firsty mofo

FIRSTY MOFO

This means other Big Law will pay the same?

THIS MEANS TAKE OUT THE VASELINE, RELAX, EXHALE AND BEND OVER FOR BIGLAW!

"The interest of Generation Y?" WTF? Is that "Kids these days would rather hang out with their kids than work so we'll pay them less?"

Guys in my high school worked on a merit basis all the time, it was no big deal.

THIS IS A JOKE. DOES ORRICK HONESTLY BELIEVE THEY ARE GOING TO DO AWAY WITH THE LOCK-STEP SYSTEM. IN THEIR F*CKING DREAMS.

Let's face it. There are a lot of associates who are adequate. There are also superstars. Then there are some who are behind, but not so far behind as to get booted (although the current market may be moving that line). Why should they all get paid the same and bill out at the same rate just because they graduated the same year?

I think there are a good number of associates who like this idea, but aren't going to speak out in favor because doing so suggests a belief that they are better than average (i.e., will benefit under the merit based system). But I'll say it. I am not a superstar, but I'm better than average at my firm, and I deserve to get paid better than the chump down the hall who graduated with me (I will likely spend my weekend fixing his mistakes).

A difference in year end bonuses doesn't provide the same recognition and incentives as a difference in salary and/or title.

THIS IS A JOKE! THIS IS SUCH A F*CKING JOKE I WILL MAKE STATEMENTS WITH THE INDISPUTABLE AUTHORITY OF ALL-CAPS! (Though I will ineffectually bleep out my profanity, because I am loud but impotent!)

HOW DO I BOLD-TEXT THIS MOTHERF*CKER?

Jones Day already has a merit-based compensation system. Some people bitch about it (usually people who are not with JD), but it works and is the way 99% of other industries (i.e., our clients) pay their employees.

Guys in my high school used to use that "guys in my high school" line all the time. They were stupid too.

Lots of firms in the bottom half of the AmLaw 100 have merit-based compensation. I like how idiot law student commenters on this blog think this is novel.

GUYS IN MY HIGH SCHOOL WERE A F*CKING JOKE! HONESTLY!

Is anyone at a firm that has announced partners this year? Will numbers be dramatically down? I'm supposed to be eligible next year, but if nobody makes it this year, I think my odds will be even steeper than they already are.

15 - good question. Elie how about a post on this? My understanding is that there are fewer partner appointments in slow years, and even when the market turns back up there is essentially a waiting list to accomodate those associates who were held back (and did not leave).

If you're in big law right now thinking you need lock-step to avoid getting a pay cut, you best start updating your resume.

*salivating over the prospect of an Orrick bonus*

-nervous T-10 1L

Former Thelen partner and current Orrick partner Tom Glascock (aka Glass Cock) here. I'd like to explain the new compensation structure in very simple and graphic terms: Bend over and spread it wide for the big glassy cock of orrick.

The number of new partners a firm makes will be one of the most accurate indicators of how that firm really views its own strength in this climate. It's easy to send "yay us" emails even when your firm is internally hurting. But making your historical average for new partners is another thing altogether. Pay attention to these numbers.

How would this work, except the possiblity of being based on hrs billed? It works in other industries because there is a pretty clear way to show how a manager has added to the bottom line, and it works at the partner level for the same reason. As long as associates meet their billables, I do not see how this could work unless it is based on a ridiculously arbitrary assessment of each associate.

*spends halloween trick or treating at partners homes...only instead of candy i'm hoping to fill my bag with offers*

-nervous T-10 1L

send me your job leads at nervoust101l@yahoo.com

5 new partners at fried frank this year. down from about 9 or 10 last year.

Yes, big law should become merit-based so fewer people do it. Maybe people who are really more interested in government or public interest will go directly into it instead of spending a few soul-sucking and mediocre years at a firm.

how much candy do you think elie has eaten today???

i'm saying the over/under is four bags of reese's

Guys in my school thought #12 was a moron, and it was no big deal because it was so obvious.

Guys in my high school thought #12 was a moron, and it was no big deal because it was so obvious.

Does anyone have a sense for Holland & Knight bonuses?

Is there any truth to the rumor Elie has been cast as Mr. Hanky the Christmas Poo in the upcoming live action film version of South Park?

