Firm Telling Associates They Won't Be Getting Bonuses After Claiming To Match Market
This feels like the rug getting pulled out.
(Image via Getty)
[UPDATES: There are several below!]
I wonder if this speaks to why Shearman & Sterling is so hot to get a merger done with Hogan Lovells.
A lot of law firms suffered slowdowns over 2022, but bonus season reminded us all that Biglaw mostly remains resilient in the face of some economic speedbumps. We thought Shearman was no exception when it first informed that it would match the Baker McKenzie bonus scale.
But the promise to meet the market was a little less than advertised. One Shearman tipster reports:
they had a zoom meeting towards the end of the year announcing there would be an hours requirement in order to get your bonus when previously Shearman has been known to not have billable hours requirements. Since the firm has been slow this year they are telling associates they didn’t meet the hours requirement and are not eligible for a bonus.
Hourly requirements are common across Biglaw, but adding one at this juncture is just an effort to pawn off a slow year on the employees with the least responsibility for the firm’s problems. [UPDATE: Tipsters say that it’s worth noting that the hours requirement was presented to them as a requirement for the 2023 bonus. But reports are that some associates are losing their 2022 bonuses with the firm citing the hours requirement (More on this below).]
And another tipster suggests that the hours requirement is just one piece of a multi-pronged effort to get out of paying bonuses:
After Shearman & Sterling announced that it will pay bonuses to on track associates earlier this month, we are now being informed by phone calls that despite being on track and in good standing we will not get any bonus this year. They started calling associates earlier this week just a few days before payment day and did not provide any other explanation.
[UPDATE 1: After publishing this story, another tipster shed more light on the discrepancy between these tips:
My understanding is that bonuses shenanigans are different dependent on department and utilization. So some practice groups aren’t paying bonuses at all, while others are paying a percentage based on the number of billable hours.
What this means practically is that some associates will be getting nothing regardless of hours while associates in departments that are getting paid a bonus will receive a percentage of the market bonus depending on their hours.]
[UPDATE 1/5/23: As things crystalize, we’re getting a better picture of what happened. Shearman historically had no hours requirement, but instituted one explicitly intended for 2023 of 1900 billable plus 150 “other” hours, which could include pro bono, marketing, CLE, D&I, mentoring, etc.
Last week, associates learned that “market bonuses” would be paid on the following scale using (1) a 10-month look back period (1/1-10/31); (2) applying a prorated utilization of 2050 hours; and (3) counting only billable and pro bono hours. Using this 2050 utilization baseline:
110%+ utilization = market bonus
100-109% utilization = 90% of market bonus
90-99% utilization = 75% of market bonus
0-89% utilization = 0% of market bonus
So it’s apparently even worse than just springing a new, retroactive hours requirement… associates needed to exceed the new hours requirement.]
This isn’t a complete picture and it’s entirely possible that some associates are still getting bonuses on the prior announced scale. But adding requirements and making last second individual “bonus condolence” calls paint an unflattering picture.
Earlier: Hogan Lovells And Shearman & Sterling… Potential Merger On The Horizon
Joe Patrice is a senior 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. Joe also serves as a Managing Director at RPN Executive Search.
