RPC RPC to scrap NQ flat rate salary for performance-based pay By Richard Simmons 19 November 2013 11:46 17 December 2015 13:50 Sign in or register to continue reading. It's FREE Sign in Email Password Keep me logged in Forgot your password? Not registered? It's FREE! Register now Register with The Lawyer Tim 19 November 2013 at 14:24 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. Reply Link kathy 19 November 2013 at 14:52 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? Reply Link Anonymous 19 November 2013 at 14:57 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! Reply Link EA 19 November 2013 at 15:52 “over-worked HR functions”. Thanks for that. Made me laugh. Reply Link Anonymous 19 November 2013 at 16:26 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… Reply Link Gene Kelly 19 November 2013 at 16:28 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! Reply Link Anonymous 19 November 2013 at 17:07 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? 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 entirely from charging on the matter (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 gross’s £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. Reply Link jason 19 November 2013 at 17:53 yes Kathy, deal with it! Grasshopper, that is the way of the city! the force is storng in anonymous of 5.07 Reply Link Ashley Balls 19 November 2013 at 21:11 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. Reply Link RQ 20 November 2013 at 09:41 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? Reply Link Anonymous 20 November 2013 at 10:29 “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. Reply Link Anonymous 20 November 2013 at 13:24 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. Reply Link Anonymous 20 November 2013 at 14:01 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. Reply Link Anonymous 20 November 2013 at 16:36 kind of distracts from the half-year figures though… Reply Link John DeMarsac 20 November 2013 at 17:20 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. Reply Link Anonymous 20 November 2013 at 18:00 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. Reply Link Recruiter 21 November 2013 at 08:23 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 … Reply Link Anonymous 21 November 2013 at 08:37 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. Reply Link Anonymous 21 November 2013 at 10:31 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. Reply Link RQ 21 November 2013 at 13:37 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. Reply Link Recruiter 21 November 2013 at 15:58 Thanks RQ. Relax, I’d spotted that. I’d just taken it as read that after 2 years of close supervision a firm should be able to tell the difference. Whereas they can’t on the basis of an interview/assessment day when recruiting them as trainees, hence fixed salaries for trainees. Oh, but of course that assumes 2 years of ‘close supervision’ and giving trainees sufficient exposure to clients/the difficult stuff, which in my experience of seeing many NQ CVs most firms do not, and which is why most firms can’t tell the difference. Again, harsh but fair … Sorry! Reply Link Ronin 21 November 2013 at 16:50 Have just picked up on this thread from over the pond. Great stuff. Looks like the RPC have wound up the establishment Reply Link Severina 22 November 2013 at 08:29 Admittedly I trained and qualified a lot longer ago than I care to reveal, but I’d obviously been under the mistaken impression that firms these days were much better at giving their trainees proper work, and proper responsibility, throughout their training contracts, and had measures and criteria in place in order to assess their performance. These comments – and the assumptions people make on which to base their opinions – seem to reveal a worrying number of firms are stuck in the dark ages when it comes to talent management. You’d have thought if PRC were planning to break from the pack they’d be one of the seemingly few firms that does have proper assessment framework in place (can anyone confirm?). Or maybe they’re just winging it like everyone else, and getting a bit of free publcity into the bargain. Who knows? Reply Link Anonymous 22 November 2013 at 10:49 PRC will be doing a hard sell internally and externally to try an convince everybody that this is about “rewarding talent” etc. but the main motivator will be to give them greater flexibility in the business. They are basically an insurance firm and there is so much pressure on legal fees in that sector that an insurance NQ on 60k wont be offering much profitability. Unfortunately for their NQs, their salary will be less dependent on merit than which department they qualify into. If the department you work in charges lower fees, or they happen to be quiet for whatever reason, then they will earn less than a colleague in another department that charges its clients more (e.g. a corporate or banking department) . Fair enough (because they are making less money for the firm), but neither of these factors has any relation to an NQs “merit” or ability as a lawyer – so its not “merit based” pay. You can guarentee that the overall spend on NQ salaries will be lower than under the current system. Not sure if they are really fooling anybody…. Reply Link Heather 22 November 2013 at 11:42 This is turning into a great thread as a ‘client’ reader. One firm makes what is a relatively small step in line with what client’s expect and the traditionalists start sniping. Seems to me that for no real gain or loss RPC will pay their newly qualifieds more fairly and be able to demonstrate /justify that to clients – most of whom want to pay less for legal services. The firm will encourage the best guys to stay and the also rans to leave (presumably to join a traditionalist firm). Reading the original announcement it’s obvious they have some sort of structured competence framework in place for all the other lawyer grades already so simply ‘tidying up’ at the junior end. Reply Link Pheasant 22 November 2013 