"Given the changing nature of the law practice, the changing expectations of clients, the changing outlook of Generation Y, law firms would be remiss if they did not re-examine the associate model."

This statement really pisses me off. Gen X values(d) time over money, too, but could still get through the world and get good work done without being mollycoddled by mommy, daddy and every other real adult within a 12 block radius. But firms are changing for Gen Y? It's not because Gen Y is special or worth the effort, it's just that their parents are the ones that made them that way and are the ones who are now in firm management. (Seriously, partners at my office are doing all the legwork for their kids' college, graduate school and internship applications. I guess they'll have to show up to the job and do the work for them, too.)

Not everyone thinks you're mommy's precious angel. Cut the apron strings, kids!

Uncle Orrick here.
***
The deal with moving off lockstep is not that it will save money but that it will result in fewer pissed off clients. Right now everyone gets promoted on the same magical date without any real examination of their professional development, or at least that's how it looks to clients.

The system being studied at Orrick would involve more in-depth and frequent associate evaluations, combined with definitive benchmarks. Then, if everyone makes the jump to "third year" the same day, at least Orrick can point to actual reasons for the promotion (and simultaneous billing rate hike).

The system won't result in individual merit-based comp so much as it will in reasoned promotion decisions. Some people will also, in the system as planned, get to skip one or more years on the partnership track- and the firm will be able to justify billing higher rates for them than for their law school classmates.

The only "individualized" aspect of the plan, in its current incarnation, is creating an alternate path for those who don't want to be partnership track. But that's more of an accommodation for associates than a client-pleaser.

So that's Ralph's plan, and it's not going to result in pay cuts- at least I don't think so. In fact I would expect that most associates (beyond the first three lockstep years) would get more pay & bonuses than peer firms, on average, to compensate for the uncertainty created by the plan (more risk, more reward).

But the benefit to the firm would be that associates would know where they stand well before they go up for partnership (and so hopefully be happier/less anxious) and clients won't bitch about rate hikes as much.
***

4, I don't think it means firms will pay the same. Last year, in decent economic times, punk firms like Heller and MoFo failed to match Orrick's bonuses, by setting a 2100 hour threshold and then effectively paying $15k-$20k less at every level. I don't see them moving to catch up this year.

And then in NYC people will probably get at least the Orrick 2000 hour bonus even if they don't get the hours.

And the bonus levels won't be the same man/boy separators that they were in previous years because firms can use the hours cutoff to cut costs instead of capping the payouts.
hth

All right, well, you've been drinking too much Orrick Kool-Aid. The only person from a merit firm I met that really loved it was screwing her boss. So if you are bumping nasties with your boss, or if you have connections such that your firm sees you as a probable equity partner then it is probably good for you. Otherwise the firm will eventually use the merit system to pay you less. And this client billing stuff is BS to make you feel like it isn't the partners that will be giving you the shaft.

But whatever, enjoy the Kool-aid.

The Kool-Aid is free. And it's green.

I'm not taking a position on whether it's going to be good for me or the firm. I'm just explaining it as it was presented so that people can discuss it intelligently (or as close to intelligently as discussions can be on ATL).

PHILLIES RULE!

(Dechert still laying folks off, though.)

I can't wait for Obama to win. All your bonuses are going to me once I quit my firm and go on welfare.

MoFo has married the bonus lockstep structure beginning at 1950 with a merit based system. You get a minimum, but depending on the quality of your work, you can get substantially more.

Don't know if the "discretion" part will allow them to pay less, but it seems more fair this way.

FCOL, can't you all be happy you have jobs? and some kind of bonus! Stop being such wussies.

37--
It was reported that when MoFo bumped to 160k, they eliminated the 2000 hour bonus, so that you had to get to 2100 to really get a bonus.
Is what you are describing different and new? Do you have a memo or something to back it up?

Management at Wilmer Hale is also seriously considering moving to some sort of non-lock step/merit based system.

31- that's an interesting proposition. If the shift to a more dynamic career ladder is coupled with significantly greater transparency, it's an intriguing attempt at true meritocracy.

But here's reality. Organizational life is a jungle everywhere. Lots of politics and backstabbing. In the model proposed by Orrick, the stakes would be significantly higher than they are now. Currently even if office politics screws you out of a partnership or results in being relegated to 5 years of doc review, you're guaranteed a pay raise every Jan 1. Of course that pisses off clients. Now clients will be happy because they're paying based on what you're actually doing, not how many years you've been at the firm.

