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Some law firms have unfortunately learned the truth behind the age-old saying: Money talks, and underpaid associates walk. Fortunately, due to the way most law firms are structured, the management may be able to incentivize associates so that if they feel underpaid, those associates will have no one to blame but themselves.
While the adversarial process is still a kill or be-killed process, in recent years, many law firms have moved away from the eat-what-you-kill model for associate, and even partner, pay. Sure, most associates may still have minimum billable hour requirements, but general attitudes about compensation seem to be shifting toward models where the killer gets less than the traditional lion's share in order to feed the less voracious members of the pride.
An associate's job is stressful. Basically, an associate has at least two bosses: the client and the partner. And it can often be easy to forget that many associates these days are buried under massive amounts of law school debt well into their thirties and longer.
When an associate generates business, or logs extra hours, that should translate directly into pay increases or bonuses. Many law firms are reluctant to break from lock-step pay structures, but the truth is that basing compensation on merit and results can significantly boost individual performance.
Notably though, results and merit-based compensation programs do have drawbacks. For instance, typical firm activities, such as training and mentoring, speaking at conferences, or performing outreach, which help the firm's brand, are likely to fall by the wayside.
For firms that provide market-rate salaries, it may be difficult to find the money to pay bonuses. But bonuses are where firms have the opportunity to truly incentivize top performers. As noted in the ABA's business law journal nearly a decade ago, bonuses shouldn't be automatic and shouldn't be given to everyone. Merit-based bonuses should be earned.
In addition to merit bonuses, firms that want to incentivize associates to participate in those "typical firm activities" that may or may not be billable, could have non-financial incentives tied to those activities, such as increased time off, most-expenses-paid trips for conferences, more flexibility to work from home, or even a company car.
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