There were a few rough patches last year for O’Melveny & Myers. The elite firm, founded in California but now international in its coverage, experienced a significant number of partner departures. It conducted some staff layoffs. And there was turnover at the top, with New York litigator Bradley Butwin picked to replace D.C. power broker A.B. Culvahouse as chair of the firm (ending Culvahouse’s leadership term about a year early.)
Has OMM turned a corner under the new leadership? Butwin and the other new leaders at the firm have started implementing a new strategic vision for the firm, and thus far, things seem to be going well. The firm’s latest financial results were healthy, with the key metrics of profits per partner and revenue per lawyer hitting record highs in 2011 (reaching $1.73 million and $1.02 million, respectively).
What have these financial results meant for O’Melveny associates? The firm recently announced its 2011 bonuses….
It’s hard to draw conclusions about the overall OMM bonuses. As you may recall, O’Melveny bonuses are individualized. In addition, unlike last year, the firm did not provide associates with a table showing median and high bonuses.
So we’ll have to go on anecdotal evidence — and invite additional contributions in the comments. Said one source:
O’Melveny paid bonuses [in late February], but no memo went around. I’m a mid-level associate who got about 150% of the Cravath scale for working a ridiculous number of hours. Would have liked more, obviously; I suppose whether or not there is a spring bonus will make or break the season.
We asked this tipster about how colleagues were feeling about their bonuses:
No sense of how others feel; I was expecting more. I think the individualized bonuses make people pretty reluctant to say anything: if you got a big bonus you’re bragging, a small one and you must not be very good at your job. Or something like that.
That’s the beauty, from the perspective of firm management, of individualized bonuses. They take advantage of people’s natural discomfort with talking about money, giving rise to a sort of green wall of silence.
A second source provided these details about the O’Melveny bonuses:
At the town hall, they noted the following (on a Power Point — no written memo this year, because it might “mislead” us):
- 78% of the firm received bonuses.
- 95% of those receiving bonuses got at or above the Cravath “class” bonus, and 75% were above the class bonus.
- Roughly 15% of bonuses went to people under 1950 hours (I think they said 62 people were below 1950 and got bonuses, 48 were below 1900, although I could be off slightly on those numbers.)
Usual spiel about pro bono being 1 for 1, recruiting being taken into consideration, etc. There’s a lot of skepticism about the numbers, though, and the lack of a memo.
If we take these numbers at face value, though, they’re not bad. They would suggest that 74 percent of O’Melveny associates got at or above the Cravath-level bonuses, with 59 percent of associates doing better than Cravath. That seems reasonable enough.
But should OMM have been more generous to associates in light of how 2011 went for the partners? One source thinks so. This individual forwarded us a firm-wide message from Brad Butwin, reprinted in full on the next page, along with this commentary:
I hate this crap. Why email the entire firm about how much money the partners, and only the partners, are now making? They won’t put this in print — they’re not even releasing a bonus memo this year — but [bonuses are going out shortly], and everyone I know who has heard their number so far has been underwhelmed.
I’m a [midlevel associate], and have yet to hear from anyone getting above the Cravath [amount for our year]. Last year, our average [was above the Cravath amount for our seniority level]. So it looks like we’ll set a new record low for bonuses this year — despite setting record PPP last year while paying above-market regular bonuses and spring bonuses.
Also, buried in the fine print of “it is hard to remember a busier time” is that, according to our most recent town hall, the firm’s litigation department averaged 2200 hours last year. Everything above 1900 is pure profit for the partners — billing 2200 versus 1900, you’re lucky to see an extra $2-3k in your bonus check.
Seriously, you guys need to start making 10 posts a day about spring bonuses. Make these cheap asses pay up. I should note, I do feel almost as bad for the junior partners… I understand they averaged 2450 last year, and they’re now at constant threat of de-equitization, which was very quietly endemic over the past 2-3 years. I lost two “mentors” to the phenomenon…
Given your [recent posts about new trends] in partner compensation, I doubt most of the partners I know, like, and work with, are seeing much of this benefit. A narrow cabal keeps it all by killing us. But yeah, “thanks for the sacrifice and team work.”
Ouch. U MAD, OMM-er?
UPDATE (9:30 PM): Other O’Melveny associates are quite pleased with their bonuses. We heard from one “very happy” junior associate who received roughly twice the Cravath scale.
In defense of O’Melveny management, let’s face it: running a law firm isn’t easy. How do you allocate the financial rewards across a diverse range of constituencies? You need to keep the worker bees happy, because, well, they do all the work. You also need to keep the rainmakers happy, or else they’ll bolt, taking their books of business with them. But you can’t overpay the rainmakers either, because then you’ll have problems with your overall firm finances and with making payroll (as we know certain firms are now discovering).
That was a bit depressing, wasn’t it? If you’re in the mood for something cheerier, flip to the next page and read Brad Butwin’s “Go Team O’Melveny!” firm memo.