Biglaw Firm Announces Disappointing Year-End Bonuses
UPDATE: The firm has amended their bonus policy, and it's much friendlier to associates.
UPDATE: The firm has unveiled a new bonus system. Check out the end of the post for all the details.
When it comes to Biglaw bonus memos, shorter is better. Just let folks know how much they’re getting (hopefully at least market rate) and when they’re getting it and… that’s it. That’s all folks really want to know. The longer the announcement, the more conditions on the bonuses — like the number of billable hours or the time frame to enter said hours in order to qualify for the money.
The 2020 bonus memo at Goldberg Segalla, 171st on the 2020 Am Law ranking with $150,000,000 in gross revenue last year, is an astonishing 15 pages long. (Available in full on the next page.) (Ed. note: check out the update at the bottom for details on the firm’s new policy.)
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Yikes.
The majority of it is dedicated to describing the leadership and “professional hygiene” components of the bonus formula which is an attempt to put some criteria on functionally discretionary factors. Listen… the Biglaw gold standard is lockstep bonuses. Besides being impervious to subjective impressions of associates which can reflect personal bias, lockstep gives associates a measure of certainty about their compensation and allows for apples to apples comparisons across peer firms. This is… not that.
In any event, the leadership and “professional hygiene” components can enhance the production component of the bonus, and that’s where Goldberg Segalla lays out the hard numbers. First we’ll note that associate production bonuses are based on “realized hours” meaning the firm has to actually collect from the client to get a bonus on that time, which… is not great for associates. It’s hardly a young associate’s fault if the firm is unable to collect on the work that they did. Of course there’s always a risk that a firm won’t get paid, but floating that should be the responsibility of the partnership, not the rank-and-file associates that have little control over whether clients pay, especially when they rarely have autonomy over which matters they’re assigned in the first place.
But anyway, here are the bonus amounts detailed in the memo — regardless of class year (the two discretionary components may account for class year differences):
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Subject to the professional hygiene component of the bonus program as described on the pages discussed within the body of this bonus memo, the Production bonus component for associates is based upon number of realized hours during the fiscal year (see above).
Hours: Bonus:
1950 $5,000
2000 7,000
2050 8,000
2100 9,500
2150 11,000
2200 12,500
2250 14,500
2300 17,000each additional 50 realized hours = $2500; there is no maximum production bonus component.
But don’t worry — it gets shittier. Usually year-end bonuses are paid… at the end of the year. Or perhaps at the end of the first quarter the following year. Not at Goldberg Segalla. They drag the process out over the course of the following year:
“Gross bonus” is the cumulative amount determined by adding the gross production component to the leadership component and adding or subtracting the professional hygiene component (if any).
The bonus will be paid in five distributions as follows:
On or before December 31, 2020: 12.5 percent of the gross bonus
On or before January 31, 2021: 12.5 percent of the gross bonus
On or before April 30, 2021: 25 percent of the gross bonus
On or before July 31, 2021: 50 percent of the remainder after write-offs and holdbacks are accounted for
On or before October 31, 2021: remainder of bonus after write-offs and holdbacks are accounted for
Any holdbacks that still exist as of October 31, 2021 will be monitored monthly and released accordingly as the receivable on which the hold back is based is collected by the firm.
And of course, associates only get the bonuses they earned if they’re still employed at the firm at the time of the distribution. That locks associates in at the firm and off of the lateral market if they want to collect the money they’re owed.
UPDATE: According to a spokesperson at the firm, while this was, at one point the 2020 bonus policy, it has since been scrapped. After internal changes at the firm, and you know, the whole global pandemic thing the powers that be at Goldberg Segalla decided to implement a different system for assessing bonuses. And there’s a lot of good news for associates in the new formula, with several of the more onerous provisions eliminated. Aidan Ryan, a spokesperson for the firm, describes the new policy:
Goldberg Segalla’s leadership recently announced significant changes to the firm’s previous bonus program, aimed at simplifying and streamlining the program and responding to feedback about the program from the firm’s attorney community. The Above the Law article published November 19 purporting to discuss Goldberg Segalla’s bonus program was entirely based on a year-old document describing a program that has been replaced.
Goldberg Segalla’s new bonus program eliminates components of the previous program including the professional hygiene requirements, realization and productivity calculations, and write-offs and reductions. The new program also shortens the payout structure. The firm has also implemented a practice of conducting individual meetings between attorneys and practice group leadership to discuss anticipated compensation and expectations for the upcoming year, providing greater transparency and predictability around total compensation at the beginning of the year.
Goldberg Segalla has not yet released bonuses for 2020.
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Since Baker McKenzie made the first year-end bonus announcement last week, Biglaw has been pretty quiet on the bonus front. Let’s hope whichever firm acts next will do so with the nice, big lockstep numbers we’ve come to expect from the elite in Biglaw.
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Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).
