Nationwide Bonus Watch: MoFo Giveth, Then Taketh Away

Yesterday When I was a kid, I used to steal the Reese’s Peanut Butter cups from my younger sister’s Halloween bag, eat them, place the empty wrappers back in the bag and steal away into the night. My thinking was that at no time would my sister discover that the wrappers were empty, and if she did, well, the worst that my parents could do was take away my Nintendo.

Last night, attorneys at Morrison & Foerster opened up what they surely hoped would be their adult goody bag — an email from firm chair Keith Wetmore, titled “2008 Bonuses and 2009 Compensation ” — only discover that they, too, were faced with empty wrappers.

Naturally the email announced the usual bad news, including “simply unknowable” 2009 bonuses and salary freezes for 2009. The exception is for New York, where increases will be paid as bonuses if associates, among other things, are able to decipher the announcement itself:

In New York, however, where all major New York firms implemented step increases this year, the step increase will be paid as a Contribution Bonus in January 2010 in an amount equal to the step increase that would otherwise have applied for that class. The Contribution Bonus will be paid to those New York-based associates who progress with their class and record 1950 Efficient Legal Service Hours (see Compensation Brochure), subject to the usual prorations, and who are employed with the firm on the date the Contribution Bonus is paid.

But the email also contained a chart revising and lowering the already announced 2008 Evaluation Bonuses, which comprise the lion’s share of the total bonuses.

A tale of betrayal and woe, plus the MoFo compensation email, after the jump.


A tipster explains:

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MoFo just sent its non-compensation announcement… Care to compare this to the bonuses they set out in the memo you posted in April ’08?

By way of background, in April 2008, MoFo sent out a five page, heavily footnoted memorandum to all attorneys, describing how the new and improved 2008 bonus system worked. The memo closely resembled a wizard’s book of spells with its arcane and elaborate formulas for determining “Standard Evaluation Bonuses,” “Enhanced Evaluation Bonuses,” “Productivity/Hours Bonuses,” and “High Hours Bonuses.” It reiterates that if associates meet the given criteria for bonuses, associates “will receive” such bonuses, and such bonuses “will be paid” based on a simple 7×9 footnoted and subdivided graph (note in particular the Evaluation Bonuses):

Compare it with the “revised” Evaluation Bonuses graph included in yesterday’s email:

Ruh-roh. Says a tipster:

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There aren’t any contingencies that allow them to take away the money they promised after we’ve already earned it. Class action anyone?

Some might think that MoFo associates are lucky to have jobs, let alone bonuses. But the fact is that MoFo set the pay, then took it back. While I can’t promise MoFo attorneys restitution, there will certainly be confiscated Nintendos, if my parents have anything to do with it.

MORRISON & FOERSTER — MEMORANDUM — 2008 BONUSES AND 2009 COMPENSATION

Confidential

TO: U.S. Associates and Of Counsel

FROM: Keith Wetmore

RE: 2008 Bonuses and 2009 Compensation

As I noted in my voicemail message of several weeks ago regarding associate compensation, the turmoil of the global economy presents enormous challenges to our clients and our profession. We remain committed to paying market compensation to our attorneys, but there is more variation in the market among strong firms than we have seen in many years. In these sobering financial times, there are significant downward movements in headline bonus numbers by prominent national and international law firms, reflecting in part the reduction, deferral or elimination of bonuses by many of our clients. Having listened to many voices within the firm, including associates, and having assessed trends in the market by our competitor firms, we announce the following:

2008

All 2008 bonuses will be paid on February 27.

2008 Hours bonuses and New York discretionary bonuses will be paid at the previously announced amounts.

2008 Evaluation Bonus ranges have been revised as set forth below.

2009 Base Compensation

In all offices except New York, 2009 base compensation will not increase by virtue of advancing a class year. In New York, however, where all major New York firms implemented step increases this year, the step increase will be paid as a Contribution Bonus in January 2010 in an amount equal to the step increase that would otherwise have applied for that class. The Contribution Bonus will be paid to those New York-based associates who progress with their class and record 1950 Efficient Legal Service Hours (see Compensation Brochure), subject to the usual prorations, and who are employed with the firm on the date the Contribution Bonus is paid.

2009 Bonuses

Non-New York-Based Domestic Associates and Internationally-based Associates on the U.S. Associate Compensation Structure: As the market for bonuses for 2009 is simply unknowable in light of economic uncertainties, we do not anticipate an announcement regarding bonuses until late in 2009 or early 2010. Assuming bonuses remain a feature of market compensation, we anticipate that the factors to be considered will be evaluations, hours, and firm and practice performance.

New York: The 2009 discretionary annual bonus in New York will be determined at year end or in early 2010, based on firm performance and will take into consideration comparable annual bonuses in the New York market. New York firms have announced that associates may receive significantly reduced or no year-end bonuses for 2009 bonuses. While the New York discretionary bonus is not contingent on achieving a specific hours target, should bonuses be paid, the amount may vary based on significant differences in levels of contribution, either as to quality or commitment, and an individual discretionary bonus may be adjusted downwards or withheld.

Of Counsel compensation is individualized and 2009 arrangements generally will be finalized by March 1.

The 2009 Compensation and Evaluation Brochure will be available March 1 on the Professional Development Group community page on the Portal. The Brochure provides details of the compensation and evaluation programs.

I will be meeting with the Associate Representatives tomorrow afternoon; if you have questions please direct them to your Associate Representative in time for that meeting.

Going Forward

For associates and Of Counsel in all offices, we urge conservatism in personal budgeting; even if bonuses remain part of 2009 market compensation in the markets in which we practice, they may well be quite low given market disruptions.

These are difficult times and there are no completely satisfying solutions to the challenges. Partners are working together to meet these challenges for the firm and our clients, and to position ourselves to emerge from the recession among the strongest group of competitors for the best legal work for the most interesting clients.

We appreciate and value the contributions you make to the Firm and our clients. I will continue to talk with you and answer questions as the year progresses with as much clarity as I am able to given the economic realities and uncertainties we are facing together.

2008 Evaluation Bonus

Keith C. Wetmore | Chair