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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  • Re SIlver Circle "Big firms just aren't equipped to properly assess merit across practice groups"
    Are you seriously suggesting that these firms do not have the expertise to be able to assess their own staff??
    surely lawyers have to be answerable to someone at an early stage in their career- clients for a start. How does anybody learn without feedback from peers and clients alike? If you just move up the ranks because you're five years PQE rather than based on merit, couldn't that create some serious issues for the profession? In 10 years we could end up with partnerships full of people who are there because they've stuck with their firms- not because of merit.

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  • Wake up and smell the coffee. More work is being outsourced. If it's a non-reserved activity, then anyone can do it. Why would anyone pay an associate 80 grand to be a doc monkey? It's a closed shop and it stinks. Before long all you moaning assistants are going to wake up and realise your work is being done in Bangalore!

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  • The key problem is how to measure the "merits" objectively. How do you want to make an overall comparison between all associates in a firm? Each partner usually works with only a few associates and partners have an incentive to push their own associates because they want them to be motivated.
    Hence, the real question is which partner is best positioned to push through his demands for his associates. The only relevant "merit" of an associate is to be working for a partner who has sufficient standing in the firm. This is how pay, bonuses and titles are distributed without clear, objective and binding rules.
    Of course, "merit-based" sounds fantastic and everybody agrees to the concept. Only that it does not work at all in real life.

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  • What is this all about? It is depressing to see such apparent concern about high levels of earnings within private practice (I presume quite early on) as opposed to gaining experience and earning more as a result and as a real reward for experience (which is the theory behind the so called lock step pay. There has never been lock step anyway - firms have always used their discretion, albeit within bands, and where necessary have departed from them for commercial reasons.It is also just as depressing to see the attitude of on housers - having seen both sides of the law I know very well that, very often, the criticism of in housers by those in private pratice is justified, but equally the in house lawyer performs a valuable and different function. Above all else, what really matters, as has been pointed out, is that a lot of the routine work that many people have done is no longer a sine qua non for law firms, and what we all have to do (see generally Richard Susskind) is to move on to different things if we are to justify ourselves - and remain a worthwhile profession, and not a money churning, paper chasing crowd - which is why my first point is so relevant!

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  • If the total pot for the associates' salary remains the same, it wouldn't be a problem. However, I am 100% sure that the firms introducing the system will reduce the pot!

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  • We are supposedly a profession - a profession considers itself bound to advance able solicitors to ultimate leadership of the firm either as the firm growns and/or as the elder members retire.
    The lockstep and PQE are hallmarks of a professional set up; there is no reason why these systems cannot produce able solicitors that are a credit to the profession - after all, many of those looking to set new standards and schemes got where they were are because of these schemes.
    True: PQE is not a universally applicable service standard (nothing is ever universally perfect) but the fact is that it should be; and if it isn't that is the fault of the mentors not of the disciples.
    Elder lawyers should not be shunted into early retirement as they age - rather they should be revered and exposed to the younger members of the profession as mentors: passing on their skills and experiences.
    Car salesman judge merit by bottom line criteria alone because they aren't a professional body.
    The proposal to depart from the lockstep and PQE is nothing more than a refusal to pay people for their experience, levelling the playing field so that paying someone with 12years PQE the same as someone with 2yrs PQE can be justified.
    Put this another way - would you want your loved one to undergo heart surgery under a surgeon with 2years experience or one with 12? Would you let your wife/girlfriend/lover have breast or womb surgery at the hands of a 2 year qualified surgeon when a 12 years experienced surgeon was available? No!
    Equally, would you expect a surgeon of 12 years experience to be motivated and driven when he/she is being paid the same as a first year surgeon? Would you want that disgruntled surgeon doing your prostate operation? No!
    This is a case of people setting standards for others that they would not want to follow themselves - there is a saying in the Bible that goes something like:
    "Brood of Vipers! You cannot get through the door of the kingdom of heaven yet you bar the way for everyone else"
    The fact is that since equity partners cannot make their businesses profitable by their own efforts they need to find a way to go back on their promises to all those on their way up.
    This isn't a drive for standards - it's a desire to cheat the up and coming out of their professional expectations because it's become too expensive to honour them.
    Here's another gem from The Outlaw Josey Wales that answers the spin doctors here: "Don't p*** down my back and tell me its raining"

