Small Law Firms

Smaller Law Firms Should Have Uniform Pay Scales

Smaller law firms can realize a number of benefits if they adopt uniform pay scales like many Biglaw shops.

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As numerous people within the legal profession already know, many Biglaw firms have uniform pay scales that are based on the year associates join the firm.  Although some Biglaw shops offer less money to non-partnership track associates, pretty much every attorney in Biglaw knows how much other attorneys at their firm are paid based on their background.  However, numerous smaller law firms do not have uniform pay scales.  For many smaller shops, the only constant in determining how much money attorneys are paid is how little associates are willing to accept to work at a firm.  For this reason, many attorneys at smaller shops make different amounts of money from other associates at those firms, even if they are similarly situated.  Some attorneys are paid less because they earned lower salaries earlier in their careers, and others are paid less because they did not negotiate a higher salary.  However, smaller law firms can realize a number of benefits if they adopt uniform pay scales like many Biglaw shops.

One benefit of implementing a uniform pay scale is that doling out compensation this way minimizes the chances that someone can argue that there are illicit pay disparities at a firm.  As this website has covered at length, gender disparities in compensation is a serious issue within the legal industry.  One of the ways to combat gender pay disparities, and yes, to limit legal liability, is to pay all attorneys the same amount of money based on an objective standard.

For instance, I used to work at a firm that paid attorneys the absolute minimum the firm could get away with.  As a result, compensation varied greatly from attorney to attorney.  After discussing salary information with several colleagues (which everyone should do as mentioned in a prior article!), we discovered that a female colleague of ours was earning substantially less than two male colleagues.  This was despite the fact that this female colleague graduated law school one year before her male colleagues, and had been practicing law in our field for far longer than her male colleagues.

On its face, this seemed like blatant gender discrimination.  The firm at which we worked would likely argue that the female attorney was making less money prior to joining the firm, and as such, the firm felt warranted in paying her less after she joined the firm.  However, this is a flimsy argument, and I doubt that an employer would be successful in court arguing that they weren’t engaging in gender discriminating but were merely screwing associates by paying them the least amount of money possible.  Had the firm simply paid everyone a uniform amount based on class year, there would be less arguments for gender discrimination.

Furthermore, adopting a uniform pay scale can help boost morale at smaller firms.  Nothing hurts morale more at a workplace than feeling like you are underpaid.  No one likes an employer that is screwing them to save a buck, and employees want to feel valued by their bosses.  I remember one time, I worked at a shop where an associate with much more experience than me was making slightly less than I earned.  This attorney was extremely wounded by the fact that the firm did not pay him as much as someone with less experience, and this motivated him to seek employment elsewhere.  Some firms don’t care about attorney turnover, and they don’t mind dealing with constant hiring in order to save money.  However, if firms want to boost moral and increase continuity in their firms, they should adopt a uniform pay scale.

In addition, not implementing a uniform pay scale can impact how attorneys serve their clients.  Uneven salaries can create resentment between associates that can lead to inefficiencies in how attorneys work on matters.  For instance, I used to work at a firm where a few people discovered that an attorney on our team with less experience than us was earning substantially more money.  As a result, we resolved that if there was ever a bad assignment that one of us needed to jump on, the higher-paid associate should be the one to complete the work.  Although you might say we weren’t being team players, it is kind of difficult to argue that someone making five figures more than you shouldn’t be the one to work harder to complete tasks!

However, sometimes the extra work involved an assignment that a lower-paid associate was more qualified to handle.  For instance, a lower-paid attorney might have attended the deposition in a case, or otherwise knew the facts of the matter better than the higher-paid attorney.  As a result of pay disparities, the most effective members of our team would not work on some matters, and this impacted how we served our clients.

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In the end, the legal profession is extremely competitive, and firms are forced to cut costs whenever possible.  However, smaller law firms should adopt uniform pay scales.  Of course, firms should vary compensation based on performance, but this should be done with bonuses and not with salaries.  In any case, applying an objective standard to salary calculations is not only the right thing to do, but firms can realize a number of benefits by paying attorneys a uniform salary based on experience.

Jordan Rothman is the Managing Attorney of The Rothman Law Firm, a New Jersey and New York litigation boutique. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jrothman@rothmanlawyer.com.

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