Life outside of lockstep is like Forrest Gump’s box of chocolates: you never know what you’re going to get. A lockstep system for compensating and promoting associates has its drawbacks, to be sure. But at least it offers the virtues of transparency and predictability.
Earlier this week, we covered the arguably amorphous definition of “merit” at WilmerHale, one of several leading law firms to abandon lockstep. Today we turn our attention to Winston & Strawn, another prominent firm that has moved to a more “merit-based” system of compensation.
Back in February, we described Winston’s compensation scheme not as a box of chocolates — that would be sweet and delicious! — but as a black box. Among associates, nobody really knows what anyone else is making. As stated in the firm memo, “Individual associate salaries will be determined on a case by case basis based on seniority, performance and productivity factors and will be communicated separately to each associate.”
We now have a better sense of what’s going on at Winston, thanks to the recent release of individualized salary info (and some comparing of notes among Winston associates). And not everyone is happy….
Back in December, WilmerHale announced that it was moving away from lockstep associate compensation. The plan will be phased in through 2012, but at the time of the announcement, WilmerHale gave precious little information about how the firm would determine which associates were meritorious and deserving of advancement. At the time, I wrote:
Many lawyers were liberal arts majors in college, so they should be comfortable with the array of soft and nebulous factors that will now determine how much they get paid.
WilmerHale supporters didn’t like that line too much. They told me that I should give the firm time. They told me that the firm would eventually come up with objective indicators of merit, so that associates wouldn’t feel that their pay was tied to soft factors and office politics.
In fact, word on the street was that WilmerHale was working with consultants to come up with the merit factors crucial to their anti-lockstep plans.
Well, a tipster reports that WilmerHale has given associates some more guidance on the new merit-based factors — and, well, you’re going to want to check these out for yourself…
Other Biglaw firms that moved away from lockstep would not follow DLA down the salary rabbit hole.
Now, DLA Piper has given it up its quest to drive down associate salaries. The National Law Journal reports:
DLA Piper is raising associate pay by 10 percent, in a move that will return compensation to their levels before the economic downturn.
A memo released to attorneys on Thursday by firm leaders announced midyear pay increases in offices outside New York. DLA Piper raised salaries in New York in January to pre-recession levels of $160,000 for first-year associates.
Welcome back to the pack, DLA? Tipsters report that the firm is not quite there yet…
We have good news for Morgan, Lewis & Bockius associates. Salary information is in and most people are getting raises. True-up raises at that. The class of 2008 pulled the short straw, but everybody else seems relatively happy. A tipster reports:
Please post that yesterday MLB essentially unfroze salaries (most ’08 grades only went up to 165 though) but otherwise made everyone whole, retroactive January 1, 2010.
The double-bump raise for veteran associates comes a couple of months after MLB announced big time raises for a select few associates — while most of the firm’s associates were left to wait and wonder. In January, we reported this message from Morgan Lewis Chairman, Francis M. Milone:
After considering all of these factors, we awarded base salary increases of up to $25,000 and incentive bonuses of up to $35,000 to our highest performing associates. As I advised in my November video presentation, we did not reduce associate base salaries.
According to the firm, the decision to give true-up raises to mostly everybody is in keeping with MLB’s new merit-based strategy …
Back in December, Sonnenschein announced the outlines of its new merit-based compensation structure. At the time, the firm promised its associates more details in March.
The firm is true to its word: we’re now in March, and we have more details. Above the Law talked with a spokesperson for Sonnenschein. Here’s the top line news:
First year compensation returns to $160,000 for first year associates.
12% – 15% of that compensation will be paid out as a “base bonus” in 2011.
There are no hours or competency requirements to achieve the base bonus in 2011
2010 raises for veteran associates will be in accordance with Sonnenschein’s merit based tier system
According to Sonnenschein, the decision to pay 12% – 15% of 2010 associate compensation as part of a 2011 bonus will help them transition to their new compensation model. The firm wants a greater percentage of total compensation to be paid out as merit-based, end-of-the-year bonus. That new system will be fully operational in 2011, so the firm is viewing 2010 as a transition year. Again, the firm emphasized to us that there would be no hours or merit requirements for associates to receive this 12% – 15% of 2010 money next year.
Sound good? Let’s see what the tipsters have to say.
