Akin Gump: Salary Unfreeze Update
On Friday, Akin Gump announced it was unfreezing salaries for associates who were on track to make their hours. There was a lot of speculation on how many people would benefit from the pay raise, given the general slowdown in work. We've got some more clarification from our Akin Gump sources.
Above the Law has obtained the internal memo Akin Gump attorneys received yesterday, explaining the firm's compensation structure for 2009. According to the memo, pay raises will be paid on a quarterly basis for attorneys on track to hit 2000 hours:
Associates and Counsel throughout the Firm who meet the targeted client hours (500 hours as of March 31, 2009; 1,000 hours as of June 30, 2009; 1,500 hours as of October 31, 2009; and 2,000 hours as of December 31, 2009) will receive a pro-rata distribution equivalent to one-quarter of the difference between an Associate/Counsel's current salary and the salary to which the Associate/Counsel would have advanced without the freeze.
That means that an associate who isn't on track to get a pro-rated portion of the raise this quarter can still make it up next quarter. If they do, they'll get the both the second quarter raise and a retroactive first quarter raise. The memo explains it like this:
Payments will be based on the cumulative annual client hours as of the previous quarter, including up to 100 hours of pro bono annually. For example, an Associate with a pay class differential of $20,000 who works 500 hours in the first quarter, 400 hours in the second quarter, 700 hours in the third quarter and 400 in the fourth quarter (for a total of 2,000 hours) would receive a distribution of $5,000 on April 30th; no distribution on July 31st, two distributions of $5,000 each for a total of $10,000 on October 31st (one for the second quarter and one for the third quarter as the Associate was back on track for 2,000 hours), and one distribution of $5,000 on January 31st for a total of $20,000.
Aside from being low on hours, there are other people who will not be eligible for any raise. We check in on them after the jump.
The pay raise only applies to associates and counsel. There will be no extra money for staff:
Associates and Counsel are eligible for these quarterly distributions; Staff Attorneys, Senior Attorneys, and Senior Counsel are not eligible, and the compensation for these attorneys will remain at their current levels. Compensation programs for attorneys in our international offices will continue to be addressed by each office.
Attorneys who are not employed with the firm (for whatever reason) when the quarterly payments are made will also get left out of the pay raise bonanza:
Payments will be made on the last payroll in the month following the end of each quarter. Associates and Counsel must be actively on the Firm's payroll at the time each quarterly distribution is made to receive the distribution.
This seems like an important point. Should the firm undergo another round of layoffs (stealth or otherwise) this indicates that whatever severance is offered will be on the basis of the person's frozen salary, regardless of whether or not those laid off were meeting their hours for the quarterly pay raise.
Other than that, Akin Gump is certainly hoping that this salary arrangement is a temporary issue. The firm plans to reevaluate its 2010 structure once it has a better read on 2009.
Read the full memo below:
AKIN GUMP -- MEMO -- ASSOCIATE/COUNSEL COMPENSATION
The Firm is pleased to announce that for 2009, Associates and Counsel who are on track to meet a target of 2,000 client hours will be eligible to receive quarterly adjustments that will provide them compensation equal to the amount they would receive if salaries were not frozen.
Associates and Counsel throughout the Firm who meet the targeted client hours (500 hours as of March 31, 2009; 1,000 hours as of June 30, 2009; 1,500 hours as of October 31, 2009; and 2,000 hours as of December 31, 2009) will receive a pro-rata distribution equivalent to one-quarter of the difference between an Associate/Counsel's current salary and the salary to which the Associate/Counsel would have advanced without the freeze. A copy of the current compensation grid is attached.
Below are the guidelines for the quarterly distributions:
* Associates and Counsel are eligible for these quarterly distributions; Staff Attorneys, Senior Attorneys, and Senior Counsel are not eligible, and the compensation for these attorneys will remain at their current levels. Compensation programs for attorneys in our international offices will continue to be addressed by each office.
* Payments will be made on the last payroll in the month following the end of each quarter. Associates and Counsel must be actively on the Firm's payroll at the time each quarterly distribution is made to receive the distribution.
* While this program is designed to recognize the economic contributions of our Associates and Counsel, we believe it is important to affirm our continued commitment to our pro bono practice and thus we will be including 100 hours of pro bono client work in meeting the 2,000 hour threshold. As in the past, all pro bono hours will be considered in any year end bonus program consideration. In this regard, we urge everyone to continue their commitment to pro bono and to help us meet our Pro Bono Challenge commitment of devoting at least 60 hours per attorney per year to pro bono representation, particularly now when the need is so acute.
