Tiered Payscale at Patton Boggs Leads to Associates Giving Back Money
Can you imagine having to pay your firm money over the next couple of months because the firm overcompensated you at the beginning of 2009? That is the situation facing a number of Patton Boggs associates over the next couple of weeks.
Patton Boggs has a three tiered associate compensation system. A firm spokesperson explained the details to Above the Law:
Patton Boggs has three base billable hour tiers for associates: 1650, 1800, and 1900. Associates on one of the lower tiers who reach a billable hour total of a higher tier are automatically paid the salary differential in the early part of the next year.
Associates who don’t make their hours are bumped down to one of the lower tiers. But the whole decision making process is done as part of the firm’s annual performance reviews, many of which haven’t taken place yet. A tipster explains the consternation among many Patton associates:
If an associate is bumped down, their salary will be bumped down accordingly in an amount to be determined by the firm (i.e. not the full published drop between the 2008 rate for [1900] and the 2008 rate for 1800 - as in some instances that could amount to up to 65K). So some don’t know if they will be bumped or, better yet, how much their salary will be for 2009. In general, people were pleased just to bump down as opposed to getting laid off or some other alternative.
But:
But here is the kicker - associates [won’t know if] they are being paid at the [1900] rate until after their review, if at that time they are bumped down to 1800, they have to PAY THE FIRM BACK the difference in pay for the first 2 months of 2009. The “overpayments” will be spread out over 4 paychecks.
After the jump, the firm explains that this is nothing new at Patton.
According to a firm spokesperson, associate pay backs are nothing new at Patton Boggs, it’s a policy that associates have known about for some time:
Associates who fall materially short of their hours target will have their base salary adjusted as part of the associate evaluation process. This policy has been in effect for several years. There is nothing retroactive -the policy clearly states that decisions on tiers will be made at the time of associate reviews (which are ongoing). In fact, we choose not to adjust associate pay as much as the policy allowed and capped the reduction. Some associates were paid at a higher tier for the first couple of pay periods in 2009; post their evaluations, their pay will be adjusted to reflect the tier that they are on for 2009. That happens every year.
But hasn’t work been slow all over? It seems that regardless of individual performance, a lot of associates could be looking at a serious paycut simply because of industry wide economic factors.
Of course, one imagines that nobody was complaining about the multiple tier system when people automatically received raises commensurate with their actual hours billed.
As we’ve seen time and time again, as long as people have jobs complaining is kept to a minimum:
Word on the street is that most are just happy to have a place to go every morning and understand 99% of the steps the firm is taking.
No layoffs, no cry.
Earlier: The 2009 ‘Obamaration’: Brought to you by Patton Boggs
Chapman and Cutler Blazes The Trail of Tiers
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First
First!
Horrible.
It's inconceivable that there isn't a better way to run a system like this.
let's end this "first" thing
They shoudn't have dropped "Blow" from their name.
Sixth
Sounds like a kickback for not being laid off
PB has a top tier of 1950, not 1900.
let's end this "first" thing
9=slow fat kid in gym class...COMPETITION MATTERS! Strive to be first
I've had to pay back salary twice, one of which was to a law firm for classifying me one class too high. In both cases I brought the mistake to the attention of my employer and was required to pay the money back. Be glad you have a job. I'd happily pay back 20%-30% of my salary to have a job through the end of 2009.
can we discuss why she didn't get a dime?
http://www.msnbc.msn.com/id/29289191/
Horse shit.
Judge Kent pleads guilty to one charge of obstruction; resigns.
http://www.chron.com/disp/story.mpl/front/6276260.html
I wonder if the civ pro text books will continue to include his sharply worded opinions.
Meh.
First to say that Patton Boggs have excellent chocolate chip cookies in the DC office. And plenty of overweight attorneys (who have failed to pass the bar) to eat them.
Who cares about PaTTTon Boggs???
FAIL!
Gentlemen at the legal preparatory academy with which was I was once affiliated found themselves required, if affiliated through an employment relationship with a certain business entity purportedly engaged in the practice of law and other and sundry endeavors, to return a percentage of the earnings obtained through the course of that employment relationship, if and only if certain performance obligations went unmet by those gentlemen. These occurences were for the laudable goal of partner retention of the lucre that represented the fruits of the labors of the oppressed gentlemen. Nonethless, this course of conduct was ascribed only minor significance by any group of persons not including the aforementioned gentlemen, and was otherwise considered not to be a big deal.
