'It breeds mistrust' - Jones Day's black box pay system and poor communication blamed for City exits

Former partners at Jones Day say tensions around the firm’s infamous lack of transparency over pay and a disconnection between the London office and the rest of the firm are to blame for the recent spate of UK partner exits.

The US giant has seen eight partners leave in eight months, including a number of practice heads.

The most recent departures were energy partner Paul Exley, real estate partner Iain Hindhaugh and Sebastian Orton, who was previously a partner but most recently worked as a counsel at Jones Day. All left last week. 

Other partner exits since last August include private equity partner Weyinmi Popo, banking partner Dominic O’Brien, India partner Sumesh Sawhney, head of construction, Hamish Lal, employment head Jules Quinn and banking partner Bryan Conway.

As long as I’m getting paid what I think I’m worth why should I give a monkeys what someone down the corridor gets paid

The partners have joined a variety of firms including Orrick Herrington & Sutcliffe, Akin Gump Strauss Hauer & Feld, Baker Botts and King & Spalding.

Former partners say there is no single new driver for the mass exits. Instead, they point to the firm’s longstanding secretive pay system and general disenchantment within the office as factors. Jones Day does not publish an associate pay scale and partners’ remuneration is decided on a case-by-case basis by management.

One ex-partner previously based in the firm’s London office said their were pros and cons to the system: “If you want people to work together, one thing that stops that is knowing the person down the hall from you earns $50,000 more.

“Money doesn’t get in the way if you don’t know what each other gets. However, the difficult bit is the relativities.

“There’s no origination credit and no billing credit, and somehow the firm is meant to see what you have done and compensate you accordingly – how do you know that works? It breeds mistrust.”

One current partner in the London office argued the system was “terrific”. They said: “As long as I’m getting paid what I think I’m worth in the market why should I give a monkeys what someone down the corridor gets paid? It takes away a huge amount of bullshit.”

Referring to how the firm credits its partners the Jones Day website states: “We do not believe that applying formulas or metrics to these complicated relationships is productive.”

It adds that “a very small number of people” advise the firm’s managing partner, Steve Brogan, on compensation rewarded to partners.

One ex-partner previously based in Jones Day’s New York office added: “The firm prides itself on a black box system and thinks that its compensation system works better because people aren’t always vying for better salaries.”

There’s no origination credit and no billing credit but somehow the firm is meant to see what you have done and compensate you accordingly – how do you know that works?

Former partners said that in addition to issues with pay the London office had also seen a number of partner demotions in recent years which have affected morale. This active management of partner performance is nothing new at the firm, with Legal Week reporting in 2009 that almost 10% of the US firm’s London partnership had been demoted in this way, however one former partner said a number of demotions were made in January this year .

Multiple sources have also said the London office – the product of a merger with legacy City firm feels Gouldens in 2003 – is disconnected from the global firm.

One ex-partner said: “There was limited contact between the Washington HQ and London. The firm makes much of its so-called global integration but that didn’t really seem to be the way it worked. It’s easier for the firm to be more joined up in America.”

With $1.85bn (£1.3m) in gross revenue in 2014, the firm placed 6th on The American Lawyer’s 2015 Am Law 200 ranking.

Jones Day declined to comment.