Law Practice Management
Reed Smith Sidesteps Lockstep, Creates 3 Classes of Associates
Posted Oct 27, 2009 6:21 PM CST
By Martha Neil
It's a move billed as offering enhanced attorney training. But Reed Smith is also sidestepping traditional lockstep advancement—and annual pay increases—for associates in a new CareeRS program announced today.
Associates will now be classified as junior, midlevel or senior. Their status will depend not only how long they've worked as lawyers but whether they have demonstrated skills that the more than 1,600-attorney Pittsburgh-based international law firm considers “core compentencies," reports the Wall Street Journal Law Blog.
“The most painful conversation you can have with a client is to tell him that that all of a sudden, you’re charging more for an associate just because the associate has aged a year,” firm chairman Greg Jordan tells the newspaper. “Something needed to change. The recession made that clear.”
More details are provided in a law firm press release.
Additional coverage:
Recorder: "Reed Smith the Latest Big Firm to Drop Associate Lockstep"
Updated on Oct. 28 to link to Recorder article.
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Comments
B. McLeod
Oct 27, 2009 6:31 PM CST
Yes, it is a good thing we have the occasional recession, because trying to wake Mr. Jordan by beating him with a board would be tortious.
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john
Oct 27, 2009 6:48 PM CST
The 3 levels of associates remind me of the levels on that old british show, are you being served where they had junior salesman, senior salesman etc
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AndytheLawyer
Oct 28, 2009 7:51 AM CST
I thought that the most painful conversation you can have with a client is a post-mortem on why and how you lost a bet-the-company lawsuit. Mr. Jordan needs more exposure to the real world.
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Q
Oct 30, 2009 5:46 AM CST
All snarking aside, this is a great move. Gives associates something to work towards - sorta like, you know, THE REST OF THE WORKING WORLD. You don’t get promoted unless you earn it.
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MikeIP
Oct 30, 2009 7:41 AM CST
My firm has already move to a similar model, with the addition of a “lifestyle choice” equalization component. It’s all nonsense, and complete BS. The paybands - let’s be honest, that’s what this is - offer no objective criteria to facilitate moving from one to another. Everything is subjective. It is impossible to fairly review a person using entirely subjective reviewing criteria. The equalization component is equally BS. All it is, is an interest-free loan to the firm. Pay me interest on MY money, and perhaps it would be more reasonable. But, partners have to keep their PPP up for looks so the associates get screwed.
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stephenG
Oct 30, 2009 8:31 AM CST
“performance-based pay” is doublespeak for salary freeze.
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LEE
Oct 30, 2009 9:15 AM CST
Wow 5, Clearly you’ve never worked anywhere else in the world, because that’s the way it is for 99% of society. Merit based advancement with a subjective standard for advancement….. oh the horror.
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NL
Oct 30, 2009 10:05 AM CST
“The paybands - let’s be honest, that’s what this is - offer no objective criteria to facilitate moving from one to another.”
As a law grad who has held non-attorney positions in several different organizations, let me assure you this is precisely the way the rest of the working world works. Welcome!
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oleary
Oct 30, 2009 12:11 PM CST
I agree with those who recognize that pay for performance is logical and that, performance evaluation, no matter how you slice it, is subjective. The world is a subjective place - get used to it!
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joe
Oct 30, 2009 12:41 PM CST
Other industries are very different than law firms. A large portion of keeping your job as an attorney is having billable work. If a person does not have proper performance/enough billable work, said person’s work options within the firm wil dry up. Further, if a lawyer in a firm does not perform, they are let go.
So there has always been an indirect version of pay for performance. Let’s all be honest, moves such as these are geared to save the firm money and lower their opertaing costs. As for the people who suport these moves, clearly you do not work as an associate. These policies are geared to serve the interest of the partners. If the partners are so concerned with costs, why not take lower cuts on their share? That would be an atrocity, right? LOL. They are using the recession as an excuse to lower their bottom line.
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Houston Lawyer
Oct 30, 2009 1:02 PM CST
MikeIP and joe have clearly never worked anywhere other than a law firm. Just because your performance includes bringing in billable work, doing a good job so that people will continue to give you billable work, etc., there are still other skills you need to demonstrate to deserve an increase in pay. The rest of the world, including corporate law departments, where lawyers are evaluated and receive pay increases and bonuses based on their performance, works this way. Law firms are not that different; lawyers who have never worked in the real world just like to think they are to justify their stupidly high billing rates and salaries. Yes, I was an associate and a partner at a law firm. Now, I work in the real world, and I think this is good evidence that law firm lawyers are looking out the window of their ivory tower and actually seeing the rest of the world and how it works and applying it to their businesses. Get over your bad self - just because you work for a law firm doesn’t put you above having to be evaluated on your merit.
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joe
Oct 30, 2009 1:42 PM CST
Houston lawyer, I think there is an old saying regarding assumptions. ;) I have worked outside of the legal industry for 8 years, where I work now. Thank you very much. I thought bonuses at law firms were based on performance? This is just a variation of pay structure. The same thing applies to investment bankers who have them crazy 7 figure bonuses, but we are complaining over lawyer salaries. lol.
Further, if you have such great experience outside of the legal field you would realize that law firms operate completely different than private corporations. Employees in a corporation are treated very differently, than a lawyer in a FIRM. Not as in-house counsel in the corporate law department, but a Firm!!!
