Associate Salaries, Biglaw, Money

Jones Day Finally Raises; Help Us Open Up Its 'Black Box' Of Compensation

An explanation of Jones Day's complex compensation scheme -- and a request for help in demystifying it.

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open up black box transparencyWe’ve been on the case of Jones Day for quite some time now (about associate compensation; their controversial representation of Donald Trump is pretty accepted at the firm now, and so is its lack of a sense of humor).

We highlighted complaints from JD associates about the firm’s failure to raise salaries post-Cravath. We put the firm on our list of shame. Heck, we even made JD’s failure to raise a Trivia Question of the Day, noting that Jones Day was the only Vault 30 firm that hadn’t joined the MoneyLaw club.

So let’s start by giving credit where credit is due: today Jones Day issued its annual compensation letters to associates, and at least for first-year associates in New York and Chicago, these letters seem to reflect a raise to $180,000. If you’re a first-year in another JD office and got bumped up to $180K, please email us or text us (646-820-8477), and we’ll update this post to note that fact.

UPDATE (6/25/2016, 3:51 p.m.): See the long update at the very end of this post regarding the new first-year salaries at Jones Day offices around the country.

What about associates beyond the first year? This requires an explanation of Jones Day’s complicated compensation system.

After their first year, Jones Day associates receive individualized compensation. That compensation does not follow any sort of lockstep scale. As we’ve mentioned before, the JD compensation system is a “closed comp” or “black box” system, meaning that nobody knows what anyone else makes (at both the associate and partner level).

Talking about your comp with colleagues is a violation of firm policy (again, both for partners and associates). Jones Day cites this salary secrecy as a virtue, saying that it promotes collegiality and teamwork by eliminating complaints over pay so lawyers can focus on their work and client service.

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Here’s how the Jones Day pay system works for associates in practice. The firm doesn’t pay year-end or midyear bonuses; you get just your base salary. Each June, you’re notified of what your base salary will be for the coming year (a base salary that should be above market to reflect the lack of bonuses). That salary goes into effect on July 1 and remains in effect through the following June, when you get your next pay raise letter, starting the cycle anew.

Today happens to be the day of the JD annual memos (form of memo posted on the next page). According to one source:

I think you guys should seriously consider writing an article explaining to potential hires (1) how the comp system even works here (it seems almost designed to make it hard to compare your comp to market, because they do raises mid-year, and allegedly fold bonus into salary), and (2) explain that you might end up making slightly above base, but your salary — even with great reviews and 2200-2400 hours — will never be the equivalent of market base plus bonus.

A good explanation from another tipster:

The rough outline of Jones Day’s black-box compensation is an under-reported story. This Friday is when JD tells its associates their all-in comp for the next year.

Jones Day does not offer bonuses. They put it differently, of course. They say that they roll bonuses into salary and thus offer above-market salaries to offset not offering bonuses, much like Williams & Connolly — just on an individualized rather than lock-step scale. But the reality is that JD shortchanges associates in a few ways.

First–and ignoring the new Cravath scale for a minute–JD starts off its associates at the same salary they would get at the lockstep firms. The individualization doesn’t happen until the end of an attorney’s first year at the firm. Thus, in effect, JD spreads the first-year bonus over the second year, spreads the second-year bonus over the third year, etc. That is a substantial disadvantage, even if the bonuses were market size.

Second, the total comp tends to be substantially lower than the market salary plus bonus. I’ve heard from people who mostly like the firm but find it frustrating that peers at other firms consistently make tens of thousands more. The “above-market” salary at JD is only nominally above the Cravath salaries, and therefore way under the Cravath salaries plus bonuses.

The party line is that some people make above market in total comp and some people make below but that it roughly comes out to the same and how great is is that we have such a great culture by not talking about it. That JD puts so much emphasis on confidentiality ensures that no clear picture emerges. That JD makes individualized determinations ensures that the few data points that might emerge can be dismissed as unrepresentative.

I heard from a junior associate that salary variations–among the few peers who subversively compared notes–were very minor. He assumes the range widens in later class years.

There are a lot of great reasons to go to Jones Day. But people who choose Jones Day should understand the trade offs they are making.

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That’s how the Jones Day system works overall. What are we hearing more specifically? We have no general memo — remember, everything at JD is individualized — so all we can do is pass along individual data points from various sources. Note that in a few cases we have made salaries or hours billed more vague, as indicated by brackets, to protect the anonymity of our tipsters.

I’m an associate in a major, non-NYC office…. [People] expect the bare minimum so that firm can say they matched, without truly bringing our comp up to market. It used to be true that total comp was on par with peers, and bonuses were baked in. Not so much anymore. From what I gather, this is an office by office issue, and our office culture and morale are struggling. Associates are frustrated and unhappy, more so than at other offices, and most folks blame the Partner in Charge…. Our summer recruiting is struggling, and we’re landing fewer kids from top schools. Lateral positions are going unfilled. More than this, what is killing people is the fact that our PIC seems completely unaware and uncaring. I expect things to continue this way for the foreseeable future. Everyone I know is looking to leave and I highly doubt that the management will see this as an opportunity to change course, more like a necessary cost they’d prefer to avoid.

