Morgan Lewis Delays the Death of Lockstep
In July, Morgan Lewis & Bockius announced that it would be ending lockstep compensation for its associates in 2010. At the time, the firm furnished this statement to Above the Law:
“We’re running our own business and focusing relentlessly on client relationships,” said Francis M. Milone, Chair of the Firm. “Doing so responsibly means continuing to reduce expenses, committing to the people in whom we are already invested, and looking at compensation across the board to ensure our structure matches the reality the entire legal industry must face.”
The July announcement was the culmination of the effort made by MLB and its chairman, Francis Malone, to reform the Biglaw business model. Back in April, Milone gave an interesting interview to the Philadelphia Inquirer:
Question: Law firms are still very profitable. Why do they need to downsize?Answer: You have to make a judgment about whether you can keep people busy going forward. It is not healthy for a lawyer to not be busy, to have free time on his or her hands. You don’t grow, you don’t develop, you’re not happy.
And from a cultural perspective, you don’t want to build a firm that culturally is populated by a lot of people, or too many people, who don’t have enough to do.
Q: Is that the only reason?
A: The other piece of it is the feedback we got from clients. Because they’re looking at the way they want law firms to act. They’re not going to be as willing to pay, frankly, to train new lawyers. So it’s going to be harder to find things for new lawyers to do. And when we’re paying new lawyers $160,000 and clients don’t want to pay for them, you’re putting them in a position where there may not be a lot of things for them to do.
Well, 2010 is almost upon us. But MLB is suddenly not so excited about ending lockstep compensation. Milone conducted a firm-wide video conference yesterday, and tipsters report his enthusiasm for ending lockstep compensation was noticeably lacking.
Details and a statement from the firm, after the jump.
Tipsters report that at yesterday’s video conference Milone said the move away from lockstep would be delayed “indefinitely,” but not forever. Morgan Lewis still plans to implement its “death to lockstep” plan at some point.
Here are the other headlines from yesterday’s video conference:
* there will not be across-the-board salary cuts;
* there may be compensation reductions based on performance;
* there will be bonuses, but they don’t know how much; and
* no word on salary increases at the first of the year.
A spokesperson for Morgan Lewis gave Above the Law this statement about the firm’s associate video conference:
As our chair told the firm yesterday, we are not implementing a competency based promotion model until we have taken the time to consider carefully all of the feedback we have solicited and received, and continue to solicit from partners and associates.We will not be engaging in any across-the-board base compensation reduction this year, and our evaluation and compensation processes will proceed this year as they have in the past.
We already consider individual associate performance and contribution to client service in determining total compensation for our associates, and will continue the process of moving away from a lockstep compensation system.
We’ve already discussed the fact that many MLB associates expect base pay to be cut, regardless of whether or not overall salary remains consistent “across the board.” But there is always room for those people to be surprised.
But it will be really interesting to see if Morgan Lewis raises base salaries at the beginning of 2010. Morgan Lewis froze salaries in 2009. Second-year MLB associates are still being paid like first-years. Will those people get a raise as they start their third year at the firm?
It should be an interesting winter.
Earlier: Morgan Lewis Cancels 2010 Summer Program
War on First Years
Morgan Lewis’s New Compensation Structure = Less Base Compensation?
Nationwide Pay Freeze Watch: Morgan Lewis Freezes Even Though They Said They Wouldn’t
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Dr. Furst
Cr. Win
Q: Are you POSITIVE those are the only reasons?
A: Yeah, well, we want to keep the money for ourselves, associates be damned.
Mystal IS the WALRUS~!
Elie
When you first read the phrase "friable issue of fact" did you get hungry?
Being a terrible firm, Morgan Lewis may as well abandon lockstep.
Why is my groin so itchy?
Last (for now)
I don't know if I agree with Francis. When I have time on my hands, I usually go to Rick's Cabaret and come out pretty friggin happy.
Morgan spread those buttcheeks so i can Lewis the juicy insides!
6
You shoulda shaved your balls for this babe. Those are crabs.
8-
Chicago?
oh well, getting laid off now from there now sucks twice as bad for me
Elie
MLB = Major League Baseball
Don't stain MLB by using its initials for Morgan Lewis.
Morgan Lewis deserves this, as it is simply a reflection of the bad decisions the firm has made by merging with regionally marginal firms, to create a large marginal firm. Plus, they lose their largest rainmaking partner, then try to continue to charge ridiculously high rates for their mediocre work. This ship is definitely sinking.
-Guy who misses the douchebag who rips on DLA Piper in every post because he got no offered there.
this dude is a dbag. It isnt healthy for a lawyer to have free time on his hands? Listen closely, that is a man explicitly telling you that by excepting employment from his firm makes you fork over your soul.
Is Mystal really a walrus?
I thought this firm was dissolving
I think it's cute when ATL reports on the happenings of these small firms.
Can't wait to see how the whole no-lockstep model works out. Attorneys, especially biglaw types, are an awfully competitive bunch and, well, full of them (our) selves. People will talk and info on who makes more than whom will be exposed; It will create dissention in the ranks internally and may end up increasing turnover when loyalty goes out the window in favor of one's ability to make 5-10k more across the street. Firms will eventually raise to match the guy across the street in order to "remain competitive" and - bada-bing - we're back to lockstep. Thoughts?
http://www.thelawyer.com/cahill-to-bulk-up-london-base-ahead-of-expected-high-yield-revival/1002488.article
I just sharted.
