New chief executive stakes all on radical overhaul of controversial profit system
Denton Wilde Sapte (DWS) chief executive Howard Morris is launching a radical review of the firm's controversial discretionary bonus system for partners in a bid to stop partner departures at the firm.
The top 10 firm operates a modified lockstep, with 25 per cent of profits set aside for discretionary merit-based allocation. However, perceptions of a lack of transparency and independence in the allocation of the bonus - which can account for the bulk of partners' remuneration - have led to a groundswell of support for reviewing the system.
Morris is consulting with the firm's board and partners and expects to issue proposals to the partnership by the summer. However, it is highly unlikely that the firm will follow the lead of CMS Cameron McKenna and revert to pure lockstep. One Dentons partner said: "I expect we'll get a similar system, but one that's more fairly decided. We can't afford to go to lockstep. You need to give someone like [insolvency head] Mark Andrews a reason to stay."
Currently, DWS partners at the bottom of the equity are allocated 45 points, rising by five points every year to a 90-point plateau. Bonuses, meanwhile, are allocated across eight bands. Last year, each band was worth just over £30,000.
Sources at the firm said recent departing partners, including the 11 technology, media and telecoms partners who last week joined DLA Piper Rudnick Gray Cary, and the five contentious insurance partners who are leaving to join Chadbourne & Parke, are unlikely to receive a bonus this year.
Former chief executive Virginia Glastonbury faced criticism for maintaining key roles on the remuneration and partner promotion committees, with some partners describing the discretionary bonus as a "stick" wielded over the partnership. Morris is understood to have excluded himself from seats on both committees.
"I wanted to introduce a separation between the executive and these institutions," he told The Lawyer.
At the same time, Morris has revised the firm's previously dire profit estimations, indicating that profit may yet exceed the psychologically critical £300,000 mark.