Firm’s all-equity push places UK and overseas partners’ remuneration disparity under scrutiny
Linklaters is poised to take a major step towards the integration of its international partnership, with the firm planning to move its German partners onto the same remuneration package as their UK counterparts following next year’s pay review.
It is understood that there has been growing unrest among the firm’s German partners, whose remuneration has until now been held at around 90 per cent of that of UK partners.
The magic circle firm currently operates a system whereby the locksteps in its overseas offices are scaled according to the profitability of particular jurisdictions. While the lockstep runs from 10 to 25 points across the firm, senior partner David Cheyne said the system sees some offices held at a “factor” of the ladder, typically somewhere between 70 and 90 per cent.
Partners in Germany, where the economy is proving far more robust than in the UK, are understood to be angry that, while they are billing as much, and in some cases more, than their UK counterparts, they do not share in the same rewards.
Linklaters has stated that it intends to move as close as it can towards a system whereby as many partners as possible operate on a level playing field.
Cheyne said: “Our policy, as far as it’s achievable, would be to have every country on a factor of one.” Cheyne would not be drawn on when the German partnership would be brought into line with the UK, but confirmed that an annual review would take place at the end of the financial year.
The move comes as Linklaters steps up its progress towards an all-equity partnership. The firm has been steadily cutting its number of salaried partners, with fewer than 10 per cent now not part of the equity.
Sources at the firm suggested that this number could ultimately drop to less than 5 per cent, with a rump of salaried partners retained in certain less profitable jurisdictions.
“Our view is that, if we want someone as a partner, we want them as an equity partner,” added Cheyne.
Magic circle rival Freshfields Bruckhaus Deringer earlier this year brought its German and UK locksteps fully into line with one another. The German remuneration package had previously been lower at entry level and for the first two years of partnership.