‘s management, led by managing partner Peter Cornell, is getting tough on its equity partners as it proposes sweeping constitutional changes allowing it greater powers to weed out underperformers.
As part of the firm’s partner compensation review, it is believed that lawyers will be asked to vote on lowering the threshold to expel a partner from equity. At present it would require 85 per cent of the equity to vote in favour of expulsion. This has been invoked only once, when this year, former Bangkok managing partner Wirot Poonsuwan was removed from the partnership.
At present, the management also has little or no room to move partners down the partnership if they do not come up to scratch. But as part of the review, it is believed that it will be made possible to freeze partners on the lockstep, or even reduce their points, which run from 40 to 100 units, as they descend the ladder.
At the moment, only partners in Germany can be kept on a rung of the ladder for one year or, in exceptional circumstances, two. The rule was introduced at the time of Clifford Chance’s merger with Pünder Volhard Weber & Axster in 2000.
The Lawyer 100 revealed that in the last financial year, profits per equity partner had fallen dramatically to £644,000 from £714,000 in the previous year, placing it well below its magic circle contemporaries.
Clifford Chance has already implemented plans to extend the gateway between salaried partners moving into the equity from two to three years.
A change in the constitution would also allow Clifford Chance to loosen the bottleneck at the top of equity. Nearly half of Clifford Chance’s 441 equity partners are on plateau. In London, 87 per cent of partners hold more than 80 points, in the US the figure is 75 per cent and in Germany 64 per cent.
The changes are part of the firm’s compensation review, which is putting forward plans to stick with lockstep but with an additional bonus pool for exceptional partners.
A spokeswoman for Clifford Chance said: “The issue is currently under discussion as part of the compensation review. We cannot comment until that review is completed.”