Killing Lockstep

What Does ‘Merit’ Mean at WilmerHale?

By

Back in December, WilmerHale announced that it was moving away from lockstep associate compensation. The plan will be phased in through 2012, but at the time of the announcement, WilmerHale gave precious little information about how the firm would determine which associates were meritorious and deserving of advancement. At the time, I wrote:

Many lawyers were liberal arts majors in college, so they should be comfortable with the array of soft and nebulous factors that will now determine how much they get paid.

WilmerHale supporters didn’t like that line too much. They told me that I should give the firm time. They told me that the firm would eventually come up with objective indicators of merit, so that associates wouldn’t feel that their pay was tied to soft factors and office politics.

In fact, word on the street was that WilmerHale was working with consultants to come up with the merit factors crucial to their anti-lockstep plans.

Well, a tipster reports that WilmerHale has given associates some more guidance on the new merit-based factors — and, well, you’re going to want to check these out for yourself…

double red triangle arrows Continue reading “What Does ‘Merit’ Mean at WilmerHale?”

46 Comments

DLA Piper Ends Experiment With Low Salaries

By

Back in December, DLA Piper decided to move to a merit based compensation system. Attendant to that move, the firms instituted a 10% pay cut, dropping starting salaries to $145,000. Despite widespread outrage among DLA associates, the firm repeatedly defended the move.

Other Biglaw firms that moved away from lockstep would not follow DLA down the salary rabbit hole.

Now, DLA Piper has given it up its quest to drive down associate salaries. The National Law Journal reports:

DLA Piper is raising associate pay by 10 percent, in a move that will return compensation to their levels before the economic downturn.

A memo released to attorneys on Thursday by firm leaders announced midyear pay increases in offices outside New York. DLA Piper raised salaries in New York in January to pre-recession levels of $160,000 for first-year associates.

Welcome back to the pack, DLA? Tipsters report that the firm is not quite there yet…

double red triangle arrows Continue reading “DLA Piper Ends Experiment With Low Salaries”

79 Comments

Nationwide Salary Watch: Morgan Lewis Raises Salaries

By

We have good news for Morgan, Lewis & Bockius associates. Salary information is in and most people are getting raises. True-up raises at that. The class of 2008 pulled the short straw, but everybody else seems relatively happy. A tipster reports:

Please post that yesterday MLB essentially unfroze salaries (most ’08 grades only went up to 165 though) but otherwise made everyone whole, retroactive January 1, 2010.

The double-bump raise for veteran associates comes a couple of months after MLB announced big time raises for a select few associates — while most of the firm’s associates were left to wait and wonder. In January, we reported this message from Morgan Lewis Chairman, Francis M. Milone:

After considering all of these factors, we awarded base salary increases of up to $25,000 and incentive bonuses of up to $35,000 to our highest performing associates. As I advised in my November video presentation, we did not reduce associate base salaries.

According to the firm, the decision to give true-up raises to mostly everybody is in keeping with MLB’s new merit-based strategy …

double red triangle arrows Continue reading “Nationwide Salary Watch: Morgan Lewis Raises Salaries”

28 Comments

Sonnenschein’s New Compensation Potpourri Starts to Take Shape

By

Sonnenschein logo.jpgBack in December, Sonnenschein announced the outlines of its new merit-based compensation structure. At the time, the firm promised its associates more details in March.
The firm is true to its word: we’re now in March, and we have more details. Above the Law talked with a spokesperson for Sonnenschein. Here’s the top line news:

  • First year compensation returns to $160,000 for first year associates.
  • 12% – 15% of that compensation will be paid out as a “base bonus” in 2011.
  • There are no hours or competency requirements to achieve the base bonus in 2011
  • 2010 raises for veteran associates will be in accordance with Sonnenschein’s merit based tier system

According to Sonnenschein, the decision to pay 12% – 15% of 2010 associate compensation as part of a 2011 bonus will help them transition to their new compensation model. The firm wants a greater percentage of total compensation to be paid out as merit-based, end-of-the-year bonus. That new system will be fully operational in 2011, so the firm is viewing 2010 as a transition year. Again, the firm emphasized to us that there would be no hours or merit requirements for associates to receive this 12% – 15% of 2010 money next year.
Sound good? Let’s see what the tipsters have to say.

double red triangle arrows Continue reading “Sonnenschein’s New Compensation Potpourri Starts to Take Shape”

18 Comments

Inside the Bingham McCutchen Bonus

By

Bingham McCutchen new logo Abovethelaw Above the Law blog.jpgWhen you step into the killing lockstep zone, your bonus disappears into a black box. A while back, we reported that Bingham McCutchen adopted a lockstep-merit hybrid approach to associate compensation. Base salary would still be lockstep, but the bonus would be merit-based.

