i tried to avoid lock-step firms when looking for places to work this summer. i'm getting a little sick of hustling, it would be nice to be paid the same no matter how mediocre i am.

*hustles for jobs now so i don't have to hustle for cash money in the future*

-nervous T-10 2L

2 - Other way around. Lockstep firms pay everyone the same no matter how mediocre they are.

3 - my bad, i meant i was looking FOR lock-step firms.

-nervous T-10 2L

won't be good for me, but in principal I favor merit based pay.

“The most painful conversation you can have with a client is to tell him that that all of a sudden, you’re charging more for an associate just because the associate has aged a year,”

So, under this new system, RS will not promote associates with ongoing client matters to avoid this "most painful conversation"?

This is a hoot. And who is going to judge these fine young associates? Most partners I know lack core competencies. In fact, the legal profession in general is going down the drain in terms of providing competent attorneys to represent clients. I can't imagine how today's partners ever could expect to have competent associates, much less know what it means to be competent. Most lawyers are worthless, just plain worthless pieces of shit.

I thought the most painful conversation was explaining why the client should settle the case after spending millions in legal fees. GCs call it "the letter" or "the talk."

6: no, they will tell clients to pay more because the associate got a positive year-end review. this should make it much less awkward.

Dickstein Shapiro used to have this "everyone at their own pace" system. Interesting enough, a reverse Lake Wobegon effect took place -- lots of associates where kept back (at lower compensation), while finding an associate promoted early was like finding a unicorn. Just another tool to keep salaries low. Nothing new to see here.

Can't Reed Smith just announce its dissolution already?

"A number of firms — although, interestingly enough, not the Cravaths and S&Cs and Davis Polks of the world — are moving away from a lockstep system of associate compensation and promotion."

LOCKSTEP = PRESTIGIOUS???

Dayum

Elie looking sexy in the ATL

**********************************************

**********************************************
Washington law firm Hogan & Hartson is in advanced talks to merge with London's Lovells in a deal that would create one of the world's largest law firms.
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Does no one read the journal?

QUINN REMAINS lockstep

Who cares. RS is a hastily merged group of craptastic regional firms and a repository for undistinguished graduates of regional law schools. RS's bankruptcy filing is just a matter of time.

Not sure if the Hogan / Lovells stuff is really news (until there is an actual announcement):

http://abovethelaw.com/2009/10/lovells_and_hogan_and_hartson.php

17 = Unhappy with Life

Merit based pay scales are always a difficult concept for me. In theory, they are a great idea. Why should someone down the hall from me who finishes the year 150 hours under budget still get a lockstep increase in salary that is identical to mine? Sure that's what bonuses are for, but there is still a built in process which encourages people to half-ass it because an increase is guaranteed. Give me the extra 10-15k that the 1850 guy would otherwise get, and I'll give you another 2200 hour year.

However, on the flip side, firms never keep their promise to people like me who always bill in excess of 2200 hours. Systems like the one proposed by Reed Smith always talk about "rewarding performers," but at the end of the year, the increase you get for working those hours isn't gratifying at all, and in many cases, convinces you that merit based pay is nothing more than the firm installing a black box, and pointing to it whenever their merit based salary increases get questioned. As a result, I take my foot off of the gas in October and coast in right above the minimum, because I know the extra 200-250 hours isn't going to get me a comparable salary increase.

At the end of the day, I say lockstep is the way to go. Everyone knows what they are increasing to, and everyone knows what everyone else is getting paid.

7 is right on. All these wonderful improvements law firms are making assume that law firm partners have any freakin idea of how to measure and manage such things. Call me a cynic, but i have a sneaking suspicion that those who advance most rapidly at RS will be those associates who go out drinking the most with certain partners and/or who happen to have gone to the same law schools as certain partners.

management consultancies don't have lockstep, but that's b/c they're in the BUSINESS of knowing how to measure/manage performance. cravath is at least self aware --they realize that they lack the ability to measure associate performance w/ anything resembling accuracy and fairness, so they just stick w/ lockstep -- the worst system around, except for all the others.

Does anyone know the Summer Associate offer numbers for Reed Smith?

Lockstep is the worst form of pay except for all those others that have been tried (and are being tried).

Oh the horrors! Firms are actually starting to promote based on competency! Question for all my fellow lawyers out there: Does it ever bother you that you can never be promoted (except to partner)? That no matter how good we are, nothing will come of it because our primary worth is how many hours we bill? I hate this profession.

