Editors' Blog

Needs must for A&O's new approach

Posted 18/10/2006 by legalweekblogs.com SU

They say that necessity is the mother of invention. So it is fitting that Allen & Overy’s (A&O’s) new bonus scheme sprang from an idea by the firm’s head of derivatives and structured finance, Simon Haddock. Certainly, there are few partners within the firm – or in the City, for that matter – who would welcome an effective retention scheme more than Haddock, given the demand from investment banks for derivatives lawyers.

“We have some remarkable talent in our team and we are finding that the banks are targeting them when they have been qualified for two years,” he says. Haddock came up with the scheme after bouncing some ideas off some of his investment banking contacts. It emulates the deferred share option schemes used by the banks. Of course, law firms cannot currently issue shares, so A&O has instead linked associates' bonuses to the value of an equity point. It is also deferring the payment of the bonuses in an effort to encourage its lawyers to stick around.

“We wanted to come up with something that mirrored what our clients do,” says Haddock, who concedes that the scheme’s ultimate success will depend on how well it is implemented by his colleagues across the firm. In an article in tomorrow’s issue of Legal Week, HR director Genevieve Tennant says the firm’s greatest challenge is changing the way the associates are managed. “As the human resources director, I all too often hear behavioural skills described as 'soft' skills, the inference misleadingly being that they are somehow the easy skills,” she writes. “And yet getting the behaviours right in respect of managing our people is probably the hardest challenge we face.”

Her piece complements an article penned for Legal Week by Linklaters managing partner Tony Angel in September, in which he called for partners to take more responsibility for the nurturing of associates (see article). Over the last year or so there has been a great deal of debate about how firms can improve their retention. Initially, much of the attention focused on the opportunities thrown up by alternative career paths.

Taken together, the pieces by Angel and Tennant provide a powerful case for the alternative view that it is the partners themselves who hold the key.

john.malpas@legalweek.com