PEP Watch

LJScofield
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#1
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So I was just reading comments on LegalCheek about PEP being announced by most of the Magic Circle and people were discussing how long you need to be a partner before getting the PEP. I had always assumed that partners were paid evenly but is this not the case?
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The West Wing
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Varies a lot by firm but most have quite a substantial salaried partner band with some partners who will have equity (I think Macfarlanes is 50% salary 50% equity partnership for example). You usually have to work through salary partnership for many years before being given equity. The magic circle firms have quite a high ratio of equity partners.

Then there's two major systems firms use, one is lockstep where you get given more points each year you're in the partnership, and each point translates to a share of the firm's profits so effectively your profit share goes up every year based on seniority. The other system is called 'merit' where you keep a portion of equity that translates to your billings or the amount of work you've brought in (or both). Most UK firms are 'lockstep' model but the trend in recent years is for these firms to take on more 'merit' elements. An example is Freshfields that went from being a very traditional lockstep model to having a complex hybrid model. The pay within partnerships is often very uneven and some of the junior partners may make less than some senior associates.

To get to the PEP, which is a slightly weird question, I'd say it would be on average 10-15 years of being a partner, but there's many factors at play and many different systems that would affect the length of time it takes.
Last edited by The West Wing; 1 week ago
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