Associate Salaries, Killing Lockstep, Texas

Baker Botts Releases New Merit-Based Compensation Levels

Back in November, Baker Botts told us that they would be moving away from a lockstep associate compensation system and instituting a new merit-based system. Yesterday the firm released the base salary levels for its new four-tiered system. Here’s the statement from the firm regarding the basic changes:

The next phase of a talent management program — moving from a lockstep to levels format to track associate progress at the firm — was announced today by Baker Botts Managing Partner Walt Smith. This new format is the latest enhancement of a multi-year plan to better manage associate development at all experience levels.

“Implementing this program will allow us to remain competitive in our efforts to recruit and retain the best and brightest lawyers,” Smith said. “Importantly, it will help us foster an environment that emphasizes the attributes we believe are essential to our firm’s culture.”…

The compensation aspects of the program will be effective August 1, 2010. Base annual salary for entry-level lawyers will remain at $160,000.

The firm wouldn’t officially release the salary levels for more senior associates, but tipsters gave us the inside scoop…

Like many firms that have decided to do away with lockstep salary compensation, Baker Botts is going with a multi-tier system. But at least Baker Botts is keeping people starting at $160,000.

Beyond that, things get a little more complicated. Tipsters report the base salary levels for associates in New York and California. The levels roughly correspond to the seniority of associates, but as with most merit-based compensation plans, associates have to be promoted to higher levels (they won’t get there automatically):

* Level 2 (2nd & 3rd years) — $180,000
* Level 3 (4th through 6th years) — $230,000
* Level 4 (7th years and beyond) — $270,000

When plotted against the standard New York lockstep salary scale, Baket Botts associates shouldn’t feel underpaid as against their peers, providing they progress from level to level at a rate that keeps pace with their class year.

Tipsters tell us that in Texas, where Baker Botts is based, base salary will be a little lower:

* Level 2 — $170,000
* Level 3 — $185,000
* Level 4 — $200,000

But what is a merit-based system without bonuses? Remember, the point of these systems (or so we’re told) is to pay high-performing associates more than they would get under a lockstep system.

Our sources report that Baker Botts told them what their max compensation could be if they achieve the highest possible bonus. In New York and California, here’s what associates can hope for:

* Level 2 (Max Comp w/Bonus) — $210,000
* Level 3 (Max Comp w/Bonus) — $280,000
* Level 4 (Max Comp w/Bonus) — $320,000

In Texas, where associates will start with smaller base salaries, the bonus incentives are greater:

* Level 2 (Max Comp w/Bonus) — $210,000
* Level 3 (Max Comp w/Bonus) — $280,000
* Level 4 (Max Comp w/Bonus) — $300,000

Okay, that’s a lot of information. But looking at the raw numbers, it appears that Baker Botts is offering a very competitive salary.

The key question will be whether or not Baker Botts associates move from level to level in a timely manner.

What do you guys think? If you are sitting at a lockstep firm, would you be interested in lateraling over to Baker Botts?

Earlier: Baker Botts to ‘Hybrid-Lockstep’ in 2010

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