Clifford Chance has reneged on its bold plan to form an all-equity partnership, according to new proposals unveiled internally last week.
Although the lockstep review group floated the idea of an all-equity partnership with rungs at the lower level earlier this summer, this has now been rejected following three months of consultation with nearly 300 partners.
“Half our partnership in Germany are non-equity partners compared with only about 50 in London,” said one Clifford Chance source. “It would be a major issue to convert all of the Germans to equity partners.”
Clifford Chance insiders say that the eight-page document now recommends that the firm should retain the hierarchy between equity and non-equity partners, but that entry into the lockstep should be made more flexible.
The current rules allow junior partners to shadow the equity on eight, 16 and then 20 points. After three years they then join the equity on 40 points and reach the plateau of 100 after eight years.
Under the new proposals, junior partners may be able to enter the equity after only one year, which would require exceptional performance. That entry, on 20, 30 or 40 points, would be calculated by reference to the economics of the jurisdiction.
The proposal of a third superpoint ladder has also been watered down. London partners have vociferously objected to this dilution of the lockstep principle, but US partners may yet vote for it. One Clifford Chance partner said: “[With these proposals] we can have a third ladder, but an office has to vote to opt into it.”