Bonus question

In line with many law firms, Norton Rose has had a chargeable-hours-based bonus scheme for associates for a number of years. About two years ago we amended the scheme to include an additional element called ‘knowledgemanagement time’. This was intended to promote a greater investment of time in knowledgemanagement activities by all associates.

In the two years since this change was introduced, we have listened to feedback from our lawyers and found that rather than encouraging lawyers to spend more time on knowledge-management activities, they were telling us that the total chargeable and knowledgemanagement hours target was now too high, thereby causing dissatisfaction with the bonus arrangements.

In May the firm introduced a new system that has taken account of, and acted upon, the feedback that we received from our associates and which we believe now recognises and rewards exceptional effort and contribution.

Under the new system, associates start qualifying for bonuses if they bill more than 1,500 hours a year, which can include up to 100 hours of knowledge-management work. Solicitors can also get bonuses of up to 30 per cent of their basic salaries if they have a particularly busy year – this percentage is up by 10 per cent from the previous maximum bonus.

Why did we decide to make these changes? Every fee-earner has various opportunities to provide feedback on the firm policies. Those who leave Norton Rose go through an exit interview with a member of our HR department. The HR team also has feedback meetings with associates four months and two years after an associate has qualified or joined the firm. On top of this, I also attend feedback sessions with the associates, one of which is the first level management-development course, where I meet those with three years’ PQE and discuss whatever topics they decide they want to talk about.

Last year, a feature of these processes was that there was a certain amount of disquiet about the bonus system. The level of 1,700 chargeable hours plus 100 knowledge-management hours was seen as being too difficult to achieve. The other concern expressed was a lack of transparency in the firm’s salary system. The associates were telling us they wanted to be able to see what the salary levels were for each year of qualification and they wanted to know how they were being rewarded relative to their peers.

We recognised that we needed to make some major changes to the bonus scheme having absorbed the feedback we had received from our associates. The firm’s salary review committee then spent six months looking at different schemes and trying to find the right balance between rewarding hard work and setting targets that were realistic.

The upshot is that we now have greater transparency in the firm’s salary structure, and the bonuses go up on a sliding scale ranging from 2.5 to 30 per cent of base salary, subject to chargeable hours and overall individual performance. The threshold to be reached of 1,500 hours is now also much lower than it was previously.

We have kept in place the system that allows knowledge-management time to contribute to an individual’s hours each year. For us, this knowledge-management work can be providing training or writing articles, or it can be identifying and collating knowledge gained during a transaction and putting it into a useable and retrievable format.

We think this is important and it is something Norton Rose is keen on. But we recognise that making those 100 hours a year mandatory was putting additional pressure on associates who were already very busy. Now those hours can contribute to a lawyer’s annual hours, but they don’t have to.