In terms of firm finances, Paul Hastings had a perfectly decent 2011. Revenue and profits were fairly stable, according to Am Law Daily. Gross revenue fell by 2 percent to $884 million, and profits per partner fell by 1.3 percent to about $1.97 million. On the brighter side, revenue per lawyer surpassed the $1 million mark for the first time, hitting $1.01 million.
So how are those revenue-generating worker bees being compensated? Bonuses are out at Paul Hastings. How are PH associates reacting?
The firm of Orrick, Herrington & Sutcliffe has been a leader in instituting a merit-based compensation system. Two aspects of their system make Orrick’s commitment to merit-based seem genuine:
1. Partners put in significant time so that merit evaluations are more than just hours cut-offs.
2. Orrick is transparent about how many people get paid.
You can’t run a merit-based system with a Jones Day-like approach to transparency without everybody feeling like they are secretly getting screwed. If you do it out in the open, at least the low-hanging fruit will know that other, better work paid off for others in their class.
So let’s look at the memo. While Orrick generally does a good job of looking at associate productivity instead of mere man-hours, make no mistake, the firm still wants you to bill, and in a timely fashion….
Today everyone’s talking tech, thanks to Facebook’s upcoming IPO. In light of how Silicon Valley is dominating the news cycle, it seems fitting to discuss the recent bonus and salary news from Wilson Sonsini — one of SV’s top firms, and counsel over the years to many startup companies turned tech giants.
Back in 2009, when killing lockstep was all the rage, a number of large law firms announced that they would be moving to some form of a merit-based compensation system. Now that we’re a few years into those systems, how many firms have stuck with the plan? And which systems do associates prefer?
Of the 86 distinct Biglaw firms at which survey respondents work, 63% of the firms pay base salaries on a lockstep system, and the remaining 37% of firms use a merit-based system or hybrid-lockstep system for paying base salaries. The vast majority of respondents, 70%, say they prefer the lockstep model for base salaries because of its transparency and predictability.
For year-end bonuses, 70% of the firms utilize a merit-based or hybrid-lockstep system, while 30% have a lockstep system based either on class year or billable hours. According to 62% of respondents, the most preferred type of year-end bonus allocation system is a merit-based or hybrid-lockstep system.
After the jump, find out how various combinations of compensation systems measure up against market.
The official title of the NALPconference panel that I attended on merit-based compensation contained a playful shout-out to Sarah Palin: “How Is That Performance-Based Compensation System Working for Ya?”
The panel was originally supposed to have featured a representative of the now-defunct Howrey law firm. So the snarky answer to the question presented might be, “Not well.” (In fairness to merit-based compensation, however, Howrey’s dissolution didn’t have much to do with its model for training, promoting, and compensating associates.)
No mention of Howrey was made during the introductory remarks (or anywhere else in the discussion, for that matter). Rather, the panel focused on the positive — and offered useful advice for firms that are contemplating adoption of performance-based systems….
In the throes of the recession, many Biglaw firms jumped on the bandwagon to kill lockstep compensation in favor of a more merit-based system (though some have already fallen off the bandwagon). With a variety of compensation models currently in use among firms today, we want to hear from you about how you get compensated at your firm — and how you prefer to get compensated.
Please take our short survey, brought to you by Lateral Link, and tell us how you are compensated at your firm. Then check back later for the survey results. As always, your survey responses will be kept completely confidential.
What’s going on over at Orrick? Spring bonuses, that’s what — but with a twist.
As we’ve noted before, Orrick remains committed to merit-based compensation, even though some other firms that started moving away from lockstep have returned to it. Orrick’s approach to spring bonuses reflects the meritocratic orientation of its compensation.
Well that didn’t take long, did it? On Tuesday afternoon, we wrote about associates at Winston & Strawn who were upset over the lack of news on seniority-based salary bumps. Since we’re well into a new year, associates at top law firms should be getting raises, with first-years becoming second-years ($160K to $170K), second-years becoming third-years ($170K to $185), etc. But the Winston tipsters hadn’t heard anything — even though historically they’ve received pay raise news in early February, and now it’s mid-March.
Today, however, the Winston associates received some good news — very good news, in fact. “Salary memos went out today,” one Winston source reported. “The bottom line is that those who were not at market rate now are. They’ve abandoned the ‘merits-based’ system and have gone back to lockstep.”
Wow. Is merit-based compensation becoming a casualty of the economic recovery? Back when merit-based systems were all the rage, we created a category on ATL called Killing Lockstep. Perhaps now it’s time to create ones called Killing Killing Lockstep, or Lockstep Resurrected?
Regardless of whether or not this becomes a trend throughout Biglaw, Winston associates are happy — and grateful….
As we’ve explained before, we want to hear about your law firm’s bonus news, even if it’s old. As long as we haven’t written it up yet, please consider it fair game. (Use our site search box in the upper-right-hand corner, or scroll through our Associate Bonus Watch archives, to see which announcements we’ve already covered.)
Ed. note: The Asia Chronicles column is authored by Kinney Recruiting. Kinney has made more placements of U.S. associates, counsels and partners in Asia than any other recruiting firm in each of the past six years. You can reach them by email: [email protected].
Since late last year, things have been booming in Hong Kong / China in cap markets, especially Hong Kong IPOs. M&A deal flow has recently been getting a bit stronger as well. Although one can’t predict such things with any certainty, all signs are pointing to a banner entire 2014 for the top end US corporate and cap markets practices in Hong Kong / China. This is not really new news, as its been the feeling most in the market have had for a few months now and things continue to look good.
The head of our Asia practice, Evan Jowers, has been in Hong Kong for about 10 days a month (with trips every other month to both Shanghai and Bejing) for the past 7 months, and spending most of his time there meeting with senior US hiring partners at just about all the major US and UK firms there, as well as prospective candidates at all associate levels and partner levels, and when in the US, Evan works Asia hours and is regularly on the phone with such persons, as our the other members of our Asia team. Our Yuliya Vinokurova is in Hong Kong every other month and Robert is there about 5 times a year as well. While we have a solid Asia team of recruiters, Evan Jowers will spend at least some time with all of our candidates for Asia position. We have had long standing relationships, and good friendships in some cases, with hiring partners and other senior US partners in Asia for 8 years now.
The evolution of relationships between the genders continues. Currently, in law firms, there is an interesting conundrum; balancing the desire for a gender-blind workplace where “the best lawyer gets the work and advances” and the reality of navigating the complicated maze created by the fact that, in general, men and women do possess differences in their work styles. These variations impact who they work with, how they work, how they build professional connections and how organizations ultimately leverage, reward and recognize the talents of all.
Henry Ford sat on his workbench and sighed. A year earlier, he had personally built 13,000 Model Ts with his own hands. Fashioning lugnuts and tie rods by hand, Ford was loath to ask for help. Sure, there were things about the car that he didn’t quite understand. This explains the lack of reliable navigation systems in the Model T. But Ford persevered because he knew that unless he did everything, he could not reliably call these cars his own.
“Unless my own personal toil is responsible for it, it may as well be called a Hyundai,” Ford remarked at the time.
The preceding may sound unfamiliar because it is categorically untrue. And also monumentally stupid. Henry Ford didn’t build all those cars by hand. He had help and plenty of it. Almost exactly one hundred years ago, Henry Ford opened up the most technologically advanced assembly line the world had ever seen. Built on the premise that work can be chopped up into digestible pieces and completed by many men better than one, the line ushered in an age of unparalleled productivity.
Today, an attorney refers business because he can’t do everything the client asks of him.
There are three reasons why this is way dumber than a made-up Henry Ford story…