Law firms are rushing to swap PQE for ‘merit-based’ compensation. But will it help them retain talented associates – or drive them away? RAVINDER CASLEY GERA reports.
Since 2007, there has been a rush of law firms abandoning PQE for merit-based assessment. Ashurst, Lovells, Norton Rose and Berwin Leighton Paisner have introduced merit remuneration for all associates, while Addleshaw Goddard has introduced a merit-based senior associate role. Simmons & Simmons and CMS Cameron McKenna are also currently considering a switch.
Last year saw a clutch of law firms in the USA announce a switch to merit pay, including Reed Smith; DLA Piper; Orrick, Herrington & Sutcliffe; Sonnenschein, Nath & Rosenthal; and Bingham McCutchen. Even the magic circle has made tentative steps in this direction: Allen & Overy introduced a merit-based senior associate role in 2007, and Freshfields is introducing a new ‘milestones’ programme to move associates through three merit-based tiers, albeit not tying salaries into the scheme yet.
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