Clifford Chance's review of its bonus scheme has turned the spotlight on how other firms shape up in the rewards league.

Mark Smulian discovers that not only money talks

Lunch with the boss might not always be seen as an appropriate occasion to complain about remuneration; it is more often used as an opportunity to impress.

However, Clifford Chance's London managing partner Peter Charlton went looking for complaints when he hosted a series of informal lunches for the firm's assistant solicitors to find out what they thought of its bonus scheme.

He was fact finding in reaction to an impression gained by senior staff that all was not well with the bonus system, says Clifford Chance's regional chief operating officer, Amanda Burton.

The consensus from the lunches was not so much that the assistants - defined at Clifford Chance as all lawyers below the level of partner - disliked the bonus scheme, as that a worryingly high number did not understand it, Ms Burton explains.

Assistants' uncertainty over what they could and could not count towards their bonus led to a complete rethink and eventually to the revised scheme announced earlier this month (see [2003] Gazette, 2 October, 6).

Clifford Chance assistants can now earn potentially double what they might have done under the old scheme.

The firm has increased the amount of non-billable work that can be counted in bonus awards, and boasts that its assistants can now earn more than their counterparts at other City firms.

Assistants who have been qualified for one year and have a basic salary of 48,000 can enjoy a 20% increase through the bonus, rising to 30% up to three years, and 40% for those qualified for longer periods.

These rates come in 10% higher than under the old scheme.

Half of bonus awards are based on the quality of the assistant's work and the other half divided between billable hours and the firm's new concept of 'investment hours'.

Billable hours depend on assistants hitting 95% of the 1,700 hours target.

Investment hours take account of pro bono work, community activities, development of client relationships, and creation and presentation of training.

The qualifying threshold for this aspect of the bonus is 100 hours.

Ms Burton said that Clifford Chance's lawyers also enjoy the use of an in-house gym, a swimming pool, a squash court, a subsidised restaurant, and health care benefits.

But she insists that the review of the five-year-old bonus scheme was set in train because of concerns about its clarity, not because of any pressure of competition for talent from other firms.

'I'm not aware there were any specific recruitment and retention issues, but we offer very competitive packages so we always keep an eye on the market,' Ms Burton says.

If the other members of the magic circle of City firms are at all disturbed by the prospect that their assistants will start to ask for bonus benefits comparable to Clifford Chance's innovation, they are keeping any such concerns to themselves.

A spokesman for Allen and Overy said: 'We do not have too many perks.

There is a firm-wide bonus scheme which we have had for five years, which is payable every year if the firm reaches its budget target.

'The same percentage on salary is paid to our people whoever they are.'

A Freshfields spokeswoman said the firm had a gym.

It did not normally discuss its bonus arrangements, but she was 'not aware of any changes planned'.

Other firms were even less forthcoming, although Herbert Smith's statement to potential applicants says that it has a qualified fee-earner bonus scheme based on the financial year.

Qualified lawyers in its London office can gain an extra 20% on salary if they qualified in September 1997 or after, or 25% if their qualification date was earlier.

Paralegal staff and professional support lawyers do not qualify for this bonus scheme, but benefit from a profit-share scheme, which is also open to the firm's other employees.

This provides a 5% payment on salary if Herbert Smith meets its targets.

But one leading consultant on lawyers' pay doubts that the magic circle firms need at present to get into a bidding war for talent, a phenomenon which, as in any market, tends to surface only in booming times.

Even if they did, pay might not be the key factor.

Giles Rubens, a London-based director of consultancy Hildebrandt, says: 'I don't think there is any particular recruitment and retention issue at present that is affected by pay.

'In some firms there are non-monetary considerations, but young people are influenced by the opportunities of top-level firms and are attracted to them.'

He points out that hours worked may become an issue for some lawyers who are satisfied with their remuneration.

'We get these acronyms sometimes.

We had "dinkies" which was "double income no kids", and I've heard of "sins" which means "single income, no sex", describing young lawyers who are working such long hours they have little time for the rest of their lives,' he says.

Nor could firms get into open-ended games of beggar-my- neighbour on bonuses, Mr Rubens adds.

'The economics of each law firm has to stack up so the salaries relate to the hours a lawyer can charge and on what work.'

Some American firms that have set up in the London market are offering higher rewards, but Mr Rubens maintains this will not necessarily lead to the most talented lawyers being poached to work for them, nor to a general inflation in lawyers' remuneration as competitors try to catch up.

'I don't have the feeling that the magic circle feels the need to worry, because they offer something different,' he says.

'A magic circle firm offers a lawyer the high reputation of working or having worked there, and the quality of work they can offer is usually better, although some US firms do now handle major transactions.'

Magic circle or not, talent can usually sell itself to a higher bidder, and it may take more than a gym and a dining room to keep the high-flyers happy.

Mark Smulian is a freelance journalist