Flat rate salaries or merit and market rates for newly qualified solicitors?
Last November, Reynolds Porter Chamberlain (a city firm) decided to scrap the traditional flat rate salary for NQ solicitors in favour of a system which is linked to merit and market rates.
It was questioned by some that the firm was motivated by cost-cutting, but Reynolds Porter Chamberlain denied this and stated that the flat rate had “passed its sell-by date and no longer has any integrity”. They wanted to introduce this as it ensured that the same financial reward structure was applied across the entire firm, this was the final part of the firm’s modernisation programme.
RPC have been rewarding the rest of their firm based merit and value for a number of years, the partner lockstep was removed over a decade ago, with a merit based framework introduced for associates in 2009, business services in 2010 and secretaries in 2012. So they believe it is only fair and natural that this is rolled out into NQ solicitors.
Jonathan Watmough (RPC Managing Partner) stated that flat rate salaries “do not recognise the different merits of individual NQs nor does it recognise the market variances between the different branches of law into which they will qualify”.
As of November 2013, an NQ in the London firm would receive £58,000.00 a year, but under the new scheme, strong NQs entering their careers in the most competitive areas would be able to earn more. With that in mind will that not see an even greater increase in people wanting to qualify and practice in the most competitive areas of law? Obviously, a significant part of that is based on merit and therefore the NQ will have to work hard and perform well, but does it not give the wrong message, in that to be at the top of your game, you need to be working in a competitive area.
That is not to say that money and salary should play a part in what areas of law people decide to work in, and I for one have never wanted to have a legal career for the money, but when times are hard for everyone surely this only encourages people to work in higher financial areas of law in order to live – which can at times, if there is an increase in the applicants for positions push out people who may deserve the job better on merit.
Jonathan Watmough ended his interview with Law Gazette by saying “the firm needed to be able to show clients that it is offering good value for money from all of its lawyers”. So, this new system could work two ways, it could either inspire people to work harder to get more frequent pay rises, or if someone feels that they are being underpaid compared to someone else doing the same job as them, they may not feel spurred on and instead do as little as possible – is that then really good value for money?
So whilst it appears that this modernised system works well for partners, associates and support staff, it is yet to be known whether this will be successful in paying NQ solicitors. This is something I will keep an eye out for, as well as see if this has a snowball effect and other firms choose to adopt paying their NQs using this method.
So it would be interesting to know what any of you think of this, do you think it is a good idea to have merit based salaries for NQ solicitors? Or should it be a flat rate initially whilst they are still NQ?