Shearman parts with German arm over pay

Shearman & Sterling's Mannheim office has broken away from the US law firm after months of debate.

The split will see the 30-lawyer office, which includes nine partners, reverting back to the name it operated under before its 2000 tie-up with Shearman - Schilling Zutt & Anschuetz.

Partners within the firm told Legal Week that the break-up followed a decision by Shearman last month to dock the pay of the Mannheim partners with effect from 1 January this year.

The firm's remuneration system allows partners to be moved up and down the lockstep and it is thought the Mannheim partners would have seen their pay cut by around 10% to 15%.

The move follows a raft of departures from Shearman's German arm in recent months including Duesseldorf M&A partners Rolf Koerfer and Birgit Reese, who joined Allen & Overy earlier this year.

Those within Shearman and at rival firms suggest the Mannheim office was simply not profitable enough.

One partner inside Shearman told Legal Week ahead of this week's announcement: "It is not a reflection on their legal abilities. It is not profitable for them to leave, but it is also not profitable for them to stay, as their compensation will be reduced year by year."

An ex-partner added: "There is a view in the firm that Mannheim takes out more than it contributes. To move them a step down in terms of compensation is an obvious signal from the management."

Shearman also announced that it would be shuffling its German management with Harald Selzner named as German co-managing partner alongside long-serving regional chief Georg Thoma.

Mannheim partners were unavailable for comment.

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