Federal Education Minister Julie Bishop advocates establishing a ‘merit pay’ system for schools, under which teachers are offered financial incentives to meet performance objectives.
One of her models for merit pay is the legal profession. In a recent debate on SBS-TV’s Insight program, Bishop argued that the ‘whole point’ of comparing teachers with lawyers is that ‘lawyers have performance-based pay’ whereas teachers are in an ‘artificial environment where their pay increases by the years in the job.’
Lawyers are not the only people who are said to receive merit pay, but comparing how the teaching and legal professions compensate their members seems to make sense. Teaching and law require similar skill sets; a good teacher, like a good lawyer, must be comfortable with words and able to communicate novel ideas to an audience. Most good teachers would make good lawyers, and vice versa.
So why not look to lawyers for clues on how to establish merit pay for teachers? For one very good reason: lawyers do not receive merit pay.
First, many lawyers work for governmental agencies and, like State school teachers, get paid not for performance but on the basis of experience and responsibility. This class of lawyers includes judges the wisest and most learned (one hopes) of all lawyers.
In fact, lawyers in private practice typically don’t receive pay for performance either: their compensation is determined through a process that is at best arbitrary, at worst irrational.
Private lawyers in Australia typically charge by the hour, not for results. This system of compensation is known by lawyers as the ‘tyranny of the billable hour,’ a phrase that aptly describes its lack of focus on merit or performance. In other words, the litigator (or court lawyer) receives the same pay whether their client wins or loses; and the corporate lawyer will still be paid vast sums for foolishly recommending their client pursue a wrong-headed merger that creates a lot of work, while being paid a mere trifle for wisely advising no action.
The inefficient lawyer who prepares a lengthy piece of bad advice will get paid more than the efficient lawyer who drafts a brief statement of good advice.
NSW Chief Justice James Spigelman has described time billing as a system ‘in which inefficiency is rewarded with higher remuneration.’ The compensation of lawyers is so distant from being performance- or merit- based that the NSW Government recently established the Legal Fees Review Panel to examine whether a more rational system of compensating lawyers can be implemented. The Panel has its work cut out, given the inherent difficulty of measuring merit in a profession that can’t be reduced to a series of metrics.
It’s also interesting to note that while there is a wide range in how much law firms charge their clients with the large, big-city firms charging the most when it comes to actually paying the firm’s lawyers, merit pay is practically unknown. Even many partners have ‘lockstep’ compensation arrangements where, just as in schools, the lawyers’ pay increases by seniority.
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Thanks to Sharyn Raggett |
The United States legal market is very similar to Australia’s, but much more detailed information about the pay of junior American lawyers is publicly available. The data shows that merit pay does not exist for associates (lawyers with less than eight years’ experience) at major US law firms. All law-school graduates who start with big firms in the same year will receive nearly exactly the same pay, year after year. The only factor that influences pay for associates is the city they live in and the number of hours they bill: the best lawyer at the number one firm and the worst lawyer at a second tier firm get the same pay. The only way junior lawyers can earn more money is by working harder, not smarter.
Now, admittedly, an outstanding senior lawyer who chooses to pursue a career of representing corporations and wealthy individuals can expect to be rewarded monetarily for his or her superior ability.
For example, Jonathon Sumption QC has been the talk of Australian legal circles recently for his highly paid representation of Channel 7 in its litigation against Foxtel. Sumption, who lives in London and flew out to Sydney just for this case, is reportedly being paid $23,000 a day (plus expenses) by Channel 7.
Sumption is, no doubt, a superb lawyer and his pay reflects his skill. But in what sense is it meaningful to say that he is receiving merit pay? He is being paid vastly more than he would for prosecuting a rapist, or for representing an abused spouse in family court proceedings. In fact, he is being paid more in a fortnight than a judge of the High Court of Australia earns in a year. Is he really that much better a lawyer? Is he really contributing that much more to society?
My point is not to criticise Sumption or to suggest he doesn’t deserve his pay he is a skilled professional making an honest living and earning the wage that the market will bear. My point, rather, is to suggest that ‘merit,’ in this case, is a loaded term and packed with assumptions. Sumption may be the best at securing favourable verdicts in high-profile trials for his corporate clients, but that doesn’t mean he is the most meritorious lawyer, or that winning corporate litigation is society’s most important legal work, or that the market is efficiently allocating scarce legal resources where they are most required.
We would be making a terrible mistake if we assumed that the legal profession’s pay model can serve as a model for teachers. Instead, we should use the legal profession as an indicator of just how difficult it is to appraise merit and determine where value is being added in a profession that, like teaching, doesn’t produce easily measurable outputs.
Julie Bishop, in arguing for merit pay, has so far managed to dodge the most important issue: how do we measure merit? Her response meritorious lawyers are rewarded, so it can’t be too hard to develop a system that rewards meritorious teachers is simplistic and indicates that she hasn’t yet begun to address the tough questions surrounding merit pay.
(Disclosure: James’s mother, Judith Wheeldon, has been an active participant in the debate over merit pay for teachers.)