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Associate Bonus Watch: Which Firm Just Issued Supplemental Bonuses?

Is bonus "season" becoming a year-round phenomenon? Check out how this firm just sweetened the pot.

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SHEPPARD MULLIN RICHTER & HAMPTON — MEMORANDUM — SUPPLEMENTAL BONUSES

From: Guy Halgren
Sent: Tuesday, March 17, 2015 9:30 AM
To: ALL-ASSOC
Subject: Supplemental Associate Bonuses Announcement

To All Associates:

As detailed in the State of the Firm meetings, the Firm had another outstanding year in 2014.  Your contributions to this effort are much appreciated.

I am pleased to announce the Firm will be paying supplemental Associate bonuses for the measuring year ending September 30, 2014.  Associates who meet hours guidelines will receive payment of these supplemental bonuses in March 2015.  We are also changing bonus payout timing going forward and are enhancing our pro bono creditable hours structure.  Here is a description of the changes we are implementing:

  1. Good Standing Bonuses.

Associates in levels A1 through C2 who are in good standing, who had at least 1950 creditable hours during the 2014 measuring period (subject to normal adjustments for efficiency in performance of work), and who are with the Firm on the date of payment, will receive a supplemental bonus to bring their total bonuses (including both hours and discretionary bonuses previously paid) with respect to the 2014 measuring period to the amounts listed below.  These supplemental bonus payments will be made in March 2015.

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The following bonus scale will apply for Associates in our U.S. offices other than New York:

The following bonus scale will apply for Associates in our New York office:

Bonuses for Associates who worked less than full-time during the 2014 measuring period as a result of a late work commencement date, a permitted leave of absence, or a flexible work arrangement, will be calculated on a full time equivalency-adjusted basis.

  1. Discretionary Bonuses.

An important part of our Associate bonus program has been the payment of discretionary bonuses in addition to the good standing bonuses. These discretionary bonuses are paid for exceptional contributions in hours, client development, recruiting, diversity, practice group support and other non-billable areas. Last year, we paid discretionary bonuses totaling about one‑third of our total Associate bonus payments. We will retain a discretionary bonus component, in addition to the hours-driven bonuses set forth in the tables in paragraph 1, above. However, in the future, discretionary bonuses will be a smaller component of total bonus compensation.

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  1. Timing.

We are moving to the first quarter of the year our annual bonus determinations and payments so we will have access to more market data before setting bonus levels. We will keep tabs on the market during January and perhaps into February and then pay out bonuses to the Associates working for us at that time. We will try to pay out the bonuses as early in the first quarter as possible. The Associate measuring year will remain October 1 through September 30. The Associates with whom we spoke overwhelmingly preferred to continue ending their measuring year in September rather than in December during the holidays.

  1. 2016 Structure.

We do not know what amounts we will pay at various hours levels in March 2016. That will depend on the market. We can confirm now our plan is for the hours levels for Associate bonuses to be 1950, 2100 (2000 in NYC), 2200 and 2400. I want to emphasize these hours levels are not intended to incentivize our Associates to work high hours. However, when Associates are required to work extraordinary hours on behalf of our clients, we believe they should be rewarded.

  1. Pro Bono Credit.

Under current policy, Associates receive a maximum of 100 hours of credit toward billable hour requirements for pro bono work, except in New York City where there is no cap. Associates working on pro bono projects that will consume more than 100 hours have been invited to ask that the cap be removed. These requests have been freely granted, and Associates outside of New York City have received more than 100 hours credit. To simplify matters, we are removing the 100-hour cap in all offices. Hours charged to approved pro bono projects will be credited toward billable hours requirements in the same manner as client-charged time. Just as with client-chargeable hours, these hours are subject to normal adjustments for efficiency in performance of work.

Our adoption of the changes described in this memo has been the result of much discussion and consideration. Data supplied by and discussions with the Associates Forum Bonus Subcommittee have been very constructive and helpful. I received a lot of useful input during my recent round of State of the Firm presentations. As I have discussed this topic with you over the last two months, I have been extremely impressed by your attitudes. Although you are understandably interested in the amounts of bonuses you will each receive, your overriding concern has been to make sure our Firm pays a competitive bonus so we can continue to attract and retain outstanding talent to serve our clients.

We believe the bonus program announced above is consistent with our goal of providing you a competitive package, including the opportunities we offer to build your career and to have a realistic chance of making Partner.

Thank you for your hard work in 2014 and for your patience as we worked through these issues.

-Guy

Guy Halgren
Chairman

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