Akin Gump, Associate Salaries, Biglaw, Killing Lockstep, Money

It's Mid-January. Do You Know Where Your Raise Is?

Associates at two top law firms freak out over fears of not getting their annual pay raises.

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Today is January 17, so you should have received your first paycheck for 2013 by now. Was that paycheck smaller than you expected?

Well, it wasn’t your imagination. Due to the non-extension of the payroll tax holiday, if you’re earning the same salary this year as last year, your take-home pay should now be smaller.

But what if you’re an associate at a major law firm with a lockstep compensation system? You should see a seniority-based raise reflected in your first paycheck of the year, correct?

Earlier this week, associates at two leading law firms flipped out when their paychecks weren’t what they expected….

On January 15, we heard the following from an associate at Weil Gotshal & Manges:

Woke up this morning to find my gross pay the same as last year. No raise? If this is something like where they are going to do a catch-up on the 31st when they pay bonuses then freaking tell us that, we’ve got families. Even if there is an explanation, the communication here sucked.

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Later in the day, this source reverted to us:

They sent an email saying that raises will be reflected on January 31st retroactive to January 1st. They apparently are unaware that that delay has an impact for those with loans and families to support. I’m a bit bothered that they didn’t think it necessary to inform of us this until we saw our paycheck this morning and had to ask what is going on.

This shouldn’t come as a huge shock, given that Weil has moved the associate review process into January, with bonus payments being made on January 31st. If someone gets a poor review in mid- to late-January, the kind of review suggesting they should look into opportunities outside of Weil, it wouldn’t make sense to bump up that person’s salary as of January 1.

But the tipster has a point: it seems that maybe communication could have been better.

UPDATE (5:45 PM): Or maybe not? From a more-senior Weil associate: “In [all the years] I’ve worked here, Weil has raised salaries in the second paycheck of the year retroactive to January 1 every single year.”

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Communication definitely could have been better at Akin Gump. Also on January 15, several upset Akin associates contacted us. This email is representative:

Akin Gump just retroactively announced it is switching compensation models from lockstep to some yet unknown model based on performance and hours. People won’t know what they make for 2013 until February 15th including work completed before then. They didn’t announce the change in advance, it was only announced after people saw their paychecks didn’t increase in 2013 as they do every other year. Everyone is freaking out firm-wide and there is nothing but silence from management.

Apparently these fears — which turned out to be unfounded — did have a factual basis, rooted in a poorly worded communication. After we reached out to the firm for comment, a spokesperson explained to us:

Nothing has changed regarding Akin Gump’s compensation structure. As has always been the case, it is expected that associates and counsel in good standing at Akin Gump will advance to the next compensation level. The confusion stemmed from a message sent earlier today that was intended only to address a timing change in compensation adjustments that resulted from a streamlining of our compensation and bonus review timing. Although it was our intent to communicate this timing change clearly at a firmwide town hall meeting in December, it is obvious that we did not, and a follow-up message was sent this evening correcting this misunderstanding and apologizing for the confusion created.

Moral of the story: the most dangerous place in Biglaw is between an associate and his pay raise. And when it comes to compensation, clear communication is essential.

Ouch! No, you’re not imagining it. Your paycheck just shrank. [WonkBlog / Washington Post]

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