Akin Gump, Associate Bonus Watch 2007, Biglaw, Bonuses, Money, Skaddenfreude

Associate Bonus Watch: Wilson Sonsini, Akin Gump (DC), Quinn Emanuel

associate bonus watch 2007 law firm Above the Law blog.jpgHere are a few quick updates on the associate bonus front:
1. Wilson Sonsini: On Monday night, the firm issued a long and complicated memo, which we’ve posted in all its glory after the jump. Since we haven’t taken math since high school calculus, it went a bit over our head.
General reaction to the WSGR bonus news was less than positive. From one tipster: “My friends there are pretty pissed in light of Latham’s bonuses.” From another:

“Some constituent groups (those with low hours) are happy. Other groups (people who work for a living) are less happy. All associates outside of New York are upset that New York special bonuses were paid without a minimum hours requirement.”

Under the WSGR bonus system, in certain class years, a lawyer in New York who billed 500 hours less than her counterpart outside New York could wind up with a bigger bonus.
2. Akin Gump (Washington, DC): On rather short notice — the email went out at around 1 p.m., announcing a meeting at 5 p.m. — a meeting to talk about bonuses was held on Monday in the D.C. office of Akin Gump. Here’s the bottom line:

[T]he gist was that bonuses “ranged from $1,000 to 75,000,” which basically means that if you are a first year (or any associate who started in the fall) you got $1,000, and the most senior associates who are most valued got $75,000. Associates were also told that the average was $25,000. This was not broken down by class year, hours, or any other details that may tell you whether you’ll be compensated well or terribly.

Lovely. Guess they think transparency is overrated
3. Quinn Emanuel: At Quinn Emanuel, in contrast, management is fairly transparent, and communication is relatively open (at least by Biglaw standards). How many senior partners of major law firms write open letters to ATL, as John Quinn did recently?
Anyway, two pieces of news. First, yesterday QE gave supplemental bonuses today to laterals, recalculating how they pro-rated (a subject of prior controversy). Second, they provided some information — albeit not terribly specific information — about billable hours and 2008 bonuses. Memo after the jump.

