No Special Bonuses At This Am Law 100 Biglaw Firm, And Associates Are PISSED
Associates are upset they're making below market.
Yesterday, the Biglaw firm of Sheppard Mullin announced year-end bonuses. But what should have been a positive moment for the firm — which made $799,139,000 in gross revenue last year, making it 54th on the 2020 Am Law 200 ranking — was instead met with dissatisfaction. So, let’s take a look at what’s going on at the firm.
The announcement (available in full on the next page) sets out the following scale, with associates able to hit market year-end bonuses at the 2,000-hour threshold:
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What’s noticeably absent from that bonus scale is any mention of the special bonuses that became all the rage among Biglaw firms starting in the fall, in appreciation of associates’ hard work during the pandemic. At Sheppard’s peer firms, those special bonuses range from $7,500 to $40,000, depending on class year, and are in addition to the year-end bonus numbers.
To be fair, the firm’s announcement also indicated more money was on the table for some associates, and as reflected in the step-ups at 2,200 and 2,400 hours in the chart above:
We are pleased to announce 128 associates will be receiving a discretionary bonus, compared to 74 in 2019. This is the largest number of discretionary bonuses ever awarded and the highest percentage under our current system. We also are proud to announce 83% of our associates will receive a bonus for hours, discretionary contributions or both. This is eight percentage points higher than last year and the highest in recent years. Discretionary bonus decisions will be shared during annual evaluation meetings.
But, tipsters at the firm are not optimistic they’ll hit the full market bonus threshold:
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Despite the chairman repeatedly promising during associate town halls in the past few months that the firm would pay “market bonuses,” these bonuses are not in any way market, ie they do not have Covid bonuses. At most, the firm is giving out “discretionary” bonuses that range from $2,500 to $10k but only if you bill from 2000-2,400 hours. And only 128 associates will even get that!
It’s a complete slap on the face to all of the associates who kept this firm afloat this past year. And we won’t forget.
And there are a lot of folks at the firm who don’t anticipate market bonuses:
No special bonuses – are you kidding? After repeatedly being assured that our finances are excellent (including the firm’s best month – ever), that associate loyalty during pay cuts would be rewarded, and that the firm would pay market bonuses, turns out the firm doesn’t pay market rate or on par with the firms it claims are its peers. Instead, we get black box “discretionary bonuses” (typically small) from a firm that touts its transparency. Thanks a lot.
The firm’s previous messaging of having a strong financial performance played into many tipsters’ perceptions that they’d make full market bonuses, only to have the rug pulled out from under them:
SMRH did not do fall/Covid bonuses. We had an across the board associate salary cut for associates in May; and it was lifted—and we were paid full restitution— in October, after we were told that the firm had done quite well despite COVID. Indeed, associates were told that the firm’s profits for the year end were beating PRE-COVID expectations.
Against that backdrop, everyone—and I mean everyone—believed the firm would match the Covid bonus structure of the major market firms. As you’ll see from this announcement, that has not happened. Rather, the firm is relying on its black box “discretionary bonus” notion; that is usually tied to some combination of non-billable work and prompt time entry over the last year. And while discretionary associate bonuses are not formally “announced” by the firm, they are generally no more than 10k.
Needless to say, absent further information about this year’s “discretionary bonus” system, this announcement is a total morale disaster. Within minutes of the email, associate internal emails and Skype messenger was blowing up. Everyone thinks they’re going to get screwed; and that the discretionary bonus is likely to be a relative drop in the bucket. Further, the fact that whatever the “extra” bonus ends up being, it’s not tied to measurable productivity—but rather some nebulous combination of things (including the‘professional statement’—which is a paragraph self evaluation that every associate writes at the end of the fiscal) is just incredibly disappointing.
I guess some people are holding out hope that—in the end—it will match the big law Covid bonus scale. But the overwhelming consensus is that we’re not in that ballpark.
Super disappointing.
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So yeah, insiders are pissed, here’s a sampling of more reactions:
Unsurprisingly, not even a hint of a “Special” Covid bonus – despite repeated suggestions that the firm is having a good year and performing well financially. “Discretionary” bonuses are just that, and unlikely to actually make associates whole. Very frustrating that we’re back to paying below market.
No mention of Covid appreciation bonus. Apparent consolation of giving more discretionary bonuses (to 128 associates — maybe 1/4th of us). I heard that discretionary bonuses were capped at $10k in previous years, too. Folks are pissed.
Sheppard Mullin announced bonuses for associates and people are very disappointed in the lack of special bonuses. Discretionary bonuses are historically very small compared to the special bonus amounts. People do not feel optimistic that discretionary bonuses will come close to matching special bonuses.
The firm consistently states it is doing great, and associates are feeling very discouraged to be left out of the firm’s success. I have heard associate responses ranging from outrage to feeling unmotivated to continue working as hard as they have been. Considering the stealth layoffs (“performance based firings” all done at the same time…) Sheppard did early in the pandemic and the impact such layoffs had on morale, this choice was a missed opportunity for Sheppard to step up and be better.
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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).
