Inertia and Worries About Associate Recruiting Keep Merit Pay an ‘Un-Trend’
Merit pay for associates never really caught on, despite the high-profile status of a small group of law firms that announced they were abandoning lockstep compensation in 2009.
A Thomson Reuters story calls merit pay an “un-trend” and examines the reasons why.
Most major law firms still have lockstep compensation, according to a survey of 86 firms released in May by an affiliate of the job placement firm Lateral Link. The survey found 63 percent of the firms had lockstep, and the rest had either merit pay or a merit-lockstep hybrid.
Inertia may be one of the reasons, the story says. There are also concerns that merit pay will hurt associate recruiting and morale, and eat up the time of partners who have to prepare the merit evaluations.
Another reason: Merit pay hasn’t consistently led to savings for law firms, according to Ward Bower of legal consulting firm Altman Weil. Law firms that adopted merit pay typically dropped associate pay by $10,000 to $15,000, but they ended up awarding larger bonuses.
Patterson Belknap Webb & Tyler is one of the firms still using lockstep compensation. Managing partner Robert Lobue points out that Howrey, which dissolved in March, was one of the first law firms to tout merit pay. “My concern is that it’s a little tarnished as a model,” Lobue told Thomson Reuters.
