CMS lockstep rejig sees shorter track to equity and tighter management

CMS Cameron McKenna is set to introduce a revamped partner remuneration system that will see junior partners make equity faster but be put under a higher level of scrutiny once they start moving up the lockstep.

Dick Tyler
Dick Tyler

The firm is scrapping its ranks of roughly 65 salaried partners and making them fixed-share partners, know as gateway partners, of which it currently has around 10.

As a result, fixed-share partners can now expect to make full equity in four years, compared with a total of five years previously served in the two non-full equity positions.

Senior partner Dick Tyler said the move was an attempt at “simplification” of the firm’s partnership structure, which consisted of three classes of partner in contrast to many competitors’ two.

The changes were voted through in early March and take effect on 1 May following a long-running review.

The equity lockstep, still running from 28 to 70 points, will now see partners move up the ladder by 6 points every year. Under the old system, partners were promoted by roughly 14 per cent of their existing points allocation rather by than a fixed number, meaning the first step was from 28 to 32 but the last was a leap from 61 to 70.

Gateways will be fixed every three years, with partners almost always moving up the lockstep every year within these, although this is not guaranteed.

However, at each gateway and on joining the lockstep they will be reviewed, meaning they could be held or have their progression sped up or slowed down. Occasionally partners will be moved down. Reviews will be overseen by the firm’s board.

Tyler added: “The process of all partners moving up the lockstep is going to be more visibly managed than it has been.”

The firm confirmed that the new fixed-share partners would be paying capital into the firm but declined to confirm how much. It also said it could not disclose how much it would save in National Insurance and pensions costs as a result of the revamp.

The firm introduced the salaried rank in 2007 on moving away from an all-equity partnership (25 January 2007) and brought in fixed-share partners two years later (13 April 2009).

CMS’s average profit per equity partner for the entire network in 2011/12 was £465,000. The equity spread ranged from £139,000 to £1.16m.