When you step into the killing lockstep zone, your bonus disappears into a black box. A while back, we reported that Bingham McCutchen adopted a lockstep-merit hybrid approach to associate compensation. Base salary would still be lockstep, but the bonus would be merit-based.
When we reported on the Bingham bonus, we noted that the firm intended to pay bonuses generally on the Cravath scale to its associates, based on a number of merit-based factors instead of hours.
But now our tipsters are telling us that some Bingham associates received much less than a Cravath-level payout:
A peek inside the black box, bonuses are generally well below the Cravath scale. The only associates receiving bonuses in the vicinity of the Cravath scale are those that exceeded the 2,100 hour minimum by a few hundred hours. Even bonuses in those instances were barely above the Cravath scale. Amazing considering JayZ just told the Boston Globe that the firm “had our best year ever.” Guess we know where all that money went. Morale is definitely at an all-time low. I would be shocked to see any associates making much of an effort to bill above the 2,100 hour minimum in 2010. I think “why bother” has become the most uttered phrase around the halls of Bingham over the last week.
The good news is that the double salary freeze, which has apparently resulted in first- through third-year associates at Winston all earning $160,000, may be thawing. Managing partner Thomas Fitzgerald sent a memo — this time to its intended recipients — indicating that raises are on the way.
The bad news is that Winston associates don’t know how much of a raise they’ll be getting — and the most they can hope for is a salary that matches the market. The memorandum contains the standard $160K salary scale — 160-170-185-210-230-250-265-280 — but states that “[s]alary levels in each associate class will range up to the maximum base compensation levels set forth” in the memo (emphases added).
The Winston associates we’ve heard from are upset. They’re unhappy not just about the move away from lockstep, but over the firm’s failure to set forth in detail how salaries will be determined. Most of the other firms that have abandoned lockstep have set forth elaborate systems for evaluating associates to determine their compensation and advancement. The Winston memo simply states: “Individual associate salaries will be determined on a case by case basis based on seniority, performance and productivity factors and will be communicated separately to each associate.”
This is a “black box” approach to compensation. It’s used by other big firms — e.g., Jones Day — but it’s a significant departure from Winston’s historical practice. It’s not what Winston associates signed up for when they joined the firm.
But then again, thanks to the Great Recession, lots of Biglaw associates aren’t getting what they expected when they joined their firms. And if associates aren’t happy, with compensation or any other aspect of their employment, their firms will tell them: you’re free to leave. In the words of an unemployed woman quoted in this weekend’s New York Times, “There are no bad jobs now. Any job is a good job.”
There’s a little more bad news about Winston associate salaries. Find out what it is, and read the full Winston & Strawn memo, after the jump.
A number of firms have adopted a merit-based pay structure, and other firms claim they want to. But few firms have thought through how to make a merit-based structure work as much as Orrick, Herrington & Sutcliffe has. And nobody is addressing the new scheme with quite as much transparency.
Orrick sent around its merit-based bonus memo today. If you have gotten used to firms using merit compensation to hide what they are paying their people, prepare to be surprised:
82% of all US associates received a bonus. As previously communicated, we did not apply an hours threshold in determining bonus eligibility.
The following tables provide information about our US 2009 bonus distribution by new talent model role for all US associates.
That’s right, Orrick actually provided a chart showing the general bonus payouts to its associates. This is not entirely new — Latham comes to mind — but it’s certainly nice. Here are the overall numbers:
Do you want more transparency? Orrick has you covered.
The firm even provided a bonus comparison chart, so its employees know where they stand.
Maybe Toyota should take a lesson from Bingham McCutchen: don’t try to cut corners when producing a hybrid.
Back in October, Bingham announced that it would be adopting a new “merit-lockstep” hybrid approach to associate compensation. The plan came with the stamp of approval from Bingham partners and associates. And a majority of Above the Law readers also approved of Bingham’s hybrid approach.
Today, Bingham rolled out its hybrid system. The firm is providing true-up, lockstep raises for people who hit 1900 hours. The double bump extends nationally, across all of Bingham’s offices. People who hit 1500 hours will only be getting a single class bump in salary. We understand that only a small percentage of Bingham associates were low enough on hours to be affected by this stratification.
At the low end, people who billed fewer than 1500 hours will have their salaries frozen again.
On the bright side, all of the people who are frozen will have their hours reevaluated in June. If they’re on pace, they’ll get their money.
