oFo associates can go ahead and put
down the pitchforks.
That's the message from Morrison & Foerster chairman Keith
Wetmore in the wake of the firm's announcment that it will do away
with lockstep next year.
The firm is moving to a merit-based compensation system that
Wetmore says will be based on an undefined mix of the prior year's
hours as well as less-quantifiable contributions and skills.
Lockstep compensation is ingrained in big firm culture, and not
surprisingly, the firm's announcement has MoFo associates scrambling
to figure out what it may mean for them.
It's a brave new world Wetmore has sketched out, and he
acknowledges that it will create uncertainty. "You don't know for
sure that you'll get a raise next year," he says -- and that doesn't
particularly bother him.
But the move, he says, is more evolution than revolution. It also
makes a lot of sense -- assuming it's not simply an attempt to roll
back associate salary gains.
Wetmore says the decision stems in part from the realization that
steps his firm and others took in response to the Gunderson salary
raise 16 months ago had made "lockstep a faint memory." MoFo created
different tiers for associates unwilling to bill the 2,000 or so
hours needed to justify the new prevailing market rates.
MoFo wanted to "rationalize" its compensation system in a way
that would reward not just top billers, but top contributors, too.
Wetmore insists "this is not a cost campaign." He won't make any
promises, but says there's "no expectation" that the firm's overall
tab for associate compensation will decrease next year.
And whatever the salary ranges turn out to be, Wetmore says most
associates contributing 2,300 to 2,400 total hours, including 1,850
to 1,950 hours of client billable or pro bono time, will be put at
the top of the range.
Since the firm won't be looking at performance reviews and
setting salaries until at or around the end of the year, it's too
soon to judge Wetmore's claims.
Nor have they completely calmed the waters in the associate pool.
Some associates worry they'll be penalized if there's a shortage
of work in their practice group.
Associates and headhunters suspect that's the firm's true
motivation. If associates -- especially those with no work -- leave
the firm, then it won't have to lay them off. And MoFo can avoid the
bruise to its recruitment reputation that some firms experienced
when they made deep cuts in the early 1990s.
Wetmore says that's not what's going on. In fact, he says the
firm is hiring laterals -- not in securities, to be sure -- but in
litigation and elsewhere.
Associates also worry that more subjective compensation criteria
will mean they'll have to suck up to partners who play favorites.
Wetmore counters that the firm has long handled its non-lawyer
and partner pay according to performance, "and the walls have not
come tumbling down."
Nor is he particulary bothered by the idea that employees will
seek to please their bosses -- which, he says, is a pretty common
aim throughout the rest of the working world.
Indeed, law is one of the only industries where lockstep is
common, and the arguments in favor of keeping it make little sense.
You'd think most associates would like the idea that they'd be
assessed and compensated based on their own contributions and
abilities, rather than by the one-size-fits-all lockstep system.
Which is why other big Bay Area firms will probably follow --
though maybe from a distance. "They'll probably want to wait and
see how this works out," predicts recruiter Avis Caravello.
But follow they will, because though their hours may be fungible,
lawyers really aren't: Some solve client problems better and faster,
and that fact isn't reflected in their regular pay.
Of course, most other large businesses put compensation in the
hands of a trained human resources staff rather than in the hands of
partners. So fears of pay-based bias suits -- real or imagined --
may be one reason firms have clung to lockstep.
"When you start getting really subjective with lawyers -- well,
who wants to be in that position?" asks Caravello.
The answer, it appears, is MoFo.
