More Firms Adopting Merit-Based Pay for Associates
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Wheee! Money!Many law firms are using the economic meltdown as an excuse to end seniority-based pay for associates, adopting “merit-based” systems similar to those used outside the legal profession.

Examples in the US include Orrick, Herrington & Sutcliffe, Shearman & Sterling and WolfBlock.

Firms are also cutting salaries for starting associates, just two years after top firms raised pay to compete for talent.


“In the current economic crisis, we see the final demise of the Medieval guild in the American legal profession,” consultant Joel Henning tells Bloomberg.

Orrick will introduce new tiers of associates, replacing the traditional single-track system where some become partners who share in the firm’s profits after about eight years. Under the new structure, associates will be able to stay at the firm permanently, drawing salaries; and will not have to leave the firm if they are unwilling to work long hours.

Clients typically pay much less for work done by a law firm associate than that performed by a partner.

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Howrey introduced a similar plan in January, and McGuireWoods started one two years ago.


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