at 11:48 Ince by inch or should that be metre by metre, RPC seem to be shaping the sort of firm that sensible buyers of legal services want – me included.I have nothing but priase for this firm.Everything ‘new’ they come up with is a no-brainer to acknowledge as progress. If only the rest of the law sector were as smart… Reply Link JL 22 November 2013 at 11:55 At last! From the comments above there seems to be a lot of sour grapes about RPC going first on this. It’s long overdue and the talk of some firms offering up to £100k for newly qualifieds is just plain daft. I agree that £50k plus still seems a lot for very junior lawyers but if that’s the market price for the right talent then it is despite the overpopulated lawyer market. This will help to sift the best from the rest and probably not change their overall salary bill by much – it could even go up if they get deluged by those qualifying in older style firms. They seem to be the go-to firm at the moment. Reply Link Anonymous 22 November 2013 at 11:56 What are they going to pay any NQs recruited externally? They won’t have had 2 years to judge their ability. Reply Link Simon 22 November 2013 at 12:08 @Severina. They do indeed have measures and criteria in place. We’ve bought a variant of their own performance measurement system for our internal team as it was better than anything we could come up with ourselves.So not only do they have one but they provide as a service to clients who request help in assessing lawyer performance – which presumably covers their costs of developing it in the first place…almost business like. Joking aside, I haven’t come across a firm as commercially smart as RPC in my 10 years in-house – including where I trained – and I still have a soft spot for them too but just not as in the 21st century as RPC. Reply Link JL 22 November 2013 at 13:15 To anonymous at 11.56. That’s one of my points. because they’ve clearly got a structured system, they will run some sort of assessment centre for NQ joiners from other firms and pay accordingly. But presumably the bar will be set high to only attract the best from MC firms etc who are looking for a different culture. Reply Link Anonymous 22 November 2013 at 13:38 Ah, I see that RPC’s PR cavalry have finally arrived. I was wondering how much more of a bashing this PR stunt could take before they showed up. Reply Link Simon Goldstone 22 November 2013 at 14:10 Obviously, RPC can’t go charging top whack for its duffer trainees. So will RPC be transparent with their clients about whether they are supplying a hero swot or a cheapo duffer? Clients might want to economise and hire cheapo duffers for some tasks, but be happy to pay top dollar to have hero swots perform other tasks. Reply Link Anonymous 22 November 2013 at 14:14 Arn’t they all being sent to Bristol anyway? Reply Link Caroline 22 November 2013 at 14:36 Probably thankful they haven’t got a Manchester office – it’s grim up north. Reply Link CRose 22 November 2013 at 14:42 I got passed the link to this for a laugh. The one “In my experience, generally speaking, a trainee is as good and as useful as their supervisor and/or department allows them to be” was a guffaw out loud moment. Perhaps the Dr Who effect is rubbing off and we’ve all been transported back to the 1930s. Reply Link Norman 22 November 2013 at 15:26 If you dig around you’ll see that they’re top of the independent employee satisfaction surveys and top of the independent client service surveys. And the two can’t be unconnected, surely? As a recruiter in both the partner and associate markets, all I can say is that they are very easy to recruit for and have been picking and choosing for several years. It’s funny to watch the banal and naiive sniping comments come from those who wish they could follow suit, but the harsh reality in the business of law is this is a smart move from them as it makes them stand out to recruits and clients for all the right reasons. Reply Link Rumpole PR 22 November 2013 at 16:48 To Anonymous at 1.38pm – I don’t want to sound critical but can’t you see the irony in what you’ve said? If I was in RPC’s PR team I’d be putting in the negative not positive comments because it’s that stuff which will play out for them so well amongst GC readers. They have positioned themselves on the side of the clients and the best trainees, and you are just underscoring that for them! Reply Link RealEstateBabe1980 22 November 2013 at 17:15 Sadly most of the above comments underscore the old school mentality that the legal sector still clings on to. Surely a trainee is only ever as good as their mentor/supervisor allows them to be. If a trainee is made to photocopy witness statements, then of course they’ll be an expert in hitting the big green button on the copier. If all they’re doing is fetching coffee for people more senior than them, then it’s likely they’ll be well versed in working the coffee machine. But if their supervisors are giving them the experience of actually being a lawyer then that’s the best way forward. And why not pay them according to the skills they possess rather than some insane and uneconomical figure that merely comes from the pressure of feeling like you always have to outdo your competitors? Reply Link HR 22 November 2013 at 20:58 Overworked HR? Who do these people think they are? I have worked at 4 firms in my career and I have yet to meet an HR department that adds any value at all. Generally staffed by the thickest of the thick they genuinely think they are key to the business. The comment above demonstrates this perfectly. Reply Link Marian 24 November 2013 at 14:36 Can’t see why this is causing such a debate. Seems clear: if you’re very good and providing very good value to clients then surely it makes sense to be rewarded accordingly – if I were still a trainee and being given a chance to bring home top whack at a medium size firm I’d think “bring it on”. Not so much a smart move, Norman, as an obvious one. Reply Link Name Email Cancel reply Threaded commenting powered by interconnect/it code.