Palo Alto firm Fenwick & West is setting up a two-tier pay system for its associates in a bid to keep its best lawyers, while accommodating those who want to work fewer hours.
The plan is to offer associates who bill at least 1,950 hours a base salary of $125,000 (£78,130), while associates who want to work fewer hours can aim for a 1,800 hours target and earn $110,000 (£68,750).
The move is a direct result of the pay war started by Brobeck Hale & Dorr, which recently raised first year associate pay by 25% to $125,000 (£78,130).
A member of 250-lawyer Fenwicks' management committee, Greg Sueoka, said: "We did it because we want to retain our culture. Traditionally, we do not ask associates to bill 1,950 hours a year. We like our lawyers to have an outside life."
Sueoka said a several first year associates had already chosen the lower hours pay scale. He added that if they clocked up 1,950 hours anyway they would get the difference as a bonus.
Sueoka denied that associates choosing the lower rate would damage their partnership prospects. "It will not change [the partners'] perception of them," he said.
It is understood that fellow Californian firm Morrison & Foerster will also set up a similar system. The firm will raise its associate pay to match other Silicon Valley firms, but will also offer its associates the choice to earn less and work less.