Associate Bonus Watch: Arnold & Porter Will Try Transparency Next Year, This Year Sticks With Cloak and Dagger Routine
It’s hard to understand why some firms choose secrecy over transparency when it comes to associate bonuses. I understand not wanting to tell Above the Law about them. We often find out eventually, but if you want to make us jump through a couple of extra hoops, that’s fine. (To help us jump through the hoops, please email us about your firm’s news.)
But even if you don’t want ATL to know about your firm’s bonuses, I don’t see how fear of a blog is justification for keeping information from your own people about how they are compensated. If you are transparent about how bonuses are calculated and awarded, most of the people will accept that they knew what was expected of them and either met those expectations or fell short. Sure, there will be some disgruntled people, but at least everybody gets to know why they are being paid what they are being paid.
But if you roll out there with secret formulas and unspecified hours requirements, nearly everybody feels disgruntled because they have no idea why they received (or didn’t receive) whatever they got. It’s like, if a girl tells you she won’t put out until after at least four dates, you know what you’re up against. But if she says nothing and you find yourself standing outside her apartment after a successful third date and she’s not inviting you up for “coffee,” you’re super-pissed (and hoping that the slutty chick who was checking you out earlier is still at the bar and relatively disease-free).
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And that’s where Arnold & Porter associates find themselves when it comes to their bonuses. Standing outside of some chick’s apartment, wondering what the hell just happened.
Oh A&P announced its bonuses. But the eligibility for these bonuses is really anyone’s guess…
On paper, the Arnold & Porter bonuses look like a pretty good deal. According to a firm memo, the A&P bonuses will generally range from $10,000 to $50,000, with a maximum available bonus of $70,000 (for “an extraordinary number of hours” and work of “exceptional quality”). Considering that the Cravath bonus scale ranges from $7,500 to $35,000, this seems like a good deal for A&P associates.
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But the catch is a doozy. From the Arnold & Porter firm-wide memo:
2010 Bonuses
We will be paying bonuses to eligible associates for work performed in 2010.
As in prior years, eligibility for bonuses will be based on a number of factors, including productivity, the quality of an associate’s work, the extent to which an associate has performed at a level commensurate with his/her seniority, and whether an associate has complied with Firm policies (including timekeeping). Although we may make exceptions in rare circumstances, associates who did not meet the 1800 billable hours expectation will be ineligible for a bonus. Moreover, although the combined (billable, pro bono, business development) hours required to be eligible for a bonus will be lower in 2010 than in 2009, an associate will again need to have billed additional hours (beyond 1800 billable) either on pro bono, business development, or additional commercial work to be eligible for a 2010 bonus.
As a general matter, the bonus amounts for work performed in 2010 will range from $10,000 to $50,000, depending upon performance, class year and productivity levels. For those associates who billed an extraordinary number of hours (2600 or higher), we will award additional amounts, with the maximum available bonus (at the highest productivity levels and for work of exceptional quality) being $70,000.
Did you catch that? To be eligible for a bonus, associates have to bill 1800 hours (at least) on billable matters, and… well… nobody really knows how many hours doing all sorts of other stuff.
Moreover, this isn’t a distinction without a difference. As a tipster reports, having unexplained eligibility requirements can cost Arnold & Porter associates dearly:
Last years bonuses were from 10k-50k, but less than 20% of associates received a bonus and the firm refused to say how many hours were required to get one, which really upset people because they deviated from the previous scale and refused to tell people how much they needed to bill to get a bonus. Anecdotal evidence suggested that the requirement was 2400 hours to get a bonus last year.
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But that was last year. And you might think that this year Arnold & Porter’s unspecified hours requirement will end up around 2000 hours (as it does at most of A&P’s peer firms that also have hours requirements). But, in a truly bizarre move, Arnold & Porter announced a hard hours target for next year’s bonus eligibility, even as they are being purposefully secretive about this year’s bonus eligibility:
2011 Hours Expectation & Bonus Program
Next year, the minimum productivity expectation for associates will be 2000 combined billable, pro bono, and business development hours, of which at least 1800 must be billable. This minimum combined hours commitment affirms what we previously communicated regarding our expectation that associates will supplement their billable work with pro bono and business development efforts.
If transparency will make sense next year, why doesn’t it make sense this year? And if 2000 hours will be next year’s requirement, is it fair to assume that this year’s requirement is quite a bit north of 2000 hours? We reached out to Arnold & Porter but the firm has not responded to our request for comment.
But then again, maybe they don’t have reliable access to emails and telephones over at A&P. How else can you explain the fact that the firm is apparently unaware that the Biglaw base salary market has moved firmly back to $160K (after a few firms failed in moving the whole market down to $145K back in 2009)?
