Firms warned against ditching associate lockstep

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  • We at Badenoch & Clark have recently explored this topic (http://www.market-talk.co.uk/2009/11/06/lockstep-vs-merit-based-pay-structures/).
    If firms are looking to change their pay structure they should carefully consider how they go about it. Forcing change on employees will affect a firm’s ability to retain staff.
    Firms should look to involve their employees in the process to ensure that they are engaged in any change ( http://www.badenochandclark.com/files/file/Employee-engagement-a-guide_jpg.pdf).

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  • Oh, come on. So you did a ring round and some of the people you spoke to aren't sure it's a good idea - and that translates into "Firms warned against ditching associate lockstep"? This is tabloid stuff.

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  • love the assumption that associates would be offended by a move to greater meritocracy.

    probably rests on another assumption - that the new system is likely to be used so that perceived poorer performers will be held back, but that perceived top performers will not be promoted early.

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  • Firms have been too frightened that they will lose associates if they start changing the comp system. Now is the right time to be doing it. If they had any balls they'd cut pay levels again. As a in-house lawyer I am appalled that my bills are going towards paying for associates who aren't even differentiated on merit.

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  • I think Badenoch & Clark's comments show that there is real concern among associates (and their employers) over a move that - whether it's the main driver or otherwise - will see firms save money on both salary and bonuses.

    It's not about whether the lockstep is anachronistic, but about how performance is recognised and rewarded.

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  • For some firms moving away from the lockstep is surely a disastrous move. For the bigger firms who can hire and fire at will the meritocracy has to be better. But for the smaller firms and even some of the regions it could be a recruitment nightmare.
    It could even create a split in the market?
    how are associates likely to move up the career ladder if they don't get access to cases which those at the bigger firms have access to? Could it end up with a two tier profession, where some are judged on their merit and others by how many years they have worked?
    And what will this mean for instructions? Will in-housers be forced to pay the extra money to go to the CIty firms which are able to work on a meritocracy, leaving smaller firms to dwindle?Of course meritocracy-based career paths are probably best, but there are reason why it doesn't suit all firms.

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  • Nobody is pretending that locksteps are a good system, but as Churchill said of democracy, it is the least worst that has been tried. Big firms just aren't equipped to properly assess merit across practice groups, let alone assess potential recruits against their existing crop of associates. I'm sure they are making changes for the more senior lawyers, but my money says it is only a matter of time until the junior associate ranks work out that they are all being paid within a grand of a median "lockstep" figure at each PQE band.

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  • Anonymous at 5.31pm. I am appalled that in-house lawyers, wanting to go home early, often ask for unnecessary things to be done that create more work for law firms. And then act as an obstacle to getting bills paid.
    Merit is fine, but juniors are pretty much interchangeable and clients don't make it better by farming out dull work to expensive firms then complaining about fees.

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  • I'll repeat what I said on another thread:
    While I don't deny that it makes sense to reward exceptional performers, for the average associate (and, on a grading curve, there will obviously always be "average" associates), this smacks of stealth salary cuts to me.
    Many of us think we work hard, but while merit has something to do with that, it's not always the case that partners can judge these things fairly. If a partner brings in fewer deals, and associates get less challenging work, partners can just keep salaries low and their profitability stays the same. They would have no incentive to pay for their salary costs (which their hiring policies are directly responsible for) by trying harder to bring in work and run the firm more efficiently.
    Merit is already taken into account in appraisal systems at many firms, and feeds directly into bonuses. Surely that is how (hard work x competence) should be rewarded? The issue some firms seem to be ignoring is that there is often both a fixed and variable component to salaries. Merit is taken into account in the variable (bonus) element. The firms moving away from lockstep are merely trying to lower the amount they pay for the fixed component, which is likely to become a to move to a rate that is lower than market as a starting point for base salaries. There is nothing wrong with this if you think associates are paid too much; but these firms are being cynical and dishonest about things - they are in effect trying to give the impression that they are paying comparable to market rates, but in reality are reducing certainty about an associate's basic salary. I say again - I feel this may be verging on the dishonest. A better way to put it would be "We want to give you a lower base salary, and you'll have to earn the rest - though note your ability to control the quality, quantity and nature of the work you get, as well as the partnership's judgment on what you deserve for putting up with this, may be highly arbitrary and subjective".
    If you think an associate isn't worth the basic salary that the "lockstep" firms pay, then the only way to compete with those firms would be to convince everyone that the "average" associate on a merit curve (who, in many respects, will have no certainty on where on the curve s/he will fall) would earn as much under non-lockstep as under lockstep. Otherwise, they'll go where they get a better guaranteed salary, with a variable merit bonus. As we will no doubt see, I believe the average salary will fall at non-lockstep firms (as Pinsent's Jonathan Bond appears to be admitting in the earlier article), and with it, the overall quality, collegiality and team-spirit that we all hope to work with, as people compete to be seen to be better and harder-working, rather than supporting each other in what can be a difficult and challenging environment.

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  • Anonymous | 16-Nov-2009 5:41 pm - do you live in the 1970's? The professional is already two tiered and smaller firms are dwindling, whereas the proactive firms are alligning / have alligned themselves as global businesses rather than big law offices. Meritocracy means that people that do well are rewarded and those that don't are not. If the ones who do not progress decide to leave then I doubt too many are concerned as long as the pool of hungey talent is standing by to learn and progress. Typically those firms with a meritocracy will invest heavily in training.
    Meritocracy doesn't suit firms with poor management...and those with a pure lockstepped partnership where time in the seat seems to be rewarded more than ability....and profitability.

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