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#59: Choose How Many Hours You Bill: Steptoe’s New Associate Compensation Model with Kate Cappaert
00:28:32
In today’s episode, I sit down with Kate Cappaert, a partner in the Intellectual Property group at Steptoe. We discuss a major shift in Steptoe’s associate compensation—one that gives lawyers more control over their careers and work-life...
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- [00:10]
Laura Terrell
I'm Laura Terrell, an attorney who's been an equity partner in two of the world's largest global law firms. Now I'm an executive coach, working with ambitious attorneys and other professionals like you who want to achieve success in their work life. Big Law Life is focused on helping you do just that. I want to share with you on this podcast what I know from my experience, including that law school does not teach you how to succeed in a big law firm. No one is going to give you a roadmap that is aligned with what's most important to you, but you want to learn what can help you chart a better path and how that can change your professional life. When I joined a large law firm, I had to learn more than just great lawyering. I needed to understand the culture of firms, the business side of legal practice, and a whole lot more. On this podcast, I'll share with you some of the practical strategies, steps and conversations that can help you grow your career working in and with big law firms. You'll hear from lawyers and other legal professionals who have experience navigating work and life in the big law environment and making moves outside that arena based on their big law background. You have questions about how to meet the challenges that come your way. So let's get started on a path towards your success.
- [01:20]
Hello and welcome back to Big Law Life. Today I'm talking with Kate Cappert of Steptoe about an innovative new approach to how the firm is handling compensation for its Associates. In 2025. The firm has adopted a new model where associates will elect to target different levels of annual billable hours and be paid at different salary levels according to those targets. This type of offering is something that speaks to what many associates in Big Law have suggested could be another way for them to find varying paths in their law firm careers that match differing professional and personal goals and needs. It also represents a very distinct way of working in large law firm environments, and one that Steptoe gave a tremendous amount of time and energy to consider. So I'm excited to find out more and for us to learn more today about how this came to be and why Steptoe is committed to make this move. Here to break it all down for us is Kate Cappert, who's very familiar with this program in her role as chair of Steptoe's Professional Development Committee, where she works on associate development initiatives. Kate is also a partner in the Intellectual Property Group at Steptoe. Her practice spans district courts, the ITC, and the USPTO's patent trial and Appeal board, giving her comprehensive experience across the tribunals that she leverages in helping clients to develop successful litigation strategies. Prior to embarking on the practice of law, Kate worked as a mechanical engineer. She leverages that technical experience today, helping clients navigate high stakes patent disputes spanning across a wide range of industries, from solar modules to graphics processing, cloud computing, and networking. Kate, we have so much I want to talk to you about, but I first want to start by getting a bit more about your background. So how did you come to where you are today professionally? I want to hear a bit more about the mechanical engineering background and how you came to Steptoe.
- [03:11]
Kate Cappert
Sure, sure. So I started off as a mechanical engineer. I worked for a few years and realized I wanted to do more. And I went to law school. And from law school I have been doing patent litigation and IP litigation since I started as an attorney. And I joined Stepco about seven and a half years ago as an associate. I made partner a few years ago and then also got more involved with the Professional Development Committee and have then took over as chair of the Professional Development Committee at the end of last year.
- [03:41]
Laura Terrell
So does being an engineer help you think more about how to think about the processes and the structure for how talent management works as well? I'm just curious because I think engineers are often very process focused and thinking about how we can do things in a different way.
- [03:58]
Kate Cappert
Sure. So I like to say that engineering and my experience as an engineer taught me a lot about problem solving and critical thinking and kind of being able to think about all of the different parts of a puzzle and figure out how it fits together. And I think that applies to a lot of different facets of law and also applies to a lot of different facets of the legal industry in general. And so I think it does help kind of in that role and for both an attorney and also as a professional Development committee chair.
- [04:30]
Laura Terrell
Well, let's dive right in because this is a unique situation and it's a unique conundrum to solve. I think, as I mentioned up front, a lot of associates and a lot of lawyers have been saying for years, how can we better confront this issue of I have different ideas about what my professional path might look like, and one of those is how many billables or how much I might want to do in my practice and how my compensation might vary according to this. But Steptoe's been one of the few firms, I think, that's been able to really look at this and say, hey, maybe we could do something that could take a different path. So can you walk me through how Steptoe came to looking at this and what that new model looks like for the firm?
- [05:11]
Sure.
