Editor's Comment: 'Tis the season...
As no-one wants to read another gloom-fest about the economy, I've decided to end the year fleshing out an earlier idea for how City firms could design a pay model that, well, works. This is prompted by the view that the current pay system based on associate lockstep, small ad hoc bonuses and sporadic pay reviews is not fit for purpose. The main problem is the system is awful at matching boom-time pay with boom-time conditions, and law firms are still unsure what behaviour they are trying to incentivise through compensation.So here is my idea. Start with the basis of the division you have between base salary and bonus comp, and then come up with an outline of how that would fluctuate between the top and the bottom of the economic cycle. Let's assume this model would have a 40:60 bonus to salary ratio during boom conditions. This is designed to shift to 10:90 at the bottom of the cycle, meaning the bonus element would drastically fall during a recession. This creates a model flexible enough to move with the markets, while also giving law firms a strong incentive to develop young lawyers, rather than dumping them when the wheel turns.
This premium content is reserved for
Legal Week Subscribers.
Subscribe today and get 10% off.
A PREMIUM SUBSCRIPTION PROVIDES:
- Trusted insight, news and analysis from the UK and across the globe
- Connections to senior business lawyers within the leading law firms and legal departments
- Unique access to ALM's unrivalled, market-leading reporting in the US and Asia and cutting-edge research, including Legal Week's UK Top 50 and Global 100 rankings
- The Legal Week Daily News Alert, Editor's Highlights, and Breaking News digital newsletters and more, plus a choice of over 70 ALM newsletters
- Optimized access on all of your devices: desktop, tablet and mobile
- Complete access to the site's full archive of more than 56,000 articles
Already have an account? Sign In Now
For enterprise-wide or corporate enquiries, please contact Paul Reeves on Preeves@alm.com or call on +44 (0) 203 875 0651