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Is a race to the top really the way forward?

Posted by: Laurence Simons 09/01/17
It’s fair to say that US giant Cravath, Swain & Moore is now seen as somewhat of a pacemaker in terms of raising salaries and bonuses. Just days after announcing their 2016 bonuses many leading US firms and Magic Circle firms were rushing to confirm they would match Cravath’s waterline, from $25,000 for the class of 2014 straight through to $100,000 for the class of 2009 and earlier. But is a race to the top the best approach to remuneration?

Texas based Susman Godfrey recently announced that it would beat Cravath’s ‘benchmark’ bonus, awarding lawyers that have been at the firm for one year a minimum of $40,000 and those who have been at the firm for six years and above between $120,000 and $140,000. However Bill Carmody, head of Susman's New York office, insists that many associates surpass the minimum bonuses. Out-paying competitors to attract talented associates has long been a Susman strategy, but is it the most effective way to attract the top legal minds?

UK based practice Slaughter and May recently announced that it has introduced sabbaticals and flexible working options for its associates as part of a major review of its employee benefits. The changes mean that associates are entitled to a four week paid sabbatical once they reach three years PQE and will also be allowed to work from home one day a week. However the firm has revealed they will also be boosting associate salaries by eight to ten per cent. The firm will be paying out Christmas bonuses of 3 per cent to trainees while associate bonuses will range from 9 to 16 per cent depending on PQE.

There is little doubt that the nature of work is changing and while raising pay and bonus has long been the approach for attracting talent at both ends of the scale, law firms may find that such an approach becomes less effective in years to come. Those that are reluctant to embrace a more holistic approach to remuneration and benefits may find attracting and retaining millennials becomes a more difficult task.
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