- [05:12]
Kate Cappert
So I will say it's been a long road and a lot of evolution has happened. Steptoe really started evolving its associate program a few years ago. It launched Associate academies and kind of made more of a commitment to continue looking and involving the associate program here at Steptoe. And part of that was talking to associates, talking to partners, doing industry research and really seeing what others were doing and how that would fit in Steptoe's culture and the overall what Stepto wanted for its entire associate experience. And what we heard from a lot of associates was we want that flexibility. We not everybody has the same career path. Not everybody is looking for the same thing out of their day to day job. Some people want a ton of hours and some people want flexibility to have less hours and be able to kind of choose a little bit of their own adventure. And so we took all of that into consideration and tried to create a, I'll say flexible but still structured approach to the associate experience in creating kind of three different billable hour, but target budget. So we have three different budgets, an 1800 hours, 2000 and 2200 hours budget that associates can choose to have.
- [06:32]
Laura Terrell
And did you have research or models that you had seen maybe of what other firms had done or what academics or others in the industry had looked at that helped you along the way as you were examining what you might find that worked best for your firm?
- [06:47]
Kate Cappert
Sure. So I think we looked at a lot what other firms have done and I know that I have heard of other firms who have had kind of two different level approaches. And I think Steptoe took that, but really wanted to make it its own and expand on it and see what fit best with its entire culture and what Zepto is hoping to achieve through the program. So I think to the best of my knowledge, Zepto is the only firm that has this three different level approach.
- [07:18]
Laura Terrell
So tell me how it works in practice. I think it's different for first year associates. Maybe explain how this is different for first years. I think they're not part of the three tier approach. They, they need to come in and learn a bit about the firm and maybe even about being a lawyer a bit before they can enter into this path.
- [07:36]
Kate Cappert
Yeah. And so for first year associates, you're going to come in at your 2000 hour level. And the same also applies to lateral assertion. You'll come in at a 2000 hour level with the understanding that you can also opt to go lower. So at any point across you can always choose to go down in terms of level. So if you come in at 2000 but you want 1800, that's totally fine. And then we look at historical data, so we're going to look at how your hours were in the past, how you were performing, were you hitting target hours. And then you have the opportunity to potentially move to a different level if you've had those hours. But with all of that, you also have the flexibility to choose to stay where you are or to, to say where you are in 1800, 2000, 2200 or go down. So we really wanted to make it something where attorneys and associates, both the associates and partners have open communication in terms of what does the next year look like? How busy do they think they're going to be? Are there things that are going on in an associate's life that may affect their hours, budget and really think through that process and allow and provide the flexibility to be able to choose kind of which of those three budgets they would end up at for the following year. It's a stats right now on a yearly basis. So each year we're going to look at it and I think as the program continues, it's something that's going to continue to evolve. So we just launched this in December 2025 is the first year and it's going to be something where we continue to look at it iterate, get feedback on it and see what's working, what isn't and potentially change it's needed.
- [09:17]
Laura Terrell
So who has input into this? When it came up this year, I assume this being the first year each associate that was eligible had an idea about where they wanted to benchmark themselves in one of the three tiers. Did the partners that they worked for have input, talent, development, who had a role in helping them figure out where they should be in that three tier system?
- [09:43]
Kate Cappert
So it's kind of a mix of all of them. A lot of it is really looking at that historical data. So it's something where if you have somebody who has historically billing one hours, you're not going to say, okay, next year you're clearly going to bill 400 hours more than that. So you're going to be in the highest, the 2,200 hours. So it's looking at some of that historical data to see what the past has looked like and then also having conversations. So we had a lot of associates who were given suggestions as to what the different hours breakdown should be. And then the associates had communications with their practice group leaders, with the partners that they work most closely with. I had conversations with both partners and associates across the firm to really think about where the associates wanted to be and to figure out where they should go for this first year.
- [10:39]
Laura Terrell
And again, recognizing that this is a new program, but is it envisaged that an associate could move across tiers at different points in their career, depending on what's going on with their practice or what's going on with them personally?
- [10:54]
Kate Cappert
Definitely. So it is flexible. It is something that can be revisited and evaluated, and we expect to be revisited and evaluated each year. We want it to be flexible. We recognize that different life situations happen, different career goals happen in terms of billable hours and just what you're looking for in your career as you grow as an attorney. And we want to provide that flexibility to, on a yearly basis, assess kind of where you are and what you're looking for.
