Associate Bonus Watch 2010, Associate Salaries, Biglaw, Bonuses, Cheapness, Money

Associate Bonus Watch: DLA Piper’s People Pipe Up — and They’re Not Happy

DLA Piper has released some information about its associate compensation and bonus payouts, and some associates who work for the firm are unhappy. Why? I don’t really know. I don’t know why they thought that working for the largest firm in the world would be a good thing when it came time to pay out bonuses.

Attempts to economize on associate salaries are not new at DLA Piper. The firm has been at the cutting edge (pun intended) of reduced associate base salaries, deferrals of incoming associates, and various other methods for keeping the cost of associates down. It’s just how they roll.

It should surprise no one that DLA associates are complaining about the firm’s bonus plan. In fact, I’m not even sure it’s news that the firm seems to be low-balling associates. If anything, the news hook is that there are still associates at DLA Piper who are surprised by sub-market comp….

Last week, DLA Piper sent out a memo to all associates regarding compensation and bonuses. DLA Piper associates have been angry about it pretty much non-stop since then. The full message is reprinted below, but let’s skip right to the highlights. From the memo:

Bonuses were awarded to 70.7% of the associates reviewed, compared to 55.3% in 2009. The aggregate bonus pool increased by approximately 32% over 2009. The high end of the bonus range is at the top end of the market and is in keeping with our objective of ensuring that our top performing and most productive associates are competitively compensated. Bonuses were determined based on overall performance and contribution to the firm. Bonuses paid to our top performing associates exceed those paid by firms who used the Cravath bonus scale and are now paying spring bonuses.

Here are the charts, showing bonus information for 2010 and 2009:

In response to the firm’s claim that top performers received bonuses “exceed[ing] those paid by firms who used the Cravath bonus scale and are now paying spring bonuses,” a tipster bluntly tells us:

This is false. Fewer than 10% of associates are [getting] bonuses that match the market, and certainly do not exceed it.

Yeah, I don’t think “exceed” means what DLA Piper thinks it means. Here’s the Cravath regular bonus and here’s the Cravath spring bonus. If you look at both figures and apply basic arithmetic, DLA’s claim to “exceed” the Cravath bonus for top people seems dubious.

But that’s not all. Our DLA sources tell us there is a lot going on behind the numbers:

As shown in the Chart, DLA’s “Max Bonus” is precisely equal to the Cravath regular bonus + spring bonus. What this chart doesn’t show is the number of associates who qualify for this bonus. Because of the f**ked-up compensation structure, overall performance is ranked on a scale of 1-4, with only 3 and 4 being bonus eligible. Usually a 3 is a half-bonus. The “Max” bonus is actually a 4+ bonus, which is not even disclosed by the Firm. Fewer than 10% of associates receive this bonus. That means that fewer than 10% of the Firm’s associates receive the same bonus as all other straightforward spring-bonus paying firms. And, importantly, this doesn’t even discuss salary….

Do they really want to tell us that fewer than 10% of us should make the same bonus as an average (or even below-average) attorney at another firm? And here’s the rub — DLA’s compensation is STILL NOT THAWED. This means that our salary is still a year behind. So, the end result is that NO associate in the firm is compensated as well as any old associate at a normal lockstep firm paying spring bonuses. The World’s Largest Law Firm needs to be called out for this, because that’s what the memo should say.

Based on the information we have, this tipster seems correct. But I can’t say that I’m surprised to learn that the “world’s largest law firm” is paying people as little as it can.

Honest question: Is DLA going for quality, or is it going for quantity? If the firm is going for quality, it’s unclear how they intend to keep their best people when this is how they’re compensated. If a “top” DLA Piper associate can’t figure out that he or she is getting, at best, market compensation, then that’s a pretty piss-poor “superstar.”

If the firm is just looking for bodies, however, I imagine there are a lot of unemployed or underemployed lawyers who would work for DLA for this money. No, it might not be as much as they could make at some of the other Biglaw firms — but if they can’t get hired at some of the other Biglaw firms, then it really doesn’t matter what those people are making.

Good luck to those who are currently working for DLA and don’t feel like they have good exit options. You might not be making as much as some of your friends from law school, but perhaps your firm is just being financially prudent. See also Nixon Peabody (“NP management [might be] taking an honest and prudent approach to running their business — if this is the most they can reasonably afford to pay people, then maybe this is for the best.”).

And, DLA associates, you’re still making a heck of a lot more than the average American J.D. holder. For now, that’ll have to be enough.

Earlier: DLA Piper and the Long Road Back to $160K


DLA PIPER — MEMORANDUM — BONUSES

As in prior years, associates have asked that we share a few statistics regarding our US Associate Evaluation and Bonus program. In 2010 we reviewed 440 associates as part of the Year-End Evaluation process. Rating and advancement statistics were as follows:

Bonuses were awarded to 70.7% of the associates reviewed, compared to 55.3% in 2009. The aggregate bonus pool increased by approximately 32% over 2009. The high end of the bonus range is at the top end of the market and is in keeping with our objective of ensuring that our top performing and most productive associates are competitively compensated. Bonuses were determined based on overall performance and contribution to the firm. Bonuses paid to our top performing associates exceed those paid by firms who used the Cravath bonus scale and are now paying spring bonuses.

The charts below show our bonus information for 2010 and 2009:

We believe our transition to the new competency-based Associate Talent Management system in 2010 was a success on a number of levels. As we continue into 2011, we will continue to improve upon this model and provide updates.

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