When we reported on the Bingham bonus, we noted that the firm intended to pay bonuses generally on the Cravath scale to its associates, based on a number of merit-based factors instead of hours.

But now our tipsters are telling us that some Bingham associates received much less than a Cravath-level payout:

A peek inside the black box, bonuses are generally well below the Cravath scale. The only associates receiving bonuses in the vicinity of the Cravath scale are those that exceeded the 2,100 hour minimum by a few hundred hours. Even bonuses in those instances were barely above the Cravath scale. Amazing considering JayZ just told the Boston Globe that the firm “had our best year ever.” Guess we know where all that money went. Morale is definitely at an all-time low. I would be shocked to see any associates making much of an effort to bill above the 2,100 hour minimum in 2010. I think “why bother” has become the most uttered phrase around the halls of Bingham over the last week.

“JayZ” refers to Bingham Chairman Jay S. Zimmerman, not the talented Mr. Shawn Carter.

But I suppose you could put Zimmerman’s positive outlook about the firm into a rap song …

double red triangle arrows Continue reading “Inside the Bingham McCutchen Bonus”

30 Comments

Winston & Strawn Kills Lockstep and Adopts a ‘Black Box’ Compensation System

By

Winston Strawn LLP logo Above the Law blog.jpgFriday brought good news and bad news for Winston & Strawn associates.

The good news is that the double salary freeze, which has apparently resulted in first- through third-year associates at Winston all earning $160,000, may be thawing. Managing partner Thomas Fitzgerald sent a memo — this time to its intended recipients — indicating that raises are on the way.

The bad news is that Winston associates don’t know how much of a raise they’ll be getting — and the most they can hope for is a salary that matches the market. The memorandum contains the standard $160K salary scale — 160-170-185-210-230-250-265-280 — but states that “[s]alary levels in each associate class will range up to the maximum base compensation levels set forth” in the memo (emphases added).

The Winston associates we’ve heard from are upset. They’re unhappy not just about the move away from lockstep, but over the firm’s failure to set forth in detail how salaries will be determined. Most of the other firms that have abandoned lockstep have set forth elaborate systems for evaluating associates to determine their compensation and advancement. The Winston memo simply states: “Individual associate salaries will be determined on a case by case basis based on seniority, performance and productivity factors and will be communicated separately to each associate.”

This is a “black box” approach to compensation. It’s used by other big firms — e.g., Jones Day — but it’s a significant departure from Winston’s historical practice. It’s not what Winston associates signed up for when they joined the firm.

But then again, thanks to the Great Recession, lots of Biglaw associates aren’t getting what they expected when they joined their firms. And if associates aren’t happy, with compensation or any other aspect of their employment, their firms will tell them: you’re free to leave. In the words of an unemployed woman quoted in this weekend’s New York Times, “There are no bad jobs now. Any job is a good job.”

There’s a little more bad news about Winston associate salaries. Find out what it is, and read the full Winston & Strawn memo, after the jump.

double red triangle arrows Continue reading “Winston & Strawn Kills Lockstep and Adopts a ‘Black Box’ Compensation System”

43 Comments

Associate Bonus Watch: Orrick, A Case Study in Merit-Based Bonus Payments

By

2009 Associate bonus watch above the law.JPGA number of firms have adopted a merit-based pay structure, and other firms claim they want to. But few firms have thought through how to make a merit-based structure work as much as Orrick, Herrington & Sutcliffe has. And nobody is addressing the new scheme with quite as much transparency.
Orrick sent around its merit-based bonus memo today. If you have gotten used to firms using merit compensation to hide what they are paying their people, prepare to be surprised:

82% of all US associates received a bonus. As previously communicated, we did not apply an hours threshold in determining bonus eligibility.
The following tables provide information about our US 2009 bonus distribution by new talent model role for all US associates.