- [11:24]
Laura Terrell
And how will the different compensation paths affect timing and consideration for partnership. Again, I recognize it's new, but you must have some associates that are more senior that are thinking about how will this affect me when I'm considered for partner and I'm coming into that phase of my career?
- [11:44]
Kate Cappert
Sure. So that is a question that we've had an associates have asked that question. And the answer is it doesn't. So regardless of what budget level you are on, every associates from every budget level are promotable on the same path or track as they previously would have been. Regardless of what budget level you choose, that will affect your chances of promotion or promotability.
- [12:10]
Laura Terrell
I find that's so interesting because the traditional model has been, you really have to make that push the last couple of years before partnership. On most firms, you've got to be billing really at the top of your game. Many firms it's been historically, you've got to meet or exceed your. Your billable hours threshold, I take it some of that also has to do with what the practice expectations are across practice groups. Because some are going to have different needs and expectations depending on how busy they are, what's going on within the group and what the need is for a partner and what the capacity is that they need a partner to take on or to help grow that practice. And also what the strategic needs of the practice are long term. I guess that all factors in.
- [12:54]
Kate Cappert
Yeah. So all of that factors in. And I think what we've seen is through these conversations, that is something that is being discussed as well in terms of what Associates are looking for, why they are necessary, why they may be choosing a different budget, and how they expect that to affect kind of what the next steps in their career are. And having those open conversations with the partnership about that. I think something that we've also seen a lot of through this is many associates are viewing this kind of as the flexibility of I'm setting this, but it's not necessarily a. I'm going to choose to be at an 1800 hour if that's all that I want to be. But it's kind of setting a goal and figuring out like what your goal is, what in your mind makes sense is something that you want to be able to achieve. And if you go farther than that, then that is great and you. We have bonus structures in place to support that as well. But really kind of having that flexibility to have what your end of the year goal is going to look like.
- [13:54]
Laura Terrell
What kind of conversations took place with partners in the firm about this? And I certainly don't need you to attribute it to particular people, but I'd love to know some of what the reactions were when this was raised. I remember coming up in a firm as a young associate and even as a partner, and I can imagine there would be some skepticism and there would be also some. Well, I can understand why that would be necessary, including to attract the kind of talent that, you know, we recognize is asking us for a different way than some of the. The culture that we've traditionally had around billable hours. I'm curious what you've heard from partners that were approached with this idea.
- [14:33]
Kate Cappert
Sure. Honestly, when, when the partners were approached with it, all of the ones that, that I've spoken to, that I know were had, I think there were definitely questions. Partners wanted to know how this was going to factor into just the day to day, like life of a law firm. But I think that once partners like really started to think about kind of the different budget levels and talk to associates about it, it really became something where it became beneficial for everybody. And everyone saw that there was kind of this mutual benefit and an openness of conversation that happened as a result of this. So once we launch this conversations that maybe associates were thinking about, our partners were thinking about in terms of what 2025 looks like, what the next year looks like, in terms of how busy you expect practice groups to be. Those conversations were happening in 2025. And so it was really allowing for more openness of communication across all levels within the firm, which is something that we've been working to achieve. And is also kind of part of our new, like, the associate experience relaunch is really having these open conversations between partners and associates. And I think that this is one of the ways that that has been. Those conversations have been started. And so I think that while there may have been questions in the beginning, I think that the more and more that it was talked about, it became viewed as like, this is something that is beneficial for everybody because it allows for that openness and flexibility and having associates feel confident and comfortable in what they're doing and also able to talk about it with the partners that they work for.
- [16:14]
Laura Terrell
That suggests on one level that everybody is part of maybe a more open discussion about planning and what the next year looks like in terms of not just revenue or financials, but also what the stream of work looks like, what the goals are for practice and for the firm overall. Is that fair?
- [16:35]
Kate Cappert
Yeah, I think that Steptoe really does. We do try to have kind of those open conversations within the different practice groups and have. We have a very collegial, open environment. And I know a lot of people will say that, but I really, truly do believe that Stepto does have that. And these conversations, I mean, I've sat in on them, and not just in my practice group, but across different practice groups as part of this launch. And I think that it had been something where those conversations have been happening.
- [17:03]
Laura Terrell
What about when associates heard about this and you went to them and I assume you were asking them also their views, what reactions did they have and what ideas did they have about how this would work or what would make this a successful launch?
