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San Francisco firm Morrison & Foerster (MoFo) is taking the unusual step of abandoning its traditional banded pay system for associates.
Historically, the firm has given hourly-based bonuses on top of basic pay, which was set for each year group, but is to start paying all associates according to individual evaluations.
It is believed to be the first time a firm of MoFo's size - with more than 1,000 lawyers worldwide - has entirely abandoned pay banding for assistants.
From next year there will be a range of pay levels in each year group. The move takes the firm, it says, into line with clients and away from the traditional model. It has not yet decided whether to tell lawyers what the range of pay level is in their year.
Chairman Keith Wetmore says: "We'll communicate separately with associates as to their compensation for the year, like every other company on the face of the earth except Government departments and law firms.
"We've now got firms in the same city paying different base compensations, and now find that Brobeck [Phleger & Harrison] and Pillsbury Winthrop did a $10,000 (£6,968) bump and nobody followed. That never would have happened before. "
The changes will be brought in gradually over the next year. The firm plans to create a professional develop-ment group, headed by a non-lawyer, to make sure that every lawyer gets an evaluation before the end of this year.
Based on that evaluation, associates will get a performance bonus for this year's work and will be told their base compensation for the following year.
Wetmore says that the firm remains undecided on whether to completely abandon an hourly-based bonus on top of the base pay.
An internal memo states: "The [current] system underemphasises non-billable contributions and offers no incentives for doing important non-billable work upon which the business and culture of the firm depends."
Wetmore says: "What this system gives us is some flexibility for working with individuals where, for example, development is not at the same pace as the class.
"It's also a less transparent compensation system, so it enables us as a business to respond better in compensation plans to market pressures and competitive pressures."