Associate Bonus Watch: 10 Leading Law Firms — Who’s Naughty And Who’s Nice?

Santa Biglaw continues to fly around on his sleigh, shimmy through HVAC ducts, and drop bonus checks into the stockings of associates around the country. Some young lawyers are delighted by their stocking stuffers, while others feel that they’ve been given lumps of coal.

Here’s a list of 10 firms with recent bonus announcements that we haven’t yet covered. We’ve divided them into two camps, “Naughty” and “Nice,” although please note that these are broad generalizations based on majority opinion among the sources we’ve happened to hear from. Folks at the same firm will disagree over whether the bonuses being doled out deserve praise or condemnation. See, e.g., Kirkland & Ellis and Quinn Emanuel. And the sources we hear from are not necessarily representative of everyone at a firm — which is why, if you want your firm’s bonus news to be accurately covered, you really ought to email us or text us (646-820-8477) with information and opinions. The more information we get, the more accurate our reports will be.

We’ll start with the “naughty” firms, places where a majority of ATL tipsters have expressed displeasure with their bonuses:

1. Hogan Lovells: Some folks feel that Ho-Love isn’t showing its New York associates sufficient affection . Here is one representative reaction:

Hogan Lovells NY did not match DPW for associates over 2000 hours. Instead, they (without telling the associates beforehand or even after the fact in the memorandum) have instituted a tiered system. Below 2000 hours (including 100 pro bono), and you got no bonus. 2000-2100 (including up to 100 pro bono), and you got last year’s Cravath scale (so a rising second year got $10,000). Above 2100 hours, you got a Davis Polk market match.

This is a big change, as repeatedly management has promised that HLNY is a lockstep market shop. The kicker, and what has people really upset, is that they didn’t actually tell associates any of this and instead people have figured it out by discussing the shock and anger with each other. Oh, and to boot, instead of getting our memos from a member of firm management, we were given our compensation envelope by a member of the recruiting staff on Friday afternoon when seemingly none of the partners are in the office. I’d expect a mass wave of attrition, people are pissed.

This tipster is not an outlier. Flip to the next page for additional angry comments from Hogan Lovells associates in New York.

2. Sheppard Mullin: Passing along the memo, one Sheppard Mullin associate offered this straightforward commentary: “See attached. That’s right, legal recruiters, there is a countrywide fire sale on SMRH associates in time for holiday shopping! Needless to say, associate morale is extremely low this Christmas.”

Turn to the second page of this post for the full memo — the bonuses top out at $37,500, which is pretty sad — and more weeping and gnashing of teeth from additional SMRH sources.

3. Bryan Cave: Here are two representative reactions to the memo (reprinted on the next page):

• “No increase from last year, despite increased revenue and increased rates for associates.”
• “Bryan Cave bonuses. Truly pathetic, particularly for larger markets.”

Bryan Cave associates are probably as excited about their bonuses as Therese Pritchard is about her new role as chair of the firm.

4. Irell & Manella: Congrats to Irell partners on getting rid of that pesky lawsuit by former partner Juliette Youngblood (see this stipulation and order and this judgment). And congrats to Irell associates on their above-market bonuses (with the market bonus, i.e., Davis Polk, indicated parenthetically):

Class of 2014: 20 (15)
Class of 2013: 20 (15)
Class of 2012: 30 (25)
Class of 2011: 60 (50)
Class of 2010: 75 (65)
Class of 2009: 90 (80)
Class of 2008: 105 (90)
Class of 2007: 115 (100)
Class of 2006: 120 (100)

But wait! Irell associates don’t want congratulations; they are generally not happy with these bonuses:

• “People not thrilled. More than market but down from 1.5x last year (and double in prior years), to about 1.1x.”
• “Slightly above market but nothing earth shattering. Basically, the firm matched market and then tacked on a nominal ‘good year’ bonus…. This was pretty much exactly what I was expecting, as it reflects I&M’s serious culture shift away from being a market leader in compensation to just doing enough to keep us coming back for more. Most associates I know billed well over 2k (the minimum for bonus), with most averaging between 2200-2400. I didn’t expect a multiple of Cravath, but the firm knew they could not just match market and not have a serious retention problem.”
• “Many associates, especially junior ones, are annoyed they came to firm under guise of double market or at least in that ballpark, and now they’re here and it’s clear we are retreating.”
• “[T]here is a clear trend the firm should account for. There were double bonuses, then down to 1.5 last year and now down to 1.1 or 1.2. The trend is clear to everyone here but no answers were given. Likely will hurt recruiting.”

