CMS Cameron McKenna has come full circle since the turn of the century. For the top 15 UK firm, which has long held firm in resolutely retaining an all-equity partnership, the announcement last week that it was to introduce a salaried partner role could hardly have been more radical.
The creation of a new tier of non-equity UK partners, who will not be able to vote on major strategic decisions, mirrors the firm¹s position seven years ago. At that stage, the firm had salaried partners across its network and a profit per equity partner (PEP) of around £340,000.
But in 2000, Camerons decided to go against the grain. At a time when rivals were introducing merit-based pay and salaried partners to retain top performers, it opted to become an all-equity partnership, in part to help bed down the turbulent 1997 union between McKenna & Co and Cameron Markby Hewitt.
This traditional stance was reinforced in 2003 when the firm moved to a pure lockstep, joining the likes of Slaughter and May and Freshfields Bruckhaus Deringer.
But now the seven-year itch has hit, and the 131-partner firm is set to ditch its convivial structure in favour of introducing 20 salaried partners by 2010. The partners will retain the status for the first three years, after which a proposal can be made for an individual to enter the equity.
The three-year duration of the position is longer than some City rivals, which often operate two-year salaried partner periods.
Camerons managing partner Dick Tyler commented: "It will enable the appointment of partners where there is not yet a complete business case, giving an incentive to the individuals to build a practice, using the leverage that partner status brings."
The move comes as a result of a three-year strategy review, in which the firm has set out its stall to generate revenue of at least £250m by 2009, up from £182m during the last financial year.
Tyler played down suggestions that the change is designed to boost the firm's PEP, saying: "There is no magic or mystery to why we decided to do this now. We just wanted more flexibility. We have learned through experience since 2001 that this is the way to go. We have had local partners in Europe for some while and this will align us with that system."
However, in terms of partner profits, Camerons has clearly lost ground to rivals during the last seven years. The firm¹s PEP - currently at £476,000 - is on a par with Simmons & Simmons. Back in 2000, Simmons' PEP stood at around £272,000, well below Camerons' figure of around £340,000.
There will be no denying the effect of having around 15% fewer equity partners. Based on current figures, if Camerons' 131-strong equity partnership was to drop to 111 partners, PEP would rise to around £560,000 - an increase of almost 20%.
One former partner commented: "Rising to partnership in stages is useful for a firm, and means lawyers have to justify their existence to make equity."
However, Camerons previously viewed this system as divisive. Now they are closer to the breadline it is hardly surprising they have changed their minds. Rivals also believe that to compete seriously, the firm will need to take more action than just introducing London salaried partners, a warning the firm seems to have heeded with the introduction of an hours-related bonus system for associates, as well as an overhaul of its management board.
The firm is also shaking up the leadership of its main practices. Will Meredith is set to take over from Duncan Aldred as head of banking, while Liam O'Connell will replace Anthony Hobkinson as insurance head and Andrew Sheach will take the place of the retiring head of corporate, Guy Billington. All three new practice heads will sit on the 13-strong executive committee.
For Camerons, the changes promise a welcome boost, but for the firm's critics they have come too late. Most importantly though, the firm will hope the U-turn is the start of a path that does not end up as another circle.