From: Roos, John
To: wsgr. Assoc. & Other Non-Member Attys
Cc: wsgr. Members; Layzell, Stacey; Beley, Julie; Boyd, Chris; Timm, Carol
Sent: Mon Jan 28 18:06:28 2008
Subject: January Merit Bonuses
To: All Wilson Sonsini Goodrich & Rosati Associates, Special Counsel, Of Counsel and Staff Attorneys
cc: Members
From: John Roos
Date: January 28, 2008
Re: January Merit Bonuses
On behalf of the members of the firm, I want to thank you all for your contributions to the firm’s success in FY08. Through your hard work and commitment to our clients, we’ve had another year of increased profits. The merit-bonus program reflects our increased profits and rewards those who have had the most impact on these results through the quality of their work and productivity.
Following our announcement of compensation changes for associates in most offices on May 1, 2007, which included increased base salaries, new chargeable hour requirements for the merit bonus and mid-year elimination of the productivity bonus, we had ongoing discussions with the Associates Committee to better understand the concerns and expectations of associates regarding compensation. We listened to the input from the committee and focused on key issues as we designed this year’s merit-bonus program.
Merit Bonus-Schedule
This year’s annual merit bonuses for associates, special counsel, of counsel and staff attorneys will be paid according to the following bonus schedule, subject to the performance criteria and hours requirements described below.
Performance Rating
Comp Year H3 E
2007 $10,500 n.a.
2006 $27,500 n.a.
2005 $30,000 n.a.
2004 $32,500 n.a.
2003 $35,000 n.a.
2002 $37,500 $43,750
2001 $43,750 $50,000
2000 $43,750 $56,250
1999+ $43,750 $62,500
Performance Criteria and Hours Requirements
Our goal is to provide a performance-based, competitive compensation program that emphasizes individual performance and the quality of work, with consideration given for productivity.
Therefore, to be eligible to receive a merit bonus on the schedule, you must have received a performance rating indicating good standing. In addition, you must have recorded at least 1,800 eligible hours in calendar year 2007. Eligible hours include all chargeable hours recorded, pro bono hours, hours charged to accounts for WSGR legal services, and a cumulative total of up to 40 hours charged to Knowledge Management, Attorney Recruiting interviews, or preparing and presenting internal training courses that qualify for CLE credit.
Bonus awards range from 35% of the scheduled bonus at 1,800 hours to 100% at 2,000 hours, on a linear scale. To calculate the percentage payout between 1,800 and 1,999 hours, use the following formula:
(Number of eligible hours – 1,800) * 0.00325 + 0.35
The resulting percentage is then applied to the target merit-bonus amount. For example, if an associate classified in compensation year 2005 has 1,934 eligible hours:
(1,934 – 1,800) * 0.00325 + 0.35 = 78.55%
78.55% * $30,000 = $23,565
In response to feedback from the Associates Committee, this hours-criteria range represents a blending of the criteria in place at the beginning of the fiscal year (1,700 hours for 25% bonus and 1,900 hours for 100% bonus) with the new criteria announced last May (1,900 hours for 40% bonus and 2,100 hours for 100% bonus).
Additional Bonuses
Attorneys who recorded at least 2,100 eligible hours will receive a supplementary bonus equal to 10% – 20% of their earned annual merit bonus. The supplemental bonuses for all eligible associates total $1.2M.
Instead of the supplemental bonus described above, associates in our New York office are eligible for “NY Special Bonuses” that match those announced by many firms in that market and range from $10K to $50K.
All bonuses will be paid on January 31, 2008, by auto deposit.
Pro Rata Bonus Payments
Attorneys who worked part-time, were hired mid-year, or who were on leave of absence during the year will be evaluated at their annualized rate of chargeable and other qualifying hours to determine the percentage of the bonus that they will receive according to the bonus schedule. The bonus payment will be prorated for the portion of time worked in fiscal year 2008.
Fall associates hired by December 1, 2007, will receive a $10,500 bonus prorated for length of time employed during the fiscal year, with no minimum-hours requirement.
E-rated associates not meeting the minimum-hours requirement will receive $5,000 (or pro rata share thereof). Other eligible attorneys who do not meet the minimum-hours threshold will receive a $1,000 bonus.
Base-Salary Increases
Associates will receive base-salary increases for their compensation year using the existing base-salary schedule for their office, effective February 1, 2008. There are no changes to the base- salary schedules for FY09.
Additional Information
We will discuss the bonus program and answer your questions at a Town Hall Meeting to be held on Tuesday, January 29, 2008, from 9:00 – 10:30 a.m. It will be held in Palo Alto, 950 Terrace 2F, and will be video conferenced to all offices. To join the meeting by telephone only, please dial 1-xxx-xxx-xxxx and use pass code #xxxxxxxxx.
Please contact xxxx if you have questions regarding these programs. This memo will be posted on the firm’s intranet Associates Website for your reference. Please contact xxxx, xxxx, or xxxx in Human Resources if you have specific questions about your bonus calculation.
Thanks again for your ongoing dedication to Wilson Sonsini Goodrich & Rosati. We are proud of our achievements and look forward to strengthening our leadership position in the year ahead.
From: “John Purcell”
To: “Associates”
Date: Tue, 29 Jan 2008 13:19:43 -0800
Subject: 2008 Bonus Information
In the state of the firm address, JBQ said the firm would announce hours requirements for bonuses in 2008 before the end of January. The purpose of this email is to do that.
We do not know what the amount of a “par” bonus will be In 2008. That will be determined by the market and how the firm does. However, we anticipate that the bonus standards will be no less favorable to associates than as follows:
For purposes of computing an associate’s hours billed, the firm will count up to 100 hours of AAIT and authorized pro bono time, combined, in the aggregate. The firm may reduce hours billed to reflect inefficiency or time that is for other reasons not properly chargeable to the client.
Associates who bill at least 2100 hours will receive a par bonus. Associates who bill at least 2000 hours but less than 2100 hours will receive at least half the par bonus. Associates who bill significantly more than 2100 hours may receive a bonus in excess of par. The amounts of above par bonuses will be determined by the firm at the end of the year.

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