Legal Commentary

WARNING: Beware of Stealth Rate Increases

By Patrick J. Lamb

This if for clients only.  If you are from a law firm, don't bother reading this.

Many firms have announced that they are moving away from lockstep compensation and advancement for their associates.  DLA Piper announced yesterday that it was joining other firms in this approach.  Above The Law described the DLA structure like this:

Instead of traditional lockstep advancement, the associate career path will be characterized by three broader and more flexible levels of development: Level I, Level II, and Level III. Each Level will in turn consist of two to three Steps through which an advancing associate will progress. Promotions between and within Levels will be performance-based, not tenure-based.

The focus has been on what this means for associates.  But for clients, the question is what does it mean for them.  Consider the case of two associates, Jane and Bob, both from the same year.  Until now, both had been billed at the same rate.  But now, Jane is evaluated as superior to Bob, and will be paid more.  Will there be a rate differentiation?   Does Jane's billing rate go up to reflect the differentiation from Bob, or does his rate go down? 

My bet is that firms will raise the rates of those in higher tears rather than lower rates of those who are not reviewed as favorably.  Thus, while the client with the lower-valued associate sees no change, the client on whose matters Jane is working will see a rate increase even though Jane continues to work just as she did before. 

Watch for it.  And let us know how firms handle this shift.

Full post as published by In Search of Perfect Client Service on December 09, 2009 (boomark / email).