Biglaw, Bonuses, Money

Associate Bonus Watch: Anger And Disappointment At A Leading Law Firm

Where do these associates work, and why are they so angry?

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Last week, I wondered: is it fair to hold non-New York firms, firms whose profitability generally isn’t driven by capital markets or M&A work, to the high bonus standards set by the likes of Davis Polk and Simpson Thacher? Despite the impressions of 2Ls going through on-campus interviewing, there’s a lot of diversity within Biglaw. Firms come in all shapes and sizes — and profitability levels — and some just aren’t as money-focused as others. Expecting a non-NYC firm to pay out DPW or STB bonuses is arguably like expecting a Lexus sedan — a perfectly nice car, but not one built for speed — to go as fast as a Ferrari.

This brings us to the subject of today’s post, Jenner & Block. It excels in terms of diversity and pro bono work. It has a healthy respect for the public sector, with lawyers cycling freely between Jenner and high-level government positions (like Solicitor General Donald Verrilli, a former Jenner partner).

But Jenner has never been a leader in partner profitability or associate compensation — and the bonuses recently announced at Jenner make that abundantly clear. Here are a few representative reactions from associates in different offices:

  • “[T]he general feeling is highly disappointed. A few points of background: (1) Jenner touted this as an exceptional year, and people have generally been quite busy; (2) Jenner management also messaged internally that the DPW scale was their guide, associate retention was important, and generally set expectations high. They haven’t delivered.”
  • “Last year was the best year ever for the firm, and many associates racked up huge hours last year because it was so busy. Yet D.C. associates (and I assume New York associates will be the same) are being paid substantially less than market bonuses.”
  • “Guys, where’s the Jenner story? Throw us poor associates a bone here! Average bonus was [roughly $20K] below Davis Polk, whereas for Wilson Sonsini it was just $5K below. Our outrage exceeds their outrage. Seriously, people are glued to your site waiting for the story to drop.”

Where does that average bonus figure come from? One enterprising associate in the firm’s Washington office put together an anonymous survey of fellow associates — Jenner bonuses are individualized, so there’s no master scale — and made these findings (by the way, the survey is a smart idea — and also sounds to me like protected concerted activity, but I’m no expert and defer to the labor and employment lawyers on that):

For associates who billed over 2000 but under 2400 billable hours (irrespective of pro bono), the bonuses were roughly [Davis Polk amounts noted in brackets]:

2012 — $20K [DPW: $25K]
2011 — $30K [DPW: $50K]
2010 — $45K [DPW: $65K]
2009 — $60K [DPW: $80K]

Only associates who billed (not counting pro bono) over 2400 received a DPW bonus. All this calls into question whether Jenner is a D.C. player and whether its “commitment” to pro bono is anything but name only.

So is Jenner a D.C. player? Here’s what one tipster told us (corroborated by a second source):

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[T]he new managing partner [Terrence J. Truax] told the D.C. associates that, in his estimation, the D.C. office “was not a player — you know that, right?” and then proceeded to riff on how having a bunch of fancy SCOTUS and appellate court clerks did not a successful law office make. Everyone left that meeting over the summer feeling knocked down several pegs. I think we all had high hopes that Terry Truax would not put a price tag on his evidently low valuation of our office. But that is exactly what he did. I just can’t imagine how the firm is going to stay competitive with top appellate shops, or even top complex commercial lit shops, if it is going to lowball associates, and pretend that isn’t even happening.

Well, D.C. associates, if it makes you feel better, associates in Chicago — where Jenner was founded, and where Terry Truax is based — aren’t happy about their bonuses either. From a Chicago source:

Messaging in reviews was that you could get “up to” DPW, but that appears to be the rarest of cases (i.e., flawless reviews and 2400 or so hours). Solid reviews and 2000-2300 hours are coming in notably under market for midlevel and senior associates (40%-65% of DPW). They are also compressing salaries below market in the mid/senior ranks if they can find any nits to pick in your reviews. Understanding that it’s not a NYC-centric firm, Jenner still holds itself out as a top-tier firm. I don’t know anyone that feels good with these results.

They are keeping the junior associates (2014-2012) happy by largely matching DPW regardless of hours or reviews. I’m sure this is because that is the cheapest option to still allow them to present some stat about “the percentage of associates who got market.” While that’s great for the junior associates, it only makes their treatment of mid-level and senior associates more difficult to swallow.

Yup, the old “pay market bonuses to juniors” tactic. We’ve seen that strategy before.

Now that Jenner is on notice of associate dissatisfaction, will it enhance payouts, as firms like Gibson Dunn, Baker & McKenzie, and Hogan Lovells (New York) did this season? Or will Jenner dig in its heels and say, “The door is that way” (indicating)?

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One source is not optimistic: “Essentially, the partnership made an across the board decision that they would prefer to lowball associates and absorb whatever negative PR comes their way, rather than doing right by their rank and file in the most profitable year in the firm’s history. People here just think it’s a travesty and the firm is going to see a lot of defections — I already know at least two people in active conversations with recruiters.”

Ah, recruiters. From the partnership’s perspective, if you have a talented associate, it’s a smarter move financially to pay that associate a Davis Polk bonus than to watch that associate leave and then have to pay a recruiter to find a replacement. But maybe Jenner wants to see some associates depart? That might be one explanation for the low bonuses. Let’s hope it’s not correct.

If you have thoughts on Jenner & Block bonuses, please feel free to email us or text us (646-820-8477), and we’ll update this post.

UPDATE (2/3/2015, 12:15 p.m.): Some additional reactions from Chicago, consistent with the foregoing:

  • “I can confirm the below market bonuses for associates making hours (advertised as 2100 all in) — 40-60% of Davis Polk seems to be the scale. Truly disheartening, especially after the recent associates meeting where our managing partner showed how great our financial condition is and told associates Davis Polk would be the scale. J&B is known as a fiscally conservative firm and does not offer many of the perks as other top law firms (meals, bar fees, association fees, decent 401k set up), but I guess after a great year, associates hoped more would trickle down…. At a certain point, people just realize it is no longer a market-paying firm. I would say a recruiter is not doing their job if they are not contacting J&B associates this week.”
  • “Jenner mid-level associate. Can confirm what others have said regarding bonus structure. Ended year with [more than 2200 ‘Jenner Hours’] and received [roughly 60%] of the DPW scale. The feeling among associates is that we were lied to last month [when told that DPW would be the lodestar] and that the partners have decided associates are interchangeable. Some are not surprised because of the firm’s reputation for being cheap, but they are still confused at the message being sent by leadership.”

Earlier: Associate Bonus Watch: Jenner & Block

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