Legal Business Blogs

On your merit: RPC abolishes flat rate salary for NQs

City law firm RPC has taken the final steps to adopting an entirely merit driven pay model as it today (19 November) announced that from September 2014 it will abolish the traditional flat rate salary for newly-qualified solicitors (NQs) in the UK, and subsequently move to a system linked to merit and market rates.

In a move said to take into account what is happening in other sectors and the pressures that clients are under to achieve value, the firm will operate a variable pay scale where the strongest NQs entering their careers ‘in the most competitive areas of the profession,’ will be eligible to earn salaries above those currently offered by major City firms, a firm statement said today.

Having scrapped the partner lockstep model over a decade ago, the firm introduced a merit-based career framework for associates in 2009, and rolled out the same programme to business services and secretaries in 2010 and 2012 respectively.

‘Today’s move is the final step in an ongoing programme of modernisation and is simply about bringing that same reward structure to bear on our NQs,’ said RPC managing partner Jonathan Watmough (pictured). ‘It makes perfect business sense for us to calibrate our salary levels based on the value particular positions offer both to clients and to our own bottom line.’

He added: ‘The legal profession lags well behind most other sectors when it comes to structuring the way we pay our people.’

‘We’ve been rewarding all our other people – from partners to business services – based on merit and value for years now. The concept of the flat rate has passed its sell by date and no longer has any integrity. It does 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. Crucially, it does not take into account the pressures clients are under to obtain value from their suppliers.’

Despite many City firms taking a number of different steps to recognise and adjust to their clients’ pressures and many have now adopted the US-style ‘eat what you kill’ approach to partner and senior associate pay, RPC is unusual in taking this approach to the pay of its more junior lawyers.

Watmough added: ‘I spend a lot of time talking to general counsel, in-house lawyers and finance directors from businesses in a range of sectors. Many of these have come from private practice backgrounds and, now in the commercial arena, they feel the real pressures of the competitive marketplaces in which they operate. They simply do not see why private practices can, or should, be immune from them – and, frankly, nor do we.’