Magic Circle firm Allen & Overy has put in place a performance-related bonus pool, in addition to its graded wage structure, in a sign that top UK firms are seeking to compete with their US counterparts for talent.
The proposal to change lockstep, where salaries are based purely on seniority, was first outlined to partners last February, and formally approved with more than 90% support last July.
The scheme came into effect from December 1. News of the reforms emerged from the firm this week.
‘The lockstep now allows for a discretionary points pool to assist in attracting and retaining truly exceptional partners and lateral hires,’ a spokesman at A&O said.
But he added that lockstep would remain the basis for the majority of partner compensation.
‘This evolution reflected the partnership’s desire to maintain the lockstep while providing the flexibility the business needs to remain competitive and grow our global market share.’
The move comes as other magic circle firms also review their remuneration models, instigated by the merit-based systems American firms use.
’UK law firms are competing in a globalised market for talent which they can only do by removing lockstep,’ Scott Gibson, director of the legal recruiter Edwards Gibson, said.