They say that necessity is the mother of invention. So it is fitting that Allen & Overy’s (A&O’s) new bonus scheme sprang from an idea by the firm’s head of derivatives and structured finance, Simon Haddock. Certainly, there are few partners within the firm – or in the City, for that matter – who would welcome an effective retention scheme more than Haddock, given the demand from investment banks for derivatives lawyers.
“We have some remarkable talent in our team and we are finding that the banks are targeting them when they have been qualified for two years,” he says. Haddock came up with the scheme after bouncing some ideas off some of his investment banking contacts. It emulates the deferred share option schemes used by the banks. Of course, law firms cannot currently issue shares, so A&O has instead linked associates’ bonuses to the value of an equity point. It is also deferring the payment of the bonuses in an effort to encourage its lawyers to stick around.
