question about law compensation Forum

[Anonymous User]

1. Do big law (Vault 50) associates make 160-170-180 etc. as a general matter?
2. What about bonuses, what's the median "median", so to speak - at big law firms?
3. What does PPM really mean as far as take home is concerned for equity partners? Does that money go to partners, or to the firm in expansion/growth, or some combination? I'm imagining this is much like what companies would do with dividend payments, either return to shareholders, or grow the business, or something else - but I could be wrong on this.
4. There's a lot of info on how much 1st to 6th year associates make, how does one figure out how much partners take home at these big firms?

[Anonymous User]

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[Sell Manilla]

Off topic, but why anonymous?

[Anonymous User]

eh, don't want to exhibit my absolute ignorance about pay, AFTER having invested a boat load of time and money into this law school thing - reflects poorly on judgment or something!

[deneuve39]

1. Do big law (Vault 50) associates make 160-170-180 etc. as a general matter?
2. What about bonuses, what's the median "median", so to speak - at big law firms?
3. What does PPM really mean as far as take home is concerned for equity partners? Does that money go to partners, or to the firm in expansion/growth, or some combination? I'm imagining this is much like what companies would do with dividend payments, either return to shareholders, or grow the business, or something else - but I could be wrong on this.
4. There's a lot of info on how much 1st to 6th year associates make, how does one figure out how much partners take home at these big firms?

Whether a BigLaw firm has the progression of 160-170-180 depends on 1) market and 2) whether the firm is lockstep. A helpful place to find this is the above the law career center (the tab Careers on the ATL site). On each firm's profile there is a graphic on the side of the screen with the salary progression as you work at the firm. It depends on market b/c although market rate for first years is 160 in both Chicago and NYC, I believe a 5th year at a NY firm would be earning more than a 5th year at a Chicago firm (though you will want to look into this). "Lockstep" means that you get the salary regardless of billable hours (for the most part...I think some firms lower it if you don't hit 1800 or something). Even at lockstep firms, your bonus is often directly related to how many hours you bill and your performance reviews in general.

As for bonuses, they obviously change depending on how the market is doing. ATL is a good place to look for info on specific firms' bonuses, but for reference, in 2009, here's what S&C gave (http://abovethelaw.com/2009/12/associat ... s-of-2002/):
Class of 2008 — $7,500
Class of 2007 — $10,000
Class of 2006 — $15,000
Class of 2005 — $20,000
Class of 2004 — $25,000
Class of 2003 — $30,000
Class of 2002 — $35,000

I don't know exactly how PPM is divided, but I do know that firms are pretty quiet about how much they give to individual partners. From what I've read on this site and other blogs, it seems that a very new partner at a V20ish firm would be making between 500K and a million, and it could go up to 4 million for a partner at Wachtell.

[clintonius]

Yeah, firms are hush-hush about individual partner compensation, but you can find average compensation per partner for some firms on the Am Law 100. And assuming by "it could go up to 4 million for a partner at Wachtell" you mean that's as high as it goes for the most senior of partners, I am not sure that's correct. Last year, Wachtell's average compensation per partner was $4.3 million, if they pay a new partner $1mm, which is $3.3mm less than the average, they can pay partners higher up in the ranks more than the average.

Now that I think about it, it's pretty clear that you wouldn't just have the highest- and lowest- seniority partners splitting the average (newest partner makes $1mm, most senior partner makes $7.6mm, to use the Wachtell example), because, well, how do you deal with that new partner as he rises in the ranks? How do you deal with the second-lowest in seniority vs the second-highest, etc? I would be curious to hear about this from somebody who actually knows about the workings of the compensation structure.

[vamedic03]

Yeah, firms are hush-hush about individual partner compensation, but you can find average compensation per partner for some firms on the Am Law 100. And assuming by "it could go up to 4 million for a partner at Wachtell" you mean that's as high as it goes for the most senior of partners, I am not sure that's correct. Last year, Wachtell's average compensation per partner was $4.3 million, if they pay a new partner $1mm, which is $3.3mm less than the average, they can pay partners higher up in the ranks more than the average.

Now that I think about it, it's pretty clear that you wouldn't just have the highest- and lowest- seniority partners splitting the average (newest partner makes $1mm, most senior partner makes $7.6mm, to use the Wachtell example), because, well, how do you deal with that new partner as he rises in the ranks? How do you deal with the second-lowest in seniority vs the second-highest, etc? I would be curious to hear about this from somebody who actually knows about the workings of the compensation structure.

