Associate Bonus Watch 2012, Biglaw, Billable Hours, Bonuses, Money

Associate Bonus Watch: Orrick Charts A Steady Course

Law firm bonus announcements come in two waves. In November and December, the New York-centric firms announce their bonuses (after taking their cue from Cravath). In January and February, the West Coast and also nationally oriented firms announce their bonuses for the prior year.

So the 2012 bonus season isn’t over, even though we’re now two weeks into 2013. Yesterday, for example, brought bonus news from Orrick, Herrington & Sutcliffe.

Orrick is a leader is the brave new world of “merit-based compensation.” What are they up to now?

Their latest bonus announcement is quite similar to what they did last year, with a few minor tweaks. If you compare their prior bonus memo with the newest one (reprinted in full on the next page), you’ll notice a great deal of similarity.

Although the firm “do[es] not have a strict hours requirement,” as noted in the memo, “associates had the best chance of receiving a merit bonus if they had 1900 client representation hours (billable, pro bono, and Orrick as a client) plus a PDC rating of VG or E” (very good or excellent). This is up slightly from the prior benchmark of 1850 hours.

For their 2012 work, 79 percent of all bonus-eligible associates will receive a merit bonus. That’s basically the same as the 2011 figure of 80 percent.

Last year, the memo included a detailed matrix showing how many associates at each of the three levels in the Orrick system — associate, managing associate, and senior associate — fell into each bonus range. This year’s memo provides less transparency; it just includes a chart comparing the market bonus rates to Orrick’s maximum bonus level (click to enlarge):

There’s no indication of how many associates received a given level of bonus money, or any kind of mean or median bonus amount. This year’s chart is less enlightening than last year’s.

But the memo does supplement it with some bullet points:

So 42 percent of bonus-receiving associates are getting market-beating bonuses. The memo doesn’t state, however, how many received bonuses equal to market. (Of course, it’s worth bearing in mind that the Cravath-set market rates were higher in 2012 compared to 2011.)

Orrick continued its policy of rewarding the timely entry of hours and punishing the dilatory entry of hours. This time around, though, the rewards were slightly lower and the punishments were slightly harsher.

Under Orrick’s merit-based system, promotion is not automatic. Performance evaluations will be taking place over the next two weeks, which is when associates will be informed of their 2013 base salary and 2012 bonus. Bonuses for 2012 will be paid out on Friday, February 8.

Congratulations to the Orrick associates on their bonuses. For anyone who’d like to see the full Orrick bonus memo, flip to the next page.

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