Also, how do they apply for new jobs? They can't say what year they are anymore, so how would they transfer into a new firm?

This is just a PR move to enhance the firm's image with clients. In practice, most if not all associates will remain on the lockstep model - it would be too disruptive to the internal dynamics of the firm (associate-associate relations and associate-partner relations) to do otherwise.

WALRUS BOOBS!

Lockstep will remain for other firms, god willing. As the economy turns around, the milk and honey will continue into our empty bellies, while the enemies of righteousness will suffer defeat and humiliation. I have already ordered a new fleet of BMWs for my servants, god willing.

Why don't they just fire 60% of the first years four months after they start like Latham?

12 - Yes, lockstep firms are more prestigious.

- LATHAM PARTNER'S SON WHO FAILED THE BAR SECURE

So they're calling your number of billable hours "merit" now? Just so we're on the same page. Ok, cool.

26,

Commenting on my woobs creates a hostile posting environment.

This system could be implemented with a good deal of transparency, but it won't.

They easily could make and distribute chart: year graduated for law school, current level, if promoted up a level, and their score in the 10 (or however many) competencies, salary and bonus.

BRING BACK CHROMETATROLL!!!!

If it's so horrible to tell a client that you have to charge more for an associate's services just because he/she has aged a year, how idiotic does it look when you start charging more and you tell the client it's because the associate "has developed core competencies"?

Headline should be "Reed Smith Copies Orrick, Gives Program Cheesy Moniker"

Exactly. No one, save for a few, will win out under this system. It will, however, add to the toxic dynamic among your co-workers. If you hated your associates before, prepare for the cage match once you are directly competing to get that single, illusory bump in pay. Bullshit.

Reed Smith is following the Wolf Block model to dissolution, it's just going at a slower pace

8 is correct, Greg Jordan is a dope.

Of course, RS is such a piss poor shop that they frequently tell their clients to settle for big bucks after billing millions in fees - so Jordan may be quite comfortable will that conversation.

Again, anyone know the RS summer associate offer numbers??

Interesting approach, but hours still matter under this model. And as long as do they, Chrometa is there for you

http://www.chrometa.com

Here is a tip ATL. Read the Wall Street Journal more often. There is a merger between Hogan & Hartson in and Lovells in the works.

What a bunch of whiners.

And when the client says it won't pay for a particular hourly rate, what is the firm going to tell that client....we have lower rates for our less competent associates?

My apologies on the typo. The "in" is to be stricken from the record. So it is to read, "There is a merger in the works between Hogan & Hartson and Lovells."
Urgent headlines of the utmost importance may often lead to small typos.

-42

45 = taj

If you know the history of RS, 17 is on target (leaving aside the bankruptcy issue).

This is just a clandestine way for Reed Smith to keep associate salaries frozen. A few token Reed Smith associates may become unfrozen and may receive compensation equal to that paid at lockstep firms. But the other 95% of associates will stay iced or may even receive salary cuts. When completing the NALP Survey, my guess is that Reed Smith will either note the highest salary paid for each class year or will write "discretionary," giving the misleading impression that compensation completely varies across the board, that a significant number of associates are being paid at Wachtell levels, and creating the false impression that Reed Smith is overall paying at or above market-level associate salaries. This will be sold to associates as a meritocratic system in which hard performers are rewarded and there is significant "opportunity" for rapid advancement for associates willing to work hard, go the extra mile, and offer complete dedication to client service. Some of the morons on this message board have already bought into this rhetoric -- gullibly believing that a truly meritocratic system is being installed that, on balance, will fairly and equitably reward and enrich high-performers while punishing lazy under-performers.

ATL should help "out" firms adopting "merit-based compensation systems" starting in 2010 by, for example, working hard to get as complete a picture as possible of what associates at all class years at these firms are actually being paid as soon as this information becomes available. Obviously, it will be impossible for associates and potential associates to gather such information from firm management, and merely asking your friends at a firm what they are being paid does not provide anywhere near a complete picture. ATL will be serving an invaluable function to associates and law students if it helps to expose firms that have chosen to reduce or freeze associate salaries (across the board or almost across the board) in 2010 while duplicitously pitching this to associates and the public at large as a move towards a "merit-based compensation model."

28,

They did fire first years. The class just was not big enough to cause a splash.

So basically 3rd years need to "make midlevel" just as senior associates now have to "mkae partner."

