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Clifford Chance partners worldwide have voted to reform the 2,500-lawyer firm’s lockstep compensation system to better account for differences in partner pay across geographic markets. The London-based firm, whose lockstep system currently allocates 40 compensation units to its most junior partners and 100 to its most senior partners, will branch the lockstep into three “ladders.” The second ladder will continue to mirror the current firmwide lockstep and be the default system for the firm. But the new system will permit all firm offices in a single country to opt into either the first or third ladders by majority vote. The first ladder, where compensation will begin at 28 units and top out at 70, is aimed at developing economies where legal fees are lower. The third ladder is intended for markets, chiefly the United States, where the current lockstep is regarded as inadequate to recruit and retain talent in a competitive market. The third ladder of the lockstep would also start at 40 units but would permit partners who meet certain criteria in terms of their contribution to the firm to be awarded either 125 units or 150 units. Clifford Chance has already had an ad hoc arrangement in the United States that has in the past permitted partners to be paid above the highest lockstep level on a case by case basis; the recent vote will institutionalize that process in the firm’s American offices and introduce similar flexibility in other offices. Clifford Chance’s U.S. offices have been decimated by partner departures over the last few years, much of the blame for which has been accorded to the firm’s lockstep, which is frequently not competitive with the pay offered by other firms in the U.S. market. The New York office has dropped in size from over 450 lawyers in 2002 to 280 today. But reform of the system had long been resisted by some partners in London who felt the firm needed to preserve pure lockstep as the cornerstone of firm culture. An earlier proposal to introduce flexibility in the system was defeated in a 2003 partnership vote, after which the pace of partner departures in the United States increased. Peter Cornell, the firm’s global managing partner said in a statement Friday that the approved changes to the firm’s lockstep would “maintain the ethos and culture of our partnership” while allowing the firm to improve its competitive position in markets around the world.

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