Associate Bonus Watch 2011, Biglaw, Billable Hours, Bonuses, Money

Associate Bonus Watch: Dechert’s Bonus Is Contingent On Something That Sure Sounds Like Billable Hours

We’re still catching up on bonus news that broke over the holidays. Remember, if we missed your firm, please let us know at tips@abovethelaw.com.

Just after Christmas, Dechert announced its 2011 end-of-year bonuses. I guess you’d call it a “match” of the Cleary Gottlieb scale. Dechert is paying a pro-rated bonus to first-year associates and has a top payment of $42,500 for very senior associates.

But Dechert isn’t a lockstep firm. You have to meet a requirement in order to get the bonus. That requirement looks very much like an hours requirement, but Dechert doesn’t want you (or its clients) to think that they have an hours requirement — so they have some kind of nebulous performance requirement that can most easily be defined with reference to hours.

Oh, and they’ll dock you if you didn’t input your time, on time, throughout the year….

The Dechert bonus memo has all this language designed to make people feel like there is a strong merit component to this year’s bonuses. From the memo:

We are pleased to announce our U.S. associate bonuses for 2011. Bonuses will be paid on January 6 to all U.S. associates who were reasonably productive during 2011 and who were performing and progressing in accordance with the firm’s expectations…

In applying a “reasonably productive” standard, we emphasize again that we do not want our associates working to a specific number of hours. Accordingly, we did not award bonuses based on a sharp cut-off of a particular number of hours. We also are aware that hours are not the only way to measure intensity of effort, quality of performance, and level of responsibility. Having said this, an associate who is reasonably productive would normally be performing legal work for clients, both billable and pro bono, in the range of 1,950 annualized hours. This year we looked at hours from December 1, 2010 through November 30, 2011.

Hours aren’t the only way, but they sure are the easiest way, to measure associate productivity. In fact, one of the things we learned from the great (and largely failed) experiments with merit-based pay in 2009 and 2010 is that judging associates based on something other than billable hours requires a whole lot of work from partners. Writing meaningful evaluations for associates requires partners to actually pay attention to their associates and spend valuable time thinking about their career development. You need to put an entire system in place so that associates aren’t unfairly punished for working for an absentee or callous partner. Partners and management have to really think about what qualities make a good associate and how one shows those qualities (especially while doing some of the menial legal work that associates sometimes must perform).

Doing all that is a lot harder than looking at a spreadsheet and drawing a line at a billable-hours mark and docking everybody who falls below the cutoff.

So, you tell me: does it sound like Dechert has a robust associate evaluation program in which partners are spending countless (unbillable) hours evaluating the progress of their associates, or does it sound like Dechert has an hours cut off with maybe one or two exceptions?

In addition, we expect all of our attorneys to contribute meaningfully to the firm on important projects such as marketing initiatives, recruiting, writing articles, and training. Thus, in determining bonuses, we spent a considerable amount of time reviewing not only how much time each associate recorded, but also how each spent his or her time, taking into consideration such factors as the balance among billable, pro bono and firm-related hours, firm citizenship, and whether the associate complied with the firm’s policies and procedures, including timely recording of time and the firm’s pro bono requirements.

In determining whether and to what extent the associate was “performing and progressing in accordance with the firm’s expectations,” we considered not only individual and overall ratings, but also how senior the associate is relative to his or her level.

As a result of this merit-driven review, we awarded full class bonuses to almost every associate who was reasonably productive, including many who had well below 1,950 billable and pro bono hours. Moreover, we are paying bonuses substantially above the grid to a significant number of associates. Finally, as we have the last several years, we have expanded the bonus pool to provide partial bonuses to many associates who fell short of the reasonably productive standard, but whose overall contributions merited some recognition.

Make of that what you will. But just in case you thought for a moment that Dechert wasn’t supremely concerned with associates billing hours, think again:

As in the past, we pro-rated bonuses for associates who did not work a full year or did not work full-time and we made deductions for repeated late time entries.

Right. Dechert cares about a lot of things other than hours — so long as every hour you bill is promptly entered into the system. As one tipster puts it:

To cut through the crap, bonus amounts are determined based on your hours. If you meet certain pre-determined hours thresholds substantially over the 2000 requirement (it is 2000 in New York, not 1950) you will get a larger bonus.

Click on the next page if you want to see the full Dechert memo. You’ll note just how many words they use to make people like our tipster ignore the obvious conclusion.

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