Allen & Overy’s highest-earning partner in the last financial year was paid a total of £2.3m, according to the firm’s Annual Review 2009.
The sum, which includes a termination payment, was paid to a partner who is no longer at the firm and is £200,000 higher than that paid to the highest-earning partner the previous financial year, who also happened to be a departing partner.
A&O would not comment on the identity of 2008-09’s highest paid partner, although New York-based Dan Cunningham left the firm for Quinn Emmanuel Urquhart Oliver & Hedges during the year (23 May 2009).
A&O had to pay above its lockstep’s highest band to attract derivatives partner Dan Cunningham from Cravath Swaine & Moore in 2001 (8 September 2008).
At the time Cunningham’s base earnings exceeded the top of equity at A&O (£1.1m back then) by around $1.35m (£930,000 in 2001). He also had to give up his generous but non-transferable Cravath pension scheme entitlement of around $540,000 (£372,000 in 2001) per year.
According to a memo sent to A&O partners at the time, Cunningham was guaranteed a top-of-lockstep position, separate significant payments to reimburse him for his lost pension and a 15 per cent interest in a proposed derivatives venture to compensate him “for the shortfall in annual earnings” he would suffer by leaving Cravath
Meanwhile, the Annual Review also confirmed that a total of 37 full equity partners have left the firm as a result of its restructuring programme, along with a total of 450 members of staff (29 April 2009).
In the report senior partner David Morley (pictured) said that the firm has “work to do to build up morale”.
The equity range for the remaining partners ran from £538,000 for those at the bottom of the firm’s lockstep to £1.36 for plateau partners. The lockstep runs from 20 to 50 points over a 15-year period.
For the new financial year A&O’s management team is basing its financial forecasting on the assumption that the global economy won’t start to experience substantial levels of growth before 2011.
Morley said in the report that A&O expects growth to remain “very weak right up until the end of 2010”. He added that when growth does arrive, the US will be among the first beneficiaries.