* Payments will be based on the cumulative annual client hours as of the previous quarter, including up to 100 hours of pro bono annually. For example, an Associate with a pay class differential of $20,000 who works 500 hours in the first quarter, 400 hours in the second quarter, 700 hours in the third quarter and 400 in the fourth quarter (for a total of 2,000 hours) would receive a distribution of $5,000 on April 30th; no distribution on July 31st, two distributions of $5,000 each for a total of $10,000 on October 31st (one for the second quarter and one for the third quarter as the Associate was back on track for 2,000 hours), and one distribution of $5,000 on January 31st for a total of $20,000.
* For those on paid medical and/or parental leave during the year, the 2,000 hour target will be reduced pro-rata in accordance with the amount of leave taken, as will the amounts of the distributions. Similarly, the 2,000 hour target will be reduced pro-rata for those who join the Firm mid-year, or those who are working reduced schedules, as will the distributions paid.
* In Texas, Associates and Counsel receive both a base and a backend payment. Associates and Counsel who are on track for the 2,000 client hours ( including up to 100 pro bono hours) are eligible to receive quarterly distributions under this program calculated on the base compensation. In addition, Associates and Counsel who work 2,000 client hours (including up to 100 pro bono hours) will receive a backend payment in January 2010 equal to the amount that would have been received had there been no freeze in compensation. Those who do not achieve 2,000 client hours as described above but otherwise qualify for the back-end deferred compensation under our current Texas program, will receive the backend deferred compensation at their current salary level in January 2010.
* Compensation plans for 2010 will be addressed once we have the opportunity to evaluate 2009 Firm performance.
We are pleased to offer the opportunity to provide additional compensation to our Associates and Counsel around the Firm. We recognize that there will be occasional instances where particular circumstances will need to be evaluated. Practice Managers or individual Associates and Counsel can contact Dennis Race with questions about this program or particular circumstances that need to be reviewed.
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Comments
RECESSION IS OVER!
so basically they are switching to base salary, plus incentive comp to hit higher hours targets.
viva la incentive for associates to try to overbill, get smacked down by partner, and the have angry associates and poor morale.
Screw you guys, I'm going home.
Comment removed by moderator.
Senior Attorneys and Senior Counsel at Akin are not "staff" (not that there's anything wrong with being "staff"). They're counsel-type designations (not partnership track) that generally pertain to laterals in niche practices who negotiated a set package coming in and aren't (and wouldn't expect to be) part of any regular group salary increases, lockstep or otherwise. Just fyi.
I wholeheartedly support anything that rewards industrious young associates. Best wishes to all!
what's with Weil. Are they hiring for bankruptcy?
So what happens to the poor guy who billed 475 hours the first three months and took a week off in February for vacation before this policy was announced. This reactionary backward-looking shit is ridiculous.
Yay! They announce this the same day they defer their incoming associates until March 2010...
First to note that my Gump is Akin'
Akin Gump's Vermont offices are celebrating this event by banging all of their male associates in the ass with maple syrup.
Wow, now there's an incentive to overbill the clients if I ever saw one. What possible incentive is there for associates to be efficient and not waste resources???
8's reading comp skillz are off the charts
This firm may have been fooled by the March bear market rally into prematurely rolling out this compensation program. In reality, what happened in March is a classical dead-cat bounce. The long-term problem with the stock market is two-fold: 1) its earnings will decline as business sags deeper and deeper into this recession which will depress stock-market prices; and 2) the price/earnings ratio (PE) is still way above the typical PE at the bottom of bear markets. The stock market will have its ups and downs and literally suck Wall Street investors into short-term rallies as they try to figure out whether the market has hit bottom. Don't be fooled. The long term trend will continue to be down through the end of this year.
From a client's perspective, this extraordinary emphasis on billable hours is more than a little troubling. Am I getting this right? A partnership caliber associate who happens to find herself or himself in a slower practice area may be treated less favorably than a grunt who has the good fortune to be assigned to a major litigation? And how much more of a personal incentive is being created by the firm for attorneys to pad their hours? This approach makes it even clearer why the emphasis on hourly billings inevitably will diminsh in relation to more project and performance related billing metrics.