This seems great for leverage and attrition: when everyone knows you didn't "make midlevel" or "make senior" you'll be shamed out the door.

Question: "junior" rates are the same as which of 1st, 2nd, or 3rd years? That is, say current rates are $30, $40, and $50 - is a "junior" rate $30, $40, or $50? Is RS going to discount a normally advancing 3rd year's rates to that of a 2nd year or 1st year so that they can all have uniform billing rates? Are they going to charge 3rd year rates for 1st years? Seems like at some point you either take a huge hit in revenue or you're screwing the client with higher overall rates. Or you're back to billing clients by class year.

People always argue lockstep is stupid because every other profession tends to avoid it. Well, thats because most other professions have dedicated management staff whose job is basically to just manage people. In engineering, my boss, a former engineer, maybe hits the lab once every 3 months. He spends the rest of his time organizing work flows, doing presentations, dealing with higher level bosses, and checking on employee productivity. But in his typical 40-50 hour week, he does very little actual revenue generating work . This is the same for any other management based system; you have the peons do the work, the high level gusy arrange the deals, and the middle management run people.

Lawfirms do not have middle management. And instead of buying a lawyer (it has to be a lawyer) 100, 200, 300k+ a year (or even partnership levels, god forbid) to basically look over work of associates, they'd rather just pay everyone the same. Admin costs are zero, cooperation is improved because people don't hog work to stand out or do better than associates, and in the end, the slackers get booted after a few years anyway.

Could you imagine firms being like 1L year at some TTT school? I am sure glad mine isnt.

And if anything, people say you arent rewarded for busting your butt. But that is totally bunk. You arent rewarded IN MONEY, yes, but you are rewarded with more and interesting work. I dont plan on doing dd and i likely wont have to, that will be for the slackers in my class...

Oooh, Emir Partnerius, a new poster has arrived! All hail Allah!

I still like Mistress Emeritus and JaKe Emeritus the best, though I have a soft spot in my heart for the original PE

42/45, read more ATL, they covered that weeks ago.

http://abovethelaw.com/2009/10/lovells_and_hogan_and_hartson.php

51-
very cogent defense of lockstep. good post.

"Reed Smith is essentially saying: our associates are incompetent, and we know it. As they become less incompetent, we will give them even more money. Not the best message for the corporate client."

Was anyone seriously under the impression that beginning associates were ever competent? Heck a lot of clients already try to insist that their matters not be staffed with anyone less than a 2nd or 3rd year.

This beats what Mintz Levin is doing at least. They froze, then slashed most salaries by 20-25% (after a number of layoffs) based on hours and THEN are moving to this merit-based model. So maybe in a few years we will be back to where we started as first years!

51, so why hasn't any other non-unionized private industry abandoned its merit-based system and switched to lockstep? Apparently they can reduce overhead, improve cooperation, and still kick out the slackers. With all these companies looking to cut costs, how come nobody has adopted the brilliant model used by law firm partners, who we all know are geniuses at industrial organization?

Damn you 53, you've bested me!
I hate ATL, and I hate all of you! I'm never coming back. Never!!!

-42/45

The logical disconnect here is that there isn't necessarily a connection between associate salaries and associate billing rates. See, for example, that rates are typically raised in September while raises don't come until January. I wouldn't be surprised if RS continues to raise rates even for associates who are not promoted under this system.

I would also hope that any fifth year that is still classified as "junior" can read the writing on the wall.

57 - Because the law is a learned profession where competence is presumed. How does a firm explain to a client that it is getting the less competent attorney on its matter but not to worry because the billing rate is $10 lower. The client assumes that it is getting associates that meet the highest levels of what a firm is selling. I have represented numerous medical practices in my career and without exception the salaried doctors (who are not "members" of the practice) are paid lockstep. No patient wants to hear that they are getting the crappy doctor who is a little cheaper. The patient assumes that all the doctors represent the standard that the medical represents. Less competent doctors should not be there.

That is why, as noted above, the most prestigious firms will stick to lockstep. A Cravath lawyer is a Cravath lawyer. Either they meet that standard or they don't.

60- Again, good post

"The most painful conversation you can have with a client is to tell him that that all of a sudden, you’re charging more for an associate just because the associate has aged a year”

Really? That is the most painful conversation you can possibly have with with a client? My clients tend to understand this feature of the biglaw billing model. Maybe it is painful in the the way that explaining to a client how to get dressed or use an elevator would be painful -- because of course they already know and you are insulting their intelligence. Or maybe this guy just is so full of it that he doesn't realize how stupid this statement is.