Senior associates gunning for partner will still throw you under the bus- hell, they need to more than ever- under the new system. The difference is now you're stuck earning a first year salary for a second year as a consequence.

From what I have heard and read, clients don't focus on lockstep as much as they focus (and grumble about) very high rates for junior associates in years 0-2. At my firm, I am aware of one important institutional firm client that will not pay for first or second year associate staffing without prior approval. From this post, however, it seems that Orrick intends to KEEP lockstep specifically for those levels, so there is a tension there.

Regarding the partnership inquiry....I know that Sidley made almost exactly the same number of partners this year as they did last year, and is in expansion mode. Not sure what that means about the firm's health, but it seems positive.

FROM WHAT I HAVE HEARD 31 IS RIGHT.

The move off lock-step would not be madated but rather initiated by an associate who doesn't want to be on partnership track.

Guys in my high school went to high school all the time, it was no big deal.

31 is incredibly (and naively) optimistic.

"So that's Ralph's plan, and it's not going to result in pay cuts- at least I don't think so. In fact I would expect that most associates (beyond the first three lockstep years) would get more pay & bonuses than peer firms, on average, to compensate for the uncertainty created by the plan (more risk, more reward)."

Do you REALLY think Orrick (and other firms) is looking at alternate salary schemes to pay associates MORE money? lol. Or that any law firm will throw more money at associates to compensate them for 'uncertainty'? lol.

Today's associates are like today's stock market investors: They've never seen tough times and think that everything always goes up. (Where are the cries for 'NY to 190' now? They've been replaced by 'I hope I don't get canned like the guy in the next office.')

Honestly, the law biz is down and will stay down for a while. It's an employer's market. Firms don't 'owe' associates lock-step salaries or big bonuses. Whether it's summer associate class sizes or salaries or bonuses, law firms are CUTTING DOWN. Don't like your reduced bonus or new 'below-market' merit-based salary? There are several qualified lawyers willing to take your spot. And having no salary sucks a lot more than being paid a reduced one.

Every fir is looking at tougher times in the next couple of years, and taking steps to really cut costs. Many people here still think associates run the show, and have a god-given right to big lockstep salaries and bonuses.These people ar ewrong. But it doesn't matter what I say--we'll be seeing lots more of this stuff in the coming months. Just ask yourself why those associates a few doors down have suddenly disappeared over the next few months. (And remember that the lateral market is the pits these days.)

40- It's about time. I think law firms are going to be moving away from their unsustainable model and begin to start running a bit more efficiently.

Why shouldn't performance evaluations mean anything? Those who can't deal with not receiving their automatic pay raise and bonus can claw their way into the firms that stick w/ this failing system (Cravath, et. al).

There are many blockheads who couldn't research their way out of a book report who continue to move through the associate track, sucking up resources (sucking in general) and should be called out and not rewarded by year 2 or 3.

Markets change. Firms can still pay market rates. Those who make the most profit will set the tone. Those who stick with the current system will soon fail to earn the most PPP.

No one knows for sure what will happen (although I know 2 and 3L commenters and some of the DBs on the board believe they do). I think it's sensible to say that the model will change, or evolve into something a little less gratuitous. Remaining competitive requires innovation.

ps, Wachtell being the exception of course ;-)

I'm not sure a firm of Orrick's size could pull off an honest and fair "merit" based compensation system for associates. How do you really assess an associate every year in a way that makes it legitimate to pay them more or less than their peers? Looking at hours doesn't work for a number of reasons. Also, how do you value associates in one practice area over another? How do you do any of this without creating a large shark tank?

These are the sorts of bad business decisions that lawyers make. I'd love to be at the lunch where someone goes, "I have an idea. Lets turn all of our relatively collegial employees who do 90% of the work around here into a bunch of backstabbing, competitive jackasses so we can save X dollars a year."

Plus, why does Orrick think that everyone would just take what they're given and be happy? Perhaps the firm doesn't realize that by moving away from lockstep, they're opening themselves to a salary negotiation with every associate they have.

