HOGAN LOVELLS — MEMORANDUM — ASSOCIATE DISCRETIONARY BONUS SCALE
To: All Associates — U.S. Offices
From: Cole Finegan and Alice Valder Curran
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Date: April 13, 2016
Subject: Associate Discretionary Bonus Scale
We have reviewed our policy for associate bonuses in all of our U.S. offices in light of current market activity. The contributions of our associates are critical to the success of the firm and we want to ensure our bonus system recognizes those contributions. Reflecting on our goals of providing associates with fair and market-based compensation and of being a well-integrated firm where work is performed across offices, regardless of where associates happen to sit, we have decided to adopt a single, nationwide discretionary bonus scale effective this compensation year (November 1, 2015 – October 31, 2016). While we determine the scale each year at the time we make bonus awards, taking into account market practices and other considerations, if this policy had been in effect in 2015, the nationwide bonus amounts for each class, based on the year completed, would have been:
Seventh+ Year $100,000
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Sixth Year $90,000
Fifth Year $80,000
Fourth Year $65,000
Third Year $50,000
Second Year $25,000
First Year $15,000
Quality and Productivity expectations
Associates will need to meet our quality and firm citizenship expectations in order to receive the class bonus, as has been the case in the past. In addition, associates will need to achieve a productivity minimum of 2,000 annualized billable hours. Bonus awards also may be adjusted upward to reflect outstanding contributions significantly in excess of expectations. When determining billable hours, we will continue our policy of counting up to 100 Pro Bono hours for those achieving 1,800 annualized billable hours and all Pro Bono hours for those achieving 1,850 annualized billable hours.
In some of our offices, the productivity expectation for a bonus had been 1,950. For this year and going forward, it will be 2,000 annualized hours for all offices.
Associates who do not meet these minimum expectations for lawyers’ workloads should not expect to receive a class bonus.
Other Bonus Factors
Factors beyond billable and pro bono hours have always been a part of the determination of whether an associate receives the class bonus, but we previously have not formally recognized that some of those factors could support a bonus where an associate’s billable hours fell below the minimum hour expectations. Beginning this compensation year, there may be circumstances where an associate who meets at least 1,850 annualized billable hours, and the firm’s quality standards, may be awarded a discretionary bonus for other significant and quality contributions to the firm such as:
- achievements in legal project management (e.g. efficiency on fee or hours capped matters); or
- contributions to business/client development efforts (e.g. significant participation in a pitch, client CLE or client alerts).
All associates will have the opportunity to provide information on these contributions during the compensation process. As currently occurs in our compensation discussions, any discretionary awards will be determined by the Americas Regional Managing Partners and the Chief Human Resources Officer – Americas, in consultation with the Practice Group Leaders and Office Managing Partners.
Origination of Business
Associates may also receive bonus recognition for significant business originations in the compensation year.
Other Considerations
Associates must be at the firm at the time bonuses are paid in order to receive a bonus.
Associates with the firm for less than a full year, or who have a billable hour requirement below 2,000 hours, will receive pro-rated class bonuses, provided their annualized contributions and quality would qualify them for a bonus.
Associates who are on leave during a portion of the relevant bonus year will receive pro-rated bonuses, provided their contributions during the period while not on leave, once annualized, would qualify them for a bonus, assuming they meet our quality and firm citizenship expectations.