Simmons & Simmons has become the first top 10 City firm to introduce an element of performance-related pay for its partners.
In a move that will be closely watched by the other top 10 firms, Simmons & Simmons partners have decided to pool 20 per cent of their profits to be re-distributed according to performance.
Alan Morris, chief executive, said the scheme would be phased in over three years, starting this financial year with a 10 per cent pool, increasing to 15 per cent and then to 20 per cent in the final year.
The remaining 80 per cent of profits would be distributed according to Simmons' existing lock-step system under which partners automatically increase their profit share by fixed increments each year up to a plateau of 10 years.
Unlike many US and some smaller UK firms which use the amount billed as at least part of the basis for remuneration, Morris stressed that total billings would not be part of the criteria used to appraise performance.
Instead, partners will be awarded points each year on eight criteria, including leadership, development of practice and “putting the firm first” – seizing opportunities to develop the firm as a whole.
Points up to a maximum of 10 will be awarded each year and will accumulate over five years with the total expressing how much of the pool the partner gets.
It is understood there was heated debate among partners between those who wanted a larger element of merit pay and those who did not.
Morris said: “We looked at a 10, 20 and 30 per cent pool. We must have examined about 15 to 20 different combinations.
Norton Rose is understood to be considering a similar move to a modified lock-step.