Where My Boies At? Some Wonder About April Bonuses at Boies Schiller
Some associates at Boies Schiller are wondering about missing or smaller April bonus payments. What's going on?
BOIES SCHILLER & FLEXNER — MEMORANDUM — FORMULA COMPENSATION
From: David Boies
To: BSF_All_Attorneys
Cc: Donald L. Flexner; Jonathan Schiller; Amy Habie
Sent: Sun Apr 29
Subject: Formula Compensation
We have received a number of questions (most, but not all, from lawyers who were not with the Firm the last time we had a detailed discussion of our formula compensation system) concerning formula compensation calculations in general and calculation of April bonuses in particular.
Luxury, Lies, And A $10 Million Embezzlement
Every December lawyers are eligible for a bonus based to a large degree on their formula compensation calculation. Although no bills for December (and only certain bills for November) will have been prepared at that time, and although many bills for September and October will not yet have been paid, the Firm makes an effort to estimate what each lawyer’s cumulative formula compensation will be once all bills for the year are submitted and paid. That amount is then compared to the lawyer’s cumulative compensation previously paid and the difference, if any, after discretionary adjustments to reflect instances where a lawyer’s formula compensation appears significantly higher or lower than the lawyer’s productivity, is used as a guideline for the amount of the lawyer’s bonus.
Occasionally the Firm will over-estimate a lawyer’s formula compensation, in which case an adjustment will be made the following December. More often (because the Firm makes an effort to err on the conservative side to minimize the instances where a lawyer carries forward a formula compensation deficit) the Firm will under-estimate what a lawyer’s formula compensation will be after all bills for the year are paid. In such cases where the under-estimation exceeds 10%, the Firm will ordinarily pay the lawyer a bonus in April (if the under-estimation is less than 10%, the under-estimation will ordinarily be taken into account the following December).
The Firm does not ordinarily pay formula compensation bonuses to lawyers who have been with the Firm less than six months when the December bonuses are paid. However, if such a lawyer has either a positive or negative formula compensation balance after all bills for the year have been paid, that balance will ordinarily be taken into account in the cumulative formula compensation calculation the following December.
Although for counsel and partners the formula compensation calculation is based on collections for the individual lawyer’s time, there are two exceptions to this principle for associates. First, associates are permitted to elect the so-called “American Express” option for contingency cases whereby they receive formula compensation credit for hours devoted to such cases at 90% of the rate applicable to Category B (i.e., non-contingency) matters in the year the time is spent in lieu of the normal formula compensation calculation for contingency cases. Second, hours that associates devote to Category B matters receive formula compensation credit not based on actual collections for those matters but based on the average weighted average rate collected for all associates on all Category B matters, adjusted for the individual associate’s relative billing rate. (The latter exception was adopted a few years ago based on the views of most associates at the time that the original calculation (which is still used for counsel and partners) was inappropriate for associates who are not ordinarily responsible if a client is unable to pay or gets a discount, or on the other hand pays a premium — and who are normally not able to control what clients they represent.) The result of these two exceptions is that for lawyers working on Category B matters and taking the American Express option for their contingency cases, the primary determinants of their formula compensation credit are the number of hours worked, their relative billing rate, and the Firm’s average weighted collection for associates’ time.
Sponsored
Law Firm Business Development Is More Than Relationship Building
Thomson Reuters' Claims Explorer: A Powerful Tool For Legal Claim Identification
Luxury, Lies, And A $10 Million Embezzlement
Law Firm Business Development Is More Than Relationship Building
Associates also receive formula compensation credit for time devoted to Category A (i.e., pro bono) matters as if they were Category B matters, provided that the matter is an approved pro bono matter and the amount of time devoted is consistent with the time budget for the matter.
If you have specific formula compensation questions not addressed by my general explanation, the administrative partner in your office will try in the first instance to answer them; if the administrative partner needs further information, he or she may forward the question to the Firm’s CFO with a copy to me.
It has now been four or five years since we have had a detailed discussion of the Firm’s formula compensation system, and if there is sufficient support for doing so we will add it to the agenda for this December’s Firm Meeting.
David Boies
BOIES, SCHILLER & FLEXNER LLP
Sponsored
Ranking The Law Firms Lawyers Love
Curbing Client And Talent Loss With Productivity Tech
Earlier: Associate Bonus Watch: Boies Schiller Shellacks Cravath
Boies Schiller Throws Down Gauntlet, Calls Out Davis Polk on Associate Comp
