7/29/10

Baker Botts Establishes Three Associate Levels, Abandons Lock-Step, But Keeps $160K Entry-Level Base Pay

Baker Botts announced yesterday that are moving into their next phase of "Associate Attributes Model [pdf]", established in 2008, through the implementation of the "Talent Management Program". The idea is to move Associates off of the lock-step model that has been prevalent in law firms, and toward more of a merit-based system that evaluates the talent and performance of the Associate to determine his or her "level" within the Associate ranks. So, old Army guys like myself can think of it as a pseudo-military officer ranking:
  • "Junior Associate" = 2nd Lieutenant
  • "Mid Associate" = 1st Lieutenant
  • "Senior Associate" = Captain
Just like in the military, the people you graduated with at the Academy (these are top firms... so no ROTC'ies) wouldn't automatically get promoted at the same time. Three factors are used to determine the skills of the Associates, including "Core Attributes", "Professional Skills" and "Interpersonal Skills", and those go through a rigorous five step process by established individual and committees of supervising lawyers. Here's a list of the five steps:
Step 1: Associates Are Requested to Identify Supervising Lawyers
Step 2: Departments Form Evaluation Committees Interview supervising lawyers
Step 3: Evaluation Committee Interviews Supervising Lawyers
Step 4: Data Compilation and Evaluation
Step 5: Associates’ Formal Evaluation Meetings
The overall purpose of this evaluation and three-levels of Associates is to respond to requests from the "clients for a clear demonstration that lawyers' experience and capabilities correlate to their billing rates." Of course, Baker Botts adds that they will still be paying their entry-level associates $160,000 a year.

It's this last part (the salary) that makes me wonder why Baker Botts is going to all this trouble to look like they are breaking away from the old "business as usual" only to fall right back into the trappings of BigLaw version 2007 all over again? I won't even get into the logistical nightmare of trying to get partners to sit in and effectively work on "evaluation committees.

I could be off base here, but it seems right now that it is a buyer's market when it comes to hiring talent out of law schools, and it doesn't seem like any firms are taking advantage of this. Why is a Texas-based firm that is hovering in the middle-40's of the AmLaw 100 paying the same salaries for Associates as a top-5 firm? The talent pool isn't shrinking, but the amount of talent that is being pulled out of that pool is. So, there is a lot more talent available for the picking... and many of them are not going to wind up in a big firm. Add to that the huge amount of talented 3rd, 4th and 5th year associates that are still looking for work, and you'd think that firms would be sitting pretty in getting talent at salaries closer to 1997 levels than at 2007 levels. My co-blogger Toby is the one with the Masters in Economics, but even I seem to understand a little about supply and demand (which seems to have alluded some firms out there.)

It just seems that adding levels and evaluating the talent of Associates is a good start, but if you're just going to continue the same recruiting, hiring techniques used in the past, coupled with the "pay whatever the top guys are paying and we'll get equal talent" idea, that you're just not dealing with the reality of how to manage talent, manage salaries, manage billing rates, and manage client expectations. Perhaps these steps are coming in the next phase of the Associates Attributes Model?

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2 comments:

Toby Brown said...

Right ... pay everyone the same but 'treat' them differently.

Two thoughts on this after a conversation with Greg:

1) Spending time justifying billing rates sounds like old paradigm to me.

2) Riddle me this: Should you pay a new hire with 10 years of financial industry experience and an MBA on top of a JD the same amount you pay someone with just a JD?

Law firms should tie comp to value more directly. This type of effort sounds like it's intended to be a step in that direction. But is it?

Anonymous said...

Does anyone know what BB pay their European counterparts i.e. in their London office?

Much appreciated.

 

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