12 -- apparently she's not very good at lobbying for herself.
Can we PLEASE be freed from the "Just Be Happy You Have a Job Troll"? Guess what, tool--McDonald's fry cooks and counter clerks at 7-11 have a "job" too. Not all jobs are great, and if you're job sucks you would be an idiot to be happy to have it anyway.
18 = TOOL
And 1ls think their going to get SA positions (http://www.blackbooklegal.com) with stuff like this happening, lol...
I second 20's motion. I'm much happier with my job at a non-pay-freeze, non-layoff firm than I would be having my bank account tapped by partners at Patton Boggs.
"It seems that regardless of individual performance, a lot of associates could be looking at a serious paycut simply because of industry wide economic factors. "
Isn't this how it works? When times are good due to industry wide economic factors, compensation increase, often regardless of individual performance (thank you lock step salaries); and when times are bad, well, compensation decreases.
Some firms may have dead weight, making layoffs preferable (i.e., aggregate reduction in compensation), whereas some firms may find that layoffs are worse value-wise to the firm than a compensation reduction.
this is awful and probably illegal. Just fire me.
Only a law firm could come up with a compensation system this stupid.
Absolutely horrible spin completely distorts the reality of this story.
NOBODY IS REQUIRED TO "GIVE BACK" ANYTHING!!!
By waiting 2 months to conduct reviews and retroactively reducing salaries, the firm is simply GIVING AFFECTED ASSOCIATES AN INTEREST FREE LOAN for the first months! The firm is not demanding that affected associates "pay back" the differential between their original and reduced salaries. Rather, the firm is reducing future paychecks to retroactively compensate for the overpayment. In no way is it even remotely fair to characterize this as forcing associates to "give back" salary... unless of course you think that associates have some kind of perpetual, vested property interest in their current salary level (news flash: they do not ).
#27 = I hope you are flame
Shut up, 27. Firms that don't put in place these BS underpaid lower-hours tiers don't do this at all. You only make 1800 because the partners can't bring in business? So what -- you're getting paid the standard associate rate, plus a bonus (if you're at a lock-step bonus firm). Why do you want to be an apologist for Patton Boggs on this?
Well said #20.
To those who think that "Be happy you have a job" is meant to be universal to 7-11 clerks, et al, just stop, please.
We are talking about law firms and, with some exceptions, a group of people who DO want to have a job.
In my firm, the majority of Associates are happy to still be employed. They, like everyone else, have bills to pay and futures to consider. So, if you have to follow a well-established firm rule and pay back some money because you didn't make your hours (by the way, there's no discrimination as to why you didn't make the hours - you just didn't), then do so and get back to work.
Back to our regulalry scheduled program!
Patton Boggs isn't the only firm that pays this way. In fact, it has always surprised me how little information about these tiered scales is given out and that the firms that use these scales will force associates down to lower ones (where they make less than 160k) if their partners/practice groups are slow.
Sorry, 31, but a job at a firm where you are forced to disgorge salary based on hours is just worse than a job at a firm where you don't. There's nothing wrong with pointing that out. Stop telling people to shut up and be happy because you have a job. Some jobs are better than others. It's good for the information on that to be public.
33: Exactly. The job market is what it is but please don't tell me I'm lucky to have a job, regardless of its terms. Why is the firm delaying so long if they're in such dire straits that they need to claw back the "overpayment" to associates? If it's that crucial, they should've gotten all of that squared away ages ago.
I'm just amazed that any lawfirm requires less than 2000 billable hours. Hell, most firms I know about require 2200 at minimum. I almost can't imagine what I'd do with my free time if I only had to bill 1900
35 = law student. No law firm requires a 2200 minimum (formally, anyway). 1900 or 1950 is fairly standard.
27 here.
