AAR partner Paul Quinn uttered in his Business Spectator column earlier this week that junior lawyers should be remunerated based on performance. As reported by our friends at ALB:
associate salaries have remained on a lockstep structure … and “none of the arguments, in my view, present a compelling case to rule out performance based remuneration for lawyers … a strong and transparent performance culture is a good thing”.
We can think of a good reason Paul; for example when your firm does not have a “transparent performance culture” and young lawyers do not possess a “champion”.
Late last year an anonymous AAR spy wrote us the following
…Allens Arthur Robinson’smanagement are aware that legal salaries across all levels are below market rate (although this has not been acknowledged or communicated to staff). At some levels, the discrepancy is as much as 20% below market rate. Salary compression at junior levels is also critical. “Thawing the salary freeze” offers the opportunity for the firm to consider a revision of its approach to remuneration. This may result in changes to the calibrated lock-step system currently in place. After the introduction of a forced-rank distribution sytem for performance reviews in 2009, the firm “successfully achieved its distribution curve”. (ie the firm reduced the number of staff achieving an “exceptional” or “very strong” rating and increased the number of staff who received a “strong” or “underperforming” grade). Some partners complained that they felt compelled to impose a grade on staff they did not agree with. Lawyers complained about flaws within the calibration system itself, including the fact that lawyers might be disadvantaged if they did not have someone to “champion” them during the calibration process (ie if they do not work directly with a high-ranking partner).
What do you think is fairest? A performance-based salary where lawyers are open to being dodged by partners, or the current lock-step model?
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In assessing any statement such as this, it’s important to remember that the ideal world for a partner is to have an army of high billing associates who work crazy hours for nothing (ie, slavery). The only thing which prevents this is that there is a tipping point beyond which even downtrodden junior lawyers realise that it’s just not worth it and leave (thus reducing said partner’s profits).
What I’m getting at is that you can bet that the driver behind reduced transparency is unlikely to be the best interests of lawyers… (Quinn refers to transparent performance culture, NOT transparent salaries). Across the board, I am fairly sure that salaries would not increase if Quinn’s model was implemented.
I also notice that in the same article, Quinn suggests that US lawyers have an “eat what you kill model” and that Australia is seeking to strike a balance between lockstep and the US model. This seems slightly disingenuous as, to my knowledge, the US model is as lockstep as it comes…
always amazing when partners from the previous generation talk about the benefits of performance based pay and remuneration…these are the same guys who were offered partnership after a handful of years..oh, and with no HECS debt either…as always Mr Q, you are out of step once again
Nice to hear the views of our leadership in the legal press before any internal communication about potential changes.