The Bingham McCutchen lockstep base pay structure is clear and straightforward (see chart after the jump). For bonuses, welcome to the black box that is merit-based compensation.
It looks like Pillsbury is back to communicating important information via firm-wide memo, instead of via cell phone conversation on the Acela. Yesterday, the firm indicated that it is thinking about moving away from lockstep associate compensation, but it is not killing lockstep just yet.
Instead, Pillsbury announced lockstep raises — they’ll be true up raises if you hit your hours in New York. In other offices, Pillsbury has decided to lowball the market. From the firm-wide memo:
So, it’s a true-up raise for some, a single class thaw out for those low on hours, and a salary cut for many outside of New York. But at least it’s clear.
Pillsbury’s New York bias when it comes to salaries extends to the firm’s decisions regarding bonuses. Details after the jump.
Ed. note: The Asia Chronicles column is authored by Kinney Recruiting. Kinney has made more placements of U.S. associates, counsels and partners in Asia than any other recruiting firm in each of the past six years. You can reach them by email: email@example.com.
We currently have a very exciting and rare type of in-house opening in China at one of the world’s leading internet and social media companies. Our client is looking for an IP Transactional / TMT / Licensing attorney with 2 to 6 years experience. The new hire will be based in Shenzhen or Shanghai. Mandarin is not required (deal documentation will be in English) but is preferred. A solid reason to be in China and a commitment to that market is required of course. This new hire will likely be US qualified (but could also be qualified in UK or other jurisdictions) and with experience and training at a top law firm’s IP transactional / TMT practice and could be currently at a law firm or in-house. Qualified candidates currently Asia based, Europe based or US based will be considered. The new hire’s supervisors in this technology transactions in-house team are very well regarded US trained IP transactional lawyers, with substantial experience at Silicon Valley firms. The culture and atmosphere in this in-house group and the company in general is entrepreneurial, team oriented, and the work is cutting edge, even for a cutting edge industry. The upside of being in an important strategic in-house position in this fast growing and world leading internet company is of the “sky is the limit” variety. Its a very exciting place to be in China for a rising IP transactional lawyer in our opinion, for many reasons beyond the basic info we can share here in this ad / post. This is a special A+ opportunity.
If you think most legal technology misses the mark, LexisNexis Firm Manager® wants to change your mind. Read more about it here.
Built with input from hundreds of solo and small-firm attorneys across the country, it’s made for practitioners who’d rather build the firm of their dreams than deal with the hassles of running a business.
· Go Mobile, Stay Connected.
See all your firm’s information, wherever you are, on whatever device you’re using. Access and update client files, enter billing, search & share documents and more. It’s just like you’re in the office, only you’re not.
When Chintan Panchal decided to leave a global BigLaw partnership to start his own firm, he could only hope that he would face the high-quality problem of firm building that many had cautioned him about. Focused on the uncertainty surrounding of a new firm launch, he decided to tackle staffing needs, IT challenges, and financial planning requirements after he had built up his legal practice.
Panchal Associates LLP–a corporate/finance and outside general counsel boutique–was quickly off to a great start. Clients and matters were flying in the door, and Chintan soon had a team of lawyers and staff with a variety of operational needs. To continue building an excellent team and provide them with a competitive benefits package, to expand his physical presence to include a European practice and additional partners, and to scale his operations and IT capabilities to support this growing enterprise brought with it demands of time, money, and expertise. Chintan knew he needed help.
“With the assistance of NexFirm, we have upgraded the capabilities of our firm to meet, and in some cases exceed, the standards we were used to at our former BigLaw firms. Operationally, we can now attract and service clients we didn’t have the bandwidth to support in the past, and continue to build our team with the best and brightest legal talent in the industry,” said Chintan Panchal, adding “It has worked out quite well in our case; NexFirm is an essential partner for us.”
The traditional job application and interview process can be impersonal, and applicants often struggle to present themselves as more than just the sum of their GPAs, alma maters, and previous work history. ATL has partnered with ViewYou to help job seekers overcome this challenge. ViewYou NOW Profiles offer a unique way for job seekers to make a personal, memorable connection with prospective employers: introduction videos. These videos allow job candidates to display their personalities, interpersonal skills, and professional interests, creating an eDossier to brand themselves to potential employers all over the world. Check it out today!