A&O Shearman is moving to an all-equity partnership and adopting a three-level modified lockstep system for partner compensation, according to Law.com.

The move marks the latest stage of a highly complex post-merger integration process that has already seen the recently formed transatlantic firm resolve to cut its equity partner numbers by 10% and close its Johannesburg office.

A&O Shearman declined to comment on the plans which, according to Law.com, will see A&O Shearman's roughly 800 partners assigned to one of three levels – 'entry', 'core' and 'super', with 'super' reserved for the firm's top performers. 

The firm was formed in May through the merger of UK Magic Circle firm Allen & Overy and New York outfit Shearman & Sterling, both of which had non-equity partner tiers. 

Legacy Allen & Overy had around 470 equity partners and 130 salaried partners, while Shearman & Sterling had around 95 equity partners and 70 salaried partners, according to the Am Law 200 and Am Law UK Top 50 rankings. 

Last month, the firm confirmed it would axe 10% of its partnership by the end of the financial year as part of post-merger cuts intended to increase profitability. The firm is also closing its office in Johannesburg with the entire team set to join South African firm Bowmans, and shuttering its consulting arm. 

A&O Shearman's adoption of a full equity partnership contrasts with a trend among top law firms of moving away from that model and introducing salaried partners in a bid to attract and retain lawyers with the prestige and higher pay of the partner title.

Most recently, Cleary Gottlieb Steen & Hamilton, which had been among the last of the elite firms with a pure equity model, introduced a non-equity tier. That followed rivals Cravath Swaine & Moore, Paul Weiss and WilmerHale making the same call over the last year.