Associate Bonus Watch 2008

What is Going On With Orrick's Bonuses?

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Let’s pretend for a moment that yesterday didn’t happen and associates were A) employed, and B) expected to be compensated.

Everybody with me? Okay.

You might remember that Orrick, Herrington & Sutcliffe announced its 2008 bonus structure way back in March of 2008. Once the market collapsed, people started wondering if Orrick would keep its word. But at the end of October, Orrick stated that they would keep bonuses at Skadden levels:

Today, Orrick assured us that the firm would not look to change their bonus plan. A firm spokesperson put the issue succinctly:

“We are committed to using the previously announced bonus schedule.”

But something happened on the way to actually making good on that promise. Details after the jump — and an update from the firm.


Last week, we received word that Orrick delayed actually paying out bonuses, without a stated reason. A tipster reported:

I wanted to let you know some of the things that have been happening [at Orrick] recently, culminating in an email today informing us that the firm “expects” to pay our bonuses “during the week of February 23, 2009.” This is a postponing of bonuses – Orrick always pays in February (which is too late in most people’s view) but it is usually in the 2nd week of February. We had previously been told that the bonus would be paid on February 13, 2009. Why the delay?

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At the time, I didn’t think much of the delay. But associates felt otherwise:

Why is Orrick not paying out bonuses? … Combine this with the pay-freeze, our changing (read: downgrading) salary structure (still an unknown quantity) which will take effect in June this year, and stealth lay-offs continuing throughout the Firm – Associates are very very worried. Oh, and add to that that one of the firm’s biggest clients, Wyeth, was recently taken over by Pfizer, leading many associates to feel that if the firm loses Wyeth it will be on very shaky ground. The atmosphere at the firm is tense, worried … and after today’s email, angry. At the very least the firm should have explained the delay in paying bonuses.

Yesterday, individual bonus news started leaking out. And few people were happy with the results:

Orrick just sent associates individual memos regarding their bonuses. Although Orrick promised they weren’t changing their bonus policy – and they haven’t in theory – the practice in 2009 is clearly different. Many associates were dismayed to find their bonuses were half of what they were expecting. But dismay turned to shock when associates realized not all associates were treated the same way.

As we understand it, some associates did receive a Skadden level bonus. But other associates received only a Half-Skadden payout … and nobody knows exactly why. According to one tipster:

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Orrick’s system is hours based. In order to get market, you have to meet 2100 hours. You can get slightly less than market if you meet 2000. However, all bonuses are discretionary, and depend on whether you are in good standing at the firm. In past years, it was almost unheard of not to get market if you met your hours. This year, it seems they are applying a different standard: one that hasn’t been explained. Some people have gotten full market, whereas others have gotten half of what they were expecting.

We’ve talked with people who made their hours, and claimed to have positive performance reviews, who nonetheless received a Half-Skadden bonus.

What gives?

Given the fact that Orrick already laid off attorneys, and froze salaries, I imagine that many associates would have accepted bonuses at Cravath levels.

If the firm was just upfront about the decision.

But paying people half of what they expected, for no stated reason, is not going to go over well.

Shouldn’t the firm tell associates exactly what it is doing with associate pay?

Update (5:10): We just talked with an Orrick spokesperson who was able to share this information with ATL:

Orrick honored the bonus scheduled that was announced in the first quarter of 2008 exactly as it was announced.

The one caveat was if you received an unsatisfactory performance review you may have gotten a partial bonus or no bonus at all. Orrick has always done this.

If you made your hours and had good performance reviews, you received the full bonus.

Earlier: Associate Bonus Watch: Orrick Stands Behind Bonus Structure

Nationwide Layoff Watch: Orrick Lays Off Attorneys

Nationwide Pay Freeze Watch: Orrick follows Latham

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