In late December 2010, the elite California law firm of Irell & Manella announced 2010 year-end bonuses that reportedly doubled the benchmark Cravath scale. Although some felt the firm could have been even more generous, given its strong performance in 2010, most Irell associates were quite pleased.
Spring turned into summer. Some at Irell feared that the firm was done doling out bonuses until December.
But that fear was misplaced. Yesterday the firm announced “mid-year” bonuses.
So, how much are we talking about?
Here is what we were told about the scale of mid-year / summer bonuses at Irell & Manella:
First year – $10K
Second year – $17.5k
Third year – $22.5k
Fourth year – Eighth year – $27.5k
First years get more than double what they got at the year end as stubs (that was prorated based on when they started). Second – third years get more than their entire year-end bonus from last year. Fourth – eighth years get a nice chunk of change.
Nice indeed. If you compare this to the Cravath spring bonus scale, you’ll see that Irell’s bonuses are bigger.
What did one have to do in order to qualify for an Irell mid-year bonus? Not much, according to one tipster: “Bonuses are lockstep and have nothing to do with hours. It appears that even if you didn’t meet hours you would still get one.”
“I saw a lot of smiling faces on the way to the bank across the street where the associates all rushed to deposit their checks,” this source added.
“Pretty huge bonuses for an unanticipated mid-year freebie,” said another happy Irell associate. “We weren’t expecting anything since we’ve already been getting double market bonuses in December. So we are pretty stoked.”
What might have motivated the generosity on Irell’s part? The announcement said the bonuses were being paid to “recognize and reward the hard work and dedication of [Irell’s] associates,” but one source at the firm suggests a self-interested motivation as well:
After totally dropping the ball on their commitment to pay above market here, it appears that the firm has decided (for now) to get back on that gravy train. When it became clear they weren’t going to beat market this year, we had above average departures, and I think it spooked them.
Who knows what they’ll do next year (I think confidence in the “top dollar” mantra is shaken), but for now this went a long way to restoring confidence. I think people felt like this should have been paid out soon after the market caught up in the spring, but we’re not complaining now. It is amazing what a drop in head count will do to get these guys in motion.
In any event, regardless of the motivation, the Irell mid-year bonuses come as welcome news. Congratulations to the firm’s talented and hardworking associates on their summer surprise.
P.S. The Irell mid-year bonuses raise the same issue as the Cahill mid-year bonuses: How should these bonuses be characterized? Should they be treated for comparison purposes as still more 2010-related compensation, or should they be viewed as the first installment of 2011 bonuses?
No matter how you slice it, though, it’s clear that firms like Irell and Cahill are paying well above the Cravath scale (which is, for practical purposes, the market rate for Biglaw). It will be interesting to see whether paying above-market compensation helps these firms’ recruiting efforts and overall performance in the years ahead.