Clifford Chance has kicked off a review of its lockstep, which could see changes made as early as the beginning of the next financial year.
A spokesperson for the firm confirmed that a review is underway but said it was in the earliest discussion stage with no formal plans on the table at the moment.
However, market sources have suggested that the inclusion of superpoints for star performers and a more flexible approach to points allocation have been mooted in a bid to retain and attract talent more easily.
One source close to the firm said people may be removed from the bottom of the lockstep and that a reduction in the number of points from 100 to 80 at the top had been proposed. It was also suggested that a super-points profit pool totalling £2.3m may be introduced for plateau partners.
However, Clifford Chance insiders confirmed that a review of the system was underway. One said: “Something will be proposed shortly, probably in the next few weeks because changes will have to be in place by May, and Matthew [Layton] won’t want a year-long debate on it.”
One insider said: “It will probably involve a more flexible approach in terms of encouraging some of the younger lawyers to stay by making it quicker for them to progress and some of the older partners will be retained because superpoints will be added.”
Although any changes are expected to be relatively subtle and are believed to be designed to introduce flexibility rather than removing the lockstep completely. The source added: “That will require a bit of a cultural change, but I think the days of pure lockstep are gone completely.”
The review of partner remuneration coincides with the launch of a five to 10-year strategy, in which partners’ performance management and remuneration was highlighted as a focus by managing partner Matthew Layton (20 January 2015).
Clifford Chance currently has a three-tier lockstep. Despite operating a global profit pool, a greater number of points are available in more profitable offices. The system was voted in after a consultation in 2005 (19 December 2005).
The first ladder has a reduced points allocation for economically weaker jurisdictions, believed to be between 30 and 70 points.
The second ladder was designed to formalise the partnership appraisal process. It was dubbed ‘MYC’, or ‘maximising your contribution’, with a yearly review, and is understood to run between 40 and 100 points.
Ladder three is understood to have been brought in to reflect US economic norms, and is believed to run between 110 and 150 points.
It is uncertain whether the latest review will remove the three-tier system and create a unified global lockstep. However sources have suggested that changes are to be instigated in Germany first ahead of a firm-wide roll out.
At the end of last year it was reported that up to nine partners were in discussion over leaving the firm as Clifford Chance reviewed its German operations. It is understood that those departures are now underway (4 December 2014).
Talking to The Lawyer earlier this month Layton said building on the firm’s leadership position in Continental Europe would be critical to the strategy.
“In Germany it’s a matter of making sure we have the right structure and that we continue to look at the opportunities, and we see opportunities in the German market. We think there was a need to get the business that we have there in the right shape and then we can look at continuing to invest there and grow,” he said.