28/29 -- It only seems like "bullshit" because of your undeserved and naive sense of entitlement. Salaries -- the price of a service -- are rightly subject to market fluctuations just like the price of goods. Unless you're working under a contract, you have no more "expectation" to receive the same salary next year than you have to pay the same price for gasoline in 2009 that you paid in 2008. Obviously, in practice, salaries are somewhat "sticky" -- they don't usually fluctuate as freely as the cost of consumer goods. The reason for this is the prevailing sentiment exemplified by you and the other posters in this thread: "I HAVE AN IRREVOCABLE AND IRREDUCIBLE RIGHT TO MY CONTINUED SALARY!" This is not necessarily a good thing, because as Posner and other economists have pointed out, it leads to certain people getting fired outright rather than wages being adjusted downward to compensate for a company's changed financial condition.
Nevertheless, even acknowledging your personal preference for "sticky" salaries, it is hard to call what's happened here "bullshit," because it happened according to established company policy that the associates were well aware of. It doesn't seem like anyone here is disputing the firm's right to adjust salaries downward (and of course, if an employee doesn't like it, he has the freedom to go elsewhere, because he's not under contract). Rather, the uproar in this thread is over the firm "taking back" money that has already been paid, which is a complete fallacy. The firm is not taking anything back, plain and simple. There is absolutely no way to characterize it as such. The firm has told some employees: "You made $120K (for example) last year. We're lowering your salary to $96K this year." This happens two months into the year, so the employee already has $20K in his pocket. It doesn't mean that he owes the firm anything -- it just means that he's only entitled to $76K instead of $100K for the last 10 months. Had the firm announced the new reduced salary on Jan. 1, the employee would have $16K in his pocket (reduced salary of $8K/month X 2) and be entitled to $80K over the last 10 months. By delaying the 2009 salary announcement, the firm has simply GIVEN THE ASSOCIATE AN ADVANCE ON HIS SALARY OVER THE FIRST TWO MONTHS.
Regardless of whether you think the firm was within its rights to adjust salaries downward, there is absolutely no basis for portraying the method in which they've done it as "taking back" from employees.
37: never had a real job.
28 here. 27/37, I could only make it through the first couple sentences before the righteousness began to sear my retinas. Maybe this clarification will do: by "BS" I simply meant "shitty"/a bad deal, not "totally unjust and previously unannounced." But the main point is that "the market" is lockstep, so this is "below market"; pointing that out has nothing to do with "a sense of entitlement" (the most overused phrase from the "shut up and be happy you have a job" set here). Also, Posner = not an economist.
I think that's it.
"Word on the street is that most are just happy to have a place to go every morning and understand 99% of the steps the firm is taking."
How pathetic and sad all the big associates turn out to be. Yeah, the eliTTTists were quite capable of cheering "NY to 190!", but now are willing to cave in.
I got laid off a few weeks ago and went straight to hanging out my own shingle. I didn't even sign the severance agreement. 100% of my clients came from the firm. All from the same three partners. I have billed 180 hrs already this month, up from 150 last month. At $250/hr. All in transactional work. All mine - not paying a dime to the partner. Yes, I am lucky that I have insurance through my SO.
My sister-in-law was laid off before me. She also went solo. No one was lining up for her type of work, so she took a few CLE's in bankruptcy and 220hrs this year at $150/hr. Not great, but not bad - she is still learning. 80% of her clients were contacts from her former firm.
Every partner that signs off on a layoff, every partner that doesn't fight to keep associates and counsels from being laid off, should live in fear that the minions will put a dent in their wallet.
27 is absolutely right. This is how PB does it, they make that clear, so their associates can't complain. No one is asking them to GIVE BACK anything. They will have already made it, so they just make a little less while their compensation is adjusted.
The only reason that could be a bad thing is that if PB associates live hand to mouth and don't plan financially for this. But they know the firm's compensation scenario, they know how many hours they billed in the previous year, and they are adults who are capable of budgeting their finances. To be really put out by this just shows that they can't handle a perfectly acceptable compensation arrangement. They need only make sure that their checking accounts can process their automatic debits and that their 401k contributions are ok.
There's nothing different between this budgeting and budgeting to pay the IRS each April 15th. If you've underpaid your taxes, you have to have the free cash available when taxes are due.
People are trying to make problems where there aren't any.
The bigger news at PB is that elimination of the eat-what-you-kill regime. That's news.
(And no, I don't work for PB, nor do I know anyone that does.)
38 -- Never had a job outside of the highly atypical legal profession.
I worked in the "real" real world for several years before going to law school, and nobody but a young associate at a law firm feels entitled to lockstep salaries (although many across all professions do naively feel entitled to continued compensation at or above their current level, for the reasons I explained above).
