Associates heard the same words over and over this year: layoffs, deferrals, and no more lockstep.
Lockstep, for the uninitiated, means every person in the same class year makes the same amount of money, regardless of hours billed or matters handled.
This may seem a bit insane to outsiders, and this year firms — who probably long agreed — decided to start doing something about it. Firms including DLA Piper, Orrick and Baker Botts have decided to re-evaluate associate pay, though some are realising figuring out whom to pay what is not so easy.
There is little reason to so aggressively change salary structure if firms do not believe it will result in smaller overall payrolls, a necessary component of finding the financial flexibility to meet client demand for lower bills.
Of course, an overall payroll reduction not completely matched by decreased fees means more money in partners’ pockets, and they tend to like that, too.
Law Shucks pointed out that the only reason clients care about what associates are paid is because they don’t like paying the $450 per hour for young associates that high associates salaries require. “This whole trend of abandoning lockstep fails to address explicitly that rates and aggregate associate compensation must be reduced,” the blog said.
And that brings up an interesting point that the lockstep issue has so far ignored. Will billing rates for associates lower on the merit-based scale reflect their “lower” firm value? Would a client be disturbed they are getting a “subpar” associate or just be happy the hourly bill rate is smaller?
We feel like firms would not want to disclose via bill rates that some associates are valued less than others, and that billing rates will remain constant across class or section or however the individual firm does it.
It’s a fine line to walk, and something to keep an eye on in the new year.
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