Kirkland & Ellis can hold back deferred pay of partners who defect to other firms, under a new policy the firm has introduced this week.

Kirkland's equity partners receive around 45% of what they make each year, with the firm holding back 55% until the following year according to Financial News, which first reported the pay policy change. The new policy gives Kirkland the ability to withhold that pay for partners who leave for other firms. 

Kirkland declined to comment on the change, which follows it losing a string of big-name partners to Paul Weiss in London over the past year led by private equity stars Neel Sachdev and Roger Johnson. 

The departures marked a rare reversal for the firm, which is used to being the apex predator and has built up top-tier practices around private equity on both sides of the Atlantic through raids on Wall Street firms like Cravath Swaine & Moore and the UK Magic Circle in London. 

The policy change could increase the cost of poaching talent away from Kirkland, according to Bloomberg, with defectors potentially expecting their new firm to replace forfeited pay. That could amount to a significant sum – Kirkland's roughly 540 equity partners were paid an average of nearly $8m in 2023 according to data published by Law.com, making it among the most profitable law firms. 

Sloane Poulton, a director of recruiters Edwards Gibson, said: "Law firms having the discretion to withhold profit distributions when partners (presumably ‘bad leavers’) resign is nothing new – but the devil will be in the detail. US firms tend to distribute profits very shortly after the close of the firm's fiscal year. So you would imagine if Kirkland has the discretion to withhold distributions this won’t of course stop partners from leaving, but they might pause for thought and ask themselves: is there an optimum time to resign?"  

While departing Kirkland partners now risk losing pay, under the new policy they are required to give less notice than before – 60 days rather than 120. Kirkland will also dish out capital contributions three months after their exit rather than one year, Bloomberg reported.  

In January, it emerged that Linklaters was considering withholding retained profit distributions from partners who left for a "deemed competitor", in response to a series of talent raids on the firm in London by US rivals including Paul Weiss, Kirkland and Skadden. The plans were reportedly scrapped in June following an internal backlash.