Associate Bonus Watch: Epstein Becker & Green Sets Bonuses to Zero
If the second-most profitable law firm in the nation cuts bonuses by 73%, what do you expect regional firms to do?
Today, the management committee at Epstein Becker & Green made a decision that we will probably be copied at regional firms throughout the country. From the EBG internal memo:
The cautiousness of the Firm’s clients regarding their cash position has continued to affect EBG’s cash collections through November. We, like all law firms in 2008, are experiencing a slower pace of payments to the Firm from our clients than in prior years. While we are confident that these monies will be collected over time and we are well positioned for 2009, cash available at year end is, as a consequence, more limited than it has been in years when the economy was stronger.
Reflecting this reality, and on our history of conservative but responsible fiscal management that dictates prudence in retaining our cash reserves and not incurring additional debt for non-capital expenses — thereby protecting the Firm’s position as we enter 2009 — the Compensation Committee has determined that no bonuses will be paid at year end 2008. While we do not make this decision lightly, at a time when many law firms and businesses are engaged in large-scale lay-offs or worse, this decision is, we believe, a moderate response to what are unprecedented circumstances facing our industry.
Is The Future Of Law Distributed? Lessons From The Tech Adoption Curve
Remember that a problem many firms are facing right now is that while attorneys keep billing, some clients have stopped paying.
EBG is the first firm that we’re aware of that is offering the “special bonus” of zero. But they won’t be the last. Don’t forget to send us your tips on other mid-sized and regional firms as they make difficult bonus decisions this year.
Read the unabridged statement that EBG attorneys received today, after the jump.
EPSTEIN BECKER & GREEN — MEMORANDUM — 2008 YEAR END BONUSES
Sponsored
Navigating Financial Success by Avoiding Common Pitfalls and Maximizing Firm Performance
Legal AI: 3 Steps Law Firms Should Take Now
Early Adopters Of Legal AI Gaining Competitive Edge In Marketplace
The Business Case For AI At Your Law Firm
As this extraordinarily difficult year in the U.S. economy comes to a close, the Firm’s leadership is by necessity carefully considering the appropriate actions to be taken at year end. The Firm’s Compensation Committee met earlier this week to address the issues raised by the sustained economic downturn and to contemplate appropriate actions that might be needed in this regard.
The Firm’s financial condition in these challenging times remains steady and sound. I repeat below what I stated in my November 18 e-mail to you in reporting on the Firm’s Annual Meeting:
* The Firm has a clear strategy.
* We have focused and well-positioned practices.
* The change in administration in Washington is likely to produce additional opportunities for the Firm in 2009.
Sponsored
The Business Case For AI At Your Law Firm
Is The Future Of Law Distributed? Lessons From The Tech Adoption Curve
* We are interested in and able to invest in careful lateral growth that fits within our strategic growth objectives for 2009.
* While we are not immune to the effects of the down economy, the Firm remains financially sound with steady cash flow, appropriate cash reserves and a line of credit that is available for emergencies.
* Although the Firm’s billings have kept pace with 2007, the Firm’s receivables have built up all year as clients, affected by the economy, hold on to their cash.
* Our highest priority in these challenging times must be to stay in constant contact with our clients, listen to their issues and concerns and respond more effectively than our competitors.
* In the end, the single most important key to our continued success is trust — our clients’ trust in us and our trust in each other.
The cautiousness of the Firm’s clients regarding their cash position has continued to affect EBG’s cash collections through November. We, like all law firms in 2008, are experiencing a slower pace of payments to the Firm from our clients than in prior years. While we are confident that these monies will be collected over time and we are well positioned for 2009, cash available at year end is, as a consequence, more limited than it has been in years when the economy was stronger.
Reflecting this reality, and on our history of conservative but responsible fiscal management that dictates prudence in retaining our cash reserves and not incurring additional debt for non-capital expenses — thereby protecting the Firm’s position as we enter 2009 — the Compensation Committee has determined that no bonuses will be paid at year end 2008. While we do not make this decision lightly, at a time when many law firms and businesses are engaged in large-scale lay-offs or worse, this decision is, we believe, a moderate response to what are unprecedented circumstances facing our industry.
Working together, we can effectively weather this economic storm. With your help, we look forward to doing so in 2009 and beyond. Please do not hesitate to contact me if you have questions.
Doug Hastings
Chair, Board of Directors
Earlier: Prior ATL coverage of associate bonuses.