Jones Day associates in Chicago got our pay bump letters today. The firm seems to think we can’t do math. We’ll know more later tonight when associates get together for “happy hour,” but right now it seems like (accounting for the fact that our regular raise kicks in in July vs. most other firms kicking in in December) of the handful of junior associates I’ve spoken with (who all got great reviews and are on track to bill at least 2K+), most are getting paid at Cravath scale for base, with no bonus. People are not happy, especially given an associate meeting in May where we were told Chicago office made killer revenue last year. Also, many of us are filling significant midlevel gaps, and taking on a lot of midlevel responsibilities (and have been billed as such) – would expect compensation to reflect that. This will hurt both lateral and entry level recruiting, which will only incentivize already overworked juniors to leave.

In Chicago we bumped, but not all the way to scale. Given the way we do things, it’s always a bit wonky. but here’s the gist from what I know:

Class of 2015: bumped to $180k uniformly, they may or may not bump to $190k in January.
Class of 2014: [most associates bumped to] $200k.
[At least one senior associate bumped to Cravath scale.]

Historically, associates at JD spend the first half of the year on the scale for their year, and the second half of the year at the next level.

I’m a third-year in Chicago, my class is all pretty underwhelmed. Bump before market changes would’ve been to $185k, got bumped to $200k. Stellar reviews and on pace for [more than 2300 hours]. They bumped first years to $180k, seems like everyone else is now officially below market — and if you factor in bonuses, the gap is huge.

[Midlevel to senior associates in Chicago] were notified regarding changes to the compensation structure today, and the 2009-2011 class years are now in excess of $50k in total compensation below the “new” market level. Bit of a torches and pitchforks sort of atmosphere….

D.C. office. Billed [more than 2300 hours] last year, with great reviews. My total comp for 2016 (six months at last year’s salary, six months at today’s new salary) will be [more than $40,000] below the total base and bonus (based on last year’s rate) if I worked somewhere else. There were major salary complaints already in a number of major cities last year about salary being below market rate (base + bonus), and the NY180 scale has just made it worse for everyone I’ve talked to in three different offices.

Jones Day D.C. comp usually comes out substantially below market, but recruits just don’t realize that going in. Performing the great service of correcting this type of information disparity is ATL’s bread and butter.

I work in a Texas office. Hearing mixed things. I am a midlevel and they matched to what the base salary would be for me the following year (because we don’t get bonuses). That still makes a lot of us come up short on total pay when you factor in bonuses. Unclear if they matched for everyone; some associates are probably making more than the grid.

So that’s a round-up of reactions. As you can see, it’s all quite individualized, but a general theme of discontent emerges.

In fairness to Jones Day, we should note that most of the complaints focus on pay. JD associates often have nice things to say about their firm culture, colleagues, and cases. And the firm is still very prestigious — #18 in the 2017 Vault rankings, actually up a spot from the 2016 rankings — so exit opportunities are excellent.

On the subject of compensation, one Jones Day source asked us here at Above the Law to dig deeper:

No one anywhere (that I’m aware of) has tried to piece together what their compensation scale actually looks like. Although ATL is in the best position to do that, JD’s internal emphasis on not discussing comp (which you have previously reported on) has always made that difficult.

The confluence of #NYto180, JD’s glaring silence [until today], mounting frustration from associates, and the timing of the comp letters coming out this Friday, offers (I believe) your best opportunity to finally break into that black box and piece together a rough idea of the scale.

Point taken. Here at Above the Law, we will attempt to open up the “black box” of Jones Day compensation. If you work at JD, please email us (subject line: “Jones Day”) or text us (646-820-8477) with any and all information you have about your compensation or comp for other associates you know. You can provide a range for pay if you prefer doing that to giving an exact number, and you can give historical data (i.e., comp figures from prior years) if more comfortable doing so.

If we get enough information, we’ll attempt to do a follow-up post, perhaps including some sort of table shedding light on compensation at different JD offices. But whether this story or chart materializes, of course, depends on what we receive. If we don’t get enough tips, we won’t be able to do anything.

Thanks for any information you can share. You’re doing a service to your current and future colleagues at Jones Day.

(Flip to the next page to see the Jones Day form memo.)

UPDATE (6/25/2016, 3:51 p.m.): If you poke around the Jones Day website, you can see the new starting salary for each office (here, for example, is Boston). A tipster went through all the JD offices and helpfully compiled this list of which offices are at which starting salary levels:

Atlanta – 180K
Boston – 180K
Cleveland – 160K
Chicago – 180K
Columbus – 160K
Dallas – 180K
Detroit – 160K
Houston – 180K
Irvine – 180K
Los Angeles – 180K
Miami – 160K
Minneapolis – 160K
New York – 180K
Pittsburgh – 160K
San Diego – 180K
San Francisco – 180K
Silicon Valley – 180K
Washington – 180K

Said this source, “The summer classes were not informed of any raises that occurred yesterday — but they happened. People noticed on Jones Day’s website they had changed first-year compensation for next year for each office, and that is how we all found out. By not telling their current summers I think it is obvious they do not intend to raise summer associates’ salaries. That part isn’t really that important; I’m just baffled they did not say a word to us that salaries had gone up.”

Earlier: Let’s Hear From The Furious Associates At Firms That Haven’t Matched!
The Biglaw Giant That Has Not Yet Raised Associate Compensation
What Firms Miss The ‘MoneyLaw’ Cut?
Jones Day: Secrecy Breeds Strength?
Inside Straight: Analyzing ‘Black Box’ Compensation

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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