2011 Base Compensation
We also wanted to provide you with an update on our base compensation for 2011. We are aware of some movement in the U.S. market with respect to the rate of base pay at certain levels for 2011, as well as movement by some of our peer firms away from strict lock-step compensation at the mid-to-senior associate levels. We have initiated a process for consultation with associate representatives regarding these issues, and once our review is finalized, we will decide whether any changes should be made to our compensation scale for calendar year 2011. Because associate evaluations have been moved to January to correspond with the date of the annual Partnership Meeting, salary increases — whether they are promotional increases on the existing scale or market increases, if approved — will not be reflected in paychecks until February, but will be retroactive to the first pay date in January. We expect to finalize any changes to 2011 base compensation no later than the end of January, 2011.
It almost looks like A&P is trying to confuse its own associates on purpose. But you know what happens when people get confused about how much money they are making? They get very, very angry. So guess what A&P does at the end of this long memo where it pretends to not know where the market is on Biglaw associate salaries and reveals that it has secret bonus eligibility requirements that will remain secret?
Well, I think A&P uses what generals would call “a diversion.” Again, from the memo:
As an expression of our appreciation for your service to the Firm and our clients, we are pleased to issue to each of you an Apple gift certificate that is sufficient to purchase an Apple iPad for your personal use. If you already have an iPad, you may use the gift certificate for other Apple products of your choice.
The gift certificates will be available in each office. A separate message will be circulated shortly as to the specific distribution plan in each office.
Best wishes for a Happy New Year.
It looks like Arnold & Porter based its associate compensation scheme on the South Park episode where researchers “discover” that monkeys get angry when you pee on them but can be slightly placated if you give them a banana.
Earlier: Prior ATL coverage of the 2010 bonus season
ARNOLD & PORTER — MEMORANDUM
Today we are making the following announcements:
2010 Bonuses
We will be paying bonuses to eligible associates for work performed in 2010.
As in prior years, eligibility for bonuses will be based on a number of factors, including productivity, the quality of an associate’s work, the extent to which an associate has performed at a level commensurate with his/her seniority, and whether an associate has complied with Firm policies (including timekeeping). Although we may make exceptions in rare circumstances, associates who did not meet the 1800 billable hours expectation will be ineligible for a bonus. Moreover, although the combined (billable, pro bono, business development) hours required to be eligible for a bonus will be lower in 2010 than in 2009, an associate will again need to have billed additional hours (beyond 1800 billable) either on pro bono, business development, or additional commercial work to be eligible for a 2010 bonus.
As a general matter, the bonus amounts for work performed in 2010 will range from $10,000 to $50,000, depending upon performance, class year and productivity levels. For those associates who billed an extraordinary number of hours (2600 or higher), we will award additional amounts, with the maximum available bonus (at the highest productivity levels and for work of exceptional quality) being $70,000.
We understand that there was some confusion among associates as to the time period to be used for calculating bonus eligibility. For 2010 bonuses only, we will consider hours worked on a 12-month rolling basis ending November 30, 2010 and on a 2010 calendar-year basis, and will use the most favorable result for each associate for bonus determinations. As we previously announced, 2010 bonuses will be paid in early 2011.
2011 Base Compensation
We also wanted to provide you with an update on our base compensation for 2011. We are aware of some movement in the U.S. market with respect to the rate of base pay at certain levels for 2011, as well as movement by some of our peer firms away from strict lock-step compensation at the mid-to-senior associate levels. We have initiated a process for consultation with associate representatives regarding these issues, and once our review is finalized, we will decide whether any changes should be made to our compensation scale for calendar year 2011. Because associate evaluations have been moved to January to correspond with the date of the annual Partnership Meeting, salary increases — whether they are promotional increases on the existing scale or market increases, if approved — will not be reflected in paychecks until February, but will be retroactive to the first pay date in January. We expect to finalize any changes to 2011 base compensation no later than the end of January, 2011.
2011 Hours Expectation & Bonus Program
Next year, the minimum productivity expectation for associates will be 2000 combined billable, pro bono, and business development hours, of which at least 1800 must be billable. This minimum combined hours commitment affirms what we previously communicated regarding our expectation that associates will supplement their billable work with pro bono and business development efforts.
We will have a bonus program for 2011, and it will be based on calendar year productivity. We have been asked to provide the minimum eligibility requirements for bonuses for 2011. As has been our practice, we will take into account productivity, the quality of an associate’s work, the extent to which an associate has performed at a level commensurate with his/her seniority, and whether an associate has complied with Firm policies (including timekeeping). Associates who meet the minimum productivity expectation (2000 combined billable, pro bono and business development hours of which 1800 must be billable) will be eligible for a bonus for work performed in 2011. We anticipate that bonus amounts will increase for work of exceptional quality and at higher productivity levels, as has been our practice, but we will not make determinations as to the amounts to be paid at different levels of performance until the end of 2011.
******
On behalf of the partners, I want to thank each of you for your work this year.
As an expression of our appreciation for your service to the Firm and our clients, we are pleased to issue to each of you an Apple gift certificate that is sufficient to purchase an Apple iPad for your personal use. If you already have an iPad, you may use the gift certificate for other Apple products of your choice.
The gift certificates will be available in each office. A separate message will be circulated shortly as to the specific distribution plan in each office.
Best wishes for a Happy New Year.
