Clifford Chance only top 20 firm with no merit-linked salaries

Clyde & Co and Bird & Bird have become the latest firms in the UK top 20 to rejig their associate career paths in a bid to tighten links between pay and individual performance. 

The moves come as research by Legal Week shows that Clifford Chance (CC) is the only firm in the group that does not base lawyers' salaries on merit. 

The changes see Clydes move further away from post-qualification experience (PQE) as a measure for pay, with the firm putting in place a clear career development framework for associates. It focuses on performance and clarifying targets for progression. 

The system was formally introduced in November, with lawyers from newly qualified (NQ) to two years' PQE classified as junior associates. Lawyers subsequently progress from associate to senior associate at around four years' PQE, with a new legal director tier introduced for those with typically at least six years' experience. 

Lawyers are promoted through the ranks based on merit rather than experience, with pay at all levels linked to performance, as it has been for the last two years.  

Meanwhile, Bird & Bird is tightening its existing structure by toughening promotion criteria at each level. This means promotion from junior (up to three years' PQE) to mid-level associate, and from mid-level to senior associate (around five years' PQE), is no longer automatic. Instead lawyers will be assessed against five criteria before they can gain promotion: matter management, people management, client management and business development, technical competence and personal qualities.

The firm is also adding winning business as a criterion in determining bonuses. 

A spokesperson said: "We see both our salary structures and the mechanisms behind the bonus scheme evolving over the next couple of years to ensure that we incentivise and reward the correct ways of working to match the rapidly changing ways in which we are operating and charging for our services."

The changes at Bird & Bird and Clydes represent the latest in a string of moves by law firms to distance themselves from associate lockstep and instead link basic salary with performance.

Following the news that Linklaters is to introduce merit-based pay for lawyers at two years' PQE, CC is now the only firm in the top 20 without a banding system in place. The firm has no current plans to change this, although associates do not automatically progress through the lockstep.

Slaughter and May, traditionally the most conservative UK firm, last year introduced two salary bands for associates with 4.5 years' PQE and above.

A spokesperson for CC said: "Our current compensation policy is designed to motivate and retain our high-quality lawyers, and while it achieves this objective we see no reason to change it."

CC also operates a bonus structure, with bonuses awarded up to a maximum of 40% of base salary.

Of the top 20 Slaughters and Allen & Overy are the only two firms where performance-based pay kicks in purely for senior associates, with the majority opting to introduce it at around two years' PQE. Some, such as CMS Cameron McKenna, Ashurst and Hogan Lovells, operate merit-based pay from NQ onwards.