Associate Bonus Watch: Above-Market Bonuses For Big Billers In Texas

Market or above-market bonuses + Texas cost of living = Happy associates.

Texas quarter Biglaw bonus money twenty five centsOil prices are languishing around $30 a barrel — less than the cost of a salmon, randomly enough. Energy companies have laid off more than 250,000 workers globally, and fresh cuts get announced each week, it seems.

Will energy-focused law firms suffer the same fate? Some have seen trouble — like Burleson LLP, which shut its doors last year and saw its founding partner, Richard Burleson, join Paul Hastings. But overall the Texas legal market, which depends a lot on the energy sector, seems to be holding up (so far).

Orrick just announced a new Houston office. Last month, Haynes and Boone announced robust bonuses, leading us to wonder whether it might be a new compensation leader in the Lone Star State. We closed our HayBoo story with this line: “Your move, V&E.”

Well, today Vinson & Elkins moved. And it’s not letting HayBoo escape with the title of Texas comp king.[1]

We got a gusher of Vinson & Elkins bonus tips — which is why we’re covering V&E before certain other firms whose bonus announcements came out earlier, but whose associates haven’t stepped up to the plate with tips or memos (cough cough, WilmerHale) — and almost all of the reactions we received were positive. Here are a few — a junior, a midlevel, and a senior associate — with additional comments posted on the next page:

  • “Class of 2015 — prorated bonus of $3,780, which is actually slightly over $15,000 prorated for 3 months. There’s a general feeling that the firm was very generous and took time to look at everyone’s individual numbers and contributions, especially given the current market.”
  • “I’m a midlevel at V&E in Houston and very excited about my bonus. Given the distressed energy industry I expected our bonuses to be lower this year, but I got 1.25x the Cravath scale. I had solid hours and it’s great to know the firm wants to show their appreciation.”
  • “I am a senior associate at V&E and just received my bonus. It was 1.25x the NY bonus scale so I am quite happy and surprised by the oversized bonus. I am a high biller, over 2300 hours, but was not expecting the bonus to be this high. The high billers are thrilled.”

Of course, a V&E bonus post wouldn’t be complete without some disagreement (see last year and the year before, including all the updates). Here is one dissenter:

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[Midlevel associate], more than 2300 hours and excellent reviews, straight Cravath — frustrating given that they told us max was up to 1.25x Cravath based on “individual contributions.” I know of first-years who got straight Cravath with more than 2400 hours. Granted, the memo said class of 2012 and above [would get 1.25 Cravath], but when not many first-years hit those kinds of hours, it makes you wonder. People at HayBoo and Latham fared better. I also understand that this was V&E’s second best year ever (compared to last year).

And here’s another complaint, based on the treatment of “stub year” associates (i.e., class of 2015 associates):

The new associates got $3,780 bonus for their stub year (October-December). So that means stub years got more than associates like myself who billed less than 2000. That does make me pretty angry. And others are expressing serious discontent. A 5th year who billed less than 2000 just walked into my office in utter shock that the stub years received more money.

Here’s a reminder from this associate of how the V&E bonus system generally works:

My understanding from talking to folks here is that the bonuses come in tiers. 2000 gets you below market. 2150 gets you below market. 2300 gets you Cravath. And very high billers get more than Cravath. Fact of that matter is that only a small minority bill 2300+. This tiered system has never been formalized in a memo as far as I know. I’ve talked to one person who billed 2400 and got Cravath.

The only thing that frustrates associates at V&E is that we advertise paying market bonuses but in reality only a small portion of associates get it. Fact of the matter is that living in Texas and making market salary is enough to keep most people happy.

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And it’s not hard to see why. Take a $160,000 base salary, no bonus. If you earn that in Houston, it’s the equivalent of almost $370,000 in New York.

Being a lawyer in the Lone Star State. What’s not to like?

UPDATE (3:55 p.m.): Shortly after this post went up, we received more disagreement (as we typically do when covering Vinson & Elkins bonuses):

V&E is far from a bonus leader in Texas and hasn’t been for a long time. The only way to get above market is to be a drinking buddy with the right person. Everybody I’ve talked to is pissed with the bonus levels. I’m a midlevel associate who billed [more than 2100 hours] and got [well below Cravath]…. I don’t know anybody who is that happy with what they got.

UPDATE (4:43 p.m.): Here’s another complaint:

Just saw the article on V&E bonuses. I would second that V&E is certainly not making any efforts to be a bonus leader in Texas and that we are consistently below market unless you are over 2300. I am a midlevel who billed around 2200 and got half Cravath. The general sentiment tends to be that bonuses weren’t terrible but certainly aren’t anything to be excited about. For the second best year ever for the firm it certainly didn’t make its way down to us.

UPDATE (1/28/2016, 11:44 a.m.): And one more:

This was another year of very consistent banding: no bonus for under 2000 hours (unless you are a stub or first-year), one-third Cravath for 2000-2150, half Cravath for 2150-2300, and Cravath or Cravath-plus above 2300. This applies almost without exception. Many many associates missed target tiers, and many got no bonus at all. I’m a senior associate and got half-Cravath for 2200.

So I’ll just repeat what I wrote back in 2014: “When it comes to VE, YMMV — ‘Your Mileage May Vary.'”

If you want ATL coverage of your firm’s bonuses to reflect your point of view, you need to email us or text us (646-820-8477) — ideally as soon your firm announces, and including the memo if any. We can’t read minds, so we have no choice but to rely on the tips we receive from you, our readers. Thanks.

[1] For purposes of “Texas compensation leader,” which is obviously not defined with scientific precision, I’m referring here to (1) Biglaw firms that (2) are headquartered in, or have a sizable number of their lawyers in, Texas. So I’m not counting smaller firms with Texas roots, like Susman Godfrey — which pays big bonuses, but isn’t “Biglaw” in an Am Law 200 sense — and I’m not counting firms like Kirkland or Gibson or Sidley, which have Texas offices but didn’t start in Texas and don’t have the majority of their lawyers in Texas. And of course I realize that V&E and Haynes and Boone, which I put in the running for this title as “Texas-centric” firms, are not Texas-only firms; indeed, they have many offices and lawyers outside of the state as well.

(Flip to the next page for (1) more reactions and (2) the complete Vinson & Elkins bonus memo. Unlike last year’s memo, it doesn’t include a chart of median and high bonuses. Given that V&E’s bonus scheme “is moving toward more individualized and customized assessments,” perhaps the powers-that-be felt that median and top bonuses are less informative as statistics.)


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