Herbert Smith Freehills’ (HSF) partners are set to green light an aligned remuneration system by the end of December, ending months of discussions over a combined structure.
Insiders have told The Lawyer that a final partner vote is due to take place “before Christmas” with the new structure – on track to be a hybrid of the two models – likely to kick in from early next year.
A number of draft proposals for the overhauled system have been put forward in recent months, though none have yet been agreed.
Sources say partners at legacy Freehills, which has a modified lockstep based on performance, have been reluctant to wed with legacy Herbert Smith’s rigid eight-year lockstep and are concerned a compromise between the two systems will lead to pay cuts for its top performers.
Legacy Herbert Smith partners voted on a full financial merger with Australia’s Freehills last June (21 June 2012), with the combined firm launching in October. Legacy Herbert Smith required 75 per cent approval from partners while Freehills required 85 per cent.
A number of financial issues were discussed during HSF’s original £800m merger agreement. This included a cash call of £20m to all equity partners at legacy Herbert Smith, an effort to boost its capital structure as part of the firm’s planned financial integration with Freehills (13 May 2013). The combined firm also overhauled its financial team with the introduction of two new roles, global chief financial officer and financial director for UK, EMEA and Asia.
A spokesperson for HSF declined to comment.