Orrick breaks lockstep in response to client cost concerns

Orrick Herrington & Sutcliffe has dumped associate lockstep and will now assign associates to one of three tiers within its partner track.

Associates at the firm will now hold one of three titles: associate, managing associate and senior associate. Lawyers will have to meet certain criteria to advance from one level to the next.

Orrick will also create a non-partner track option for associates, and boost the number of staff attorneys doing more routine work like document review.

Orrick chairman Ralph Baxter said the move aims to create a system in which clients are not paying for unnecessary costs.

"Why do clients complain so much about how much first-year associates are paid?" he asked. "They complain because they know that the work assigned to first-year associates could be done by people who are not paid that much money. These additional pieces of our talent model will give us a much more robust set of alternatives in staffing matters, which in turn will address the concerns of clients that law firms incur costs that they do not need to incur in order to deliver the service."

One mid-level associate, speaking anonymously, said that many associates were sceptical when the firm first started discussing the changes more than a year ago, but they became more comfortable as their concerns were addressed during multiple meetings.

"The firm is good about trying to be transparent," the associate said. "We have had meetings galore along the way, getting input from us, things we were worried about, things we were unsure about.

"I give them the benefit of the doubt that it is probably a good thing for the firm," the associate continued. "If that's appealing to clients and that's going to keep us from being laid off down the line, that's a good thing."

Salary changes will not take place until 2010, but the firm said that bonuses that are not tied to billable hours will play a larger role in compensation.

Orrick's move comes as firms face immense client pressure to control costs. Other firms have made similar changes, including Howrey, which last week said that new associates will follow more of an apprenticeship in their first two years, and McDermott Will & Emery, which 18 months ago launched a staff attorney program to handle tasks that could be billed at low rates.

This article first appeared in The Recorder, Legal Week's US sister title.

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