Clerkship Bonus Questions

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Clerkship Bonus Questions

Postby Anonymous User » Thu Feb 25, 2016 6:18 pm

I'm going to be starting clerking later this year and I realize I really don't understand how firm and clerkship bonuses work, given that most clerkships proceed along an academic year, but bonuses are paid out based on calendar year. Maybe someone could clear this up.

(1) Suppose I finish clerking in late summer/early fall of 2018 and return to my summer firm. Come January 1, 2019, I would become a third year associate, and would normally be entitled to a $25k market bonus. Is this bonus pro-rated since I only worked ~September-December of 2018, or do I receive the full bonus plus my clerkship bonus?

(2) Slightly more complicated: suppose I receive a clerkship bonus in 2017, then work at the firm for most of 2018, and leave for another clerkship in August 2018. I'm guessing I don't receive any bonus for 2018 since I'm not at the firm in December, and I know I'm not eligible for a second clerkship bonus returning in 2019. What kind of bonus am I looking at for end-year 2019 assuming I return to the same firm in August 2019?

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rpupkin
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Re: Clerkship Bonus Questions

Postby rpupkin » Thu Feb 25, 2016 6:34 pm

All of this stuff varies depending on firm, but in general:

(1) You would get a clerkship bonus + a pro-rated market bonus.

(2) Your assumption is correct: you won't get a bonus if you leave before annual bonuses are paid out. As for what happens when/if you return to the same firm in August 2019, the firm would likely treat you the same as it would in scenario 1 above, minus the clerkship bonus: you'd get a pro-rated market bonus at the end of the year. They're not going to want to give you credit for the eight months you worked two years prior. But you can always try to negotiate this kind of thing. It probably won't work, but it doesn't hurt to try.

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Lexaholik
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Re: Clerkship Bonus Questions

Postby Lexaholik » Thu Feb 25, 2016 7:48 pm

Anonymous User wrote:I'm going to be starting clerking later this year and I realize I really don't understand how firm and clerkship bonuses work, given that most clerkships proceed along an academic year, but bonuses are paid out based on calendar year. Maybe someone could clear this up.

(1) Suppose I finish clerking in late summer/early fall of 2018 and return to my summer firm. Come January 1, 2019, I would become a third year associate, and would normally be entitled to a $25k market bonus. Is this bonus pro-rated since I only worked ~September-December of 2018, or do I receive the full bonus plus my clerkship bonus?

(2) Slightly more complicated: suppose I receive a clerkship bonus in 2017, then work at the firm for most of 2018, and leave for another clerkship in August 2018. I'm guessing I don't receive any bonus for 2018 since I'm not at the firm in December, and I know I'm not eligible for a second clerkship bonus returning in 2019. What kind of bonus am I looking at for end-year 2019 assuming I return to the same firm in August 2019?


(1) This was my situation a few years ago except I returned to the firm in November. I received a prorated bonus for that year.

(2) I'm pretty sure you're only going to get the prorated bonus for the five or so months in 2019. They're not going to comp you for your 1/2018-8/2018.

Having said all that, a friend of mine recently lateraled to a top firm during the middle of the calendar year and instead of receiving a prorated bonus, received a full year bonus. So things may vary depending on your specific firm.

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Re: Clerkship Bonus Questions

Postby blahblewblah » Fri Feb 26, 2016 10:50 am

Anonymous User wrote:I'm going to be starting clerking later this year and I realize I really don't understand how firm and clerkship bonuses work, given that most clerkships proceed along an academic year, but bonuses are paid out based on calendar year. Maybe someone could clear this up.

(1) Suppose I finish clerking in late summer/early fall of 2018 and return to my summer firm. Come January 1, 2019, I would become a third year associate, and would normally be entitled to a $25k market bonus. Is this bonus pro-rated since I only worked ~September-December of 2018, or do I receive the full bonus plus my clerkship bonus?

(2) Slightly more complicated: suppose I receive a clerkship bonus in 2017, then work at the firm for most of 2018, and leave for another clerkship in August 2018. I'm guessing I don't receive any bonus for 2018 since I'm not at the firm in December, and I know I'm not eligible for a second clerkship bonus returning in 2019. What kind of bonus am I looking at for end-year 2019 assuming I return to the same firm in August 2019?


On scenario 2, depending on the market you are in, you may be able to get a second clerkship bonus (although likely smaller). A lot of firms give larger bonuses for two clerkships.

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Re: Clerkship Bonus Questions

Postby Anonymous User » Fri Feb 26, 2016 1:39 pm

This is a totally naive question, but when do most firms pay out the clerkship bonus (the money you get for clerking, not the normal associate firm bonus). So in other words, if I finish a clerkship and join a firm in September, do I get that 50K in my first paycheck, or not until normal bonuses go out?

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rpupkin
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Re: Clerkship Bonus Questions

Postby rpupkin » Fri Feb 26, 2016 2:02 pm

Anonymous User wrote:This is a totally naive question, but when do most firms pay out the clerkship bonus (the money you get for clerking, not the normal associate firm bonus). So in other words, if I finish a clerkship and join a firm in September, do I get that 50K in my first paycheck, or not until normal bonuses go out?

Again, this kind of thing will vary from firm to firm but, in general, firms pay your clerkship bonus at the same time you start. So if you start in September, you'll probably get your bonus in September.

A couple of exceptions I've heard about: one firm (maybe Quinn?) wouldn't pay a clerkship bonus until you completed a full year at the firm post-clerkship. And I've also heard of firms paying all or part of a clerkship bonus before a start date.

