Over the last few years many firms have implemented merit-based promotion and compensation systems in part because they think it will please their asso­ciates. What do the associates think? In our 2011 Midlevel Associates Survey, 29 percent of associates indicated that at some point their law firms had switched to merit-based pay. And 24 percent of survey respondents said that their firms instituted competency models where associates advance on the basis of their experience and skill level. At first blush, these changes appear to be popular. Sixty-three percent of associates at firms with competency models indicated that they liked them, according to our survey.
Cheri Vaillancour, director of professional development at Fenwick & West, which replaced its lockstep promotion and compensation scheme with a more merit-based model last year, says that traditionally, “firms would wait to see what every other firm was doing, but now they are more focused on what works best for their specific situation.”
But this isn’t a completely settled issue. In fact, the individual scores—of firms that have recently rolled out new compensation and promotion models, or a combination of the two—shows associates’ ambivalence. For example, in this year’s survey, Fenwick’s associates gave the firm a score of 3.32 for compensation and benefits and a 3.72 for training. But in our 2009 associates survey, the firm’s midlevel ­associates gave it a score of 3.69 for compensation and benefits and 3.69 for training. The results suggest that while Fenwick’s current midlevels are slightly happier with training, they are measurably unhappier with compensation and benefits. “I think the lower score reflects unfamiliarity with a compensation system that is not as transparent as lockstep,” Vaillancour says. “It will take a few cycles for everything to shake out.”
Moreover, in October 2009, Reed Smith announced the development of a new advancement and compensation model that put associates in three categories and, in part, pegs compensation and advancement to the mastery of certain competencies. In that year’s survey, which took place before the changes were announced, the Reed Smith associates gave the firm a 3.31 for compensation and a 3.58 for training. For this year’s survey, the firm’s compensation and training scores dropped to 3.04 and 3.33, respectively. (Reed Smith declined to comment on its survey scores.)
Some firms have had better luck. Three years ago, Paul Hastings began to develop a new staffing model for associates that links ­associate advancement to certain competencies. In 2009 the firm’s compensation and training scores were 4.42 and 3.93, respectively. On this year’s list, both metrics were higher. For compensation the firm scored 4.63, and for training, 4.56. Bonuses for Paul Hastings associates are in part determined on mastering the competencies, but base salaries are lockstep. “It gives us the best of both worlds,” says Siobhain McCarthy, managing director of attorney development at the firm. “We can reward superior performance, but lockstep keeps our compensation at the top of the market.”
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