Female Boston Attorney
Death to lockstep? Well, Morgan Lewis--
You took us law students and threw us.
We'll keep on applyin'--
And there's no denyin'--
That you will, in the end, simply screw us.
post #2 = see hybrid tough love model
This firm is on its way out, rumor has it they have abandoned their commercial lit practice in the NY office.
Morgan Lewis laid off 216 people in March. It's a shame these palliative half-measures weren't rolled out in time to save some of those jobs. I don't put a whole lot of stock in anything Fran Milone says.
The Pillsbury doughboys are marching to oblivion.
Its ironic that the partners reelected Fran Milone as chairperson and then many of those same partners were were laid off 3 months later.
Nice post about Morgan Lewis.
Can Morgan Lewis now sue ATL for invading their privacy and defamation?
14: What the fuck does "regionally marginal" even mean??? That makes no effing sense you shart.
This guy really came up with those two reasons for lay-offs? Those have to be the two worst answers I have ever heard.
Its not healthy to not be doing anything? Right, but its healthy to be unemployed with no job prospects in this market.
You don't want to build a firm with too many people with too little to do? Ok well then maybe you shouldn't have gone crazy hiring to begin with. I think lay-offs in any form have decreased morale a lot more than people not having anything to do.
Clients don't want to pay to train new laywers and since we pay our new lawyers $160 and refuse to change that we would rather just get rid of them. This argument totally baffles me. Clients won't pay, but you refuse to change the compensation scheme for 1st years, so instead lets fire them. Hmmm I think there is an easier solution.
30 - Excellent point. It also makes no sense that MLB would keep all its first years but get rid of their 3-5 years who make marginally more when you take into account their salary freeze but have far more experience that clients are willing to pay for.
These large Philly firms are horribly managed. They are full of themselves and still think they can compete with New York. A combination of greed and stupidity caused them to grow so much that they are at point where they need to trim about 50% of their fat.
If you want good Philly firms to apply to, look to the smaller ones that still pay well like Conrad O'
Brien and Hangley Aronchick- they have not sacrificed quality for quantity.
MLB has been in a slow death spiral ever since it whiffed on merging with Brobeck in 2003.
31 - Morgan did not limit its layoffs to mid-level associates. Many first- and second-years were among those laid off in March.
Hey, here's an idea, how about lowering billable rates so you keep your lawyers busy.
Supply and demand - ever heard of it?
16,
It's true.
With so many boglaw firms saying that clients are no longer willing to pay for young associates to handle any part of their files, how are young associates in biglaw going to get enough experience to eventually be senior enough that clients will allow them to work on their files? And with so much document review apparently going to contract lawyers or being outsourced, what other work will there be for young lawyers to do in biglaw? Are all young lawyers going to now have to go to small law and middle law to get experience and then be hired laterally by biglaw? How will they ever pay back their huge law school loans without the biglaw salaries? Does anyone have any suggestions?
Who moved my $160k?
18% summer associate offer rate in MLB NYC.
Never forget this bloodbath.
no lockstep = no prestige
If you are good, you should not want lockstep. It frees the firm to pay top talent more and weak talent less. My firm did not have lock step. I loved it. Made more than most of my colleagues year after year. Granted, I also worked my ass off and probably made nothing on a hourly basis. But the experience propelled me forward and I would have made less.
37: yes, you go to a small firm. I may not be making 160k, but the deal I'm working on involves three of the Vault top 10 prestige firms. You can learn a lot just by working on the same deal with some of the big boys. You may not be working for them, but you're working with them, which is arguably even a better way to learn. I'm actually doing substantive work on the deal and getting to particpate in the high level descision-making process, which is exposure I would never get as a young associate if I was actually at one of the big boys
Morgan Lewis is a fifth-rate law firm. For the most part, they are a bunch of wannabes who could not get hired by better firms. They certainly know how to run up a bill though.
Here is the problem with ending lockstep. You will have some junior associates who are given real work and some given document review. But, by ending lockstep, there is no incentive as a junior to do the drudge work because you won't advance in skill set and then won't advance in pay. In a lockstep model, however, it's easier to pull the wool over the junior's eyes.
*egrodamus
39, it's easy to forget, because your figure is wrong. The offer rate was low, but it wasn't that low. Your info. is bad.
“committing to the people in whom we are already invested.” Ok.
MLB DC Summer
30-32 -- totally agree with all of your points. As a former MLBer, I don't think they much care what anyone thinks. The infighting between partners was always a source of great fun to watch as they don't much care about eachother either. It is a what-have-you-done-for-me-lately culture and oh by the way, I've heard it said that "you should feel lucky just to work here." And this was during a good economy. They suck.
Hey 44, I would say that the "incentive" would be um, keeping your job? In case you haven't heard, first years aren't in demand right now. I get really floored when I hear this B.S. as I don't know why you think you are worth $160K fresh out of school - to do what, exactly? And if the law firm can't recoup your salary in billable rates, which you do not have sufficient experience to command, then I'd say you have a problem. Seems that some of the attitude adjustment needs to come from this side as well.
Uhh, 46, my figure is right. Trust me.
- 39
46- out of the 24 associates in ny, 4 were given offers. do the math- that's 18 percent.