No a***holes

Details confused but principle clear in Hogan Lovells’ new partner pay system

The post-merger training wheels for legacy Lovells partners at Hogan Lovells come off this year. For the first two years after merging, legacy Lovells partners were guaranteed a portion of a bonus pool equivalent to 15 per cent of revenue at the international LLP (the non-US side). That grace period has now ended.

The pool was just one of the tools brought in since the linkup. Lovells had already become a managed lockstep when it merged so it was not quite a leap from lockstep to eat-what-you-kill, but adjustment was needed.

For example, the merged firm introduced origination fees as a measure of performance. Since the merger, partners who bring in clients but share the work can split the recognition for whatever the client eventually bills and this will count – along with a number of other measures – towards pay and bonus entitlement.

Strictly speaking, the concept is not new – legacy Lovells tried to implement an informal sort of recognition some years ago, but Hogan Lovells joint CEO David Harris says it was largely ignored. Indeed, The Lawyer spoke to a source at the firm who said they had never heard of it.

According to the same source, there has been some confusion as partners sort out who is entitled to what after bringing in a new client.

“It all depends on what group you’re in and who you’re dealing with,” said the source. “But confusion can arise if you have very large client teams, like we have in the UK. If [a partner] didn’t originate the client but is part of the team they still have to negotiate about what to give the originating partner.”

According to Harris, however, the firm distributed a list of principles when it started measuring origination fees to ensure partners understood the spirit of it all. Unofficially, the firm is said to have a ‘no a***holes’ policy that weeds out the greedy anyway.

And if it’s any consolation for Lovells partners trying to get their heads round the changes, it’s not all one way. Legacy Hogan & Hartson is looking to make clients more institutional, so it’s a fair exchange of culture shock.