Biglaw

Biglaw Firm Disappoints With Convoluted Bonus Formula With High Billable-Hour Requirement

But even the highest billers might not make market bonuses.

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One of the benefits of the lockstep nature of Biglaw bonuses (and compensation, generally for that matter), is that what associates are going to make is pretty clear. And if there are conditions (usually billable hours-based) it tends to be obvious and known well in advance. But that’s not always the case.

On Friday, Hogan Lovells announced year-end bonuses. The scale matches the market bonuses, subject to the firm’s usual 2,000-hour requirement, which can include up to 150 pro bono hours until associates meet a 1,850 billable-hour threshold, after which there’s no limit on pro bono hours.

The firm’s also giving out special bonuses (full email available on the next page):

We are also pleased to announce that this year we will pay a special bonus to associates in good standing.  The special bonus will be paid to all first and second year associates, and to those third year and more senior associates who have achieved at least 1,900 billable hours.  Amounts up to $40,000 will be awarded and will vary by class and level of achievement.  Our senior associates at the top of the scale have the potential to receive a total bonus amount of $160,000.

Hmmm, not the easy-to-digest chart most firms are going for, but perhaps associates at the firm will make out okay. And initial reactions from tipsters seemed to agree most associates would be fine:

This is exactly as expected…No confirmation on the exact year scales for the special bonuses, but given the range up to $40,000, everyone assumes it is the industry standard scale.

But today, there was a town hall with Americas Managing Partner Richard Lorenzo and a different methodology entirely was introduced. For associates 3rd-year and higher (there’s no minimum for 1st or 2nd years to get market special bonuses), the following formula will be used:

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-1900-1999 hours = 5% of base;
-2000-2099 hours = 15% of base;
-2100-2199 hours = 25% of base;
-2200+ hours = 40% of base.

So, for third-year associates that hit the previously stated billable target of 2,000, they’ll get full year-end bonuses but only a $7,500 special bonus. They’d have to bill 2,200 hours to get a full market special bonus of $20,000. And it gets worse — fourth- through sixth-year associates who even bill over this new 2,200-hour target will see smaller bonuses than their peers at other firms. (For example, a class of 2014 associate at HoLove with 2,200+ hours will get a $36,000 bonus, compared with the market rate of $37,000.) Senior associates that bill their butts off will have an opportunity to make market special bonuses of $40,000.

Let’s check in with HoLove tipsters and see how they’re doing (spoiler alert, they’re not okay):

It feels like an “F You” to the associates who have had a dip in their billable hours through no fault of their own. Folks like me have been doing everything in our power to help the firm in other ways, including BD, and this is a real stupid way for the firm to show its thanks. The tying to billable hours plus the face that the firm is giving it to first and second years without regard to hours means that this is hitting their profits as little as possible. They pretend to match the market while effectively giving close to nothing to most of their associates.

[Supplemental] bonuses, however, are based on a completely different scale than normal bonuses. Accordingly, this will result in below market bonuses, even for super high billers.

The firm is modifying the hour goal posts post-hoc (the firm has constantly repeated that they “match the market” at 2000 hours), and people are, understandably, upset.

….

First and second years have no hour requirements, which creates a situation where a second year who billed 10 total hours will get a bigger bonus than a seventh year who billed 1999, raising questions of fairness…

Speaking of fair, the craziest line of the town hall was when someone asked how this was fair and Richard said, “fair can be defined in many different ways”.

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When associates started asking the tough questions, management quickly ended the town hall even though many associates asked to keep the line open so they could hear Richard explain these bonuses and respond to questions… not very transparent.

Not sure if you have heard, but Hogan Lovells just put a 2200 hour requirement on supplemental bonuses (and they are using a convoluted percentage based calculation for the amounts). Basically they are being vague and paying below market bonuses. People are not happy and the presenters ended the call when people started asking tougher questions.

Oof, it stinks to have the rug pulled out from under you like that.

As always, we depend on you when it comes to bonus news. As soon as your firm’s bonus memo comes out, please email it to us (subject line: “[Firm Name] Bonus”) or text us (646-820-8477). Please include the memo if available. You can take a photo of the memo and send it via text or email if you don’t want to forward the original PDF or Word file.

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headshotKathryn 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).

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