Linklaters partners say ‘no’ to superpoints lockstep overhaul

A shake-up of Linklaters’ remuneration process is back on the agenda at the firm, with partners asked to air views about ‘superpoints’ and gates to equity at the November conference, The Lawyer understands.

The debate questioned whether a pure lockstep structure was still appropriate for Linklaters and ended with partners agreeing to maintain the status quo, according to a source close to the firm. No concrete changes will be planned prior to the senior partner election next year.

“Linklaters is still a lockstep firm,” a source said, while adding the partners were invited to discuss the pros and cons of modifying the remuneration system to stay in line with changes to the market and following the appointment of banking head Gideon Moore as managing partner.

It signals a decision by Linklaters not to follow in the footsteps of Clifford Chance and Freshfields Bruckhaus Deringer to increase its lockstep ladder to attract star partner lateral hires.

News of the debate has emerged as Linklaters filed LLP accounts showing its top of equity reached £3.2m last year, a 33 per cent rise on 2013/14 when its highest paid partner took home £2.4m.

The magic circle firm was rumoured to be in talks to overhaul its lockstep system earlier this year, with plans to introduce gates to equity “discussed widely” at its Edinburgh partner conference in April.

Senior partner Robert Elliott included a review of the remuneration system as part of his election manifesto in 2011. Elliott is widely expected not to run for senior partner again when the role goes to a partner vote next year.

Linklaters’ next senior partner, rumoured to be one of two corporate heavyweights, Charlie Jacobs or Jean-Pierre Blumberg, will likely revisit the issue of remuneration in their first year in the job.

An insider said the proposed lockstep changes followed Linklaters “losing a lot of talent to competing, mostly US firms”.

Recent London exits include private equity partner Roger Johnson to Kirkland & Ellis in September, competition head Paul Riedel to Kirkland in May and corporate partner and head of real estate M&A Matthew Elliott to Kirkland in February.

Linklaters finance veteran David Ereira also left for Paul Hastings in November and managing partner Simon Davies stepped down a year early to join Lloyds Bank as chief legal, people and strategy officer.

Its German finance practice also took a knock this summer with the exit of Eva Reudelhuber for Gleiss Lutz in Frankfurt.

Linklaters has also seen a string of exits in Asia. In Hong Kong the firm lost star finance partner David Irvine to Kirkland in September; corporate partner Samantha Thompson to PricewaterhouseCoopers in October; capital markets partner Jon Gray to Davis Polk & Wardwell’s Tokyo office, Asia US securities head David Ludwick to Freshfields, and private equity partner Peggy Wang who is now White & Case’s Asia head of private equity.

However the firm has also made some big name lateral hires in recent months, including Herbert Smith Freehills arbitration silk Matthew Weiniger QC and Baker & McKenzie competition and public lawyer Tom Cassels, and has been on a hiring spree in the US this month, following up its first US lateral in two years with a second in the same week. 

The firm took Baker & McKenzie New York litigation head Douglas Tween as chief of its US cartel and government investigations practice in October, and hired Margot Schonholtz from Willkie Farr & Gallagher to head its restructuring and insolvency practice in New York. 

Linklaters currently operates a pure lockstep running from 10 to 25 points. Points typically increase by 1.5 points a year, meaning it takes the average Linklaters partner 10 to 12 years to reach the top of the lockstep.

The firm introduced a merit-based element to its associate lockstep structure in 2013 in an effort to “reward high performance as well as chargeable work” after lifting a junior lawyer pay freeze earlier that year.

Both Clifford Chance and Freshfields introduced superpoints to their lockstep structures this year. Clifford Chance partners voted through the overhaul in May after kicking off a consultation in January.

The firm is understood to use its extended lockstep ladder more frequently than Freshfields, which introduced superpoints to lure top talent in London in June in order to match its US offering.

It is believed Freshfields could have doubled its ladder from 50 to 100 points following the hire of Kirkland high-yield star Ward McKimm in June. A 100-point plateau could see some UK partners take home remuneration of £3.2m.

Linklaters declined to comment.