Associate Bonus Watch: Ropes & Gray Goes for a Half-Skadden, With a Twist

Ropes & Gray has announced the bonus structure they will be paying to junior associates across all of their offices. While the structure is nominally a Half-Skadden payout (which might work just fine for Boston based attorneys), there are a bunch of interesting caveats.

The basic structure is as follows:

Class: Base Salary: Bonus: Total Compensation

2008: $160,000: $17,500 (prorated): $177,500

2007: $160,000: $17,500: $177,500

2006: $170,000: $20,000: $190,000

But there are some opportunities for top Ropes associates to make a lot more, while associates who are low on hours get nothing:

As you know, we have an activity target of at least 1,900 billable and pro bono hours to be eligible for a bonus. This year, we have increased bonuses from the above scale for associates who worked substantially more than the targeted amount, and decreased rather than eliminated bonuses for many associates who worked substantially less. We did not apply the hours target to associates in the class of 2008 because their integration into client matters is still in progress. We have also adjusted bonuses in unusual circumstances where an associate’s performance review is substantially below our expectations.

More after the jump, including the full Ropes & Gray bonus memo.


If we’re reading everything correctly, this memo means that high billing Ropes associates will not get shafted like attorneys at Cravath. But that bonus money will not come out of partners’ pockets. Instead, top billers will be eating what low billers left behind.

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It is junior associate versus junior associate over at Ropes. We imagine that everybody will get that message for 2009.

More senior associates at Ropes have always had their bonuses determined on a case-by-case basis. That will not change this year, though once again overall compensation is expected to be less than last year:

For more senior associates, bonuses will, as always, be determined and communicated individually. These bonuses will reflect personal contribution on a qualitative and quantitative level, prevailing compensation in the geographic markets we serve, and market conditions. As with more junior classes, bonuses will not include the special, one-time bonuses paid in 2007.

Overall, the scheme seems designed so that Ropes can keep their superstars happy, keep profits per partner high, and put the onus squarely on the backs of low billers to up their production for 2009. It’s better than layoffs, it’s better than a straight Half-Skadden, and I suppose fostering competition for work among associates is a good business idea.

I just wouldn’t want to be caught in the crossfire.

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The full Ropes memo is below.

ROPES & GRAY — MEMO — 2008 ASSOCIATE BONUSES

We are announcing standard bonuses and total compensation for associates in the classes of 2006, 2007 and 2008 as follows:

Class: Base Salary: Bonus: Total Compensation

2008: $160,000: $17,500 (prorated): $177,500

2007: $160,000: $17,500: $177,500

2006: $170,000: $20,000: $190,000

Consistent with other major law firms, our 2008 compensation does not continue the special, one-time bonus element that was part of 2007 compensation. Also, like the vast majority of other law firms, we are paying standard annual bonuses on a scale that is approximately 50 percent of the 2007 scale. These changes reflect conditions in the markets in which we practice and the recent decline in overall activity levels.

As you know, we have an activity target of at least 1,900 billable and pro bono hours to be eligible for a bonus. This year, we have increased bonuses from the above scale for associates who worked substantially more than the targeted amount, and decreased rather than eliminated bonuses for many associates who worked substantially less. We did not apply the hours target to associates in the class of 2008 because their integration into client matters is still in progress. We have also adjusted bonuses in unusual circumstances where an associate’s performance review is substantially below our expectations.

For more senior associates, bonuses will, as always, be determined and communicated individually. These bonuses will reflect personal contribution on a qualitative and quantitative level, prevailing compensation in the geographic markets we serve, and market conditions. As with more junior classes, bonuses will not include the special, one-time bonuses paid in 2007.

Like you, we are disappointed that 2008 will not conclude as a more robust year for legal services. We understand that changes in the market bonus structure, specifically decreases in the annual bonus scale and the absence of the special 2007 one-time bonuses, will generally result in lower year-over-year total compensation for associates. While we cannot predict when activity levels will return to normal, we are confident that our diversified practices and client base will serve us well during the downturn, and will also permit us to participate fully in the upturn when it materializes.

All bonuses will be paid by direct deposit on December 24, 2008. Associates must be employed by the firm on that date in order to be eligible for bonuses. Compensation for associates who joined us during the year or who were on reduced schedules will be prorated appropriately.

We are proud of the extraordinary team of lawyers who comprise this firm and of their shared values and teamwork. On behalf of the entire partnership, thank you for your contribution and professionalism.

Earlier: We’re Super: Thanks For Asking

Prior ATL coverage of associate bonuses.