And don't give me any BS about associate compensation needing to change because off the inevitable changes in the marketplace. Any firm that thinks this should take a look at the bottom of their pyramid because it might be getting a bit too big.

In order to be competitive in the legal marketplace, you need smart people who anticipate client needs and changes in law, business and the marketplace, people who are willing to work hard, efficiently and honestly. Associates are associates for 8 to 9 years, partners are partners for 20 to 30 years (where compensation is largely merit-base). Firms that want to stay competitive need to spend less time looking at associate compensation and more time grooming and training better lawyers and future partners.

I'd like to point out that K&E is basically merit based after year 6. At year 6, you either advance to "partner" or you don't. That is a major merit based decision. If you advance, you get a pay raise. You also no longer get paid lockstep. The vast majority of associates advance, but not all. Then you are a "partner" for a few years and if you are successful in year 10 or so you advance again to Equity Partner where you make the big bucks. Really, Orrick is just thinking about moving this same thing forward to year 4, so it isn't so radical a move from what K&E is doing. Oh, and in case you missed it, K&E is hugely profitable and is one of the big growth firms in the last 10 years or so. They are taking market share from the big NY firms every year.

Also the suggestion that Orrick might back away from its bonus structure is silly. Orrick's bonuses are based on hours billed. You have to hit 2000 to get anything. Anyone who hits 2000 (provided they didn't do 500 hours of pro bono or they didn't get 500 client billable hours written off) is very profitable, even after getting the bonus. Due to the slow down, a lot of associates won't get the bonus (see Structured Finance Group), so this model self corrects and the firm won't pay as much in bonuses as last year. FYI though, Orrick did not commit to last year's NY Special Bonus this year. I think we can safely say that that ain't happening anywhere.

Just fyi - layoffs yesterday at Kilpatrick in ATL And Moore & Van Allen in CTL. More to come, I'm sure... CTL has the worst legal market in the country right now, in case any of you are considering a move there...

Just fyi.

Layoffs yesterday at Kilpatrick (Atlanta).

More to come for Charlotte firms, I think...

39 -

Lat reported it in April.

http://abovethelaw.com/2008/04/morrison_foerster.php

I love it. First and second years go from worthless know-nothings to non-equity partners in year four.

I respect K&E's model as it makes money and the lawyers seem competent for the most part. But honestly, growth is only meaningful to the people who see the profits, and that's the equity partners.

But lets not kid ourselves. All they did was take senior associates, keep them senior associates for longer, and pay them differently from each other. If you don't think that non-equity partners (dumbest term ever) aren't just associates, you probably insist that Esq. appear after your name.

Many clients have rules that you can't use summers and first years on matters without approval. Walmart is the king of this structure, but many telcos, utilities, banks, manufacturers, etc do the same. That explains why some firms question the structure of growth thru SA's. You eat a lot of cost up front.

Chicago firms were not lockstep until Silicon Valley firms raised associate comp. The old model was you got a base and a bonus. The next year the base and bonus from your prior year was your base the next year (90 based plus 30 bonus = 120 base) If you were good and billed, you could really make good money. If you were in a slow group or were not that talented, you did not do as well. Some people hated it because if you had a bad year, it was really hard to make the money up. Gunners loved it.

45/48, you're sort of right. But I think Orrick will have to end up paying at least a token bit more than its peers or it will be at a major recruiting disadvantage- otherwise why would you go to Orrick when you can go to MoFo or another Bay-area firm and get lockstep pay and promotions?

They might do okay with laterals who are comfortable with the risk but they'll get killed in recruiting at law schools if they are offering more work/competition for less pay.

Lockstep is going the way of the dodo bird. It doesn't make economic sense and clients won't put up with it from any firm where you might question the bill i.e. Wachtell, CSM, S&C, W&C, etc.

The Cravath system Does. Not. Work. for more than a handful of firms that can recruit whoever they want and charge arbitrary bills because they are That. Damn. Good.

Lockstep has also had the effect of dragging lots of lazy morons into BIGLAW because there is simply no other field where you earn top compensation for your company and profession merely by existing.

Should be a "not" in front of Wachtell in 56.

This firms needs a ten page memo to talk about their bonuses. Can anyone give a sense of how many people at Orrick got the top line amount last year?

Actually, who cares really? Orrick isn't setting the market in bonuses.