--37
35 =/= law student. I suppose it depends on your definition of "formally." I've never been provided with a written number of hours, its all been verbal and yes I've been told at many lawfirms with whom I've interviewed that my request for 2100 billable hours was not acceptable, 2200 was the minimum and 2400 was preferred.
36 - so are you saying that even when the firm says your salary is based on whether you bill 1800 or 1900 hours, that's meaningless and the firm really wants more? So why bother differentiating between 1800 and 1900? And the attorneys at this firm can't even bill out 1650?
You are required to wear at least 15 pieces of flair, which is the bare minimum. You don't want to be someone who just does the bare minimum, do you? Don't you want to express yourself?
PaTTTon Boggs Blows
43/44, I'm not saying either. I've worked at two "V50" firms (the current one is "V10"). One had a "real" 1900 minimum (like, you probably wouldn't make partner billing just 1900/year, but you definitely wouldn't be told you needed to get busier), and the current ("V10") one has a 1950 minimum (same deal -- except here it seems that half the people don't even hit the minimum and no one gets in trouble for that -- some even get bonuses). I have, of course, heard that the the expectation at, e.g., Skadden, is significantly higher than 2000 hours despite its stated "1650 minimum." I've never heard of a firm actually saying "we have a 2200 billable minimum here." You're probably too new to this to remember, but Clifford Chance's announcement of a 2300 "soft" target in 2002 or 2003 caused massive outrage and completely screwed that firm for recruiting and retention at the time.
Its funny that Patton Boggs said this "happens every year."
This hasn't been going on for years; in fact, the 3 tier salary scale was only adopted at the end of 2007. The first year it was in full effect was 2008, so this evaluation cycle is the first time anyone has had to deal with these issues.
What do you say to all the corporate associates who have nothing to do? What about all of the public policy associates? They're getting bumped down. Sure, nobody's leaving because of the economy, but when the economy comes back, it might be a different story. You just have to hope that you happen to be in a group with work.
Its not predictable, and its very random, because some people missed hours and did not get bumped down, while others did.
Not to mention, the firm came out and said in the annual meeting that they're going to fire people and call it performance in this evaluation cycle.
11, 31 et al. Anyone who says that people should "shut up and be happy they have jobs" must have voted for Bush. I thought we moved beyond silencing critics of imperfect systems. Just because we think waterboarding is torture doesn't mean we hate America. Similarly, just because we think a particular compesation package is stupid doesn't mean we don't appreciate our jobs.
27/37 - While you may be right that associates actually benefit from the "interest-free loan," you sound like either a naive 1L or a partner when you harp on some supposed compensation-as-property-interest disorder. People aren't complaining because the associates get paid less than the 1900 rate. People are complaining because of the clawback provision. If PB paid associates double the 1900 rate for the first two months and then recouped the difference (with 1900), people would STILL complain. If I agree to pay you $10 to mow my lawn, then give you $15, then two months later say "give me back my $5" people would complain that I should have just paid you $10 to begin with. If you can't understand that, there's no use talking to you anymore.
Now, while associates benefit from the current system (i.e. for 2 months they are given the benefit of the doubt at the higher rate), that doesn't mean it isn't stupid. KISS - keep it simple stupid - a phrase PB would do well to learn.
One last flaw in your analysis - if an associate leaves/gets canned before the overpayments are recouped, then they presumably WOULD have to GIVE BACK to the firm.
49 -- I'm neither naive nor a 1L nor a partner - I am a pragmatic realist. I'm not disputing an associate's right to object to a lower salary -- I'm sure many who received a bump-down think it was undeserved. Of course, the associates hold the ultimate trump card because they're free to leave if they're unhappy with the new terms of their compensation. But I nevertheless acknowledge their right to be unhappy about it (meaning the pay reduction itself).
I'm simply pointing out that there is no "clawback" provision as you suggest. In no way, shape, or form can this be construed as the associates having to pay anything back to the firm. It's merely a forward adjustment with retroactive effect since it was applied 2 months into the year. From what we know, the firm has NOT asked associates to pay anything back, nor could they. Contrary to your suggestion, an associate unhappy with his salary reduction is more than free to walk and keep everything he's been paid in the first two months of the year. The firm would have absolutely no grounds to request anything back because the associate had no way to know what his 2009 salary would be until now. This is precisely why it is fallacious to label this as a "clawback."
