Trowers puts lockstep in the firing line
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Trowers & Hamlins launched a consultation process recently with around a dozen fee-earners that could see the firm scrap its associate lockstep.
Paul Robinson
The firm currently pays newly qualified associates (NQs) £55,000, with that figure rising automatically by around 9 per cent each year.
But Trowers head of HR Paul Robinson thinks that approach is “outdated” and says that many associates agree.
“[Lockstep] doesn’t sufficiently take into account performance - it’s simple to manage, but I don’t think it helps fee-earners develop,” Robinson tells The Lawyer. “Depending on which team they’re in, they might have to assume that what they’re doing is right. This gives clear [performance] objectives.”
The trend away from post-qualification experience (PQE) remuneration began in earnest around the middle of the last decade. In the wake of the Employment Equality (Age) Regulations 2006, firms became concerned to avoid claims on the basis of appearing to financially reward seniority over other factors. As a result the PQE terminology has been deemed anachronistic and many firms have removed it from their graduate recruitment literature.
However, research by The Lawyer focused on the top 20 firms shows that, while many have begun to introduce more performance-based elements to their remuneration systems, the majority still retain elements of the lockstep system, particularly at the more junior level.
Joining a band
Addleshaw Godard and Pinsent Masons are two such firms. At Addleshaws junior associates progress between three bands on the basis of time worked, but lawyers may move between bands without a pay rise, which depends more on merit.
Those in the first band earn between £58,000 and £68,000, while those in bands two and three earn between £58,000 and £90,000. A firm spokesperson says this “reflects the firm’s determination to recognise and reward individuals in line with their contribution, rather than purely around time served”.
At Pinsents there is slightly more emphasis on lockstep in the early years, although there is also a merit-based element.
“At one-year PQE it’s quite difficult to differentiate on performance,” admits the firm’s head of HR and training Jonathan Bond.
One argument for retaining the lockstep is that, as well as encouraging individuals to share work and aim for firmwide rather than individual success, it provides greater transparency.
Furthermore, it does not disadvantage those who are working in departments that experience troughs in workflow or individuals who take time out for childcare and hence fail to meet targets.
But Bond believes the merit-based system can still take account of such issues. “You have to work out what merit means - it’s not just billable hours,” he argues.
And Trowers’ Robinson agrees. “I don’t think lockstep’s more transparent,” he says. “[Through adopting a merit-based system] what we’re aiming to do is be more transparent by being clear about what we expect at various stages of a career.
“We’d still have salary bands - it also allows us to progress some people who are performing well at a greater rate.”
He adds that the real challenge to merit-based structures is around ensuring equal pay. This is not a problem for any firms at the NQ level because all adopt a fixed rate, but beyond that level things are murkier.
“We’re going to have to be more proactive,” cautions Robinson. “We already run equal pay audits [and we’d need to continue this].”
However, five firms Ashurst, Berwin Leighton Paisner (BLP), DLA Piper, Norton Rose and Simmons & Simmons - have chosen to adopt entirely merit-based associate pay structures.
“Some skills and capabilities are clearly related to experience,” comments a BLP spokesperson. “People develop at different rates and you don’t get a pay rise because you’re here for more time, but [if] you have greater experience you may add more to clients [and therefore get a rise].”
At the associate level the firm has three overlapping bands, starting at the fixed NQ salary of £59,000, and progression is based on meeting published skills and capabilities.
Keeping step
Many firms still prefer lockstep-based remuneration schemes, but Linklaters is the only one to retain this in the top 20 (CMS Cameron McKenna is in the process of phasing it out). The firm fixes salaries up to seven and a half years’ PQE, but recognises individual performance through a bonus system. At the first three years’ PQE, salaries are £63,000, £73,000 and £85,000 respectively.
HR director Jill King thinks this is the best combination for Linklaters.
“We believe it’s fair to reward associates in line with their experience through their base salary and to use our established bonus scheme to reward individual performance on a year-by-year basis,” she argues.
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