With revenues down and collection times up, the number of law firms that are starting to consider the benefits of a two-tiered approach to associate attorneys is growing rapidly. Firms are finding that a two-tiered associate structure can be an efficient profit model in that the second tier of “nonpartnership track associates” are paid sometimes as much as 50 percent less than the first tier of “traditional associates,” but may be billed to clients with rates that are only 25 to 30 percent less than those of the traditional associates. In other words, if a nonpartnership track associate bills 1,800 hours, the firm makes a larger profit and the clients pay less money than if a traditional associate were to bill the same number of hours.
The concept of separate tiers of partners has been around for awhile, and over the past decade, most of the nation’s largest firms have already converted to a multi-tier partnership structure. However, the application of a multi-tier approach to associates is a recent development that is quickly gaining favor among many of the nation’s larger law firms and some smaller regional firms. When implemented correctly, a second tier of nonpartnership track associates can benefit the firm, its clients and the attorneys.
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