It's fine to be upset about having your salary reduced, but it's horrible journalism for Elie to mischaracterize facts to make an article more inflammatory than it really is. NOBODY IS GIVING ANYTHING BACK!! THIS PAY REDUCTION IS NO WORSE OR MORE UNFAIR FOR ASSOCIATES THAN IF IT HAD BEEN CONDUCTED IN JANUARY. That's my only complaint here.
27/37/51 -
I admit I did a poor job illustrating my point, but you're still missing it.
I'll try again: suppose we agree to pay you $10/mo for normal work, or $15/mo if you did a great job. For the first two months I pay you $15/mo. I then tell you that I overpaid you because you didn't do great work and instead you'll be getting $9/mo for the rest of the year. Although you are better off (time-value of money) with the exact same annual compensation, the perception is that you are giving $1/mo back to the firm. (Your characterization was that people think they are giving back $6/mo.)
Furthermore, if the firm did continue to pay you $10/mo while asking that you give them back $1/mo, it would be the same substance, but a different form. This is what I meant by a clawback. I realize I made a mistake in my description earlier.
I would agree that associates shouldn't complain under this system since they are better off. But that doesn't change the problem in perception. You were right to characterize the problem as sociological, but the phenomenon is not wage-stickiness or entitlement. It is a universal psychological tendency for people to view monetary mistakes in their favor as "earned" and corrections as "unfair."
PB should realize this. One solution is to just say that everyone gets paid a nominal sum "A" as an advance of their salary for the first two months, with the remaining 10 months paid at 3 levels "X@1900," "Y@1800" and "Z@1600." In my example above, the pay rates would be $15/mo and $9/mo (not $10) after an advance of $30 (split over 2 months). By couching it in terms of switching rates, PB created the impression of a clawback, since the bottom rate is advertised as $10 but distributed at $9.
Does that make more sense?
27/37/50 -
I admit I did a poor job illustrating my point, but you're still missing it.
I'll try again: suppose we agree to pay you $10/mo for normal work, or $15/mo if you did a great job. For the first two months I pay you $15/mo. I then tell you that I overpaid you because you didn't do great work and instead you'll be getting $9/mo for the rest of the year. Although you are better off (time-value of money) with the exact same annual compensation, the perception is that you are giving $1/mo back to the firm. (Your characterization was that people think they are giving back $6/mo.)
Furthermore, if the firm did continue to pay you $10/mo while asking that you give them back $1/mo, it would be the same substance, but a different form. This is what I meant by a clawback. I realize I made a mistake in my description earlier.
I would agree that associates shouldn't complain under this system since they are better off. But that doesn't change the problem in perception. You were right to characterize the problem as sociological, but the phenomenon is not wage-stickiness or entitlement. It is a universal psychological tendency for people to view monetary mistakes in their favor as "earned" and corrections as "unfair."
PB should realize this. One solution is to just say that everyone gets paid a nominal sum "A" as an advance of their salary for the first two months, with the remaining 10 months paid at 3 levels "X@1900," "Y@1800" and "Z@1600." In my example above, the pay rates would be $15/mo and $9/mo (not $10) after an advance of $30 (split over 2 months). By couching it in terms of switching rates, PB created the impression of a clawback, since the bottom rate is advertised as $10 but distributed at $9.
Does that make more sense?
-49
I interviewed for one firm that had asked me what I typically billed. I said 2100 and they replied that was fine because their minimum was 1900. So I started working there in June and for 6 months, was on target for 2100, told all was good. Two months later, my boss tells me that he expects me to bill at least 2400 for the following year. I said that might be difficult given my family situation, which I had mentioned at my interview. the next four months, he made my life hell and bitched at me whenever I didn't bill 200+ hours in a month.
So, new job, same deal. I tell them I can bill about 2100 hours a year. They said they usually like associates to bill 2400, but they really liked me (this was on my 2d interview) and my experience, so they would make an exception in my case. Its been 9 months now and so far, no problems. Some months, I have even billed 200 (and I know a couple other associates rarely, if ever, bill 200 in a month). Hopefully it will remain so.
Granted the two firms are different, but interesting the dynamics over being truthful over the amount of hours.