Biglaw, Bonuses, Money

Associate Bonus Watch: A July Bonus Memo?

Isn't it a bit early to be talking about 2015 bonuses?

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Say what? Are Biglaw summer bonuses spreading beyond Cahill Gordon?

Alas, no. Earlier this month, Mayer Brown issued a memo explaining how bonuses will work for its non-New York offices. We’ve posted the complete memo, from managing partner Ken Geller, on the next page; here is the core of it:

The Management Committee has approved a new associate bonus program for our U.S. offices outside of New York. Following the 2014 bonus process, a substantial majority of associates and practice leaders expressed a strong preference in returning to an hours-based grid system. The new bonus program is intended to provide greater certainty and predictability than our prior hybrid bonus system, which incorporated both hours-based and discretionary components.

You can see the grid on the next page. For hitting the first bonus threshold at 2100 hours, bonuses will range from $15,000 to $100,000, based on seniority. As one source summarized it, “All non-NYC associates will get something close to the 2014 Davis Polk scale for hitting 2100 hours, marginal increase for 2200 hours, and even smaller increase for 2300 and 2400 hours.”

Here’s what some of our sources had to say about the new system:

  • “There was a lot of associate blowback about the non-NY bonus structure for 2014, and this was clearly intended as damage control. I think people are happier with more certainty, but 2100 hours is still pretty high for a minimum threshold.”
  • “The new bonus structure is a step in the right direction, but still leaves a lot to be desired. As you can see, they’ve done away with the whole discretionary component, which I guess is better than the former system of using a discretionary element as a pretext to deduct from the market bonus. At least now, if you hit 2100 billables, you know for sure you’ll get the stated bonus. The flip side is you’ll never be able to go above the standard bonus, regardless of how much extra effort you put in the firm. Management claims this is what everyone wanted — and it’s true to a certain degree. The firm needs to realize that when people want a discretionary bonus, they want it in addition to the standard bonus, not for it to replace the standard bonus—this is something management can’t seem to grasp.”

But does Mayer Brown management really want to pay out that much in bonuses? They would probably argue — and reasonably so, in my opinion — that even though 2100 hours might be high and it would be nice to have discretionary bonuses on top of the standard ones, these bonuses are more than generous because they take the 2014 DPW scale as the baseline. Recall that the 2014 Davis Polk scale was higher than both (1) the prior few years of Cravath scales and (2) the initial 2014 Simpson scale (which was itself quite nice).

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In any event, congrats to Mayer Brown associates on this improved and more transparent bonus scale. Moral of the story: sharing your firm’s bonus memo with Above the Law and complaining about it, which MB associates did quite loudly after their bonuses came out, can get you results.

(Flip to the next page for Ken Geller’s complete memo.)

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