Is NQ level too early to introduce merit-based salaries?

A recent article in Lawyer 2B about RPC scrapping its NQ flat rate salary for performance-based pay caught my eye and got me thinking about whether the NQ stage was too early to introduce a merit-based system.

Claire Blackburn

RPC is widely recognised regionally as being one of the more generous payers with its Bristol office offering £44,000 for 2013 qualifiers. It also seems it is ahead of the curve with this rhetoric of moving away from a fixed NQ rate.

No commentator seemed to be disputing the benefit of a merit-based system at the experienced end. However, the article provoked a debate with some claiming that it wasn’t “fair” to judge NQs so early in their careers and that it would create a divide between practice groups. Those with exceptional supervisors would thrive, while those not given the opportunity to demonstrate their potential would be left on the sidelines.

Salary review time can be a headache for firms where there is an allocated pot of gold and when partners need to fight it out to secure the best increases for their lawyers. A flat percentage increase would be more transparent and easier to manage, but law firms moving to – and operating within – this merit-based model will surely be better adapted to survive the changes facing the legal market.

Specifically within the field of insurance litigation, firms can no longer justify year on year increases unless there is a sensible discussion around margin, efficiency and an individual’s profit. It could be argued the earlier that a trainee appreciates that his or her actions, enthusiasm and proactive nature will be measured and reflected in their NQ salary, the sooner they will be better equipped for the harsh realities of the legal market. 

I would argue it is never too early to introduce a merit-based system. Such a system, even at the NQ stage, promotes accountability and an awareness of profitability which can only help raise future market worth. The issue with this system that I foresee, and that was picked up in the comments section of the article, is the practicality around what you would look to pay external NQs recruited into the firm from the outside market? What assessment would need to be in place to determine their level of experience and how would you benchmark it against your own internal talent? A conundrum for HR and one that would be tricky to advise on.

I am sure many other firms will follow suit and move their NQs to a merit-based salary model but it will be interesting to watch what happens with RPC and its own NQs in 2014.

Claire Blackburn is a senior associate at BCL Legal