Will These Above-Market Salary Hikes Hurt This Firm's Bonuses?

The base salaries for most classes are above market, so why aren't all associates happy?

Businessman Thinking About MoneyHere at Above the Law we’ve been hearing a lot of frustration about firms’ slowness in increasing associate compensation to meet the new market standard, established by Cravath just over a week ago. But the firm we’ve heard the most complaints about is definitely Boies, Schiller & Flexner.

Interest in what the legendary litigation firm is doing on comp has come from inside and outside BSF. The firm’s top bonuses are in the stratosphere, and because of that they are widely considered compensation leaders. But those big bonuses only kick in when associates bill big hours, as a tipster noted:

The eye-popping top bonuses ($350k!) trumpeted by the firm pull up the average bonus numbers to the point that they are basically useless as indicators of what most associates are making. Last year, even 2400-2500 hours wouldn’t have been enough for BSF associates to hit the average bonuses reported.

Still, the firm hadn’t made a peep about what it was going to do about base associate salaries until this afternoon, when BSF became the 51st firm to match or beat the Cravath scale. In an email from Managing Partner Jonathan Schiller, the below raises were announced, and several of the classes will in fact be paid above market rate — we’ve noted the classes for which the base salary is above the Cravath scale:

1st Year: $180,000
2nd Year: $192,000 (+$2,000)
3rd Year: $210,000
4th Year: $240,000 (+$5,000)
5th Year: $264,000 (+$4,000)
6th Year: $282,000 (+$2,000)
7th Year: $300,000

Most people would assume this is a nice little (or not so little) payday, celebrate, and move on. Right? Well, BSF insiders say it isn’t quite that easy, and the firm’s salary raise may, in fact, come out of that big-time bonus pool:

If [Boies Schiller] do[es] raise salaries, scrutinize the move carefully. The firm’s formula comp structure means any increase in salary alone will only reduce bonuses. They need to increase salaries AND either (1) issue a special bonus or (2) change the comp formula entirely.  This is the one firm that can’t just raise salaries and call it a day.

Sponsored

We have not, as of yet, received any word that BSF intends to make any changes to their complex bonus formula (which essentially gives associates a share of the revenue they generate for the firm). One tipster characterized the new base salaries as effectively “a bigger advance on total comp” — unless, of course, how bonuses are determined is changed.

We are covering changes to associate compensation as market conditions develop, so please drop us a line — text (646-820-8477) or email (subject line: “[Firm Name] Matches Cravath”) — when you know of another firm making a compensation move. Please include the memo if available. You can take a photo of the memo and send it via text or email if you don’t want to forward the original PDF or Word file. All sources are kept strictly confidential.

(Read the full email from Jonathan Schiller on the next page.)


Kathryn Rubino is an editor at Above the Law. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

Sponsored


Bonus Time

Enter your email address to sign up for ATL's Bonus & Salary Increase Alerts.