Legacy BLP partners ditch lockstep for US-style partner pay as transatlantic merger goes live

 

Bryan Cave Leighton Paisner co-chairs Therese Pritchard and Lisa Mayhew

Legacy Berwin Leighton Paisner (BLP) partners are losing the UK firm’s modified lockstep pay system with immediate effect as a result of its merger with Bryan Cave, which will see all partners paid on a hybrid system more closely aligned with the US firm’s structure.

Bryan Cave Leighton Paisner (BCLP), which officially went live today (3 April), will operate to a calendar year-end using US-style cash accounting, with the legacy UK arm ditching both its April financial year-end and accruals accounting system as well as its lockstep.

Under the new structure, BCLP partners will be told their projected earnings at the beginning of the financial year, with drawings paid out over the 12-month period.

Any additional profit at the end of the year (beyond what was projected) will be distributed across the partnership once bonuses are paid out.

Partner bonuses have also been aligned from the outset. Pay and bonuses are aligned for all partners, with one common bonus pool, while the firm’s total bonus pot is anticipated to grow from about 5% to 12% during the next four years for partners.

Legacy BLP partners will be paid using BLP’s lockstep system for the eight-month period running from 1 May 2017 to 31 December last year, with profit share to be paid out during the course of this year, in addition to projected drawings for the merged firm.

The UK firm previously used a ‘hybrid lockstep’ system in which 75% of BLP profits got paid out to partners as drawings and profit share, with 25% going into a bonus pool. For the 2016-17 financial year, BLP’s lockstep ranged from roughly £1.5m at the top, down to £300,000.

Bryan Cave partners meanwhile received the bulk of their pay through the prospective pay system with a historically smaller bonus pool.

The bonus will go to partners who are active in “driving revenues, doing great work, billing hours and being a good firm citizen”, according to co-chair Therese Pritchard (pictured left), with integration efforts also set to be rewarded.

The cost of the one-off tax hit incurred from moving from accruals to cash accounting – a key reason most transatlantic mergers have been structured as vereins rather than single profit pools – will be shared among all equity partners. Lisa Mayhew (pictured right) and Pritchard said the cost would be split over a number of years to avoid partners feeling too much impact.

Commenting on the firm’s one profit pool structure, Mayhew added: “We genuinely believe that the service you get as a client is more seamless, efficient and valuable if you institutionalise that we are one team, one firm, one culture, one profit pool mantra. If you have that structure, you blow out the barriers of providing services to a client.”

The transatlantic merger between Berwin Leighton Paisner and St Louis-headquartered Bryan Cave officially launches today, after the firm’s confirmed merger talks in October 2017. The merged firm has 32 offices in 11 countries around the world and 1,600 lawyers. Combined revenue stands at about $900m.