Food for thought: http://legalhistoryblog.blogspot.com/2009/08/whitman-macaulay-tales-of-hoffman.html

Latham rocks!

-Latham secure

60, except your salaried doctors are paid differently based on what type of specialty work they do. There's already a merit-based sorting mechanism.

You want to know why things work this way in BigLaw? It's because BigLaw represents BigCorp and most of BigCorp long ago quit being about increasing margins and instead turned to government/regulatory capture to propel profits. In order to fulfill its part of the bargain with the government BigCorp has had to adopt non-merit based structures and it has in turn imposed the same on its counsel.

Outside BigLaw meritocracy still reigns. That's why the best and brightest start their own firms and get rich suing BigCorp which is represented by trial lawyers who've never tried any cases - lawyers who know how to write a letter that will compel in-house counsel to disgorge millions rather than risk outting their attorneys as the empty suits that they are.

66,

I hope to god you aren't a litigator.

-not 60

I hope all of the Reed associates see this "merit system" for the total racket that it is. If you're an associate there, and you're just nodding your head in agreement, then you're clueless about what's really happening in your firm.

The law firms will begin to sort themselves along lines of who is superior and who is not.

Firms that go away from lockstep make it riskier for associates to work there...there is a lower expected value.

Firms that remain with lockstep make the job a bit less risky...so more associates will want those jobs.

Firms that remain with lockstep will get better associates...and those who move away from lockstep will be punished.

A hybrid pay structure for associates is doomed to fail (if any firm is foolish enough to actually attempt it). I'm with the poster above: this is just window dressing for a salary freeze.

67 has it

Has Pepper Hamilton moved down to a "merit" based system yet? I'm sure it's in the works...especially after its embarassing summer offer rate...

This is a great idea, and fair to hardworking associates, assuming the best associates actually rise in rank and pay faster than the lockstep system. Otherwise, it's just another way to retard associates' careers.

Does anyone really think firms will promote the best associates faster? I call bullshit.

70, expected value = probability of succeeding x value of success.

Thus the expected value of merit based systems is lower than lockstep systems only for mediocre and marginal associates. That means associates looking to move will most likely be mediocre and marginal - a reputational signalling cue that will only further drive down their wages.

Of course there's always the hard work and excellence option but ever since associates effectively unionized there have been fewer and fewer young lawyers willing to go that route.

Anyway, just like blue collar workers everywhere, shit shovelers are about to learn that shit shovelling is low wage transient work.

56:

When you work at a V1000 firm (four zeroes intended), you should be happy to make anything over $65k per year.

Does anyone honestly, really think that an associate out of law school should be making 6 figures?

A fair, respectable starting salary for new big law associates would be $80,000. That's probably what you're actually worth in the marketplace.

does Fat Boy who stinks to high heaven and smells like kitty litter get a pay cut? or does he continue to milk the system?

77:
Speak for yourself, my firm is on track to make double my salary from me. Its not my fault you can't comprehend that firms actually make money from jr.'s if they manage them properly.

“The most painful conversation you can have with a client is to tell him that that all of a sudden, you’re charging more for an associate just because the associate has aged a year,” says Jordan

So not only are RS paying based on competency rather than class year but they're also charging out on that basis? So they'll charge a client a 5th year rate for a 10th year they classify as 'mid-level'? I'm gonna call bullshit on that one.

76 = numerical fail.

Did I miss something? I caught the part where Reed Smith pegs associate pay raises to a completely subjective standard that can be fudged any way they want. I didn't see the part where they say that they will bill the lower paid associates out at lower rates.

If they do, that would be a really interesting dynamic. If a client bitches about a bill, can a partner say "I will put Jones on the case. The last three research memos he sent me were just plain wrong and the one before that was actually a Chinese food menu. Once we throw the competent guy off, you should be in great shape."

How can this system save enough money to make it worth partner's time to both evaluate associates more carefully and then to assign and review salaries? The spread between associates of the same class year can't be more than 5-20k, meaning that the average savings per associate can't be much more than 10k. Assuming leverage of 3:1 (which is high these days), profits per partner are only increased by around 30k by this?

All the headache of the system itself, decreased associate morale, less friendly environment among associates, more difficulty in recruiting and a serious potential for harm to the firm's reputation for quality with clients for 30k per partner? Really?

