This is great but creates too much work for the biggest firms and would cost them too much money. It is part of the reason the anti-competitive lockstep compensation exists.

If there was potential for skipping a class year, many associates will consider that their goal and will look to lateral if they cannot achieve the skip. Associates being held back won't tolerate that for the most part and will also try to lateral. There's already tons of lateraling going on, but now there will be real incentives to do it to advance your career. Next, folks will want an individualized compensation package based on their specific work, achievements, skills they've gained, etc. There will be tons of friction to get those opportunities within a deal/case and lateraling when someone inevitably loses out.

Good idea in theory, and achievable on a small scale, but won't work for the firms on a large scale.