Baker Botts announced partners this month. Dropped to 13 partners after a couple years at 18 or so.

30 beat me to it - I too got annoyed all over again by reminder of Baxter's Gen Y comment. Given that Gen Y also called Trophy Generation, why don't firms hand out those shiny objects in lieu of lockstep raises or bonuses. These days, beyond tired of snotty attitudes of some jrs - now just trying to minimize the embarassment.

I'm not at all bothered by the idea of a non-lock-step associate pay structure. I am not a superstar in my class ('04), but I do good work, bill 2100 hrs or more every year, and people generally like my work. Meanwhile, there are total flakes down the hall who show up at 10 and leave at 4:30 most days, and can't find work ..... yet they make the same as me. It somewhat weakens desire/motivation to work hard at times.

'non-equity partner' = sr. sr. associate.

I know at my old firm the equity partners thought of the non-equity partners as 'associates'.

62: Agreed.

But, until this year, election to non-equity partner was still a good deal. You got the "partner" title. And much of the V100 paid (and continues to pay) their non-equity partners above $400K, and in some cases far above. So even with the costs of partnership, the money was still better than the top associates make.

But things are scary these days. Think of the folks who made partner at Heller or Thelen last year. Presumably they lost their capital contribution, which is not a small amount of money.

I wonder if anyone at a struggling firm would consider (gasp) declining an offer of partnership.

63:

I know of very few firms that pay non-equity above 400K. If you think this is wrong, name names.

59: Also says a lot that Baker promoted only 2 women.

Why has ATL disabled posting on S&C DB?

Are associates in Orrick's SF office busy?

63 here. I could be wrong. But here's the basis for my statement. My firm (in the V25-V50 range) pays above $400K to non-equity. My firm is very solid but not spectacularly profitable...follows the lead of others on comp issues. Also, I saw an article on this blog saying Hogan pays around $400K to non-equity.

Just did a quick google search and saw this saying average was $353K back in 2003. I would assume this figure has grown a lot over the past 5 years: http://www.alm.com/pressrelease.asp?record=17.

Finally, consider that a good senior associate in the V100 makes in the mid-300s after bonus, and most firms these days have a non-equity track. So I'd be surprised if many firms didn't start their partners at or above 400 just to create separation from the good senior associates.

But that's just speculation on my part. 64: do you know what they make anywhere?

For the most part, but junior transactional associates are doing securities doc review.

69, is that a change from the status quo?

69, is that a change from the status quo?

69, is that a change from the status quo?

Chicago firms start income partners at around $340. That might be because they promote them after 6 years. It is a point of contention because a senior associate makes more than an income partner.

Could someone explain how the current pay and advancement structure gives incentive to senior associates gunning for partner to throw juniors under the bus? See comment 41.

69, 70 -- the only thing i've heard from the rumor mills is that the firm has junior corporate associates doing litigation document review. i don't know how long this has been going on. can any orrick associates provide some information? also, how is morale among the junior associates, corporate or otherwise?

The Associate Bonus Watch feature is helpful to many lawyers. However, given the large number of layoffs happening throughout the profession, ATL should consider launching a "Severance Watch 2008" feature. The number of attorneys that have been or will be laid off this season may yet be fewer than the number that will receive bonuses. But information on "market" severance could be of greater importance to those affected than "market" bonus information is to those who retain their jobs.

Has a standard severance package been established in this climate?

76 - That is a good point. Elie, please get to it. Thanks.

69/70, it's office and practice group specific.

78, Can you elaborate? I hear this is happening in SF. Are there other Orrick offices where transactional associates are going litigation document review? And what is morale like?

36 - Agreed, all you superstars can bill 2600 hours and get your super bonuses which after Obama's tax plan will average out your bonus to about $17/hour and you're tax dollars will be supporting me when I get laid off, sit home all day, watch the Big Lebowski and eat big bags of cheesy poofs. Suck it "superstars". You rock those 2600 hours.

Guys in my high school used to do doc review all the time, it was no big deal.

Guys at my high school used to work jobs where they receive pay based on their merits rather than their seniority all the time. It was no big deal.

78, which offices? how many associates?

On bonuses --

Consider that a 1st year associate in a Chicago firm will bill out at ~ $300/hr. By billing 2000 hours, that associate has generated $600,000 for the firm.