That’s right, Orrick actually provided a chart showing the general bonus payouts to its associates. This is not entirely new — Latham comes to mind — but it’s certainly nice. Here are the overall numbers:
Orrick 2010 bonus chart 1.jpg
Do you want more transparency? Orrick has you covered.
The firm even provided a bonus comparison chart, so its employees know where they stand.

double red triangle arrows Continue reading “Associate Bonus Watch: Orrick, A Case Study in Merit-Based Bonus Payments”

33 Comments

Bingham McCutchen: Lockstep Base Pay, Merit Bonuses — It’s a Hybrid Plan That Seems to be Working

By

Bingham McCutchen new logo Abovethelaw Above the Law blog.jpgMaybe Toyota should take a lesson from Bingham McCutchen: don’t try to cut corners when producing a hybrid.

Back in October, Bingham announced that it would be adopting a new “merit-lockstep” hybrid approach to associate compensation. The plan came with the stamp of approval from Bingham partners and associates. And a majority of Above the Law readers also approved of Bingham’s hybrid approach.

Today, Bingham rolled out its hybrid system. The firm is providing true-up, lockstep raises for people who hit 1900 hours. The double bump extends nationally, across all of Bingham’s offices. People who hit 1500 hours will only be getting a single class bump in salary. We understand that only a small percentage of Bingham associates were low enough on hours to be affected by this stratification.

At the low end, people who billed fewer than 1500 hours will have their salaries frozen again.

On the bright side, all of the people who are frozen will have their hours reevaluated in June. If they’re on pace, they’ll get their money.

The Bingham McCutchen lockstep base pay structure is clear and straightforward (see chart after the jump). For bonuses, welcome to the black box that is merit-based compensation.

double red triangle arrows Continue reading “Bingham McCutchen: Lockstep Base Pay, Merit Bonuses — It’s a Hybrid Plan That Seems to be Working”

28 Comments

Pillsbury: Raises, Bonuses, and Other Sundries

By

Pillsbury logo.JPGIt looks like Pillsbury is back to communicating important information via firm-wide memo, instead of via cell phone conversation on the Acela. Yesterday, the firm indicated that it is thinking about moving away from lockstep associate compensation, but it is not killing lockstep just yet.

Instead, Pillsbury announced lockstep raises — they’ll be true up raises if you hit your hours in New York. In other offices, Pillsbury has decided to lowball the market. From the firm-wide memo:

Pillsbury salary bonus 2010 1.JPG

Pillsbury salary bonus 2010 2.JPG

So, it’s a true-up raise for some, a single class thaw out for those low on hours, and a salary cut for many outside of New York. But at least it’s clear.

Pillsbury’s New York bias when it comes to salaries extends to the firm’s decisions regarding bonuses. Details after the jump.

double red triangle arrows Continue reading “Pillsbury: Raises, Bonuses, and Other Sundries”

23 Comments

Foley & Lardner: New Salary Structure Leaves More Questions Than Answers

By

A Beautiful memo.jpgLate last week, Foley & Lardner released its new salary structure. Honestly, I can’t tell you what they’re doing. I’m a professional firm double-talk decoder, but trying to pull out key phrases from this memo made me feel like John Nash.
The memo starts off similarly to other announcements from firms that want to move to merit-based compensation. The firm has conducted a major review, the recession sucks, you know the drill.
Foley is breaking associates out into three tiers, similar to Orrick and other firms that have moved away from lockstep. But when the memo turns to “specifics” — like how much money people will actually make — the Foley & Lardner memo turns to mush:

Within Tier I, the compensation structure will be similar to what has been in place for the last several years. Specifically, there will be a set starting salary in each office for the stub year and the first full fiscal year following law school graduation. During the second and third full years, associates will have a base salary and a 1950 billable hour deferred salary payable at year-end if they achieve a minimum of 1950 billable hours and 150 investment time hours during the year.

The starting Tier I salary is the one thing that’s clear:

Salary schedules will be distributed in each office. The starting salary in New York this year will be $160,000. In our other major city markets (Boston, Chicago, Washington and all of our California offices), where the recently announced starting salaries of the major law firms have varied to a greater extent, the starting salary will be $145,000. The starting salaries in our other offices will generally maintain the differentials from the major city amounts which have existed in recent years.

Salaries for everybody else are not at all clear. See if you can understand what Foley is doing with Tier II and “Senior Counsel” associates.

double red triangle arrows Continue reading “Foley & Lardner: New Salary Structure Leaves More Questions Than Answers”

46 Comments
Page 3 of 6123456