- [17:17]
Kate Cappert
Sure. I mean, I think as with anything, you have questions. Anytime a new program is launched, there are going to be questions about how it affects the associates, what kind of. It's looked at, how. Just the logistics overall in general. But I think that we. We did a lot once we launched it. I held office hours. We had office hours that others held. We kind of had somewhat of an open stop by, ask questions about it, and had a lot of meetings with the associates to talk through kind of how these changes were going to go into effect. And it's been really positive feedback. It caused or it's resulted in a lot of associates, I would say, really thinking strategically about kind of what their 2025 looks like and thinking about what's on the horizon, how they can do it, and asking questions and kind of both figuring out, like, what they want from a career path, what they want for their 2025, recognizing that it may change year to year. And that that's totally all right. And they're supported in that. And I think that the feeling that they are supported in that has been helpful. And I think that throughout December, as we had those conversations, that was really reinforced throughout all of them is that this is something where we as a firm are trying to support the associates in their career development and career choices. And we have kind of put the different systems in place to make sure that we do that.
- [18:44]
Laura Terrell
So one question I would ask if I was an associate and I'm sure people listening to is what about bonuses? So how are they affected by the system?
- [18:53]
Kate Cappert
Sure. So each different level or budget level has bonuses. So if you hit your hours target for each level, you are eligible for a bonus just for qualifying. So you've kind of had that initial bonus. We also have bonuses on top of that for going above those levels. And then there's always discretionary bonuses. So there's, there's kind of like a three different tier bonus system that's in place.
- [19:18]
Laura Terrell
And that's really when I hear that that sounds very similar to what most firms do, which is if you hit your hours, there's a baseline bonus. If you're above, you're getting something beyond that, you're just doing it in three different paths. So really it's just giving three different paths to what was once sort of a one bonus path. And you're going to have that again across different associate levels and compensation levels. And that shouldn't be too surprising. But I'm sure that was reassuring to people to hear. Yeah, we're still going to have bonuses at each, at each path that you might select.
- [19:53]
Kate Cappert
Definitely.
- [19:54]
Laura Terrell
Well, I'm sure you've gotten lots of inquiries about this, including questions coming up. While you haven't been for on campus recruiting, I guess since you've launched this, but it'll be interesting to see the reaction of the market. And I suspect you'll get a lot of, I suspect you have gotten a lot of inquiries from people asking about this already.
- [20:11]
Kate Cappert
We have. I mean, I think that as I can say, like as we've done lateral recruiting, as we've done talking to individuals and thinking about just recruiting in general, it's something that does come up. And I think having that flexibility and knowing that you're going into a firm that recognizes and appreciates the differences in career paths and doesn't try to fit like everybody into the same peg or the same size hole, I guess you would say, I think that that's something that very much valued in the legal industry. And so it is something that has come up in a lot of conversations that we've had so far.
- [20:45]
Laura Terrell
Well, and you're a homegrown associate at the firm, so this had to be something that you could really relate to, having come up in this depco culture and understanding why this might be important.
- [20:55]
Kate Cappert
Yeah, definitely. I think that I understood it from an associate. I feel like I have a unique perspective on it because I wasn't associated with Stepto and now I'm a partner in Stepto and kind of have seen both sides of it and can really in the role of professional development chair and still very closely tied to a lot of the associate work and associate development that's going on. And I think that having those conversations with the associates and listening to the feedback and hearing what they said, I think that it's something that is very relatable to myself. I know that I have understood throughout my career path and I think that I'm glad that we were able to kind of come up with an innovative solution that we feel really helps to address this area of the legal industry.
- [21:38]
Laura Terrell
How does this fit with some of the broader training that you do at Steptoe and some of the broader support for associates? Obviously, this is not the only thing you do in your role as chair of this committee. Share with me, if you will, a little bit more of how this fits with Stepto's broader approach to associate training and development.
- [21:55]
Kate Cappert
Sure. So I think that as part of kind of our associate experience relaunched, which we were reimagined, which launched in December, training is a huge asset. So we have really promote training from a wide range of aspects. So focusing on kind of specific development skills, focusing on kind of industry wide skills. And then we also have training for different levels. So we have junior associate training, we have academy is what we call them, and then we have mid level associate academies and junior associate academies. So recognizing that at different points of your associate career, you're focusing on different things and you need different training to help support your development. So we're working on, we have implemented that and are working on continuously trying to revamp to make that better and that that will also be rolled out. We're also working on really hands on experience. So we're working on doing mock trials within the firm. So having associates kind of have tremendous internal competition where associates can compete against each other in the form of a mock trial. We're working on associate development. We are through a lot of pro bono work and we have a lot of trial experience. We just Had a trial team that achieved a really great result for a pro bono client at a trial in New York in which a lot of junior associates, so first, second, third year associates did the majority of the trial work and got a lot of really great hands on experience. And so DEPTO is very committed to helping train and support the training of its associates kind of as they come up. Recognizing that training also isn't a one size fits all approach and are really kind of focusing on approaching it from a lot of different facets that all associates get what they need.
