Shearman & Sterling is ditching associate lockstep for its lawyers in the U.K., Asia and the Middle East in favor of a merit-based pay system.
The new system, which goes into effect May 1, will see all associates assessed twice a year against a number of criteria including client relationships, legal and technical capabilities and interpersonal skills.
Associates will be placed into one of three tiers, with each level having maximum and minimum base salaries, which are yet to be decided.
Lawyers will become eligible for promotion into the second tier after gaining 18 months' experience, while at least four and a half years' experience will be required before associates are considered for the third tier.
Shearman's U.S. associates who are based in the firm's offices in the U.K., Asia and the Middle East will not be affected by the changes.
Last year the firm froze its associate lockstep, meaning lawyers with one year post-qualification experience took home 80,000 pounds ($120,000), while 2PQE associates earned 84,000 pounds ($126,000) and 3PQEs 92,000 pounds ($138,000).
Trainees who qualified in September 2009 receive 73,000 pounds ($109,600) -- a reduction of 7,000 pounds ($10,500) on the previous salary for newly-qualified lawyers.
Firmwide HR director Marcus Franks commented: "Although the removal of associate lockstep pay is certainly becoming more prevalent, we firmly believe that our overall approach on career development is highly commercial, pragmatic and flexible."
The news follows word that Milbank Tweed Hadley & McCloy has taken a similar measure in its London office, with the firm introducing a three-tier banding system in London that will run alongside its lockstep-based pay structure.
The new structure, introduced in January 2010, will only apply in London, with the U.S. firm's other offices maintaining pay based on post-qualification experience.
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