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December 15, 2009 9:29 AM

Sonnenschein Latest to Ditch Lockstep

Posted by Zach Lowe

Sonnenschein, Nath & Rosenthal is the latest Am Law 200 firm to move away from lockstep compensation for associates, and in its decision--and others--we are beginning to see a new consensus emerge on how exactly firms believe a merit-based system should be structured.

Like Orrick, Herrington & Sutcliffe, Sonnenschein's plan, which the firm is announcing today and will roll out in early 2010, will involve a three-tier system in which associates will advance once they meet various merit-based criteria. The firm did not immediately release base salary figures for associates in each tier. Bonuses for individual associates will be tied to the same criteria instead of being linked "almost exclusively to billable hours," as under the old system, the firm said. The system is designed so that "high-performing associates will be able to earn above-market compensation faster than they would have under the old model," the firm said.

Natalie Spears, a partner in the firm's Chicago office who was involved in the decision-making process, tells us the firm has been discussing a possible shift to merit-based compensation for more than two years. The discussion turned more serious in May, when the firm formed a committee (one that included associates) to work out the specifics of how the system might work. Spears would not reveal anticipated base salary figures for each tier, saying the firm will likely set those figures early in 2010 and announce them then. She would also not say whether the firm--like others we've talked to--envisions a compensation system in which a lawyer's bonus makes up a larger percentage of their salary than in the past.

Criteria for advancement between the tiers will include "written and verbal communication, strategic thinking, organization, and other components of legal excellence," and other standards, according to the firm statement. 

"This is a transformative moment in our profession and we hope our merit-based model helps enlighten the way that legal talent is nurtured and rewarded," said firm chair Elliott Portnoy.

Other firms that have abandoned lockstep to some degree include Orrick and DLA Piper.

Sonnenschein will introduce a more thorough evaluation process to ensure that all associates are judged fairly, since the new criteria go well beyond objective measures such as the number of hours an associate bills, Spears says. The process will include a reverse evaluation, in which associates report on a partner's feedback and availability, Spears says.

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