Clifford Chance is set to merge with long-time Italian joint venture partner Grimaldi e Associati after a series of tense negotiations concerned with profit integration.
The 24-partner Italian firm has been allied to Clifford Chance since 1993.
“The business has been fantastically successful, but with any joint venture there comes a point when it has to go to something else,” says Clifford Chance chief executive Michael Bray.
Of the 24 Grimaldi partners, only eight are full equity. The current proposal – to be voted on by Clifford Chance partners this month, but likely to be accepted – now provides that five of those equity partners are to be given additional units on top of the current lockstep allocation for a term of three years.
At the end of this fixed period, the arrangement will be up for review. It is expected that the five Grimaldi partners will then be integrated into the Clifford Chance lockstep.
According to The Lawyer 100, the profits spread at Clifford Chance in the last financial year went from £320,000 at entry level, to £804,000 at the top of the equity.
Grimaldi partners unanimously voted in principle for the merger with Clifford Chance over the summer (The Lawyer, 7 August).
Key to securing the deal was the support of name partner Vittorio Grimaldi, who is based in Rome. He is understood to be earning between £2.5m and £3m a year, and his new remuneration package is understood to be at the same level.
Grimaldi turned over £20m in fees last year. The joint venture, set up in 1993 with a handful of lawyers, has now grown to 125, with offices in Milan, Rome and Padua.
It is not the first time that Clifford Chance has had to tinker with the lockstep in order to secure the support of key partners for a merger.
During its negotiations with Rogers & Wells, Clifford Chance had to woo key rainmakers and anti-trust partners Kevin Arquit and Steve Newborn. They remain outside the firm’s seniority-based lockstep pay structure, with earnings understood to be $2m (£1.4m) each.
However, despite these exceptions, Michael Bray is adamant that Clifford Chance still adheres to the principle of lockstep.
He says: “This is not a lessening of the commitment of the firm to lockstep. It’s been ringfenced to take account of particular circumstances. I don’t expect us to make lots of other exceptions. Italy is an extraordinary market [as regards profits], and so is the US.”