Shearman becomes latest firm to revamp pay for UK associates

Shearman & Sterling is to ditch associate lockstep for all of its lawyers in the UK, Asia and the Middle East in favour of a merit-based pay system.

The new system, which will be effective from 1 May, will see all associates assessed twice a year against a number of criteria including client relationships, legal and technical capabilities and interpersonal skills.

Associates will be placed into one of three tiers, with each band having maximum and minimum base salaries, which are yet to be decided.

Lawyers will become eligible for promotion into the second tier after gaining 18 months' experience, while at least four and a half years' experience will be required before associates are considered for the third tier.

Shearman's US associates who are based in the firm's offices in the UK, Asia and the Middle East will not be affected by the changes.

Last year the US firm froze its associate lockstep, meaning lawyers with one year post-qualification experience (PQE) took home £80,000, while 2PQE associates earned £84,000 and 3PQEs £92,000.

Trainees who qualified in September 2009 receive £73,000 - a reduction of £7,000 on the previous salary for newly-qualified lawyers.

Firmwide HR director Marcus Franks commented: "Although the removal of associate lockstep pay is certainly becoming more prevalent, we firmly believe that our overall approach on career development is highly commercial, pragmatic and flexible."

The news comes as it has emerged that Milbank Tweed Hadley & McCloy has taken a similar measure in its London office, with the firm introducing a three-tier banding system in London that will run alongside its lockstep-based pay structure.

The new structure, introduced in January 2010, will only apply in the City, with the US firm's other offices maintaining pay based on post-qualification experience.

Shearman & Sterling on the Legal Week Wiki