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Law Firm Prepares for Major Merger with New Two-Tiered Compensation Model

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published November 14, 2024

By Author - LawCrossing

Law Firm Prepares for Major Merger with New Two-Tiered Compensation Model

 

Troutman Pepper has unveiled a new associate compensation model in a strategic step toward finalizing its merger with Locke Lord. This updated structure aims to accommodate the combined firm’s expected growth and address anticipated challenges as the two entities come together. Here’s an overview of the latest compensation strategy and what it could mean for attorneys at the soon-to-be Am Law 50 powerhouse.


A Delayed But Anticipated Merger


Originally set for earlier in the year, the merger between Troutman Pepper and Locke Lord was postponed, partly to address complex conflict resolutions inherent in such a significant partnership. As fall unfolds, both firms are moving forward with plans to merge, a process that includes tackling a core issue for any law firm: associate compensation.

Troutman Pepper’s reputation in the industry has been solid. Still, as associates progress in their careers, the firm's pay scale has trailed the market rates, particularly for midlevel and senior attorneys. The merger with Locke Lord, creating a projected $1.57 billion entity with 1,600 attorneys across 35 offices, promises to change the firm’s financial landscape, positioning it among the elite Am Law 50 firms.


New Two-Tier Compensation Model Unveiled


In anticipation of the merger, Troutman Pepper announced a new two-tiered compensation structure for associates. While the firm will continue to match market rates for junior attorneys in their first and second years, compensation will diverge into “high” and “low” tiers for more senior associates. This tiered system is intended to provide flexibility in salary distribution as the firm adapts to the merger’s demands and the evolving legal marketplace.

However, specifics on how associates will qualify for either the “high” or “low” tier remain unclear, and no concrete salary ranges have been publicly disclosed. According to sources close to the firm, many associates are uncertain about the criteria for advancement within this new model.


Mixed Reactions Among Associates


Not surprisingly, the announcement has sparked mixed reactions, especially among midlevel associates who may see this model as less competitive compared to other top-tier law firms. An anonymous associate noted the firm’s projected Am Law 50 status, remarking that the new compensation approach does not align with what is expected from firms of that caliber. “We’re projected to be Am Law top 30 post-merger but are still paying like an Am Law 200 firm,” the associate commented.


A Response to Market Dynamics


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The decision to implement a two-tier compensation system is likely influenced by recent trends in the legal industry, where lateral hiring is more active than in previous years. As demand for talent rises across practice areas, firms are not only increasing hiring but also grappling with how to retain their most experienced attorneys. The added flexibility of a two-tiered model may allow Troutman Pepper to address redundancy, which is a common result of mergers, while also managing compensation expenses strategically.


Navigating a Competitive Landscape


With increased competition for talent, the new Troutman Pepper Locke entity faces the challenge of retaining top-performing associates amid a period of flux and opportunity within the legal market. As associates look to advance their careers, this new compensation model could either help retain high-potential attorneys or prompt them to explore opportunities elsewhere.


Looking Ahead: What Associates Can Expect


For Troutman Pepper Locke associates, the upcoming months will be pivotal as they await further details on the tiering criteria and specific compensation packages. Until then, attorneys within the firm may need to weigh their options carefully and consider how the new structure aligns with their long-term career aspirations.


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