part of King & Wood Mallesons recorded a total revenue of A$424m (£274m) for the 2011-12 financial year, a 14 per cent decrease from A$491m in the prior year.
The changes to remuneration only apply to the Australian partnership of King & Wood’s Swiss Verein and do not affect the Hong Kong and China partnerships. The move means that Clayton Utz is now the only large Australian firm with a pure lockstep system.