The chairman of Kirkpatrick & Lockhart Nicholson Graham has threatened his London office with “a bloody nose” when the guaranteed payments it has been paying to City partners end in January 2007.

Kirkpatrick chairman Peter Kalis said the new merit-based system was “definitely not” an eat-what-you-kill system, but would be based on a partners’ contributions to the success of the firm.

“Is that threatening to some people?” said Kalis. “Yes, I’m not going to pretend it’s not. It will bloody some noses in the transition.”

The move to a new remuneration system has led to widespread speculation that it could lead to the exit of a number of underperforming partners, either before Christmas or early next year.

As first reported by The Lawyer (7 August), Kirkpatrick is ditching its modified lockstep system at the beginning of next year when the two-year integration period for the UK firm finishes.

When that deal ends at the start of the Kirkpatrick’s next financial year, UK partners will be remunerated on the same merit basis as the rest of Kirkpatrick’s partners.

However, Kalis pointed to the recent hire of Dechert London head of banking Trevor Beadle and other hires, including Martin Lane from Pinsent Masons and Kevin Dean from Stephenson Harwood, as evidence that the merger had been successful in attracting high-calibre lawyers.