The firm of Orrick, Herrington & Sutcliffe has been a leader in instituting a merit-based compensation system. Two aspects of their system make Orrick’s commitment to merit-based seem genuine:
1. Partners put in significant time so that merit evaluations are more than just hours cut-offs.
2. Orrick is transparent about how many people get paid.
You can’t run a merit-based system with a Jones Day-like approach to transparency without everybody feeling like they are secretly getting screwed. If you do it out in the open, at least the low-hanging fruit will know that other, better work paid off for others in their class.
So let’s look at the memo. While Orrick generally does a good job of looking at associate productivity instead of mere man-hours, make no mistake, the firm still wants you to bill, and in a timely fashion….
First, here’s the Orrick bonus matrix:
Eighty percent of Orrick associates received a bonus. So if you work for Orrick, your bonus chances are 20% better than Tom Brady’s Super Bowl winning percentage.
But Orrick also has a “time lag incentive,” whereby associates got an extra $5,000 if they released their time daily. They got an extra $3,500 if they released their time every other day. But they were docked $5,000 if they were consistently more than ten days late in releasing time. If they were more than a month late, they were sent to Ralph Baxter’s office to polish the severed head of Tower Snow that Baxter keeps in his office.
Okay, one of those wasn’t true. But the point is clear, no matter how meritorious you are, you better input your time, on time.
You can read the full memo below. If you don’t like being compensated in this way, you’ve had more than enough time to lateral out of the firm. And if you do like being compensated based on your merit, it’s time to give a recruiter a call.
Orrick 2011 Bonus Memo [PDF]