[David] Boies, the founder of Boies, Schiller & Flexner, loves the thrill of placing bets both at the casino and on big contingency cases.
In November one of those bets paid off when Visa Inc. agreed to pay his client American Express Co. as much as $2.25 billion to settle an antitrust suit. The payday for Boies and his partners should be huge. For associates who worked on the case… their share of that fee depends on how each decided to roll the dice.
A thumbnail sketch of the compensation scheme:
The associates who worked on the American Express matter were offered a choice each year at bonus time. They could take the conservative route and have their annual bonus include the hours they devoted to this case. That way they’d be assured of getting some credit for those hours. The downside was that those hours aren’t counted toward the contingency fee. One lawyer familiar with the matter says the firm offered this bonus option to appease associates worried that the case might lead nowhere.
Plan B allowed associates to roll their hours over to the next year. If the case paid off, they would receive a share of the contingency fee proportionate to those hours. Ka-ching!
According to Boies, somewhere between a quarter and a half of the associates opted for the more risky approach. In hindsight, it was the right choice:
A young lawyer who placed her bets on the contingency fee could be richly rewarded. According to one former lawyer at the firm, an associate’s share of such a fee is tied to hours billed. The firm takes the percentage of hours the associate contributed to the case, divides by five and applies that fraction to the fee premium. Boies confirmed that this formula is “basically right,” although other factors could increase the associate’s share. A hypothetical example: If an associate contributed 5 percent of the overall hours to this case and the premium fee (the amount above normal billing rates) were $100 million, the associate would get 1 percent of $100 million — which is $1 million.
Now that’s what we call a bonus. Seven figures makes even Wachtell bonuses look paltry.
As noted in Susan Beck’s article, the case was filed in 2004, so it was kicking around for several years. But even if you spread $1 million out over four bonus cycles, it still comes out to a nice chunk of change. And presumably some of the BSF associates who worked on the AmEx matter also worked on other cases, making the AmEx bonus just a part of their total compensation.
Gamble Pays Off for Some Boies Schiller Associates [The American Lawyer via NYLawyer.com (subscription)]