We’re in the middle of what we previously referred to as the second wave of law firm bonus announcements. Later today, for example, we’ll write about the Latham & Watkins announcement from yesterday. (So far we’re hearing mixed things; if you’re at Latham and would like to opine on the bonuses, feel free to email us or text us (646-820-8477).)
Right now we’re going to discuss the bonuses announced at Goodwin Procter (which actually just hired a partner, Brynn Peltz, away from Latham). The Goodwin bonus announcement came out on Tuesday of this week.
So what do 2012 bonuses at Goodwin Procter look like?
The bonus memorandum, reprinted in full on the next page, came from partner Scott Webster, chair of Goodwin’s attorney review committee. After thanking Goodwin lawyers for their hard work (and noting the firm’s 100th anniversary), the memo explains the bonus policy:
For calendar year 2012, we continued our practice of awarding bonuses based on a combination of factors – legal excellence; the amount of time spent on billable, pro bono and legal advice to the firm; overall productivity and efficiency; the nature of investment time; and commitment to professional development.
Associates in good standing who met the 1,950 hour threshold during our fiscal year ending September 30, 2012 through annualized billable work, pro bono work (up to 150 unannualized hours) and annualized legal advice to the firm are eligible to receive bonuses. Since bonuses are based on performance during our fiscal year ending September 30, 2012, newly hired associates (including the Class of 2012) are not eligible to receive bonuses.
These policies, including the 1,950-hour threshold, are consistent with Goodwin’s prior practice. See, e.g., last year’s bonus memo.
The 2012 bonuses are determined by reference to the bonus scale listed below. Individual bonus awards in each class may be above or below these amounts based on an evaluation by ARC of the factors described above. Over half of associates receiving bonuses will receive an amount that is equal to or greater than the amount listed below for their class.
The memo then reprints the familiar Cravath 2012 bonus scale, which starts out at $10,000 for first-year associates and goes up to $60,000 for eighth-year associates.
According to last year’s Goodwin bonus memo, “[a]bout 37 percent of associates receiving bonuses will receive the amount listed below for their class, and about 33 percent will receive more than the amount listed below” — i.e., 70 percent of Goodwin associates receiving bonuses got market or better. This year, “[o]ver half of associates receiving bonuses will receive an amount that is equal to or greater than the [Cravath scale].” So it sounds like fewer Goodwin associates received market-beating bonuses this time around. But remember, of course, that this year’s market bonus scale is significantly higher than last year’s scale.
As for base salaries, Goodwin is sticking with the status quo. The scale, viewable on the next page, starts at $160,000 for first-year associates and goes up to $280,000 for eighth-year associates. Don’t expect that scale to change anytime soon. Indeed, some industry observers — e.g., Professor Lawrence Solan, and our very own Anonymous Partner — want associate salaries to go down.
The Goodwin memo, while on the long side, is impressively thorough. It contains detailed discussion of the firm’s policies on bonuses, billable hours, base salaries, and pro bono. And it announces meetings being held to discuss the policies outlined in the memo, including a link to an online survey for submission of anonymous questions in advance of the meetings.
Sometimes firms drop the ball in terms of communicating with their associates. If all firms were as clear and comprehensive as Goodwin Procter, maybe we wouldn’t encounter such problems. You can read the full Goodwin memo, which could serve as an excellent template for Biglaw bonus memos, on the next page.