Are firms still going to pay to move 3Ls out to their new cities? This seems like a perk they could easily cut back on...
-12
what incentive was there for the associate to do a good job, bill hours and be productive before? exactly....
lockstep is stupid when someone working only 1600 hours versus 2100 are making the same amount.
-12
what incentive was there for the associate to do a good job, bill hours and be productive before? exactly....
lockstep is stupid when someone working only 1600 hours versus 2100 are making the same amount.
>>>This seems like an important point. Should the firm undergo another round of layoffs (stealth or otherwise) this indicates that whatever severance is offered will be on the basis of the person's frozen salary, regardless of whether or not those laid off were meeting their hours for the quarterly pay raise.
Why is this an important point. Firms are not laying off people who billed 500 hours in the last quarter, are they? It is people who don't have enough work to do.
I have to go to Des Moines, Iowa for two days of depositions next week. Does anyone have any restaurant recommendations?
Quinn remains. No salaray freezes, no pay cuts, and a b!tch'n hike coming up...
When my ass was 25 years old, I changed the face of the legal profession by billing 3,217 hours in a measely 10 months.
I was handed the keys to the kingdom. Partnership at 28, a corner office, Lexii, Anne Hathaway as my personal assistant, and most importantly unlimited Starbucks coffee.
Everyone wanted a piece of my shit. I was just a man with a mind for victory and doc review skills like a hodgy on crack.
But, sometimes when you the thunder you lost in the storm.
15, it's salary cuts for low-billing associates in slow practice groups that will allow firms to keep superstars on the payroll until things pick up. Or do you really think someone billing 90 hours a month should be raking in money based on stellar past performance? Someone staffed on a major litigation and billing a 300 hour month is still adding a lot of value even if their work is only ok. Doesn't call for a merit bonus by any means, but they should receive a higher salary than one doing no work even if the lack of work is through no fault of their own.
When my ass was 25 years old, I changed the face of the legal profession by billing 3,217 hours in a measely 10 months.
I was handed the keys to the kingdom. Partnership at 28, a corner office, Lexii, Anne Hathaway as my personal assistant, and most importantly unlimited Starbucks coffee.
Everyone wanted a piece of my shit. I was just a man with a mind for victory and doc review skills like a hodgy on crack.
But, sometimes when you bring the thunder you get lost in the storm.
>Firms are not laying off people who billed 500 hours in the last quarter, are they? It is people who don't have enough work to do.
Some of those laid off last month were billing a lot. Others were stuck in slow practice groups but picked up a lot of hours from other sections. Others were just slow. The cuts were based on bringing the headcount to the minimally sustainable level. If you had four second years billing 175 each, the practice would cut one, so the three left are now billing 225+.
>Am I getting this right? A partnership caliber associate who happens to find herself or himself in a slower practice area may be treated less favorably than a grunt who has the good fortune to be assigned to a major litigation?
How is this any different than before? If you're a star in a small section that has no work, you're less profitable than someone who has spent their entire career reviewing docs in a conference room for 200 hours a month.
I agree with Cartman.
Isn't this the exact opposite of what Hogan & Hartson did last week?
Last week, Hogan cut pay for associates not on track to bill 1950 (note that this cut was on top of already frozen salaries). Respect to Akin to re-instating annual pay raises for those on track to hit their hours rather than further reducing salaries of the low billers.
Isn't this the exact opposite of what Hogan & Hartson did last week?
Last week, Hogan cut pay for associates not on track to bill 1950 (note that this cut was on top of already frozen salaries). Respect to Akin to re-instating annual pay raises for those on track to hit their hours rather than further reducing salaries of the low billers.
Isn't this the exact opposite of what Hogan & Hartson did last week?
Last week, Hogan cut pay for associates not on track to bill 1950 (note that this cut was on top of already frozen salaries). Respect to Akin to re-instating annual pay raises for those on track to hit their hours rather than further reducing salaries of the low billers.
Isn't this the exact opposite of what Hogan & Hartson did last week?
Last week, Hogan cut pay for associates not on track to bill 1950 (note that this cut was on top of already frozen salaries). Respect to Akin to re-instating annual pay raises for those on track to hit their hours rather than further reducing salaries of the low billers.
Isn't this the exact opposite of what Hogan & Hartson did last week?
