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Trilegal lifts two Mumbai partners into lockstep, plans to ‘fine tune’ equity model (+ lockstep explained)

Prasad: Tinkering with lockstep likely
Prasad: Tinkering with lockstep likely
Exclusive: Trilegal has internally promoted the first two salaried partners into its equity partner lockstep since the Phoenix Legal breakaway, with Mumbai corporate partners Nishant Parikh and Amit Tambe starting on the first rung of the firm’s 13 year lockstep.

Last month’s promotions take retrospective effect from 1 April and increase Trilegal’s equity partnership to nine, including the five founding partners and two lateral hires Srinivas Parthasarathy and Sitesh Mukherjee who entered on the lockstep in 2008 and 2009.

Parikh graduated from NLSIU Bangalore in 2002 and started his career at DSK Legal. In 2005 he joined Trilegal and was made a partner there in 2008.

Tambe graduated from GLC Mumbai and joined Trilegal from Desai & Diwanji around seven years ago.

Parikh said: “I’d say that there are quantitative as well as qualitative parameters to make it to equity – those parameters are fairly transparent to people in the larger partnership. Given the environment and market conditions I don’t think these are very difficult parameters to meet.”

Criteria such as revenue, administrative responsibilities and client satisfaction were taken into account in the equity partner evaluation. Those parameters were shared with each salaried partner around two years after their initial promotion, said Parikh. “Once those are communicated to you, it becomes a matter of adhering to the parameters [within] a timeframe.”

“Everybody has to come into the bottom of the lockstep and then sort of go through from there,” explained Trilegal co-founding partner Anand Prasad, based in Delhi, and added that there were “concrete plans” to adjust the lockstep in future. (see below)

The first partners to have internally risen onto Trilegal’s lockstep were Abhishek Saxena, Saket Shukla and Sawant Singh, who shortly after their promotion in 2008 broke away to set up Phoenix Legal with Kochhar & Co senior partner Manjula Chawla.

Earlier this month former Trilegal counsel Saurabh Bhasin was promoted as a salaried partner, increasing the ranks of non-equity partners to 10.

Where goes the lockstep?

The Trilegal lockstep is a 13 year lockstep running from 10 to 40 points for each equity partner, explained Prasad, adding that it was “our creation” that had some similarities to its best friend firm Allen & Overy in that it was lean, although the international firm also had to take account of integrating local less profitable offices into the global lockstep.

Each point is equivalent to a fixed amount of money calculated by dividing the firm’s annual profits by the aggregate number of equity points of all partners (i.e. if the net profit of a firm is $1m and all partners together have 100 equity points then each point is worth $10,000).

Founding partners or others at the top of the lockstep – usually called plateau partners – are entitled to a profit share equivalent to 40 equity points at Trilegal.

Junior equity partners, such as Tambe and Parikh, start the lockstep on 10 points – i.e. one fourth of plateau partners.

Every year the points of each equity partner, except for plateau partners, increase by a fixed number of points until they reach the maximum.

In Trilegal’s case every year non-plateau partners receive an additional 2.3 points until they reach 40, with the very last step being around 2.4 points.

If a newly promoted equity partner earned less than a certain revenue threshold on their elevation, that partner’s progression on the lockstep would be subject to a minimum financial performance test – often called a financial gateway - after two years, added Prasad.

Plateau partners’ profit shares remain identical until they retire but their actual take-home pay may increase if the firm’s profits increase faster than the total equity is diluted by new junior partners.

Lockstep partnerships are intended to foster a culture of cooperation between partners where the interests of the firm as a whole and individual partners are usually aligned. Parikh commented: “I think it’s certainly better in comparison than an eat-what-you-kill model. It works wonderfully well in that way and builds an amazing environment within the partnership and we love it.”

However, under lockstep partnerships there is also the risk of losing high-performing and high-billing partners who could receive more compensation under a non-lockstep system, and partners may be less motivated to perform once they are on the lockstep due to the automatic progression.

“There are concrete plans and there is a need to fine tune the financial lockstep further and make it more productive,” said Trilegal’s Prasad. Potentially with the help of external consultants, the firm was considering a shortening of the lockstep, creating a system where points were not evenly distributed throughout the lockstep, or adding evaluations to enter the lockstep to eliminate any discretion. “There are a wide variety of options we have on the table.”

“It has to be continuously evolving model,” agreed Parikh. “The idea should always be to attract talent from elsewhere by marketing the model and making it more and more effective for a larger number of people and to not just make it a club.”

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