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Read the following case study carefully and then answer the questions

given in the end of case study. "Climb the legal ladder [Person-based pay structure]" Sullivan and Cromwell, a large New York law firm with offices around the world, recently raised its starting salary for law school graduates to $145,000. Most large firms use pay structures with six to eight levels from associate to partner. The associate's level is typically based on experience plus performance (see Exhibit 1.1). In the world of associate attorneys, performance is measured as billable hours. So the associates who meet or exceed the expected billable hours advance to the next level each year. Similar to the tenure process in academic settings, after six to eight years associates are expected to become partners or "find opportunities elsewhere." The likelihood of making partner differs among firms, but the norm seems to be less than one-third of the associates make it. Associates are expected to bill around 2,200 hours per year. That works out to six hours a day 365 days per year. Sullivan & Cromwell partners reportedly earn an average of $2.35 million a year. Clients are billed about $250 /hour for each associate. So if associates hit or exceed their targets, they generate $550,000 annually ($250 times 2,200 hours). Many firms also use performance bonuses for associates, capped at around $30,000. Discussion questions: 1. Would you expect the Sullivan and Cromwell associates to feel their pay structure is fair? What comparisons would they likely make? What work behaviors would you expect Sullivan and Cromwell's pay structure to motivate? Explain. 2. What about associates who joined the firm four years ago? If the salaries for new associates increased by $20,000, what would you recommend for other levels in the structure?

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