The magic circle law firm currently allows any partner made up before 2005 to take early retirement at around the age of 55 with many partners benefiting from a deal worth 25% of plateau profits until the age of 60.
CC is now considering alternatives to comply with age discrimination legislation introduced last year, which could see it discard the reference to age and refer to the number of years served. The move has led to claims that CC is hoping to cut costs. However, the firm has indicated that overhauling the system could work out to be more expensive for the firm, as payment that would have ended at 60 would be harder to cut off when linked to length of service.
The review is being led by executive partner Chris Perrin alongside managing partner David Childs, senior partner Stuart Popham and corporate tax partner David Harkness. The firm is thought to be preparing a full proposal to submit to the partnership before the end of the year. The changes are likely to require an adjustment to the firm’s partnership deed and would require a general partnership vote.
One former CC partner suggested there was more to the consultation, saying: “The firm has done all it can to cut costs and it would not surprise me if this was a way to help manage-out underperforming partners in a bid to raise profits.”
However, partners at the firm denied this. One commented: “If this is being used as a way to manage out partners, it is a very blunt instrument.”
The review follows Freshfields Bruckhaus Deringer’s high-profile ongoing dispute with former partner Peter Bloxham over its decision to introduce a less lucrative pension scheme.
Such costly ‘soft-landing’ packages were once common among City firms but have largely been phased out. CC’s own move to phase out the package took effect for partners made up from 2005.
Any move is likely to be closely monitored by Childs, who has overseen a number of cost-cutting initiatives since he became CC’s chief operating officer in 2003. Last year Childs said he had cut around £30m of costs since he took over.
