Five Questions for Law Firms Abandoning Lockstep Compensation
Law firms abandoning lockstep compensation need to consider how they can make the change without sabotaging the morale of lawyers who aren’t the firm’s stars.
The morale issue is one of several questions that an increasing number of firms will have to consider as they make the change, according to an American Lawyer article. A July survey by the Law Firm Group at Citi Private Bank found that almost half of the nation’s top 50 law firms are planning to switch to some form of performance-based system.
After the decision is made to abandon lockstep, law firms will have to spend a year designing the new system, according to the story. Law firms making the change will have to develop new performance evaluation systems and should trade the traditional “associate/partner paradigm” for a variety of timekeeper categories, the authors advise.
The story says law firms with have to grapple with several questions, including:
• Should compensation be fully individualized or set in ranges? What factors will be used in the compensation decision?
• How can the firm make equitable decisions, without any appearance of favoritism?
• How can the firm avoid de-motivating the lawyers who aren’t likely to be future star partners?
• How will the firm handle diversity goals?
• Is the firm willing to devote sufficient resources to administer the new system?
The authors of the article are professional development leaders at Orrick, Herrington & Sutcliffe and King & Spalding, and the head of the Law Firm Group of Citi Private Bank.
Hat tip to the Am Law Daily.