Depends on the firm. Some firms have a lockstep compensation plan for partners, while others have an 'eat what you kill' compensation plan.

[nealric]

Yeah, firms are hush-hush about individual partner compensation, but you can find average compensation per partner for some firms on the Am Law 100. And assuming by "it could go up to 4 million for a partner at Wachtell" you mean that's as high as it goes for the most senior of partners, I am not sure that's correct. Last year, Wachtell's average compensation per partner was $4.3 million, if they pay a new partner $1mm, which is $3.3mm less than the average, they can pay partners higher up in the ranks more than the average.

Now that I think about it, it's pretty clear that you wouldn't just have the highest- and lowest- seniority partners splitting the average (newest partner makes $1mm, most senior partner makes $7.6mm, to use the Wachtell example), because, well, how do you deal with that new partner as he rises in the ranks? How do you deal with the second-lowest in seniority vs the second-highest, etc? I would be curious to hear about this from somebody who actually knows about the workings of the compensation structure.

Just FYI, PPP != "average pay per partner" The PPP numbers are often quite massaged. The average partner almost always makes less than the PPP. That said, I'm sure there are some WLRK partner making more than $4M. Marty Lipton probably makes a lot more than that.

To answer your question about partner compensation, it depends a lot on the firm. Some firms do lockstep by seniority for partner pay. Others have an "eat what you kill" system where partners are compensated based on the business they bring in. Others have some sort of hybrid system. The ratio of the lowest-earning partner to the highest can be very low in some firms, and extremely high in others. Keep in mind that there is also a trend of non-equity partners that are really perma-associates and paid at senior associate level. The non-equity status of certain partners may not be at all advertised.

[clintonius]

Oh, yeah, I am aware of the distinction between PPP and compensation per partner (I was referencing CPP figures, not PPP, although the two are the same at Wachtell and some other firms). It's actually kind of amusing to me the difference between CPP and PPP at some places -- Quinn Emanual drops about 25% from PPP to CPP figures, Boies Schiller drops from #4 PPP to outside of the top 10 CPP, etc. As I understand it, PPP is essentially the net profit of the entire firm (not the year-end revenue) divided by the number of equity partners, while compensation does the same but also takes into account non-equity partners, who dip into equity but get less than half of their total compensation from it.

I had heard of lock-step vs. eat-what-you-kill systems, but I guess I was hoping somebody might be able to shine a little light on how they work as a means of equity distribution. It's clear-cut for associates -- you make X amount each year, plus X bonus. But with partners taking an equity chunk, you have to account for factors like the effect of new partners on the take of the more senior partners, how to balance out the percentages while adjusting for those new partners and not pissing anybody off, etc. Just wondering if anybody had more insight, but writing it all out now has made me doubt that there is anybody on these boards who would have such inside information. Sorry to threadjack.

[nealric]

But with partners taking an equity chunk, you have to account for factors like the effect of new partners on the take of the more senior partners, how to balance out the percentages while adjusting for those new partners and not pissing anybody off, etc.

The short answer is that someone is going to be pissed off. That's the nature of the compensation game. You have partners who feel they have not been properly credited for bringing in certain business, etc. You have young partners mad about the semi-retired octogenarians not pulling their weight. You have established partners mad about young partners whose book of business isn't developing enough. You have partners upset because they are eating the cost of establishing a new office in a new city. Every firm has a different way of resolving these conflicts.

As for new partners, they may or may not dilute things depending one what kind of book they have. Inside-hires may have already developed a book as a senior associate, or may be inheriting a book of a retiring partner. Alternatively, they may have been made partner because someone is needed to service the overflow from another partner. There really is no single answer to your question.

[clintonius]

Thanks for the info! It fascinates me to read about this sort of thing. Much obliged.

[Anonymous User]

i hope i end up with an eat-what-you-kill system, what firms are best known for that? I'm interviewing with Kirkland, Sidley, Skadden, Jones Day, Paul Weiss, Arnold Porter, and K&L Gates - which one of those is "eat what you kill" ?

