"The few, the proud, the Marines?" I would make that,
"The few, the proud, the lockstep-compensation firms."
I’ve opined before that
partnership compensation at many firms is in disequilibrium: While
lockstep has its merits in encouraging collegiality and the firm’s long-run
best interests over short-term profits, and while it promotes client-sharing,
and assigning the best people regardless of "originating" partner, it
can also stifle entrepreneurial instincts and invite superstars to look
for the exits. "Eat what you kill," meanwhile, creates the problems
that lockstep solves, encouraging client-hoarding and an egregiously
short-term outlook.
firm that had "owned" as a client the leader in a particular industry
got twisted up in its knickers when the client’s CFO was fired in a high-profile
and enormously acrimonious accounting scandal. One of the firm’s
star litigation partners decided to represent the CFO in a wrongful-termination
case against the big client. Nine years later, the firm is still
trying to win back at least a smidgin of business from the former client. I’m
not saying a lockstep system would guarantee this would never happen—"I
cannot prevent him from being a &#*$-head" comes to mind—but
surely it would be rare.]
Now Clifford
Chance is re-examining its lockstep. In many ways, Clifford Chance
is sui generis, but their efforts to confront the tension between
keeping, or making, partners in less-profitable offices, while rewarding
the heavy hitters in London and New York, is scarcely unique.
If I had a magic bullet for this disequilibrium, I would be selling
it to you for very handsome fee. Since I don’t, I can only advise
highly-circumstantial sensitivity, a long-run perspective, and a not
insignificant dose of opacity as to the results of the compensation determination,
if not its process.
