The combined Hogan Lovells is set to maintain separate profit pools and accounting years as part of the proposed structure to unite Lovells and Hogan & Hartson.
As partners at Lovells and Hogan met this week to discuss the planned trans-Atlantic merger in depth, more details have emerged of the structure of the deal, which would see the two firms integrate governance and remuneration but maintain separate profit pools.
Partners at both firms received detailed information on the union earlier this month in time for Lovells’ annual partnership conference, which starts today in Lisbon.
The proposed structure — inspired in part by Big Four accounting firms — would see the firms maintain separate partnerships in the United States and in the United Kingdom and international sectors. Lovells’ U.S. partners would transfer to Hogan’s partnership, while Lovells would take on Hogan’s European practice.
The proposed structure will also likely create an umbrella organization to allow for firmwide governance, branding and cost-sharing. A Swiss verein or co-operative has been cited as possible models for the umbrella entity.
The deal will also likely create an umbrella organization to allow for firmwide governance, branding and cost-sharing.
Hogan would retain its December year-end and cash-accounting model, leaving the Lovells partnership with an April year-end and accrual accounting, which is standard in the United Kingdom.
Though the model will require the firms to maintain two partnership entities and would block direct profit-sharing, the firms are set to align remuneration policies, with Lovells moving toward Hogan’s contribution-based model for partner pay.
This means 85 percent of profits for equity partners would be allocated on a points-based system, covering sustainable financial and non-financial contribution to the firm over a medium-term basis. The points allocations will be reviewed every two years.
