Chapman and Cutler Blazes The Trail of Tiers
What's the hot new trend in Biglaw? Two-track systems for associates. They're regarded as a sensible way for law firms to address the twin challenges of (1) higher associate salaries and (2) associate attrition (often due to a frustration with long hours).
Here's word of the latest law firm to join the party, from NYLawyer.com (reg. req'd):
Chapman and Cutler, a Chicago-based firm with three offices and about 220 attorneys, has joined the parade of firms boosting first-year associate pay to $160,000, but the firm is taking a new path once associates reach their second year.Second-year associates can opt for one of two compensation tracks at the firm under a new system that took effect last month, said Rick Cosgrove, who is chief executive partner at the firm. They can choose to work fewer hours at a lower pay level or more hours at a higher salary level, he said.
Cosgrove declined to specify the hours required and related pay rates under the new pay program for competitive reasons.
If you have info on the Chapman and Cutler scale that you'd be willing to share, please email us. According to a poster at Greedy Chicago:
The higher track is essentially Biglaw market, so long as you hit 2000 billables/year. The lower track is compressed to about $5k-$10k/year, depending on class year, and you need to hit 1850.
Other firms with two-track systems (click on each firm's name for a memo and/or details): Hogan & Hartson, Wiley Rein, Fenwick & West, and Thelen (formerly Thelen Reid, and FYI, "Thelen" rhymes with "wheelin'"; see here).
Do you have an opinion about this two-tiered approach? If so, vote in our reader polls, after the jump.
One might think, under a "more choice is always better" rationale, that two-tier systems are great. But here's one possible complication, from the recent press conference of Law Students Building a Better Legal Profession:
Q: What about firms with two-track systems, where lawyers can decide how much they want to bill? Are they a viable solution to the problem of attrition?A: Possibly, but we need to do more research on this. Do two-track systems create a stigmatized "mommy track"? Some firms say they don't disclose who is on which track, but some sources at those firms find laughable the notion that you don't know who is on which track.
We're trying to get a rough sense of how people feel about two-track systems for associates. Take our highly unscientific, vaguely-worded reader polls. The first considers the issue from the point of view of the law firms, the second from the point of view of the associates.
Chicago Firm Creates 2 Tiers of Associates [ABA Journal via Blogonaut]
Cash Caste System: Firm Offers Associates Choice of Pay and Hours Levels [NYLawyer.com (registration required)]
Re: Chapman Salaries [Greedy Chicago]
Earlier: ATL Field Trip: The Building a Better Legal Profession Press Conference
(34) 
$10k hit for 150 hours, I'll take that.
First....
First....
Patton Boggs has this system in place as well. We have a 1650 part-time track, an 1800 lower track and a 1950 full salary track.
People who post first when they're not first should be IP banned.
I'm not sure I like the idea of the "track"- does anyone know if that means that once you move to the lower track that you can't jump back up on hours later in your career? Does it hurt your partnership chances? I think if you could choose year by year, awesome, but I could conceive of a situation where you want to work more hours one year and much less the next (to take a big vacation, for example, or if you're just getting burned out). I would think it would be great to set out which track you're targeting yearly at your evals. Also, what happens to the 1850ers who end up slammed for the year and make over 2000 anyway?
I'm not sure I like the idea of the "track"- does anyone know if that means that once you move to the lower track that you can't jump back up on hours later in your career? Does it hurt your partnership chances? I think if you could choose year by year, awesome, but I could conceive of a situation where you want to work more hours one year and much less the next (to take a big vacation, for example, or if you're just getting burned out). I would think it would be great to set out which track you're targeting yearly at your evals. Also, what happens to the 1850ers who end up slammed for the year and make over 2000 anyway?
11:50 - I think that for some of these tiered plans, if you elect the 1850 track and then hit the 2000 anyway, the difference in salary is given as part of the end-of-year bonus.
This is hilarious. The minimum at my firm is 1850 hours. Bill 2000, hit bonus (get paid more). Having a "2-tier" system is not newsworthy. Every firm that has a minimum billable requirement and a bonus level is a 2-tier system.
The real question is, can you turn down work by saying "Sorry, I'm on the Tier II track, so I don't need the hours you're offering."
Somehow I doubt it.
Wouldn't it sound pretty lazy for a summer associate applicant to ask whether the firm offers two-track salaries?
Wouldn't it sound pretty lazy for a summer associate applicant to ask whether the firm offers two-track salaries?
Not at all- just an indication that the person does not want to dedicate his/her existence to document review.
Since when did 1650 become part-time? Also, don't fall for this gimmick. I have a few friends at firms with so called "part-time" and "two-track" systems. You have no control over your hours. If you are a parent thinking you can have a "regular" schedule, forget about it. This is just another example of firms bending associates over the conference room table.
NALP should be ashamed of themselves for taking information that firms give them af face value, like average billed hours at NY Biglaw being 1900 or 2000. Those hours would get you fired at any shop and they know it.