If I were a partner making 300k/year+, I'd rather make 30k less and work at a lockstep firm . . .

82, I couldn't agree more. The standard for competence is wholly subjective - even putting aside frat boy ties, pussy passes, affirmative action passes, and brown nosing.

I can't count how many times Partner A wanted a memo in such and such a way, and Partner B two doors down from Partner A would have thrown the same memo back in my face. Sounds like a great idea to have subjective standards in a highly subjective field.

If Reed Smith is serious about this, then they should provide written standards and guidance on rating competence. The standards should be extensive and detailed enough that it would leave no doubt what constitutes competence in litigation or tax or corporate or T&E. I am sure though, there will be a general weasel word paragraph long description on competence.

Good luck there IP litigators! Obviously, you suck. The general litigators can understand the background of the litigation in 30 minutes, took you morons an entire week to understand that 50 page patent.

Good luck there tax associates! Competency requires that you understand the any new rules for the fiscal year in a three hour session. You idiots required 20 hours.

If I was a client, I would run from a firm that has down shifted to competency pay.

That is why, as noted above, the most prestigious firms will stick to lockstep. A Cravath lawyer is a Cravath lawyer. Either they meet that standard or they don't.

Another example of a firm that can't play in the big leagues. I will now laugh a little every time I meet a Reed Smith partner.

Always a good reed . . . ehrr, read.

http://www.slate.com/id/2077953/

Paul Hastings is doing the same as Reed Smith. No announcement yet, but they are laying the groundwork.

RS associate here. They put a lot of work into preparing the materials, with a long long list of objective standards to meet for each category for each level. who knows? lockstep is stupid so this at least seems to be an attempt at a more reasonable system. we will see when the salaries come out if this was just a smokescreen to cut salaries or if it is legit. As for the health of the firm, we are supposedly ahead of budget going into the 4Q, people seem to be very busy now, and the quality of the applicants for SA positions was the best I've ever seen.

Are these attorneys Cravath material?

Completely agree with 48.

As an associate at a firm that is ditching lockstep in favor of a "merit system," I'd love to see a chart that shows billable hours for 2009 and/or performance review information and then the salary/bonus that associate received. With empirical evidence, we'll all be able to see if this merit system is the Trojan horse for lower salaries that most associates think it is, despite the concerted efforts of partners and firm management to pitch the new system a "better for associates." Plus, it'd be nice to see the strength of the correlation of billable hours to salary/bonus. Not sure if all firms leaving lockstep have taken this approach, but my firm has sworn that billables will only be a component amongst many in determining the new merit based pay/salary.

Bottom line: if you're firm is moving from lockstep to "merit," you should be very concerned.

63 and 84 nailed it. This isn't a painful conversation; in fact, it's not even a conversation. The in-house bean counters are familiar with the lockstep model, have agreed to engagement letters which included language regarding rate variability and attorney experience, and, as a result, do not initiate painful conversations regarding associate billing rates.

In the event that a client is so shitty that it claims to be upset regarding increased associate billing rates in order to negotiate a lower price with the firm -- this is the only reason a client would initiate this most painful conversation -- (1) this is the sort of client that a well-managed and profitable firm should not want to retain and (2) attempting to justify the increased rates as a result of subjective performance review is silly. (Indeed, nothing is preventing billing partners from making such subjective performance review claims under the lockstep model: "The associate is more experienced and has improved. "That is true of all our attorneys because we do not retain those who under-perform relative to our expectations.")

Of course, it is not clear that RS is well-managed or profitable. And certainly some clients will take every opportunity to nickel and dime a law firm. RS is probably not in financial position to tell those clients to go to hell.

FAT BOY! Have some wine.

22 and 40 - In DC, SA offers were only 2/8.

I summered at reed smith (DC) ... I certainly dodged a bullet. On top of being elitist, racist and one of the worst working experiences I've ever had in my life, now they're cutting salaries for the associates they treat like crap! Their behavior at fordham was not a slip up, it's indicative of the firm I saw this summer.
Thank God I found another firm in this legal climate ...

To all persons starting or considering reed smith ... make other plans if you can... it's not worth it ... you'll hate your summer and then you might not get an offer ... their offer rate is 20% ... stay away if you can ...

"After all, a job at below-market compensation is better than no job at all."

When in a profession where below market compensation is still 125K+ just starting out, not a day should go by where you don't count your lucky stars. Most people never see even half that salary.