Now, let's play with the numbers and assume a very conservative 90% utilization rate. (Most firms cannot reduce a bill by more than 5% without executive committee approval.) That means that our $300/hr associate has now generated *only* $540,000 in revenue.

So the first-year associate earning $160,000 per year is generating $540,000 in revenue. And adding money for training and overhead, we're still dealing with a very profitable model for the partners.

Number 48 has it right. With these economics, why would you upset the apple cart, tick off 90% of the work force, and create an internal dynamic and make it less likely that the firm will be able to provide appropriate client service? I've seen what the 'merit-based raise' does to morale for the 95% of the associates who are not superstars. It's not good.

The "benchmarks" idea at Orrick is straight-up stupid, YO. Let's say you set a meaningful benchmark of taking a depo or arguing a motion. That benchmark will depend on the development of your cases and the whims of your partners and/or clients. You could therefore not even receive an opportunity to try to meet your benchmarks. The end result of that would be a non-promotion, possibly.

Don't be fooled, Orrick associates. This is only one among the many ways that you will get jobbed by the new plan that is in the works.

Oh, and Elie your writing is garbage.

85,

Exactly, What if a benchmark is "defend deposition," but an associate doesn't get that opportunity despite trying really hard to do so?

How about "run case" at year 5. Very realistic.

85,

Exactly, What if a benchmark is "defend deposition," but an associate doesn't get that opportunity despite trying really hard to do so?

How about "run case" at year 5. Very realistic.

Maybe they will account for this problem!

84 -- many of those Chicago firms already have merit-based pay for year-to-year promotions.

85, you're pretty clueless. Many many firms in the AmLaw 100 already have merit-based pay and account for these factors.

Not the ones at the top.

79/83, that was my way of saying I have no idea. Only one associate in my office (not SF) has been bumped- a junior corporate put on doc review, and even that's not a full-time thing, but just to keep the associate on track for hours.

90, you are obviously not very informed about the Chicago market.

I hope my Mom gets a good bonus so she can buy me more onesies!

http://andythebunny.blogspot.com/

McDermott uses the benchmarks The official word is compensation is not tied to acheiving them; you are just supposed to put them in your career plan. However, I have heard of people criticized during reviews for not achieving them especailly for skills that people think you need to get promoted. Supposedly shows a lack of drive that you werre not able to be creative and diligent enought to find that cross examination or oral argument opportunity. I think this year we will hear more such stories.

Oh, and watch for patnership announcements. Good people getting passed over.

This year = epic bad year to go up for partner. Prime those resumes, senior associates.

"we need to compensate on merit because the rest of the industry does"

BS - what other industry consisted of 90% old white males? Orrick has something like 15% women partners.

All this does is further discrimination. No one can separate personal from professional. Old white males are going to compensate young white males better because they share the culture, for example, of drinking after work. Young asian women just don't do that. Even if their work product is as good.

84 - You do realize that once you add in office rent, a share of support staff, and a share of equipment and technology, your first year has another $300,000 of expenses to cover? Right, you do realize that the people you see walking around the office doing stuff for you (secretaries, recruiting, mail room, library, IT, marketing, accounting, janitors, cafeteria, human resources, etc.) get paid, get health, get 401ks or pensions, need space rented for them so they can do their work, get training, and get their own equipment. When you add those numbers up the first year really doesn't make any profit for a firm.
Oh, and don't forget the $200K you spent on them as a Summer Associate. You certainly didn't get that back in billables.

Every so often some bucket shop tries to move the market away from lockstep. It never works, but firms like Orrick think they'll be the one to change things. They won't..

This structure will be abandoned shortly, if it is ever even implemented.

98 should budget for the pentagon.

BREAKING NEWS: Orrick has cancelled its holiday party. Can an Orrick associate post the memo?

84- You're not thinking through the realization issue even beyond 98's overhead points. Associate time is far cheaper to write off than partner or counsel time.

Let's say you put in $5K worth of time at $300/ hr (16.7 hrs) on a bill worth $100K but the bulk of it is partner and counsel time. The partner can write off all your time, give himself 100% realization and you 0% and still comply with your MC rules.

If your firm is like mine and really cares about hours billed, not just hours worked, you just lost 10% of what you need to hit your 170 month.