This is an excellent idea, and more firms should do it. There are many, many talented, smart, dedicated lawyers out there who do quality work, but who don't want to be chained to their desk. There are also many people who would make excellent attorneys, but want to have a life outside of work. Since these people can be very profitable for firms at the lower salaries, this can be very beneficial for both the associates and the firms. Also, it is important to note that most people don't want to be biglaw partners. They just want to work in jobs where they can make good salaries and have decent lives. Firms would be well-served by creating a system where these people stay in Biglaw.
the pollcode polls suck. stick with the vizu things
12:03 is spot on.
If there were really a viable option, it seems that most people would prefer to work less for less money, but the salaries are driven higher by people feeling like they will be working no matter what so they might as well get extra money for it.
It doesn't seem to make sense to have to decide before the fact which level you want to be on because, as mentioned, what happens if you choose 1850 but get slammed or choose 2000 but are slow or something comes up? The idea of having the year-end bonus account for the two tracks seems to make a lot more sense - get paid for what you actually did and not what you anticipate doing.
Hogan's 2 tier track supposedly doesn't influence partnership possibilities, and for some practice groups that is true. For instance, the Health Care group has several part-time partners, and many 1800 track associates who made partner.
At Hogan, if you are on the 1800 hour track and bill 1950, the salary difference is awarded as a bonus.
78% of you are idiots. This is not something about which reasonable associates should disagree. This appears to be a combo of a "negative bonus" (don't make 2000 they TAKE MONEY AWAY the next year) and a possibly permanent ongoing penalty. (Is the lower track "on track"?) And 1850 can be a fairly high amount of time depending on how aggressively you can bill. (My practice group is slow and I'm not billing right now, but I'm still in the damn office and it sure as hell isn't my fault that nobody wants to do what we do right now.)
Isn't every firm in Texas doing this now, with a severly compressed schedule for under 2000 hours and a ridiculously lucrative schedule for over 2000 hours? I think this works fine, but then the other hours-based bonuses need to track. If a fifth-year gets a $50k bump for billing 2000 rather than 1850, then it's kind of silly to offer a $20k bonus for billing 2150 rather than 2000.
12:31, there's no penalty here. Most of the firms that have gone to outright $160k base will work associates far more than 2000 billable hours. Requiring that an associate keep up with market billable hour requirements to receive market compensation seems perfectly reasonable. Moreover, it is what associates have been asking for in surveys for years. How many associate have said, I'd take less pay for less hours. Basically, the salary for most associates has shifted to $160k, but now associates can choose to work less for their old salaries. There's no perfect system, but this is not a bad way to go.
12:31 - You appear to be very level-headed with good people skills. It is a travesty that nobody wants you to do work for them.
I cannot see any partnership admit a new member who took the "low" track, and would think that such lower billers would be perpetual targets for elimination. Until the billable hour is retired, firms--equity partners--only make big bucks if the worker bees bill more hours. No participant in a system that reduces the number of hours billed will, in the long run, be kept by the firm.
This system (and similar ones) are a transparent band-aid on a sucking chest wound; the practice of law is so taxing, demoralizing and exhausting, with no meaningful chance at light at the end of the tunnel, that people are finally wising up and leaving. If only I had an exit strategy...anyone want to open a bar?
12:31 here - what if you, over several years and including the low year, average 2200 but have one crap 1800 hour year for reasons not related to own performance (department-wide). This is my current situation. I'm not at a two-tier firm, thank god. I have a f*cking mortgage to pay and if the partners can't drum up some damn work I shouldn't be getting hosed. I accept that I might not be in for a bonus and I'm glad I still have my job...but shorting my base would really be for shit.
12:31 here, and another thing - do any of you think that lockstep comp has been bad for associates? If salary were independently negotiated I'm pretty sure average salaries would be lower. We don't and as a practical matter can't have collective bargaining. And individually we don't really have that much to offer. Individual associates rarely have unique skills that are in particular demand. But what we can do is promote and reward a simple, industry-wide salary model with good transparency. C&C is taking a step away from that.
I believe that under some plans if you come in under the higher billable mark you do not owe money back, but may be required to go into the next year on the lower track. If your hours go back up and you hit the higher mark then you get the difference in bonus at the end of the year. It would affect your base for the upcoming year, but you still get the compensation (albeit in a deferred manner.)
The other problem with the tracks (according to a friend at Wiley -- this might have changed recently) is that, as associate salaries for the 2000-hour track have risen to 160, the salaries for the 1850 track have stayed the same. So now a first-year on the 2000-hour track makes the same salary as a fifth-year on the 1850-hour track. I can definitely appreciate wanting a lower billable hours requirement, but I'd feel seriously undervalued if I were a fifth-year making the same as a first-year, even if the first-year is billing more hours.
"Trail of Tiers"
I like it Lat -- nice work
This really is nothing new. Lots of firm have a base salary and then pay more in a fixed bonus if you bill lots of hours. Same idea -- you can choose whether to work long hours and get the case, or not.
"cash" not "case"
Latham actually invented this concept about 15 years ago, but jettisoned it when it decided to make the move to nationwide Big Law.
Actually, WSJ is wrong...I know several individuals at the firm, and everyone there pronounces it Thay-Lin.
Guys at my law firm did the two-tiered thing all the time. It was no big deal.