Associate Bonus Watch: Half-Davis Bonuses Make For Unhappy Campers

Even if you're not a New York firm, some of your associates will be unhappy if you pay a fraction of the Davis Polk scale.

There’s a colorable claim that the “market” rate for bonuses — at least outside New York, for non-NYC-centric firms — is something less than the generous Davis Polk scale. As partners at firms that are less profitable than Davis Polk and Simpson Thacher have argued to me, it may be unfair to expect their firms to meet the high bonus bars set by Davis and Simpson, given that their firms don’t have the same financial resources and didn’t benefit from the 2014 boom in M&A work to the same extent. (We may return to this argument later; if you have opinions, or a proposal for what the “market” rate should be for non-New York firms, email us.)

But whether it’s fair or not, if you are playing (or aspire to play) in the Biglaw big leagues, some or even many of your associates will expect you to pay the Davis rate, or at least something close to it. And if you don’t, some or many of your associates will be upset, justifiably or not.

This brings us to the law firm of Morgan Lewis & Bockius. The partners at MLB have a lot on their plates right now — most notably, integrating all of the refugees lawyers and staff coming over from Bingham McCutchen. There’s clearly a lot of work left to do on that front. Note how Morgan Lewis is, for the time being, resorting to the tactic of naming co-leaders for many offices, one from the Morgan side and one from the Bingham side. Some law firm management experts frown upon this practice, arguing that it’s a “kick the can down the road” approach that defers difficult decisions.

So Morgan Lewis leaders are a little distracted right now. Perhaps this explains their approach to bonuses, which has some associates rather upset:

  • “Morgan Lewis is handing out bonuses that are only half the DPW scale. The partners seem to feel that they were induced by ‘market pressure’ to hand out these ‘generous bonuses’ and that associates should be ‘pleased.’ I guess all their cash went to buying out the Bingham crew.”
  • “Morgan Lewis is giving out offensive bonuses to its associates this week. High-performing Class of 2008 associates received $45k, half the amount on the DPW scale. More senior associates have also been complaining about bonuses at half the DPW scale.”
  • “Bonuses at half the DPW scale were received by high-performing (over 2100 hours with good reviews) associates. Many of us were disappointed.”
  • “Morgan Lewis has begun announcing bonuses. For associates with 2000+ hours they are half the DPW scale. Partners seem to think that associates should be pleased with these subpar bonuses. MLB has said that they take performance into account. That said, they gave people with 2100+ hours and excellent performance reviews bonuses at half the DPW scale.”

So the halcyon days of Morgan Lewis & Bucks-ius seem to be but a distant memory. Here is one Morgan Lewis source’s more detailed analysis of the situation:

Morgan Lewis relayed bonuses [last week]. Who knows what they are doing in New York, but best guess is that most associates are getting 50% of the market (Davis Polk) scale. Here are some examples: Class of 2008, more than 2100 billables, non-NY office, $45K. Class of 2009, more than 2000 billables, non-NY office, $40K

No good explanation for the Firm deviating from the market. They will not be doing a memo (as is the practice) and probably hope to rely on opaque nature of bonus process to keep this quiet. This is a disappointing move, when many of the firms which Morgan Lewis considers its “peers” are taking much better care of their associates. Who knows what is going on behind the scenes, but it is hard to imagine associates being pleased with the failure to even approach the bonuses offered by most of Morgan Lewis’ “peers.”

As best as I can tell, associates in the Labor & Employment Group (LEPG) got the shaft. Bonuses were likely somewhat better for litigation and transactional attorneys, but still below Davis Polk scale for most folks. Given how prestigious the employment practice is, and how hard the associates in it work, paying LEPG associates less than other associates seems pretty shortsighted, particularly when much of the competition (Proskauer, Orrick, Winston & Strawn, etc.) is also paying better. Most of the LEPG associates are steamed and I would not be surprised if they have some issues with retention this year.

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Note the line in the opening paragraph: “who knows what they are doing in New York.” Our intel from Morgan Lewis in NYC is limited — feel free to email us or text us (646-820-8477) with info, and we will update this post — but we have heard that some high billers in New York appear to be getting Davis Polk bonuses. We have also heard, however, that they’re fairly junior — it’s not that expensive to give junior associates DPW bonuses — and that some New York associates with lower hours are getting well below Davis or even nothing.

One of the themes from this year’s bonus season seems to be the return of the old New York/non-New York divide, as firms not at the profitability levels of Davis or Simpson try to find ways to limit their compensation costs while remaining competitive in the market for talent. Do you believe the different treatment is justified? Let us know, in the comments in this post or by email or text message (646-820-8477).

UPDATE (3:20 p.m.): Additional info from NYC:

[Senior associate, over 1900 billables,] good reviews, full DPW bonus, New York office. Two other associates in my group that did not hit 2000 also received DPW-scale full bonuses. Younger associates I know were angry that they received nothing, but they did not bill over 1900, which I have been told for many years is the magic number for some bonus dollars (and for highly valued associates, often enough for full bonus, this year and in prior years).

UPDATE (3:35 p.m.): Another content New Yorker:

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ML&B NYC — everyone I know received at or above DPW bonuses at junior, mid and senior levels, and for 2000 to 2100 hours. Very generous, particularly given the other things the firm is dealing with.

UPDATE (4:15 p.m.): Not everyone in New York is getting the royal treatment. There appears to be some variation from group to group:

I’m a junior associate at Morgan Lewis in the New York office. For my group, associates who billed 2000+ with good reviews got half of DPW.

Earlier: Associate Bonus Watch: Morgan Lewis & Bucks-ius

Morgan Lewis Brings Bingham Lawyers Into Leadership Fold [Legal Intelligencer]


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