JD Journal » merit based compensation

Morning Roundup

sara — Mon, 01 Mar 2010 12:54:35 +0000

Good morning everyone! Today is Monday, March 1, and here’s a quick look back at Friday’s news…

Profits and revenue decline at Debevoise & Plimpton…

Ogletree Deakins open a new office in Orange County, California…

Donchess & Notinger claim in a court filing that a bankruptcy case is creating a financial hardship for the firm…

Seyfarth Shaw releases details about it’s merit based plan…

Revenue and profits increase at Cahill…

10 lawyers leave McDonough Holland & Allen for DLA Piper…

Revenue decreases at DLA Piper…

U.S. firms scale back London recruitment according to a new survey…

Former University of Maryland law dean Karen Rothenberg is asked to refund $60,000 to the university…

Laurence Tribe accepts a position at the Department of Justice…

Freshfields unfreezes associate lockstep…

Obama nominates 4 U.S. Attorneys…

The Citizens United decision could lead to a constitutional amendment…

Congress considers a U.S. patent overhaul…

Seyfarth Releases Details about It’s Merit-Based Plan

sara — Fri, 26 Feb 2010 14:53:53 +0000

Seyfarth Shaw has released more details about its move to a merit-based associate compensation plan. This plan will be phased in over several months in 2010 and place associates in three different tiers or “bands”. The tiers are the rough equivalent to junior, mid level and senior associate positions at big firms. Instead of seniority based promotions, associates are evaluated and promoted based on a mastery of 11 core competencies in each band. Competencies include “delivering legal excellence”, “driving client value” and “building a practice”. Before implementing the new compensation system Seyfarth had a hybrid merit and seniority-based promotion system in place.

Founded in 1945, Seyfarth Shaw is a general practice Chicago based firm with 775 lawyers. The firm has additional offices in New York, Boston, Washington, D.C., Atlanta, Houston, Los Angeles, and San Francisco.

Morning Roundup

joshua — Wed, 20 Jan 2010 11:17:09 +0000

Good morning! Today is Wednesday, January 20, and here’s a look back at Tuesday’s news.

Jones Walker picks up a former US Attorney…

Gibson Dunn has launched an E-Discovery practice…

Patton Boggs expanded its international arbitration group…

Drinker Biddle announced its new merit based compensation plan…

Mischon de Reya opened its doors in NYC…

Jackson Lewis added six attorneys in Phoenix…

LG Electronics has sticker shock after losing in court…

Eckert Seamans expanded in Richmond…

K&L Gates opened offices in Tokyo and Moscow…

Walkers has new leader in its investment funds group…

Clifford Chance snagged a senior partner from Millbank Tweed…

and Sidley Austin has a major new client…

Merit Based Pay at Drinker Biddle

joshua — Tue, 19 Jan 2010 19:35:24 +0000

Drinker Biddle is moving to a merit based pay system, becoming the latest in a string of major law firms to abandon lockstep compensation. Under the new plan associates in their second year and beyond are broken down into four tiers. Each tier has a baseline salary but the firm is quick to emphasize that final salaries will recognize the individual contributions an associate makes to the firm’s success and could rise well above the minimum salaries. There are also two separate scales for major markets such as New York, and offices in other locations.

Associates in New York, Chicago, Washington DC and California will have base salaries of $145k, $165k, $185k, and $250k depending on tier, with the top tier reserved for those expected to make partner within two years. Outside the major markets, salaries range from $130k to $185k. Abovethelaw.com is reporting that this represents a salary cut for 53% of Drinker Biddle’s associates, but that’s based only on minimum salaries for each tier and may not be reflective of final salaries.

This system applies to associates in their second year and beyond. Drinker Biddle is continuing its new first year program, as reported here. First year associates will undergo extensive training while drawing salaries of $105k, and clients will be charged a reduced rate for any work done by this group.

Drinker Biddle & Reath LLP was founded in Philadelphia in 1849. The firm has more than 650 attorneys in 12 offices in the US. Its largest offices are in Philadelphia; Chicago; Florham Park, New Jersey; and Washington, DC.

Dickstein Shapiro Abandoning Lockstep

joshua — Thu, 14 Jan 2010 18:53:04 +0000

The lockstep march away from lockstep compensation continues unabated as 2010 gets into full swing. The latest firm to join the thundering herd is Dickstein Shapiro, which will initiate a three tiered merit based system as of January 22. Regulars readers of our page are no doubt familiar with the basic concept – associates are broken down into three tiers based on various subjective and objective criteria. Dickstein Shapiro associates are, in yet another market conforming convention, broken down into A and B levels within their tiers to determine base pay.

Entry level A associates will be making $145k per year and Entry B associates will earn $160k. What’s the difference between level A and level B associates? According to a statement made to abovethelaw, it’s “…based on their achievement in a number of core competencies, including productivity, problem solving, legal research, writing, communication, fact development, negotiation skills, supervisory responsibilities, and adherence to the firm’s core values…”.

Maybe it’s just me, but if I had known that I could earn $145k per year working as a lawyer in a major law firm without being productive, competent at problem solving, legal research, writing, communication, fact development and negotiating, I would have chosen a different career. That sounds like easy money. As for supervisory responsibilities, how much supervising are entry level associates expected to do?

It’s easy to pick on Dickstein Shapiro for basing salary differences on the skills required to be a lawyer, but the truth is it’s not all that different from a variety of firms moving toward merit based compensation plans.

Dickstein Shapiro LLP, founded in 1953, is a multi-service law firm with more than 400 attorneys in Washington, DC, New York, and Los Angeles.

