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More for most or less for some? Links is latest top firm to sidle towards merit pay

Even at the top of the market, the slow march towards performance-driven pay for associates continues with Linklaters this week becoming the second top City player to unveil changes to its associate remuneration.

Linklaters is to introduce a performance-based element to salaries for its London-based associates with two years or more post-qualification experience (PQE) as part of what it dubs its ‘Our Deal’ strategy.

The City firm issued a somewhat obtuse statement over the move but the new model, which kicks in from 1 May 2014, is expected to see roughly 10% of pay handed out on the basis of individual merit past the two-year PQE point. An existing bonus scheme remains unchanged.

It is unclear whether the new system is cost neutral or whether it overlaps a conventional associate lockstep, thereby allowing star mid-levels to be paid more.

Either way, it is the latest in a series of moves by top London firms away from strict lockstep compensation, in which lawyers are paid strictly on seniority, in favour of more flexible, contribution-based systems.

Slaughter and May earlier this week adjusted its bonus system for associates to include a performance element after earlier in the year introducing an element of merit to its associate pay structure.

Freshfields Bruckhaus Deringer put into place a merit-based system last year, with associate careers divided into three distinct ‘milestones’.

Such a trend has seen elite London firms follow smaller rivals, who have in many cases abandoned associate lockstep over the last decade for mid-level associates. City advisers have come under particular pressure to retain their prized mid-level associates in the face of predatory recruitment from higher-paying US rivals.

Linklaters – in common with its peers – had earlier this year also unveiled rises to the pay bands it operates for UK lawyers. The collective rise was the first substantive increase in the market rate in City associate pay since 2008, reflecting a relative revival in confidence through during 2013. Linklaters increased newly-qualified pay from £61,500 to £64,000. Years two and three PQE respectively earned £78,250 and £89,000.

Michael Bennett, a litigation partner at Linklaters who led the salary review, said in a statement: ‘Feedback from associates indicates they would like to see individual performance playing a greater role in overall remuneration. The changes we are proposing will help address this and reflect the firm’s commitment to offer our people the most attractive overall package.’