Biglaw, Bonuses, Money

Associate Bonus Watch: A New And Improved Policy At Hogan Lovells

As technology makes geography less relevant, it makes less sense to pay associates more or less in bonus money based on where they happen to sit.

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Biglaw-bonus-money-stack-of-100-dollar-bills-benjaminsWe recently wondered if New York bonuses would be taking over Washington, after the D.C. powerhouse of Covington & Burling adopted a “unified scale” of “presumptive bonuses.” Today we bring you news suggesting the answer is yes.

A source at Hogan Lovells recently shared the good news with us:

To follow up on a recent post you had about NY vs. DC compensation, there was a new compensation policy announcement from Hogan Lovells of a nationwide bonus scale at the New York market levels. This is great news for those of us in DC who have been pushing for bonuses to match our peers in town at NY- or LA-based firms who get paid the NY scale. This also moves us well ahead of other DC-based firms, including Covington’s new convoluted policy. Previously, HL associates had to hit 2200 billable hours to get the NY bonus — now that’s down to 2000, which can include 150 pro bono hours.

The firm has rightly gotten flak in the past for being cheap — talking about being a top-tier firm, but not willing to compensate associates for the work. It’s been especially frustrating the last couple years when revenue growth in the U.S. has been approaching 20%. So Steve Immelt, our fairly new CEO, should get credit for moving us toward the top of the market. With the discretionary bonuses outlined in the memo, many associates will now be getting a good bit more over the NY scale.

Also worth adding is that it’s a huge benefit moving away from the black box of what hours level equates to what bonus amount in the old sliding scale. Now we know exactly what we need to do to hit the market bonus.

Said a second source:

Everyone in my office is very pleased. There was a known retention problem, and this will go a long way to remedy that.

How is Hogan Lovells explaining its move? Here’s the key language from the memo (posted in full on the next page):

We have reviewed our policy for associate bonuses in all of our U.S. offices in light of current market activity. The contributions of our associates are critical to the success of the firm and we want to ensure our bonus system recognizes those contributions. Reflecting on our goals of providing associates with fair and market-based compensation and of being a well-integrated firm where work is performed across offices, regardless of where associates happen to sit, we have decided to adopt a single, nationwide discretionary bonus scale effective this compensation year (November 1, 2015 – October 31, 2016).

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This makes perfect sense. As Biglaw firms become increasingly national and even global, with technology enabling greater collaboration across offices, having a geography-based caste system for comp grows harder to defend.

Congrats to Hogan Lovells associates on the better bonuses, and props to the firm for updating its policy to reflect “current market activity” and the “critical contributions” of its associates. Now that Covington and Hogan are using unified bonus scales, expect other D.C. firms to follow suit.

(Flip to the next page to read the complete Ho-Love bonus memo.)

Earlier: Associate Bonus Watch: Are D.C.-Based Firms ‘Cheap’?
Associate Bonus Watch: New York Bonuses Go To Washington

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David Lat is the founder and managing editor of Above the Law and the author of Supreme Ambitions: A Novel. You can connect with David on Twitter (@DavidLat), LinkedIn, and Facebook, and you can reach him by email at dlat@abovethelaw.com.

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