Associate Salaries, Biglaw, Killing Lockstep, Money, Salary Cuts

Dickstein Shapiro: New Salary Structure Leaves A Lot of Questions

Dickstein Shaprio still basically relevant logo.JPGAdd Dickstein Shapiro to the list of firms that have decided to do away with lockstep associate compensation. As of January 22, Dickstein will adopt a new merit-based compensation system. Like many firms that have abandoned lockstep, Dickstein will be using a three-tiered system, similar to Orrick’s compensation structure.

Starting salary for new Dickstein associates will be $145,000. Or maybe it will be $160,000. Honestly, I can’t tell you with certainty what new associates will be making.

It’s not my fault. I read the original memo and everything. I talked to friends and sources and a spokesperson for the firm. I prayed on it. I just can’t seem to pin down one solid number for first-year associate salaries.

After the jump, why don’t you guys take a look at the memo? Maybe you’ll have more success divining its meaning than I did.

Here’s the associate compensation memo that was sent to Dickstein Shapiro associates last week:

From: Nannes, Michael
Sent: Thursday, January 07, 2010 4:34 PM
To: ALL Associates
Subject: 2010 Associate Compensation

Over recent weeks we have been reviewing 2010 associate compensation in the Executive Committee. We have considered recent market data, and received very helpful input from APLC and associates. Thank you for your contributions which significantly influenced our decisionmaking.

The merit-based compensation structure for 2010 will be as follows:

Entry A – $145,000
Entry B – $160,000
Professional Level I Tier A – $170,000
Professional Level I Tier B – $185,000
Professional Level II Tier A – $210,000
Professional Level II Tier B – $230,000
Professional Level III Tier A – $250,000
Professional Level III Tier B – $265,000 (or $280,000 for those grandparented at the former III B level)

These salaries will be paid on a bi-weekly basis to all attorneys who in 2009 met their budget of 1950 recognized hours (or their prorated target if an attorney has a reduced schedule), inclusive of pro bono hours, in accordance with traditional Firm criteria. Attorneys who did not reach their recognized hours budgets in 2009 will remain at their 2009 salary during the course of the year, but will be paid the difference (between their 2009 compensation and the 2010 structure) in deferred compensation, in December, if they meet their targets in 2010.

Please note that no changes have been made to compensation levels yet (for promotions or other increases) and therefore your pay on January 8, 2010 will still reflect your 2009 compensation level. The changes will be reflected in the January 22nd paycheck and will be retroactive to January 1, 2010.

Okay. Can anybody tell me what the difference is between “A” and “B”? Is it an hours thing? Is it a performance thing?

There must be a clear answer to this question. I asked the firm to clarify the distinction; here’s their statement:

Dickstein Shapiro’s compensation structure, regardless of level, is based on 1950 hours. In 2000, the firm reinvented its associate development and compensation system (the merit-based model currently in place) and the professional level at which each associate is compensated is based on their achievement in a number of core competencies, including productivity, problem solving, legal research, writing, communication, fact development, negotiation skills, supervisory responsibilities, and adherence to the firm’s core values (loyalty, respect, excellence and initiative, and integrity), among others.

So, “B” associates — the ones who are higher paid — are able to:

Produce
Problem solve
Research
Write
Communicate
Develop facts
Negotiate
Supervise

And they are also:

Loyal
Excellent
Initiative takers with integrity.

But people who are on the “A” track are not these things?

If so, how can you possibly grade anybody on all of those factors if they are an “entry” level person? How are they making a distinction between a person who makes $145K and a person who makes $160K? It almost has to be a two-track “hours expectation” distinction, like what Hogan & Hartson has. But then why won’t the firm just say that? Do they want clients to think that firm only pays “excellent” first year associates a market salary? I’m so confused.

Alright, let’s crowdsource this thing. If there are any entry-level associates at Dickstein Shapiro who are scheduled to make $160K, could you please tell us why? Thanks.

UPDATE: Commenters are suggesting that “Entry A” refers to a first year, while “Entry B” refers to a second year, and so on. So you could call this system a lockstep system with a paycut to the $145K scale, and a salary freeze if you don’t hit 1950 hours. And that would all make sense … except that the firm specifically does not call it a lockstep system. No, the firm calls it a merit-based system. The firm says that advancement is based on all of the soft, subjective factors other non-lockstep firms talk about.

Is it that Dickstein just wants to use some vaguely merit-based language with its lockstep structure because it tests well? Or is Dickstein actually trying to shoehorn merit-based factors into what used to be a straightforward lockstep system?

Earlier: Prior ATL coverage of killing lockstep

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