Last week, Hogan cut pay for associates not on track to bill 1950 (note that this cut was on top of already frozen salaries). Respect to Akin to re-instating annual pay raises for those on track to hit their hours rather than further reducing salaries of the low billers.
Isn't this the exact opposite of what Hogan & Hartson did last week?
Last week, Hogan cut pay for associates not on track to bill 1950 (note that this cut was on top of already frozen salaries). Respect to Akin to re-instating annual pay raises for those on track to hit their hours rather than further reducing salaries of the low billers.
God, 27-32, you are such a dick.
Hey, I wonder if this is the exact opposite of what Hogan & Hartson did last week?
Anyone know?
Does anyone have the lowdown on what Hogan & Hartson did last week?
Banned for posting a link to a useful spreadsheet with information about deferrals and layoffs? Huh? Thanks for the warning.
- 4
BTW, the link to your comment policy does not work so you might want to fix that before you go all commi on the people who generate all your ad revenue.
The stellar prolonged wait time of the webpage to refresh after a posted comment is generally the culprit for a 27-32 episode. Good work ATL.
10 - Why, did someone GULC you in it?
Has anyone heard about layoffs at Cahill?
has anyone heard about the lesbian partner at king and spalding that had sex with a client ? does anyone have photos ?
15/23/25: Do hours billed also trump other considerations in partnership decisions? Or is it only to pay some people more than others while they're associates, and then factor ability back into the equation when making partners? The Akin system does seem a bit distorted in rewarding quantity over quality.
Shouldn't the 3Q target date for 1500 hours be September 31, 2009 instead of October 31, 2009? Did Akin fuck up in their memo?
Hey Clients,
Sorry to inform you that you can't be lazy asses. You actually have to review the bill and if it seems like some associate billed far more hours than is reasonable, it's YOUR job to 2nd-guess it and ask the partner to take a haircut.
42 - Nope, they call that "Leap Month" at Akin. So named for the associates flinging themselves off the roof or through the window...
September 31 of what year? 2008 0r 2009;
or are you a fucking itiot?
As a client, I enjoy reviewing bills, calling up the partner and sweating him to cut the hours of worthless first year associates.
- Not an Akin Gimp client
Hey #40 -- that story sounds interesting. Enough of this layoff/salary cuts/no offer stories. Let's get ATL back to more stories like #40 has identified.
25 -- No firm is firing people in practice areas where the associates have on average 175 billable hours per month. Over the course of the year, that's at least 2,000 hours per associate, and that's a very profitable place to be.
when their start date?
Hey 45, it clearly says September 2009, you dumbass!
Apologies for the 31, September only has 30 days, obviously.
42 -- read the memo. You get paid at the end of the month "following" the quarter end -- hence 10/31. I know one thing -- I wouldn't want to pay your dumb ass to do due diligence.
51-- read the memo douchebag, target hours should be met by the end of the quarter, hence they mention the March, June and December dates. Last I checked 3Q did not end on 10/31, but on 9/30. Payment of the increase does indeed take place by the end of the first month of the following quarter.
What a moron!
48 - AG did. 175 is profitable, but 225 with one less mouth to feed in the section is even better for the partners.
20 - IHOP, Waffle House, Cracker Barrel or Denny's (the last is a personal favorite).
34 - Did you ever get an answer to your question.
32 is 27-32
2+2=4
54, yes. Exact opposite.
34
P.S. I am a gigantic tool.
52 likes to hear himself talk. He needs to, since he has no friends.
How do I get my posting privileges back without getting some gay ass IP Hiding program that sucks the life out of your computer.
This policy does NOT give pay raises. Read carefully and you will see they are giving "distributions" equal to what salary would have been if not frozen.
Translation - if by some miracle you find enough hours to meet the target your base salary does not go up. You get the money that would have been your raise this year, but are promised nothing for future years.
This policy does NOT give pay raises. Read carefully and you will see they are giving "distributions" equal to what salary would have been if not frozen.
Translation - if by some miracle you find enough hours to meet the target your base salary does not go up. You get the money that would have been your raise this year, but are promised nothing for future years.
How were Akin Gump bonuses this year?
62 -
from what I heard they weren't.
62 - shitty, and with a 2000 hour minimum that was announced after the fact. previously, hours obviously mattered, but were not the entire story.