Yesterday, we reported that Kaye Scholer would be paying market busting bonuses to associates who hit their hours.
Today, associates are telling us that “hitting hours” is kind of like shooting the moon in hearts. A tipster reports:
Bonus hour requirements were moved up from 2,000 to 2,200 this year, with the “superbonus” at 2,400 (unchanged from last year). Bonus amounts were $20,000 for 2,200 hundred hours and $40,000 for 2,400 hours, across the board, which is only above market for the 2008-2006 crowd (it would equal other firms at the 2005 year, assuming those other firms had also raised their requirement to 2,200 hours, and below market for anyone after that.)
Well then. Before bonus season started, we mentioned that we would have to pay attention to hours requirements hidden under bonus announcements.
Did any Kaye Scholer associates hit 2,400 hours this year?
After the jump, our tipsters further explain Kaye Scholer’s hours requirements for its lockstep pay raises.
On Friday evening, we created an open thread for discussion of which firms are providing their associates with the customary salary raises, now that a new year is here. We cited Willkie Farr as one notable example of a firm that had not yet told its associates whether they’d be getting the usual salary bumps.
Time to take Willkie off the list of salary laggards. From a WFG tipster:
It appears that Willkie has raised salaries for all classes in keeping with the standard NY scale ($170k for 2008, $185k for 2007, etc.).
The news was transmitted via a one-line email this morning from the Chief Legal Personnel Officer, sent to each class separately, which stated:
“The 2010 salary for the class of [ ] is $[ ].” The recipients were BCC’d and no names were included on the TO or CC lines.
Before the holidays, we reported that Latham & Watkins planned on making a true-up salary raise, putting its associates back on the level they would have been on had Latham never frozen salaries in the first place.
Today, Latham made it official. Multiple tipsters tell us the firm just announced its 2010 salary structure:
It was announced in a short e-mail from the executive committee that included a link to a secure PDF with the info.
Over the course of 2009, we covered attempts from a number of firms to replace lockstep associate compensation with a “merit based” compensation system. We have seen firm after firm (and consultant after consultant) claim that clients really care about how law firms pay their associates. And who can disagree with a term like “merit?” DLA Piper put it this way in its defense of its new, merit-based system:
At its core, this new system forces differentiation and rewards outstanding performance.
Right now, merit-based compensation is certainly winning the branding war against lockstep. There are certainly very good arguments in favor of merit compensation.
But there are also good arguments in favor of lockstep. There are reasons why lockstep is still the choice of firms considered to be the best in the country. If merit-based compensation is just a thinly veiled attempt to cut total associate compensation, that’s one thing. But let’s not forget that lockstep has some serious upside for associates, partners, and yes, clients.
There has been a lot of talk about DLA Piper’s new merit based compensation structure, and a lot of that talk has not been pleasant. Associates are pretty bummed that they’ll be starting at $145,000 with 15% of that salary deferred until the end of the year if they hit their performance marks. We noted those concerns earlier this month.
But there is a memo going around the offices of DLA Piper. It appears to be unsigned, but tipsters report that the memo is something that DLA management put together. It offers a very different viewpoint on the new DLA structure.
Whoever made the memo, it’s a full-throated defense of the firm’s decisions. Let’s take a look after the jump.
Much of the recent talk about Hogan & Hartson has focused on their merger with Lovells. While transatlantic mergers thrill the imagination, back on the ground in the States, people are still concerned about their paychecks.
Hogan has long had a two-track salary system. The higher track paid market salary with the expectation that associates bill 1950 hours. The lower track paid less and had an 1800-hour billable expectation. Associates traditionally got to choose which track they wanted.
But Hogan turned its system on its head last spring. In April, Hogan placed associates in the lower salary track if they weren’t on target with their hours through the first quarter. The firm promised to pay the money back at the end of the year if associates did hit 1950 hours.
Well, here we are at the end of the year, and Hogan & Hartson is making restitution. And it’s paying a bonus. And it’s unfreezing salaries (although it’s not giving its people a “true-up” to where they would have been without last year’s salary freeze).
The Hogan salary structure for its two tracks, plus discussion, after the jump.
As firms start to unfreeze salaries, all in different ways, we at Above the Law have started to notice a lot of confusion about what these unfrozen salary structures look like. We’ve been seeing a lot of comments and emails like this one:
wtf is a true up vs. a thaw…dude…not everyone reads this blog 24/7…these are critical details that you are leaving up to assumption that the reader knows wtf nerd language you are talking about…
To help clarify things, we have put together a little chart. To make things easier, we have looked at the salary of a fictitious soon-to-be third year from the incoming class of 2007. It seems appropriate to look at this class of people; since they are about to enter their third full year of work, they’ve experienced the recession in all of its glorious forms. And looking at one class’ salary over the years is less confusing than looking at everybody’s salary at every level.
