Losing Associate Lockstep: Reed Smith Joins the Defectors

[WSJ_law_blog]

On first blush, it’s still business as usual at the nation’s big law firms: on a broad level, they’re all still playing follow-the-first-mover. Pay cuts followed by one round of layoffs followed by another round of layoffs. Yadda yadda yadda.

But scratch a little deeper and you’ll see something interesting going on: on a micro-level, firms are making significant changes to their structures, changes that don’t necessarily follow one model.

Consider, for instance, associate pay and associate advancement. A handful of firms have tinkered with the old lockstep model, but each has done so with its own little twist. Howery slashed salaries and billable-hour requirements for young associates. Orrick split up its associates into three separate tracks.

On Tuesday, Reed Smith announced yet another way to skin the cat. Starting early next year, the firm will go to a sort of hybrid lockstep/merit-based pay system for associates, called CareeRS (get it?). Associates will be categorized as junior, mid-level or senior depending not on how many years they’ve served, but on whether they’ve demonstrated certain “core compentencies.” That is, a particularly talented third-year associate might achieve the “mid-level” designation; a fifth-year on a slower pace might still be a “junior.”

According to the firm’s chairman, Greg Jordan, the move was a response, at least in part, to client demands. “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,” says Jordan. “Something needed to change. The recession made that clear.”

We asked Jordan if he expected the majority of associates would progress as normal — with associates getting bumped up after three or so years, and then again after six or so years. “That may be what ends up being the typical pattern,” said Jordan. “But we really don’t expect that everyone will take this path. Some will advance quickly, others will need time.”

And was there a risk, we inquired, of young associates getting discouraged and leaving the firm perhaps prematurely? Jordan didn’t see it this way, explaining that “the sooner we can give detailed feedback, the better.” An associate who needed help, for instance, in business development would be encouraged to stay on and work on that. But, conceded Jordan, it might allow a firm to recognize and address when someone just isn’t a good fit.

Of course, all of this will require more and better training, something law firms certainly aren’t know for. “Our training now is good,” says Jordan. “But if we don’t improve it and deliver on a higher level of execution and tailoring, this program is going to fail.”