RPC to scrap NQ flat rate salary for performance-based pay

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  • How can you fairly assess the performance of a trainee given the nature of most of the work they do? In my experience, generally speaking, a trainee is as good and as useful as their supervisor and/or department allows them to be.

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  • Why should trainee solicitors be paid so much? There are very few places left where graduates can expect a salary of £50k plus that will rise automatically every year regardless of how much effort they put in. Does this really offer value for money? For a firm to continue to bring in trainees it must remain profitable, it can only do this with the support of clients. Surely overcharging for an underqualified lawyer is the surest way to lose clients?

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  • I really don't get this! Merit-based pay is very appropriate once a solicitor has achieved the basics i.e. above 2PQE. Before that is the trainee or NQ isn't performing you give them a chance to develop and if they don't you fire them. Pay differentiation at this level is just another useless task for already over-worked HR functions!

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  • "over-worked HR functions". Thanks for that. Made me laugh.

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  • EA - I think it's probably fair to say HR staff have been earning their quids recently - and few of them starting out will be on £58k...

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  • Fair play to RPC for introducing the idea of "merit" to NQ pay but if you read between the lines then the least deserving NQs are still going to be paid about £55,000. If I was an RPC client then I'd love to know which sort of NQ I was getting for my money!

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  • Kathy,

    This is a common false assumption when discussing trainee/lower level associate salaries. The fact of the matter is this. Most firms that run sucessful trainee programs churn healthy profits. Fee structures these days may discount the trainee rate, or eliminate a trainee from charging on the matter at all (billing partner may also cut out some of the trainee's hours). Of course, one may argue that charging £200+ an hour for a trainee is absurd. But the fact of the matter is, the current market allows for it. When a client hires an MC name, white shoe firm, etc...their concern isn't money. If it was, they would no doubt be going to mid-level firms. Often major law firms act merely as insurance policies for when things go tits up. Cost for this insurance policy isn't really a relevant factor. So take a trainee, bill him/her out at £250 for 1600 hours a year and the firm nets £400,000. Deduct office space, his/her salary, cost of LPC, etc and you still have a healthy sum leftover for the partners. But wait! This is only one angle to approach it.

    Perhaps firms such as RPC will struggle to consistently charge £200+ an hour for a trainee, as their client base is likely to be more penny pinching. In this instance, the profitability of a trainee isn't about what appears on the bill at the end of the month. Those trainees will make up the associate workforce of the firm. How else are you going to fill those ranks? Organic growth. Even if the firm can't break even on a trainee (highly unlikely), the returns will be enormous once they're billing 'em out at NQ, 1+ PQE, etc. Now, how else are you going to retain/attract the talent when the MC/White Shoe firms (those who undoubtedly will get immediate returns on their trainees) are paying £40k+ for a trainee?

    Complaining about "high salaries" is just undirected anger. The market demands and can support these salaries. So deal with it. That's the way of the city.

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  • yes Kathy, deal with it!

    Grasshopper, that is the way of the city!

    the force is storng in anonymous of 5.07

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  • This move is not only counter intuitive it is potentially foolish and will, in all probability, increase indirect costs through higher staff mobility and consequent training costs. Pay for performance is to some extent an abrogation of management responsibility. Staff should be paid according to skills, responsibility, experience, knowledge, client satisfaction, timeliness and the ability to work as part of a team. If those attributes are properly managed a fair and reasonable salary should be paid. Any additional emolument for exceptional discharge of one or other obligation can be covered by a financial reward/bonus but once a firms starts on linking pay to fees billed, cohesion/firm loyalty is lost and staff and partner mobility goes through the roof. It shouldn't be necessary to point this out but sadly it is.

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  • Different pay for different departments is one thing, but I think grading on performance for NQs is idiotic. Not only does it make seat selection, performance reviews and every other aspect of the training contract even more fraught, it also places more pressure on partners etc. to deliver a meaningful performance review process that is consistent across departments. That would be great if it happens, but much better firms (i.e. better resourced and better run) than RPC struggle to acheive that, and I can't see that changing overnight.

    What's next from Watmough - variable trainee starting salaries based on your LPC scores?

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  • "Merit" is an arbitrary and opaque way of setting salary. It is not an objective measure of ability and beyond hours billed it is hard to see how they will determine pay. In any event, you can be sure that the RPC NQ+ salary bill, when this policy is implemented, will not be any higher than it currently is and will in all likelihood be reduced. Setting NQ Levels of pay based on "merit", whether RPC admit it openly or not, allows for a flexible means of reducing the salary burden when the firm is less busy.

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  • As an in house lawyer, I am already concerned at the hourly rates model used by most of our legal providers. I suspect that the main yardstick by which to measure the "merit" of an NQ will be billable time, in which case, there will be yet another temptation for an NQ to pad out a bill even more. I agree with the comments made above expressing a view that PRC will see its wage bill decrease overall, but I do envisage that certain NQs will do their best to ensure that itsn't the case, perhaps by any means available. I think it is a bad idea, but let's see how this one pans out.

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  • It is very difficult to assess the contribution of trainee solicitors, and arguably junior solicitors up to about 2PQE. Trainee's billable hours particularly are often subject to right-off's. So it would presumeably come down to how profitable the practice area they are qualifying into is, which would disproportionally affect NQ's qualifying into the less lucrative practice areas. It is perhaps more sensible to have set salaries up to around the 2-3 PQE mark, then move to a merit-based system. This incentivises junior lawyers to stay with their training firm longer-term, and thus the firm benefiting from their own talent (and therefore a good return on the investment), rather than relying on lateral hires.

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  • kind of distracts from the half-year figures though...

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  • A few law firms have done this before. The firm I trained at did this and most people left pretty soon after realising they were getting paid less for doing the same work/hours just because their reviewer was more lenient/had their favourites.

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  • As a client of RPC I applaud the move to performance based pay for juniors, great way to weed out the wheat from the chaff.

    However when will RPC move to performance based fees which is much longer overdue? We don't mind paying for value added, in certain areas we don't get this but are still told we have to pay full rates regardless. This needs to change.

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  • There are some fascinating comments on here, nearly all defensive and negative. What's not to like about merit? All law firm clients reward their staff on merit but for law/law firms it's somehow different? I don't think so. For 'civil service pay grade' read 'law firm lockstep'. Harsh but fair ...

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  • Surely there are only two markets here that matter - client and recruitment. It can't be in client interests for there to be fixed, uniform salaries as that encourages fixed, uniform prices and inefficiency. And if you ask any City quality, high performance lawyer, regardless of pqe, how they want to be judged and it will be on merit. If law firms say otherwise it's either because of self-interest or inability to do the hard things necessary to change.

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  • John is right on the money. I am not even sure why anyone is wasting their time debating the merits of performance based pay vs lockstep. This is such a clear move by RPC to mask a decrease in salaries.

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  • Recruiter: if you bothered to read the comments properly, you would have realised that the criticism is not of the principle of performance-based pay, it's of the introduction of that performance-based pay very close to the beginning of your career, when the firm has little to go on.

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