Firm Goes Back And Does Right By Seniors Overlooked In First Raise Announcement

Norton Rose Fulbright was one of the last big firms to make the move and respond to Cravath’s new normal in associate compensation. Associates were already vocal about their frustration with waiting while every firm around them rushed to raise salaries. And when the firm finally did move — opting for the late-stage custom of raising first-years to $180K and keeping mum about everyone else — the associates went ballistic.

But there’s a happy ending to this story. Norton Rose Fulbright called a July 15 meeting to address compensation and showed the wisdom of an entity willing to admit it was taking its time to be cautious, thorough, and unafraid to admit it wasn’t right in the first place. After the recent meeting, it’s safe to say associates at the venerable verein are feeling a lot better:

The plan is a bit complex. That said, it’s fair, transparent, and uniquely tailored to the needs and personality of the firm (more on that below). No written materials were distributed, but I have summarized the basics of the plan below.

Years 1-3: full matching of Cravath scale, regardless of hours billed
Years 4-8: full matching of Cravath scale if average of billables for previous 2 years = 1,800+

Years 4-8 with a 2 year average below 1,800 stay on the old Simpson scale with the opportunity to earn a true-up bonus (bringing the associate to full Cravath scale for their class year) if 1,800 hours are billed in a year for which an associate is held back to the Simpson scale. The true-up bonus opportunity has no effect on regular annual bonuses–an associate held back to the Simpson scale who bills 2,000+ will receive both a true-up bonus and a regular annual bonus for that year. Another nuance is that 4th years whose 2 year average is below 1,800 get a raise to $215K or $220 (I can’t remember which) so that no one goes from a 3rd year to a 4th year without a raise. 4th years held back to the modified Simpson scale can still make up the difference to $235K with a true-up bonus by hitting 1,800 hours.

As I’ve said before, 1800 hours — for New York associates anyway — is not even a real limit, barring an extenuating tragedy taking one out of the office for a month or two. And an average of 1800 hours over two years means there’s really no way to miss this target and get the full Cravath scale. And these “true-up bonuses” appear to cover all the gaps.

But some associates, probably based on group and office, still see the 1800 mark as a problem:

Obviously associates with high billables will be satisfied with this while those who are below the target will be unhappy. Wondering how this affects attrition given that the same associates can lateral to another firm and make a lot more regardless of hours.

Still, I’m loathe to call averaging 1800 hours over two years “high billables.” Hell, I know people averaging 1800 hours over two six-month stretches.

Here’s how the firm discussed the way this system fits in with bonuses:

The new system was generally well received and associates are happy. Another high point in the presentation was an unequivocal statement that the new compensation system is not intended as a transfer from bonus to base comp (a common concern, unaddressed by many firms) and that the new compensation system would operate in addition to the recently adopted bonus structure.

That is a positive. Still, let’s not count our chickens. I continue to predict a crazy bonus season that continues to stretch the Biglaw haves from the have-nots. Perhaps I’m wrong, but let’s see how Cravath plays its next card.

In the meantime, one associate at least feels that Norton Rose may have rankled its people, but all is now forgiven:

From my vantage point, even the delayed announcement/effectiveness of the new compensation system is forgiven, because the result, while not quick or simple, was fair, reasonable, sustainable, and smart.

Well, did someone tell this person the raises don’t kick in until October 1? That’s a thing, isn’t it? I’m just not ready to live in a world where Norton Rose associates are happy.

Earlier: Global Firm Irks Associates With Subpar Salary Announcement

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Joe Patrice is an editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news.