Steptoe’s new pay system for associates offers an alternative approach for law firms trying to keep up with the industry’s wealthiest players while addressing work-life balance concerns.
The firm’s associates can now choose their own billable hour targets and corresponding compensation. The policy will take effect in the new year. Those selecting the highest target—2,200 billable hours per year—can earn up to nearly $582,000 on a seniority-based scale exceeding that in place at top Big Law firms.
“To my eyes, this is the way of the future,” said Kate Reder Sheikh, a recruiter at Major Lindsey & Africa who places associates. “It’s not going to get rid of the one thing that drives people away from Big Law, which is the need for constant availability, but it will mean fewer nights and weekends being disrupted.”
The new firm policy, which follows low associate satisfaction scores in a recent survey, is meant to address burnout issues that have long plagued the legal industry. But allowing associates to choose their own productivity levels could put client business at risk in a competitive market.
“While they’re a very good firm, they’re not as rich as Kirkland and Cravath,” said Matt Schwartz, who recruits associates at search firm Garrison. “You have to applaud Steptoe for raising their salaries and I think it’s largely because associates were unhappy with the current compensation model.”
The move comes as other firms in the Am Law 100 hedge their efforts to pay associates competitively. Winston & Strawn told associates this week their “special” bonuses this year will be based on billable-hour targets. A spokesperson for the firm declined to comment on the bonus announcement.
Steptoe leaders said the change came after soliciting feedback from associates.
“We heard a lot of different things from associates about what they’re looking for at different points in their careers,” Kate Cappaert, chair of Steptoe’s professional development committee, said in an interview Wednesday. “We are recognizing that each associate’s experience is different and providing each associate flexibility in a structured format to allow them to take more control of their career path.”
Bold Move, With Some Caveats
Steptoe associates beginning next year will be placed in one of three pay categories based on the volume of hours they are expected to bill, Cappaert said. They have the option to move to a lower billable hour target and corresponding pay for 2025 and can opt for a different category each year.
Top-billers—those targeting 2,200 hours—will be paid on a scale ranging from $236,250 to $581,750. The scale for those billing 2,000 hours per year will go from $225,000 to $502,500. The third category of associates—those targeting 1,800 billable hours—will be paid on a scale that starts at $215,000 for first-year associates, but the firm declined to specify the top end of the range.
The system gives the most productive associates the chance to make more than under the “Cravath scale” used by many prominent firms, which ranges from $225,000 to $575,000 when accounting for bonuses. Steptoe said it’s too early to know how many associates will fall in each category.
Associates can count 200 nonbillable and pro bono hours toward their targets. They also have the option to bill fewer than 1,800 hours, and the firm will pro rate their salaries accordingly.
The move revises the firm’s current system, which requires all associates to bill 2,000 hours every year, 150 of which could be pro bono and nonbillable hours, to qualify for the base compensation.
Steptoe’s new approach is rare among Big Law firms, said Reder Sheikh, who called the firm “very progressive.” Many Big Law associates tell her they want a more reasonable work-life balance, even if it comes with lower pay, she said.
“A lot of people said things like I want lower hours and commensurate pay,” she said. “I don’t want to be paid more for more childcare when I can just spend that time with my child.”
These kinds of flexible options are often what drives associates out of Big Law and into midsize and boutique firms, according to Reder Sheikh.
“I call it the ‘choose your own adventure’ option,” she said. “If you want to drill down and work as hard as you can this year, you pick the 2,200 hour budget, and you crank. But if this is a year when you are coming off parental leave or have a sick parent, you choose the 1,800 path and you’re in good standing.”
Schwartz said the move could also bring unintended consequences if too many associates opt for the lower hours threshold.
“Clients are very demanding and have many options in the marketplace,” he said.
“Given their demands, it’s hard to have a lot of associates billing the minimum with the volume of work coming in. Sure, you can have a few, but I don’t think firms are prepared to have a large cadre of associates billing 1,800 hours or less because it will hurt their bottom line and really hurt their client service.”
Cappaert said the firm will address the issue of insufficient coverage if it arises.
“We want to give associates the flexibility in what they want their target to be for each year,” Cappaert said. “To the extent we’re in that position we’ll evaluate it at that point.”
The firm has been working to improve the associate experience at the firm since 2021, including more robust mentorship and periodic check-ins from managers. In the American Lawyer’s 2024 mid-level associate satisfaction survey, Steptoe ranked last of the 72 surveyed firms.
“The associate experience evolution started years ago and has been consistently in process,” Cappaert said. “All feedback is considered. We really took everything into consideration to craft the associate experience re-imagined.”
To contact the reporter on this story:
To contact the editors responsible for this story: