When we kicked off our associate bonus speculation, we mentioned that Orrick, Herrington & Sutcliffe had already locked themselves into a 2008 bonus structure. We wondered if Orrick might rethink their bonuses in light of the current state of the economy. Morgan Lewis has already announced that they will not be making bonus decisions until 2009, when they hope to have a better read on the economy.
Today, Orrick assured us that the firm would not look to change their bonus plan. A firm spokesperson put the issue succinctly:
We are committed to using the previously announced bonus schedule.
This year’s bonuses are secured, but Orrick is still considering a much longer term change: ending the lockstep structure of associate salary.
Orrick chairman Ralph Baxter has spoken about this issue before. In an article for the American Lawyer this summer, Baxter pointed out the value of the current, lockstep system. But he also said:
Given the changing nature of the law practice, the changing expectations of clients, the changing outlook of Generation Y, law firms would be remiss if they did not re-examine the associate model.
We understand that Baxter has been cautiously talking to people and gauging interest in this idea.
But it is not this day. More after the jump.
Some associates are not pleased with the possibility of moving away from a lockstep system. Predicts one tipster:
Orrick will soon be moving to a merit-based compensation system. It won’t apply to 1st year associates, but will start to apply around year 3. This system is in contrast to the lock-step system that most biglaw firms follow.
Most Orrick associates I have talked to strongly disapprove of this development…. This system lowers transparency and would merely allow Orrick to pay 90% of associates less than market rate and only 10% of associates more. How disappointing.
As we understand it, Orrick does not plan to make changes that would affect associate base-salary compensation in 2009. Everybody can chill.
But changes could be coming to Orrick — and the profession at large — that will change the nature of associate compensation.
Lockstep lockdown [Legal Week]