Maybe Toyota should take a lesson from Bingham McCutchen: don’t try to cut corners when producing a hybrid.
Back in October, Bingham announced that it would be adopting a new “merit-lockstep” hybrid approach to associate compensation. The plan came with the stamp of approval from Bingham partners and associates. And a majority of Above the Law readers also approved of Bingham’s hybrid approach.
Today, Bingham rolled out its hybrid system. The firm is providing true-up, lockstep raises for people who hit 1900 hours. The double bump extends nationally, across all of Bingham’s offices. People who hit 1500 hours will only be getting a single class bump in salary. We understand that only a small percentage of Bingham associates were low enough on hours to be affected by this stratification.
At the low end, people who billed fewer than 1500 hours will have their salaries frozen again.
On the bright side, all of the people who are frozen will have their hours reevaluated in June. If they’re on pace, they’ll get their money.
The Bingham McCutchen lockstep base pay structure is clear and straightforward (see chart after the jump). For bonuses, welcome to the black box that is merit-based compensation.
Here’s how Bingham described the merit-based bonus plan to its associates:
Additionally, we will be awarding merit bonuses to eligible attorneys for their accomplishments in 2009. Individual bonus amounts will be conveyed during evaluation meetings, which will commence this week. In determining bonus amounts for each attorney, a variety of factors are being considered, including achievement of the hours target, quality of an attorney’s work, as well as pro bono and firm citizenship contributions.
As we understand it, Bingham’s bonuses are totally individual. But, in general, most associates who meet expectations will receive a payout somewhere within the Cravath bonus scale. At the high end, some associates might receive a bonus that exceeds the top Cravath bonus.
Bingham people we spoke with emphasized that the merit-based aspect of the bonus required more partner involvement to provide useful associate feedback. This had the benefit of allowing Bingham to better address its associate development needs.
It’s nice when figuring out how to divvy up the profits also shows you how to develop better attorneys.
Of course, without seeing the breakdown of who received how much of a bonus, there’s no way of objectively knowing if Bingham’s associates were generally compensated at the top of the market. That is the risk you take with a merit-based component. There will be winners and there will be losers.
Bingham associates, let us know whether or not you’re happy with your bonus.
UPDATE: More about the Bingham bonuses here.
Read the full Bingham announcement below.
BINGHAM MCCUTCHEN — MEMORANDUM — ASSOCIATE SALARIES AND BONUS
I am pleased to announce our compensation program for 2010 base compensation. As you know from various discussions and presentations over the course of the last several months, we have moved our compensation program to a merit lockstep approach. This approach provides the flexibility to recognize the strong performance of our attorneys and their contributions to the firm, while ensuring a level of predictability and stability. Additionally, we will be awarding merit bonuses to eligible attorneys for their accomplishments in 2009. Individual bonus amounts will be conveyed during evaluation meetings, which will commence this week. In determining bonus amounts for each attorney, a variety of factors are being considered, including achievement of the hours target, quality of an attorney’s work, as well as pro bono and firm citizenship contributions.
The 2010 base compensation for associates and counsel in good standing will be paid in accordance with the following schedules (based on hours billed during the 2009 billable year). I am pleased to report that following the completion of the evaluation process, the majority of our attorneys will be paid in accordance with the first schedule.
For associates and counsel who have annualized 1900 billable hours or more (inclusive of 50 pro bono hours):
Class I – $160,000
Class II – $170,000
Class III – $185,000
Class IV – $210,000
Class V – $230,000
Class VI – $250,000
Counsel I – $265,000
Counsel II – $280,000
Counsel III – $290,000
For associates and counsel who have annualized 1500 billable hours or more (inclusive of 50 pro bono hours):
Class I – $160,000
Class II – $165,000
Class III – $170,000
Class IV – $185,000
Class V – $210,000
Class VI – $230,000
Counsel I – $250,000
Counsel II – $265,000
Counsel III – $280,000
For associates and counsel who annualized below 1500 billable hours (inclusive of 50 pro bono hours), base compensation will remain at current levels. We will assess the progress for these associates and counsel in June, and the firm may consider a compensation adjustment at that time.
As in the past, of counsel compensation will be determined on a case-by-case basis.
As we did last year, following the conclusion of the evaluation meetings we will conduct a firm-wide meeting to discuss the evaluation process and answer any questions you may have. At that time we will provide detailed information regarding the merit bonuses awarded for 2009. We want to thank each of you for all of your valuable contributions throughout the year and your dedication to our clients. If you have any questions, please do not hesitate to contact me, Lynn Carroll, Cheryl Hudson Wright or your local Attorney Development Manager.