Welcome back from your long weekend. I trust everybody is ready to put in a lot of hard work through the holiday season in order to finish the year off strong.
Ah, what’s the point? Based on the early bonus news, it seems that Biglaw managers are going to go with stingy bonus payments for the second year in a row. And while we’ve reported that hours appear to be up this year over last year, hours aren’t back to 2007 levels.
If firms are going to keep bonuses at 2009 levels until their profits get back to 2007 levels, well, then maybe it’s time to kick back and do some shopping on Cyber Monday…
A new study from Wells Fargo explains why bonuses will continue to be low this year. The New York Law Journal reports:
The research by Wells Fargo Wealth Management found that while law firms nationally have seen flat revenue growth, firms in New York and Southern California are bucking that trend with 5 to 6 percent increases. But Wells Fargo said that the improved results in those areas related more to firms rebounding from declines in 2009 than real revenue growth.
“The markets that experienced significant downturns, New York and Southern California, are generally the markets that have had more of an economic recovery,” said Jeffrey Grossman, national managing director in Wells Fargo’s legal specialty group.
The findings fall generally in line with a separate report by Citi Private Bank, which surveys firms nationally but did not break out statistics for local regions.
So Biglaw firms on the coasts expect 5% growth in revenue, but they’ll keep bonuses flat? I don’t think anybody was expecting a 2007 bonus, just something that was better than 2009. Why can’t firms make at least make a nominal 5% bump in bonuses?
Oh yeah, because they don’t have to. I’m sure associates will remember that over the course of this month.
I’m sure legal staff, who are also getting little or nothing in bonuses this season, would also like to take their foot off the gas during December. But there could be risk in that slacking:
Bankers at both institutions said that without substantial increases in revenue and productivity, law firms looking to boost profits in 2011 will need to make further cuts. Both Mr. Grossman and Mr. DiPietro said a reduction of law firm staff is possible if not likely.
“You’re going to see more cuts in terms of staff,” Mr. Grossman said.
Only 5% growth? Fire staff! Mwahahaha. Seriously, it’s like these Biglaw managing partners picked up a copy of How the Grinch Stole Christmas and stopped reading before the end.
Biglaw partners are looking out for themselves; their employees should be doing the same. Do what you have to in order to keep up appearances, but there’s no reason to bust your behind for people who won’t share the wealth when there is only a little bit to go around.
Despite Flat Revenues Nationwide, N.Y. Firms Show Modest Uptick [New York Law Journal]
Earlier: The Hours Survey Results