Furthermore, I do not even work at a law firm anymore as I have found a more healthy work-life balance. However, working at a law firm is akin to working at a sweatshop. With the hours partners expect you to work and restrictions in pay like these proposed by Reed Smith. There is only so much juice a person can squeeze from an orange? Law firms are using the recession as an excuse to get more juice from the orange. And to me, it seems you are defending that????
I was not defending my high salary and/or living in my ivory tower since they are inapplicable to me. Unlike you, when I see a bad deal for someone else, I do not sit on the sidelines justifying said bad deal. Most people think that lawyers are overpaid. They maybe so. However, lawyers in law firms typically work pretty darn hard. I have worked at some fortune 500 corporations where people don’t even work 8 hours a day.
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Jim
Oct 30, 2009 2:03 PM CST
Any associate or prospective associate of Reed Smith (or other firm with a similar compensation strucutre) who doesn’t like the compensation structure is free to work for another firm. That’s how free markets work.
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NoPartnership
Oct 30, 2009 3:08 PM CST
Associates will be placed into 3 classes.
1) All MALES assocaites who will make partner
2) All MALES assocaites who will get the ax
30 Females assocaites who provide special services to the partners and those who do not
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Mark
Oct 30, 2009 9:14 PM CST
I wonder if the Partners and Reed Smith would subject themselves to the “subjective” same pay revew? Specifically a 180 degree review from their underlings which is tied to their pay. Some Accounting firms already to this. What is good for the goose is good for the gander. If Reed Smith really wants to meet ALL its goals for ALL, why not tie the same criteria to the the Equity Partners? I bet that would be voted out if that is “How the world really works.”
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B. McLeod
Oct 31, 2009 6:26 PM CST
They should design different monkey suits or badges for the different classes of “associates,” so that clients and other staffers will know if they are dealing with a third-class, second-class or first-class “associate.”
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Gayle,
Nov 1, 2009 11:22 AM CST
Wow. I have never seen so much venom over a slight change in compensation structure. Seems like something else is going on in the badkground. Having worked in a large NY law firm and in-house, I can attest to the fact that associates, on an hourly basis, should not be considered “highly compensated”. The traditional system essentially does a disservice to clients and efficient associates by rewarding almost exclusively high numbers of billable hours, which equals higher Per Partner Profits. Make no mistake, in large firms associates are not encouraged to bring in clients, unless they have the next GM on speed dial. Small companies are considered too costly to service and not profitable enough.
It would be a welcome change to see law firms rewarding excellent work, efficiency, winning briefs and the rest but given the bottom line focus it’s difficult to believe that is what “subjective” performance review actually means. Most likely it is just a euphamism for - those who didn’t reach the billable hour target are put into a special category.
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B. McLeod
Nov 1, 2009 5:51 PM CST
They probably become “special needs associates,” and have to take “remedial billing.”
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Esq.
Nov 2, 2009 9:26 AM CST
“Associates will now be classified as junior, midlevel or senior.”
That makes entirely too much sense. In fact, it’s shocking that it took so long for these basic classifications to be implemented.
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stephenG
Nov 2, 2009 9:54 AM CST
I wonder how many of the commentators who say “that is how the rest of the world works” have ever even been a law firm associate???
Your right #17, so much venom from a simple salary post, but I am not surprised. Anything having to do with law associate salaries these days is stricly flame bait. Lots of former/want-to-be associates, and the general public have an ax to grind. As young professionals, associates are an easy target.
law firms have always been performance based.
First, you need to perform at a high academic level in order to even have the opportunity.
Second, you need to perform at a high level to even keep you job.
Third, law firms are not a purely a meritocracy. Even those who perform at a high level have even a modest chance of making partner. Its essentially an up or out system and it always has been.
Fourth, some firms don’t put as much emphasis on work product as they do billable hours, so it is misleading to say “performance” because in practice performance often means more hours and not necessarily better service.
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B. McLeod
Nov 2, 2009 7:14 PM CST
“Want-to-be associates”? Are those the “staff lawyers” (or the mental patients)?
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stephenG
Nov 4, 2009 3:54 PM CST
And another thing, I am sick and tired of people saying “clients don’t want to pay to train associates”, where the hell do you think associates come from, the associate fairy? Do you think the stork just drops mid-level associates down the chimney?
And another thing, I am sick and tired of people saying “clients don’t want to pay to train associates.” Where the heck do you think associates come from, the associate fairy? Do you think the stork just drops mid-level associates down the chimney?
Its the same as if you hire a carpenter or a plumber, they will have an apprentice and you will have to pay their salary. Different services require different skill levels.
And if you want to talk about the “free market” lets talk about the free market. Without the 6-figure salaries, how on earth do you propose to get talented and ambitious people to go through 3 years of law school, assume 200K plus in debt, and work long hours on tedious work??? The free market has already dictated that law firm associates earn 6-figure salaries. If it were easy to get a job with a law firm and easy to keep it then everyone would do it.
Another reason associates earn what they do is because most will only have 8 years at best to earn that salary. Statistically, most will not make partner. Plumbers don’t get fired if they don’t make partner in 8 years and are still stuck with another 12-17 years of student debt.
Get a grip and stop the hate.
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