Clifford Chance Steps Up The Lockstep Pay
Tom Borman, LawFuel contributing editor
It’s raining money for top legal talent and the battle for legal talent has seen Clifford Chance up the ante with a big pay change to their lockstep structure to keep legal talent in the current talent wars.
The firm has changed its traditional lockstep model, which typically rewards partners based on seniority, to allow for greater flexibility in compensating its star performers compensation packages that could reach up to £12 million.
The changes mean big money for Clifford Chance partners, lifting the previous maximum from £2.8 million.
Clifford Chance brought in $2,861,200,000 gross revenue in 2023, placing the firm in place at no. 11 on the 2024 Global 200 ranking.
The traditional lockstep remuneration model has been upended. The 100-point system includes different tiers ranging from 70 points up to almost 300, permitting a so-called ‘super-pointer’ region on the program permitting around £4.8 million ($USD6.23 million) in pay for the star partners.
But according to a report in Law.com, the top stars could earn up to £12 million, which is investment banker, private equity-type take-home pay.
The firm has been aggressively building its US business to compete with the major US law firms.
Big Law Hiring War
The changes come in the midst of a hiring war as the previous remuneration models become outdated and star partner hires continue among the big firms and selected boutique practices.
The changes also mean remuneration can more readily be adjusted both upwards and downwards.
It has also lifted its pay at the lower level also to attract new entrants to the firm.
As of 2022, the average profit per equity partner (PEP) at Clifford Chance was £2.04 million ($2.65 million).
Clifford Chance have previously altered their pay structure. In 2015, it introduced a mechanism allowing leaders to move partners between 70 and 130 equity points and in 2017, a “super-pointer” tier was added to reward top performers in London and New York.
Intense competition from mainly US law firms has increasingly put the pressure on UK Magic Circle firms to ‘magic up’ bigger numbers to keep their star lawyers. The pay war has been described in some quarters as ‘insane’.
Firms like Paul Hastings have been paying big money top hire talent and Paul Weiss have been showering money on big money lawyers to build their UK and European practice.
Key Changes for UK Firms
Clifford Chance’s move follows similar adjustments by other major UK firms as they alter their pay structures:
- Allen & Overy Shearman recently implemented a three-tier system for partner compensation
- Linklaters is considering adding a third tier to its lockstep to better reward younger top performers.
This is not the first time Clifford Chance has adjusted its compensation model. The firm has made several modifications over the past decade.
The firm has been gradually modifying its lockstep over the years, introducing “super-pointer” tiers in 2017 and extending the lockstep to around 280 points more recently.
US firms like Kirkland & Ellis have been more aggressive in offering high compensation packages to both attract and retain talent, with reports of deals up to $10 million per year for big earners.
Industry Trends
The legal profession is certainly seeing a broader trend of firms moving away from rigid lockstep systems towards more flexible models that can better reward high performers and retain key talent.
The shift reflects the increasingly competitive nature of the legal market and the need for firms to adapt their compensation structures to remain competitive.
While big money changes like those made by Clifford Chance and others may help retain top talent, they also raise questions about firm culture and collegiality.
As firms move towards more performance-based systems, they must balance the need to reward top performers with maintaining a collaborative environment.
And therein lies a challenge.