One Irell associate’s longer and interesting analysis is available on the next page.

Now let’s turn to the “nice” firms, places where associates are (generally) happy with their bonuses:

1. Schulte Roth & Zabel: A tipster offers this succinct summary: “Schulte matches DPW scale, plus additional $10k bonuses at each of 2300 and 2500 hours.”

That’s nice. And it’s not surprising; it’s consistent with what the firm did last year.

But here’s something that the firm is doing differently from last year. Instead of issuing two payments, one in late December and one at the end of the first quarter of the following year, the firm is paying the full bonus amounts on January 14.

Perhaps SRZ is responding to criticism of the two-stage payout from last year’s Above the Law post? You can view the full Schulte memo on the next page.

UPDATE (12/24/2014, 11:15 a.m.): From a Schulte source: “We had known for weeks that SRZ was getting rid of the split bonus. I think management expected a happy response for that alone. It seems like their hand was really forced to also raise their scale. Usually they announce bonuses day of the holiday party and they were over a week late this year. Consensus around the firm is that they were hoping for a firm to revert to the old scale. Overall though, business is great, associates are busy, and we feel like this is well deserved.”

2. Proskauer Rose: In November, Proskauer matched the then-prevailing Simpson scale. This month, Proskauer matched the new, higher Davis Polk scale. Some reactions:

• “People are very pleased with the (revised) bonus scale!”
• “Proskauer just matched DPW. Paying the extra DPW money on Decenber 31. Thanks so much.”

Why thanks? Because as we told this tipster, we lobbed in a media inquiry to Proskauer about whether they’d be adopting the Davis scale. Proskauer never responded directly to our query, but shortly thereafter they announced adoption of the DPW scale.

You’re welcome, Proskauer associates! Full memo on the next page.

3. Shearman & Sterling: The same thing basically happened at S&S. Some associates asked us to see if we could get Shearman to raise its Simpson-level bonuses to the Davis Polk scale. We sent in a query to the firm. One day later, the firm matched. Memo on the next page.

4. Allen & Overy: On December 9, A&O announced Simpson-level bonuses. On December 18, it revised bonuses upward to the Davis Polk scale.

We can’t take full credit for A&O’s move, since we never sent a query their way. But we did give publicity to a fellow Magic Circle firm, Clifford Chance, matching Davis Polk — a development that happened on December 12, after A&O’s first announcement and before their second. So perhaps reporting the Clifford Chance news contributed to A&O enhancing its bonuses.

5. Linklaters: On December 18, Linklaters, also a member of the Magic Circle, announced that it would be pulling Davis Polk bonuses out of its hat. Bonuses will be paid tomorrow, December 23.

6. Ropes & Gray: Just a small bit of housekeeping. In a prior post, concerning Ropes announcing bonuses for junior associates — classes of 2014, 2013, and 2012 — we wondered what the firm did for more-senior associates. Here’s what we’ve heard:

• “Ropes class of 2011 here. Can confirm that we matched DPW scale with (small) +/- for people over/under target hours.”
• “Ropes appeared to match DPW [for more-senior classes]. Hard to know since I can only speak for myself but I got the DPW scale.”
• “I’m class of 2008 at Ropes. Firm expressly communicated during reviews that they are matching the Davis Polk scale, with typical tiered reductions for anyone who was under the billing target of 1900 and typical (anemic) tiered increases for anyone above target (starting at 2000 and usually maxing out at 2200). It’s what R&G always does — match the market high and then give little higher nudges to high billers. FWIW, most people aren’t happy about the hours-based bumps up being so small (again) — it has kind of the opposite intended effect on morale — but I guess most firms don’t do any bumps at all and have higher billing targets to boot.”

So there you go: bonus dispatches from 10 leading law firms. We have more coverage to come, including a round-up of firms that announced Simpson-level bonuses and have not yet upgraded to Davis. If you have information or opinions to share — we keep our sources anonymous, of course — please email us or text us (646-820-8477).

I can then follow up with the foot-dragging firms and pressure them into see if they plan on doing something. To quote Jerry Maguire, “Help me help you!”

(Flip to the next page for official memos, additional reactions, and other goodies.)