Salary Cuts and Merit Based Compensation at McDermott Will & Emery

joshua — Tue, 12 Jan 2010 20:53:01 +0000

McDermott Will & Emery is moving to a merit based compensation system beginning in 2011. Like several other merit based plans we’ve detailed on these pages, this is a three tiered system. Some firms have moved to a merit based plan that holds the line on starting salaries, while others have cut base pay. McDermott is squarely in the latter category.

Under the new plan, associates on the bottom tier will have a base salary of $145k. Any associates looking for a bonus plan that will help make up the difference in base salary may be disappointed. The bonuses will be based on market conditions, the success of the firm, and merit. If the market scale for bonuses is anything like 2009, McDermott associates will need the bonus just to catch up to the base salaries their contemporaries are earning.

As noted, this plan isn’t going into effect until next year. This year the firm is just cutting salaries. New associates will be pulling in $145k and second year associates are seeing their pay cut to the same level. Which, remarkably, is the same as it would be under the merit based system that isn’t actually in effect.

McDermott Will & Emery LLP, founded in 1934, is a prestigious international law firm headquartered in Chicago, Illinois. It is one of the top 10 largest law firms in the United States and one of the 20 largest in the world.

Holland & Knight is the Next to Abandon Lockstep

joshua — Fri, 18 Dec 2009 21:46:28 +0000

I think it’s time for some new terminology. Lockstep compensation referred in the past to associates moving up in pay scale in “lockstep” with their contemporaries. All associates from the same class got the same raise, year after year. But it also holds another connotation – that all biglaw firms move together in lockstep when it comes to associate compensation, in order to not be left behind in what used to be fierce competition for the top graduates each year. Well the firms are still in “lockstep”, but now they’re marching together away from class based yearly pay raises and into merit based systems.

Holland & Knightis the latest firm to join the lockstep march away from lockstep compensation. The firm is moving toward a merit based system but unlike the three tiered system being floated by many of its competitors, H&K will go to an individualized system that they believe is more fair to the attorneys. In a bizarre twist (and a cutting edge use of the English language) H&K characterized the systems being adopted by others as being uncertain, providing little stability for associates, and said “… we’re moving to a system with a lot of quantitative and subjective factors.” Setting aside for the moment that a system using subjective factors to determine salaries is not likely to be universally accepted as fair, certain or stable, there’s also the interesting contradiction between quantitative and subjective factors. Does anyone else think this sounds like being “a little bit pregnant”?

H&K, again like nearly all its contemporaries, is using this time to cut first year salaries. In addition to the overall salary cut that happened in July, first year associates are taking another ding, dropping down to $130k.

Holland & Knight is a law firm with more than 1,150 lawyers in 23 US offices. Foreign offices include Beijing, China, and Mexico City, Mexico, with representative offices in Caracas, Venezuela, and Tel Aviv, Israel.

Seyfarth Shaw Abandons Lockstep

joshua — Thu, 17 Dec 2009 18:54:12 +0000

Like many firms before it, Seyfarth Shaw is abandoning lockstep starting in 2011. Details haven’t been released, not even to the associates who must now spend next year trying to hit performance goals that have not been announced in order to receive salaries that have not yet been determined but that’s just part of the charm of working for biglaw. 2010 salaries will be based on 2009 performance and although exceptional associates can expect a 5% salary increase next year, those that merely met expectations will be rewarded with a 5% pay cut. Exceeding expectations without being exceptional is good enough to get you a salary freeze, so a second year associate that is exceeding expectations can expect to be paid the same as a wet behind the ears first year and a second year associate meeting expectations will be paid less than colleagues that haven’t had the pleasure of prepping their first document. Seyfarth Shaw’s web page says that they pay “competitive salaries”. Who knew that meant competing with each other to avoid being paid less than a first year…

I’m not sure which is more insulting – getting a 2010 pay cut for meeting 2009 expectations, or being told that at the end of 2009.

UPDATE: A tipster reminded me that Seyfarth Shaw has already cut the salaries of the incoming first year associates by five to ten percent, so meeting expectations isn’t going to drop your salary below that of a first year associate after all. Well, isn’t that a relief.

WilmerHale Ditches Lockstep

joshua — Tue, 15 Dec 2009 20:12:44 +0000

WilmerHale is abandoning lockstep compensation and adopting a merit based three tiered system that should look familiar to anyone that’s read these pages over the past few months. The new compensation plan, cleverly titled “career advancement program” or “CAP” will take effect in 2012. But not to worry, WilmerHale has found another time honored method of holding labor costs down in the mean time. Next years salaries look remarkably like this years – yes, the firm is instituting a salary freeze for everyone but second year associates, who will receive a $5k bump in compensation.

Wilmer Cutler Pickering Hale & Dorr LLP has twelve offices across the US, Europe and Asia. It was created in 2004 through the merger of the Boston’s Hale & Dorr and the Washington’s Wilmer Cutler & Pickering, and employs more than 1,100 attorneys worldwide. As of 2008, it was the 23rd largest law firm in the world in terms of revenue.

Sutherland Ditches Lockstep

joshua — Mon, 23 Nov 2009 22:29:05 +0000

Atlanta based Sutherland is joining the rush to abandon lockstep compensation and is moving to a merit based system similar to the one other top firms have adopted or are planning to adopt. Associates will be classified as junior, mid-level and senior, with the levels roughly corresponding to their time in the firm. Unlike lockstep compensation increases, however, it’s possible for an associate to move forward at a faster or slower pace than his or her classmates, based on demonstrating proficiency at certain core skills. Sutherland says this change is designed to meet the wishes of their clients, many of whom are unwilling to continue to pay billing rates based solely on the length of time an associate has been with the firm.

Additionally, Sutherland is cutting the pay for new associates in its Atlanta office, but associates in its other offices will continue to earn $160k. Atlanta associates will now start at $135k.