Associate Bonus Watch: Biglaw Firm Retroactively Changes Bonus Rules -- Associates Left With 50 To 80 Percent Of Expected Bonus

Nothing generates ire like shifting the goalposts.

As a general rule, individualized bonuses and bonuses announced after the New Year aren’t good news, so when a firm does both, it’s cause for suspicion. There are exceptions, such as Cooley LLP’s up to 150 percent bonuses, but more often than not there’s something shady going on when a firm waits this long and then tries to atomize its workforce.

Associates at Baker McKenzie are outraged based on the tips we’ve received. The firm conducts reviews in late February and early March, and associates are learning, to their shock and dismay, that the firm changed its bonus requirements without adequately informing attorneys, leaving them with 50 to 80 percent of the bonuses they worked all year to earn.

At the heart of the controversy was the firm’s decision to change its 2000-hour billing target from the target required to earn a market bonus to the eligibility threshold for earning any bonus at all.

Market bonuses were not paid in NY (and all our US offices) unless associates hit 2100 hours. This policy was implemented retroactively and after the fact. Associates are outraged and were paid anywhere from 50-80% of market bonus even for hitting what we thought was our target (I.e., 2000 hours).

The sense of detrimental reliance was a theme of associate comments:

We all feel like we were completely blindsided by this. There was no indication from the management that they would be moving the goal posts this year and requiring associates to bill several hundred hours more than 2,000 to get a market bonus, even though we all got market bonuses last year for billing 2,000. We didn’t find out that the firm had changed its policy until this past week during our annual reviews just before bonuses were paid out on March 2.

For those who hit between 2,000 and 2,200 hours, the bonus amounts vary wildly between associates and practice groups. In my group, bonuses ranged between 50% to 80% of market, but we pretty much all billed and worked the same amount. It doesn’t make any sense.

An associate relayed a rumor going around the firm that attempts to find some rationale for the firm’s bait and switch:

Sponsored

Rumor is that the firm thinks it made a mistake last year by paying market rate bonuses for associates “only” billing 2,000 hours. I am hearing from our associate leaders that the firm is saying we don’t deserve market rate bonuses because we don’t work as hard as the associates in the prestigious New York firms where (according to firm management) associates are required to bill at least 2,200 hours to get a market bonus.

That’s… not really true. If that’s the argument, then the firm should consider hiring a better industry consultant to set them straight.

As we’ve explained before, “bonuses” sound like the sort of gratuitous payment that associates have no right to expect. But the market makes reality. Everyone enters this industry knowing that the top firms will pay an annual bonus and it’ll generally match Cravath’s and it’ll generally center around a 2000-hour billing target. At that point, this isn’t a bonus as much as “guaranteed variable compensation.”

And when people don’t get money they’ve been expecting, they get angry.

There is an eligibility threshold of 2,000 billable hours, under which there will be no bonus. For those of us who exceeded the billable hour requirement, we are getting anywhere from 50% to 75% of the market level. Very disappointing. We have been led to believe that 2,000 billable would get us the market level bonus all year long, only to be let down in early March of the following year.

It was a big hit on morale. Certainly feel like second-class citizens in the big-law world right now. I’m yet to meet another associate who is happy (or even OK) with the bonus amount. I would not be surprised if fellow associates start dusting off their resumes and picking up recruiters’ calls in the next few months.

Sponsored

For all those law firms looking to grow… I’ve found a soft target for you.


HeadshotJoe 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.


Bonus Time

Enter your email address to sign up for ATL's Bonus & Salary Increase Alerts.