To refresh your memory, here’s what our class of 2007 associate has been paid at a top tier firm that didn’t freeze, year-by-year. A person working at Davis Polk, for instance: FIRM THAT NEVER FROZE
’07 (stub-first year) = $160K
’08 (full first year) = $160K
’09 (second year) = $170K
’10 (third year) = $185K
But not everybody can work at Davis Polk (or someplace similar). How the other half lives after the jump.
The Day That Lockstep Died
(to the tune of “American Pie”)
My, my, pushin’ lockstep aside,
They say merit — do they mean it? ‘Cause my raise has run dry.
But top-tier firms are not inclined to comply:
Sayin’, we’re not sure if this s**t will fly; we’re not sure if this s**t will fly.
What started out as a trickle is turning into a flood. Orrick and DLA Piper have already announced new associate compensation models for 2010 — and now WimerHale wants in on the action. The firm announced the change in a memo to all of its associates:
The Firm has decided to transition to a merit-based compensation program for associates and counsel in our U.S. offices. This afternoon we will hold local office meetings to discuss the details with you followed by an open forum for questions. Shortly you will receive a calendar invitation for this meeting, but first we wanted to provide you with background on the plan, the timing, and our thought process.
Before we lay out the details of the new model, it is important to recognize that this step is one that falls within a much larger framework. As you have heard us say before, whether at the State of the Firm address or in smaller group settings, the traditional structure and method of doing business for law firms is changing and needs to change.
The plan will be phased in through 2012 — but why wait until 2012 to address labor costs, when you can freeze associates’ salaries for 2010? Today’s WilmerHale announcement includes the news that the firm will be freezing associate salaries (except for second-year associates, who will be bumped up to $165K).
Additional details on the new compensation scheme and the full memo, after the jump.
The artifice of the slurpee salary freeze and the “temporary” salary cut can be put to rest. As long as you are not doing keggers with the firm Kool-Aid, you already know that Biglaw will keep associate salaries depressed for as long as they can. It’s not hard to see where this is going, as Am Law Daily reports:
“If you do the math,” says Steven Davis, chairman of Dewey & LeBoeuf, “associate compensation is coming down across the board.” …
“I lean much more in the direction that this is not a blip,” says Dewey’s Davis. “In the medium term, we’re seeing, and will continue to see, a paradigm shift” in associate compensation. (Dewey, interestingly, hasn’t announced cuts in compensation or in bonuses, though it has sent dozens of 2009 first-years on leave with a stipend.)
That last parenthetical isn’t entirely forthright. Dewey hasn’t announced bonuses yet. If the firm follows Cravath or S&C, that will represent a “cut” in bonuses from last year (to say nothing of two years ago). If Dewey doesn’t follow the market and instead pays what it did last year, I’ll strip naked and run through the streets screaming “I am TTT! I am so TTT!”
But the general point — the one about basic “math” — is exceedingly obvious.
The only open question is whether firms will keep the deflationary salaries on lockstep, or if they’ll move towards a system that rewards people based on still undefined “performance metrics” instead of experience and billable hours.
I’m a senior associate at a large NYC law firm — I’m hearing rumors that some large law firms who have frozen salaries (which unfortunately includes my firm) are preparing for the big thaw — have you guys heard anything to that effect?
Ha. Haha. Unfreezing? Yeah. Let me just ride my unicorn down the streets of El Dorado and see what there is to see.
Jiminy jillickers! ATL editors are going all over the place over the next month or so. Or at least all over the Eastern Seaboard. If we aren’t heading to your neck of the woods on these trips, never fear, we may hit you up on the next time around. We’ve already hit up Houston, Chicago, Seattle, San Francisco, and Los Angeles in the past year.
Kinney Recruiting’sEvan Jowers is currently in Hong Kong for client meetings and still has a few slots available through October 22. Evan will also be in Hong Kong November 14 to December 15. Further, Robert Kinney has been in Frankfurt and Munich this week and is available for meetings with our Germany based readers.
One of our key law firm clients has referred us to one of their important clients in the US, Europe and China – a leading global technology supplier for the auto industry – in order to handle their search for a new Asia General Counsel and Asia Chief Compliance Officer.
Kinney is exclusively handling this in-house search.
This position will have a lot of responsibility and include supervision of eight attorneys underneath them in the Asia in-house team. The new hire will report directly to the global general counsel and global chief compliance officer, who is based in the US. The new hire’s ability to make judgement calls is going to be as important as their technical skill set background.
The position is based in Shanghai and will deal with the company’s operations all over Asia and also in India, including frequent acquisitions in the region.
It is expected that the new hire will come from a top US firm’s Shanghai, Beijing or Hong Kong offices, currently in a top flight corporate practice at the senior associate, counsel or partner level. Of course, the candidate can be currently in a relevant in-house role.
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