- [23:47]
Laura Terrell
Well, it strikes me then this is a great complement as well to the new initiative that offers a different structure to billing and compensation as well, which is that people are at different places in their careers where they may be looking for a different fit as well. That isn't a one size fits all as you say. So what are you looking for in 2025 as you evaluate and monitor this program? Are there things that on your mind as you look to see what will be indisha of it being a success for the firm?
- [24:18]
Kate Cappert
I think just having continuous conversations with associates, with partners. Seeing as the year progresses, if there are questions how everyone's feeling about it at the six month mark, as we get closer to the end of the year and really getting that feedback and figuring out what is working, what isn't working, if there are aspects that people think could be tweaked, I think that that's something that we're really looking for as we continue to go through this. And I think with respect to the training too, I think something that is also important to mention about this is while there are different hours budget, each of Those budgets include 200 hours that are non billable. So we are still also like that training and that those components that relate to that non billable work are also still part of that. And it's something that the firm is still also working towards. And so I think the whole picture and figuring out kind of how all of the training and mentorship and budget hours budgets fit together as the year develops and as we get feedback and have more of these open conversations with associates, I think that's really what we're looking to see and see what feedback we're getting and then how we adjust to it.
- [25:26]
Laura Terrell
I'm glad you mentioned that because I think not every firm is including that level of training as part of budget for associates. And I think a lot of firms do include some pro bono hours. Even some are starting to add business development for even mid level associates and above as part of required billing or encouraged billing hours that are included. But I haven't heard quite that level of training as being part of what's anticipated or what's included within a billable budget. And that's something that can make a lot of difference for associates who feel like otherwise. I don't have any bandwidth to be able to do the kind of professional development that I'd like because my time has taken up so much with the billable focus. And I think that's one thing that certainly is tough sometimes in a big law firm where you feel like your, your time is all focused on getting the billable client work done and you still have time to keep up with your training, your learning, your knowledge work.
- [26:23]
Kate Cappert
Yeah, no, I. Exactly. I think that's something. Training is really important to the associate experience. And I think that that's something as, again, as we had these conversations and really assess how we were going to evolve the associate experience, that's something we consistently heard in addition to the flexibility. And so all of that was really considered when we, when we did the associate experience reimagined.
- [26:45]
Laura Terrell
Well, I think you're going to continue to get a lot of calls. I suspect you're going to have a lot of people asking you questions on campus recruiting in the fall. And I think it's amazing what you're doing. This is a really great initiative. So it'll be great to follow up with you at some point and see how the program evolves and moves forward. But best of luck with it as it moves forward. I know it's still relatively new and has just launched, but certainly seems like something that responds to a lot of what the next generation of lawyers is asking for and even past generations of lawyers have been clamoring for for some time. So, Kate, thank you very much for your time. Where can people learn more about the program, more about Stepto's associate training overall?
- [27:28]
Kate Cappert
Sure. I think our website has information and you can always reach out to us at Steptoe and reach out to the firm and we can provide additional information.
- [27:36]
Laura Terrell
Great. Well, we'll put that in the show. Notes for the show. Thank you so much for your time today. I really appreciate it.
- [27:42]
Kate Cappert
Thank you so much for having me, Laura.
- [27:44]
Laura Terrell
Great. Thanks so much. Until next time, this is Laura Terrell and this is Big Law Life.
- [27:53]
If you're looking for more ways that you can better navigate the world of big law, I hope you'll check out my website@lauraterrell.com that's L A U R A T E R R e L l dot com. You'll also find some additional information there about me and the one to one coaching work that I do with law lawyers. If you've enjoyed listening to today's conversation, and I really hope you have, please subscribe to be notified when new episodes are available. Also, please consider leaving a review on Apple to help others find this show. And if you know anyone who should be listening, I hope you'll share this podcast link with them. Thanks again for joining me today and until next time, this is Big Law Life.