Biglaw

Associate Bonus Watch: Moving The Goalposts?

Some associates think the firm could have been clearer in its communications about bonus eligibility.

By David Lat on February 19, 2016
Moving the goalposts?

Moving the goalposts?

Earlier this week, Paul Hastings announced its 2015 associate bonuses. The bottom line: the firm paid market-level bonuses to qualifying associates, plus supplemental bonuses to certain high-achieving associates. The PH associates we’ve heard from expressed happiness with their individual amounts.

But there was a slight rub pertaining to bonus eligibility, as one PH source explained:

Bonuses are out. Market match, which is good. But [some folks] aren’t pleased with the way they raised the hours minimum.

For the past several years, the stated hours budget has been 2000 but they reduced it to 1950 to be bonus eligible. If you polled all the associates in the middle of 2015 on what was required to get a bonus, 100% would have said 1950. This year, they sent out a very vague memo in the fall that (among many other things) reiterated the 2000 hours expectation. That got associates confused, so they sent out another memo later on that, essentially [saying] nothing has changed.’

Well, this year they set bonus eligibility at 1990. I got a bonus and everybody else I’ve spoken with also did, but [I wonder whether some] associates got screwed by landing between 1950 and 1990. Everybody knows 2000 is fair by Biglaw standards, so I don’t think anybody would care at all if they had just said at or before the start of the year and in an unambiguous manner that they were going to strictly enforce the 2000-hour budget this year. Other firms have raised the minimum lately and given over a full year’s notice (e.g., Skadden). Seems like common sense.

But a second source we contacted was much less troubled:

I agree that the firm could have been more transparent in its hours expectation — if you consistently deviate from a 2,000-hour expectation to 1,950, 1,950 understandably becomes the expectation in associates’ minds. That being said, I think anyone coming in between 1,950 and 1,990 hours (and I can’t imagine there were that many, given the firm’s busy year) was aware that they were taking *some* risk by doing so.

This sounds like a 1L Contracts question. If the document says bonus eligibility starts at 2000 hours but the firm has a pattern or practice of paying bonuses at the 1950 hours, which hours threshold controls?

We did some digging and learned that, in one sense, “nothing has changed.” The firm has had a 2000-hour requirement for quite some time now, and it has also had a practice of adjusting that requirement at the end of the year to reflect lawyer productivity, whether the firm “made budget,” etc. In the past few years, that process happened to lead to an adjustment down to 1950; this year, because the firm was having such a strong year, the adjustment went down by less, to 1990. But the 2000-hour requirement and the methodology for adjustment have remained constant, so in that sense, “nothing has changed.”

Could the firm have communicated this more clearly? Perhaps. But one source explained to us that because of how busy the firm was, it didn’t expect many associates to have a problem hitting 2000 hours. Accordingly, it didn’t feel the need to spell out in the memo that the downward adjustment might be smaller or that associates should operate on the assumption of a 2000-hour requirement.

We understand that only a small number of associates, less than a dozen, were affected by the shift from 1950 to 1990 hours (and that these associates’ cases were individually reviewed and many got bonuses anyway). We also hear that even with the increased threshold, a significantly higher percentage of associates received bonuses this year compared to last year. And supplemental or discretionary bonuses were more generous this time around, going both to associates with high hours and associates with strong performance.

In the grand scheme of things, this is a pretty minor issue. Paul Hastings is still one of the most highly desirable Biglaw employers, with an A-minus rating on the ATL Insider Survey and lots of other industry recognition as a great law firm to work for and a top law firm for diversity.

If you are lucky enough to work at Paul Hastings and have your heart set on a market-level bonus, though, just bill those 2000 hours. It’s possible that the firm might set the hours threshold below 2000 at the end of the year — but you don’t know ex ante that it will go lower or by how much, so better safe than sorry.

(Flip to the next page to read the full Paul Hastings bonus memo.)

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