Profit-Sharing: system to make firm 'more competitive'

Eversheds is to scrap its lockstep and introduce a new profit-sharing system for equity partners based on merit, as the firm unveiled plans for rapid expansion of its City arm.


The scheme, to be implemented early next month, will replace the current modified lockstep and reward partners according to their individual contribution rather than simply because of their financial performance or seniority. It will take into account their performance in five areas - client service, people, behaviour, profit and strategic value, and fee-income generation.


An assessment will be done by a senior management committee, which will consider the partner's annual appraisal, the views of their team and clients, and an evaluation of their standing in the market, to determine the overall value of their contribution and the appropriate level of remuneration.


Eversheds chairman Alan Jenkins said: 'These changes will allow us to compete in increasingly competitive international and national market-places. Lockstep is pretty old-fashioned and inflexible, emphasising seniority rather than the value of the contribution of the individual partner.


'The increased headroom that the structure provides in terms of potential profit-share earnings will help to attract high-flyers and support our expansion plans in the City.'


The firm said it would move to new premises in the City, providing 50% more office space than it currently occupies, by summer 2008. It has also set itself a target of doubling the size of the London staff over the next five years.


David Temporal, law firm adviser and principal at Temporal Consulting, commented: 'The challenge when firms move to a merit-based system is to retain cohesion within the partnership, and build in assessment criteria that promote it.'