[let/them/eat/cake]

i hope i end up with an eat-what-you-kill system, what firms are best known for that? I'm interviewing with Kirkland, Sidley, Skadden, Jones Day, Paul Weiss, Arnold Porter, and K&L Gates - which one of those is "eat what you kill" ?

where's my ROFLcopter when i need it.

EDIT: just saw ur edit. I think they will all kill you and then eat you.

[Anonymous User]

o..kay, I'm genuinely interested in learning which one of those is the most merit-based because I'm interviewing with them very shortly, I don't like the idea of getting paid more just for aging. I guess I'll hit up Vault or ATL or something - in the meantime, if anyone has any helpful comments, I would appreciate it.

[let/them/eat/cake]

o..kay, I'm genuinely interested in learning which one of those is the most merit-based because I'm interviewing with them very shortly, I don't like the idea of getting paid more just for aging. I guess I'll hit up Vault or ATL or something - in the meantime, if anyone has any helpful comments, I would appreciate it.

i think lockstep promotion is the norm bc merit based compensation entails less transparency/more subjectivity re: criteria for promotion and who is being promoted based on what factors. i responded as i did, bc it reeks of gunnerific douchery to say something like "i hope i end up at an eat-what-you-kill" firm, the implication being that your are already at this early stage of your career on the partner track.

come to think of it, why don't u get the info straight from the horse's mouth, and just ask ur interviewers how they pay their partners out?

HTH.

EDIT: not that lockstop would entail more transparency/objectivity necessarily, just one could see why it is preferred for most associates, who are then on notice with clear billing requirements for different bonus levels each year and have a clear sense of salary progression--these are important to associates in the short-run bc most of them know the odds of making partner are slim and that the process can be a complete crapshoot.

[Anonymous User]

nah, not gunner, I just don't think its very economically inefficient to do lockstep - sets up the wrong incentives, although I doubt anyone working at these Vault 25 firms is in need of incentives - maybe they are.

I don't get why law is unique in this problem though, doesn't the rest of American business work on subjective evaluations? I hope I glean something useful out of firm reviews and such on my school's career page. I want to work for a Kirkland or Skadden, it seems like having that name on your resume is a big boost even if you don't make partner, you can go out to do other things.

Long term, I don't think its gunnerish to want to be paid on merit, as opposed to some communal payout based on tribal seniority, don't you think so?

[bk1]

Long term, I don't think its gunnerish to want to be paid on merit, as opposed to some communal payout based on tribal seniority, don't you think so?

His point is that it is gunnerish to make decisions based on something that is very unlikely (because it implies you feel that it is likely and that you will beat the odds).

[let/them/eat/cake]

Long term, I don't think its gunnerish to want to be paid on merit, as opposed to some communal payout based on tribal seniority, don't you think so?

His point is that it is gunnerish to make decisions based on something that is very unlikely (because it implies you feel that it is likely and that you will beat the odds).

this. although, OP, i agree with some of the thoughts you expressed in the post quoted above. i think what you should be looking at more is how the firms' assignment systems compare with one another, and firm cultural attributes re: how much rope they give younger team members w/r/t taking on responsbility. check the Chambers guide and their accompanying firm bios. obvi a lot of what you hear will be self-serving and tailored propaganda, but they get some current associate commentary/quotations, and this might be helpful.

[Anonymous User]

let/them/eat/cake: you seem knowledgable about this stuff, so I got one for you: how can I figure out if a firm is "not doing so well" - I really want to find out if my list of interviews have some red flag firms in there, thanks dude.

[Renzo]

I think they will all kill you and then eat you.

[Cavalier]

While we're discussing partner compensation, let's also discuss what we think Supreme Court clerkship bonuses will be in 2014.

[steve_nash]

While we're discussing partner compensation, let's also discuss what we think Supreme Court clerkship bonuses will be in 2014.

$400k, approx. HTH.

[Cavalier]

While we're discussing partner compensation, let's also discuss what we think Supreme Court clerkship bonuses will be in 2014.

$400k, approx. HTH.

No way! I think they're currently only $250k.

[steve_nash]

While we're discussing partner compensation, let's also discuss what we think Supreme Court clerkship bonuses will be in 2014.

$400k, approx. HTH.

No way! I think they're currently only $250k.

my sources tell me otherwise.

[Sell Manilla]

^ I'm assuming I'm supposed to be reading this with my sarcasm radar on?

If not, holy shiznit. If so, real numbers please?