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  • In my view this is just another way to get people to work harder, for the same (or possibly less) money. In a lock-step system, an associate who bills 1,700 hours a year get's paid the same (ignoring bonuses) as someone who bills 2,500 hours. Some might say that that is unjust on the person who has billed 2,500. But who is to say that the higher biller deserves more? If he chooses to work extra especially hard, and be an all-round keen-been, then good for him - I'm sure that will be rewarded in an increased liklihood of being made partner in the future. But he could also have chosen (had he wanted to) to work at a pace (e.g. 1,700 per year) which just about keeps his head above water. So yes - partners I am sure will be very happy with moving away from lock-step at associate level, as will some particularly hard-working associates. But not all lawyers want to be desk-monkeys for their entire career. Some, like me, are happy doing a good quality job, keeping clients and partners happy, but at the same time enjoying the occasional weekend or evening free to spend with family/friends etc. For this reason if I was applying for training contracts again, then the firms which offer lock-step pay would be significantly more attractive to me than those that don't.

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  • As an outsider, 'lockstep' seems to me to be a form of communism, and lawyers are being paid on the basis of how long they've managed to keep their jobs.
    I read some very interesting points here, and can't help feeling that there might be a very workable middle-ground.
    With proper planning and performance management wages could be paid both on PQE and merit.
    Performance against KPI's - right ?!?!?

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  • In certain aspects the law profession in England is so old fashioned and it feels that by joining this profession I've gone back in time ...
    This lockstep rubbish (also present in training contract salaries) prevents experienced professionals from coming in from other industries and bringing in a wealth of expertise into the legal profession.
    For example, as an engineer working in telecoms, I've come across solicitors who are unconciously incompetent, whilst the rest of the project team bang their heads against the wall in dispair at the time it's taken to explain something so basic to someone who's firm charges such extortionate fees.
    If a 1 yr PQE with 20 years of previous experience in another profession is able to use this previous experience and contacts to bill more than a 1 yr PQE with no previous work experience .... what's wrong with the salary reflecting the reality of the value the solicitor brings to the business?
    There is a free market in the rest of the country outside the legal profession just in case people hadn't noticed.

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  • I worked at a Silver Circle firm and was astonished at how both at the standard of lawyering and, not unconnectedly, the intellectual abilities of the average associate, and not because they exceeded expectations.

    Even during the boom years I think that by hiring smarter people they firm could have done all the work to a higher standard with a workforce 25-50% smaller. Perhaps unsurprisingly, the partners did not reward me for making this observation. I therefore left for a better firm and have been pleased to find that a career in law can be what I had hoped it would be and not a thankless process of kow-towing to seniors for whom pride in the work product seemed far secondary to getting the cash in.

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  • [Proofread version!]

    The lockstep question seems to me to be closely related to recruitment policy. If clients knew how easy it is to get into certain firms, would they even begin to accept the continuation of the pay that ticks up for each year of qualification?

    I worked at a Silver Circle firm and was astonished both at the standard of lawyering and, not unconnectedly, the intellectual abilities of the average associate, and not because they exceeded expectations.

    Even during the boom years I think that by hiring smarter people they firm could have done all the work to a higher standard with a workforce 25-50% smaller. Perhaps unsurprisingly, the partners did not reward me for making this observation. I therefore left for a better firm and have been pleased to find that a career in law can be what I had hoped it would be and not a thankless process of kow-towing to seniors for whom pride in the work product seemed far secondary to getting the cash in.

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