Better disclosure of compensation aims to promote fairness and trust, bonuses not disclosed
Leena Yousefi knows that "people will talk" no matter how often she tells lawyers at her firm that they should not disclose their pay to others. But hearing the mutterings about pay from lawyers at the Vancouver-based family law firm she founded is what took her down the road to adopting a policy of pay transparency.
“It all started with one of our lawyers coming to me saying another lawyer at the firm said they were able to negotiate a higher pay, but yet the two were doing the same level of work. The lawyer felt taken advantage of.”
Yousefi, who founded YLaw in 2013, learned that pay discrepancies were being discovered despite supposed confidentiality, leading to lawyers feeling “screwed” over. “I realized I would never want people to feel like they got fooled or screwed. And I would never want to reward people based on how much they can negotiate. My job is to make sure people are treated fairly.”
Her next decision was to “go fully transparent” and let those at her firm understand the calculations used to arrive at compensation. Yousefi says that YLaw will become “the first law firm of its size in Canada to go completely transparent and uniform on all our pay.” And that includes disclosing her pay and that of partners and associates.
As she writes in a recent blog post: “I realized how ridiculous I was being for trying to prevent people from talking about their pay to reduce the risk of some feeling like they were underpaid or overpaid. A better way would have been to just pay everyone fairly and equally and to have nothing to hide because of it. Imagine the lightness I (and they) would feel.”
The pain of negotiating
As an employer, Yousefi says she hates "the amount of time I have wasted negotiating pay and conducting pay reviews." Not only has it involved going back and forth with her staff, but the process can also lead to an “us vs. them” environment, which she feels goes against the YLaw's culture of “community, mutual giving and fairness.”
Pay transparency eliminates time spent on negotiations, Yousefi says, as all incoming and current associates and partners would have to sign into the pay program, and there would be no exceptions. Those who sign on would know Ylaw is the right employer for them, while those who did not come on board can try their luck somewhere else. This lowers turnover risk, as all expectations would be clear from the start.
Pay uniformity and transparency also help eliminate favourable treatment and avoid paying someone more based on their negotiation skills rather than their expertise and experience. Yousefi adds it also holds her “accountable to the market” to provide competitive pay to attract great candidates.
Pay equity also means all lawyers, regardless of their gender or sexual orientation, or cultural or racial backgrounds would be treated more fairly.
Yousefi admits to two sticking points: disclosing her own pay and what to do about those who already negotiated “a good deal” - should they get a pay cut or pay freeze.
On the latter point, Yousefi says that negotiated pay will be “grandfathered in” for those to whom it applies.
As for the part about her pay, Yousefi points out that those at her firm “probably already have a good idea” about how much she makes. “They will simply do the rough math . . . and also look up online to see how much partners and owners make.”
She also says having people know what she makes isn’t necessarily bad. She remembers when she was an associate and learned her boss made a lot of money, and her first thought “wasn’t that he was exploiting me."
As she says in her blog: “I simply thought he probably deserved to make that much because ‘that sh!t is hard.” He had so much experience, so many responsibilities, and was damn good at what he did. What he made also encouraged me to grow my career and get to higher levels. To me, it wasn’t necessarily a negative thing.”
Bonuses will still be kept confidential
Yousefi says she doesn’t feel comfortable sharing the "dollars and cents" of her lawyers’ pay with the world. “That is not the intent of salary transparency. The intent is to provide fairness within the workplace, not outside the firm.” She also says she won’t disclose bonus amounts.
“I don’t know if this is the right or wrong thing to do yet, but I’ve decided not to disclose the bonuses amounts paid to lawyers,” she says. "I don’t want unhealthy competition between lawyers. So I’ve decided for now to keep them private."
But she does share parts of her policy. For those who take a salary option, pay is based on the year of call, billable hours, a collection requirement and then three types of bonus factors: initiatives and innovation, exceeding collections, and essential firm culture considerations such as good customer service.
For those who opt to take the split-fee compensation arrangement offered at YLaw, there are specific requirements to meet:
- Years of experience.
- Time at YLaw.
- Meeting collection targets in the year before going on split fee (or accepting a lower percentage if not met).
- Meeting the same standards for a bonus as salaried lawyers.
Pay uniformity also comes with some conditions, says Yousefi. First, lawyers must meet their targets to be considered for this policy. “It would not be fair to pay two associates the same rate when one does not meet . . . targets and the other one does. If an associate does not meet their targets, a different pay will be negotiated and disclosed to the rest of the team.”
There is also some consideration for those who work remotely. Yousefi says they will receive slightly more because the firm saves by not having to pay certain expenses. These include their office rent, utilities, team outings and social events they won’t attend. Remote salaries will also be disclosed to all at YLaw.
There’s also the situation of wanting to hire someone but that lawyer wanting more pay. Yousefi says that rather than rejecting that person outright, “I would first ask why they want more pay.
“If they bring something unique to the table that would set them apart from the rest of the lawyers, I will determine whether it would be fair to pay them extra, or whether the unique things they bring in would be considered under our bonus category. If I decide to pay extra based on extraordinary circumstances, I will disclose how much and why we are paying them extra. The point is that it would need to make sense. And be fair.”
In the end, says Yousefi, it comes down to trust. “If you don’t trust your employer, do you see yourself working at that place long term? The most important element of employee retention for me has been to gain people’s trust and keep it.
“Pay equity builds trust and moves the company’s culture in the right direction.”