Lovells is revolutionising the way it pays salaried partners ahead of its merger with Hogan & Hartson, abolishing a profit-linked portion in favour of a performance-related bonus to mimic the US firm’s model.
Currently salaried partners receive a fixed salary plus a variable sum, which is equivalent to three equity points but is not an actual profit share. In the 2008-09 financial year the additional payment amounted to £36,798, with salaried partners taking home an average total of around £270,000.
Under the new system the three points will be traded for an as-yet undetermined fixed sum, which will be lower than the three-point equivalent, and all salaried partners will be eligible for a bonus.
Lovells senior partner John Young said: “It’s expected that the bonus will work as it will for equity partners, who can effectively expect that the bonus will be around 15 per cent of their total pot.
“That will feed in over time, so in the first year the bonus will be around 7 per cent of total remuneration, then 10 per cent, then 15 per cent.”
At the moment non-equity partners’ fixed salary portions are determined by a four-year lockstep. This will be phased out over two years, after which time it will be determined on a case-by-case basis.