Biglaw Bonus Season Is Here!
If your firm doesn’t stack up this holiday season, team up with a good recruiter who has his or her finger on the market’s pulse and can help you land a better position.
Zain Atassi
Ed. note: This is the latest installment in a series of posts from Lateral Link’s team of expert contributors. Zain Atassi is a Director with Lateral Link, where she recruits and places high-level attorneys with leading AmLaw firms, high-end boutiques, and Fortune 500 companies. Zain focuses on the individual needs of her clients and candidates, delivering the utmost personalized attention. Before joining Lateral Link, Zain gained significant experience as a legal recruiter with a national legal search firm. Prior to recruiting, she spent six years as a litigation attorney with Chicago-based law firms. Zain holds a J.D. from Washington University School of Law and a B.A. with Honors from Washington University in St. Louis.
‘Tis the season — for Biglaw bonuses, that is. But do associates have reason to rejoice? As we expected, firms are standing pat this year, pursuing an agenda of gradual change while they wait to see where the new market equilibrium falls. Firms are looking to the last round of salary raises as a guide for how to — or rather, how not to — implement a new pay scale.
This summer, Cravath’s new salary scale triggered a war of attrition for talent. With an increasing brain drain out of law, firms are fighting for an increasingly scarce supply of quality associates. However, with Cravath’s announcement (and the subsequent matching) of an unchanged bonus scale from last year, it seems unlikely that another firm will significantly up the ante on bonuses.
The last time we saw a Biglaw salary raise was in 2007. Compared to 2007, the current “MoneyLaw” scale is below the 2007 round of raises when factoring in Cravath-level bonuses in both nominal and real dollars. No associate in 2016 will make more than their 2007 counterparts in nominal dollars. What gives?
Taking lessons from the recession, firms are trying to maintain a margin that can absorb a shock. Because it is much easier to increase compensation and perks than roll back on it, firms are proceeding with caution. They are also still evaluating the financial impact of this summer’s “MoneyLaw” raises on law firm profitability. What’s more, the uncertainty wrought by the election is yet another factor likely nudging firms to play it safe.
So how will firms stop their top talent from leaving then? We will likely see more meritorious bonuses given with a black box dispersion. With few mechanisms for universally rewarding high-performing associates well above their peers, we expect to see more implicit deals and black-box bonuses to obscure any perceived inequity, and entice top-performing associates to stay.
Firms will also likely turn to short-term solutions to test the market before fully committing. For example, Dentons announced in July that they would be giving a performance bonus in lieu of a salary raise and would explore the possibility of raising salaries in January. With 7,000+ attorneys around the world, it is unsurprising that they are proceeding cautiously. We expect to see more of the firms that declined to match the Cravath salary scale issue one-off bonuses or performance incentives to test the impact on their bottom line before committing to a set scale.
The announcement of an unchanged bonus scale was not unexpected, and if I had to wager on next year, I would guess there will be a small increase of around $5,000, graduating upwards through class year, assuming profits hold steady and the new administration has a negligible impact on Biglaw. Should we see the reverse, layoffs are more likely than firms rolling-back salary and bonuses — the latter of which would trigger a massive amount of attrition.
If your firm doesn’t stack up this holiday season, team up with a good recruiter who has his or her finger on the market’s pulse and can help you land a better position. My colleagues and I at Lateral Link are happy to share market intel and discuss the legal job landscape with you.
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