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Re: Clerkship Bonus Questions

Postby Anonymous User » Fri Feb 26, 2016 2:40 pm

rpupkin wrote:
Anonymous User wrote:This is a totally naive question, but when do most firms pay out the clerkship bonus (the money you get for clerking, not the normal associate firm bonus). So in other words, if I finish a clerkship and join a firm in September, do I get that 50K in my first paycheck, or not until normal bonuses go out?

Again, this kind of thing will vary from firm to firm but, in general, firms pay your clerkship bonus at the same time you start. So if you start in September, you'll probably get your bonus in September.

A couple of exceptions I've heard about: one firm (maybe Quinn?) wouldn't pay a clerkship bonus until you completed a full year at the firm post-clerkship. And I've also heard of firms paying all or part of a clerkship bonus before a start date.


Quinn pays it up front but you have to stay for at least a year (if not you have to pay it back).

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Lexaholik
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Re: Clerkship Bonus Questions

Postby Lexaholik » Fri Feb 26, 2016 3:56 pm

Anonymous User wrote:This is a totally naive question, but when do most firms pay out the clerkship bonus (the money you get for clerking, not the normal associate firm bonus). So in other words, if I finish a clerkship and join a firm in September, do I get that 50K in my first paycheck, or not until normal bonuses go out?


The V5 firm I worked at paid my clerkship bonus right at the beginning. No strings attached. I specifically asked if I had to return any part of it if I left the firm before a year and they said no. Not sure if this is still the policy, or if this is common.

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Re: Clerkship Bonus Questions

Postby Anonymous User » Tue Mar 01, 2016 12:39 pm

Another question, how are clerkship bonuses taxed? Right now I'm clerking in jx with low taxes and I'm eligible for a 50K bonus at a firm in DC. If I take a 50K advance on the bonus, will I be taxed under my current low tax rate or still the DC rate?

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rpupkin
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Re: Clerkship Bonus Questions

Postby rpupkin » Tue Mar 01, 2016 2:59 pm

Anonymous User wrote:Another question, how are clerkship bonuses taxed? Right now I'm clerking in jx with low taxes and I'm eligible for a 50K bonus at a firm in DC. If I take a 50K advance on the bonus, will I be taxed under my current low tax rate or still the DC rate?

I'm not sure I understand your question. Your bonus would be taxed just like any other income.

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Lexaholik
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Re: Clerkship Bonus Questions

Postby Lexaholik » Tue Mar 01, 2016 3:32 pm

Anonymous User wrote:Another question, how are clerkship bonuses taxed? Right now I'm clerking in jx with low taxes and I'm eligible for a 50K bonus at a firm in DC. If I take a 50K advance on the bonus, will I be taxed under my current low tax rate or still the DC rate?


It would be taxed as ordinary income at your marginal rate. As to whether that bonus is earned in DC or the low-tax-jx, it's worthwhile to consult a CPA. (NOTE: THIS IS NOT TAX ADVICE.) It's tricky because your advance probably won't be considered "earned" until you start working at the firm. But if you can get it to be "earned" in the low-tax-jx, you could save thousands in taxes so it really makes financial sense to hire a tax advisor here.

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Re: Clerkship Bonus Questions

Postby Anonymous User » Tue Mar 01, 2016 3:41 pm

Anonymous User wrote:Another question, how are clerkship bonuses taxed? Right now I'm clerking in jx with low taxes and I'm eligible for a 50K bonus at a firm in DC. If I take a 50K advance on the bonus, will I be taxed under my current low tax rate or still the DC rate?


My co-clerk confronted this same issue. We were clerking in a state with super low state taxes. He was going to a state with super high state taxes. He told the firm that they should withhold less because he was still in low-tax state and they disagreed because it was connected with his employment in the high-tax state. They, of course, could have been wrong. And he could have (and may have) consulted a CPA and sought a refund. That was just the firm's initial reaction regarding withholding.

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bruinfan10
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Re: Clerkship Bonus Questions

Postby bruinfan10 » Tue Mar 01, 2016 4:21 pm

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Last edited by bruinfan10 on Wed Mar 02, 2016 7:22 pm, edited 1 time in total.

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Lexaholik
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Re: Clerkship Bonus Questions

Postby Lexaholik » Tue Mar 01, 2016 4:49 pm

Anonymous User wrote:
Anonymous User wrote:Another question, how are clerkship bonuses taxed? Right now I'm clerking in jx with low taxes and I'm eligible for a 50K bonus at a firm in DC. If I take a 50K advance on the bonus, will I be taxed under my current low tax rate or still the DC rate?


My co-clerk confronted this same issue. We were clerking in a state with super low state taxes. He was going to a state with super high state taxes. He told the firm that they should withhold less because he was still in low-tax state and they disagreed because it was connected with his employment in the high-tax state. They, of course, could have been wrong. And he could have (and may have) consulted a CPA and sought a refund. That was just the firm's initial reaction regarding withholding.


That's pretty savvy of your co-clerk even if it didn't work out. I told the poster above to consult a CPA but I did no such thing when I got my bonus. Do as I say not as I do, I guess. (Although I guess I didn't clerk in a low tax jurisdiction.) I just felt thankful for my $60k and went along my business. I only started studying up on personal finance and taxes afterwards.

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Re: Clerkship Bonus Questions

Postby Anonymous User » Fri Mar 18, 2016 11:09 pm

If I start clerking Jan 1 after a full year working bonus-eligible hours, will my firm pay me my bonus for that year of work? Or am I SOL because of "leaving" before bonuses pay out?

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Re: Clerkship Bonus Questions

Postby stretchedtoothin » Sat Mar 19, 2016 2:00 am

Anonymous User wrote:If I start clerking Jan 1 after a full year working bonus-eligible hours, will my firm pay me my bonus for that year of work? Or am I SOL because of "leaving" before bonuses pay out?


I think this is firm specific, and you should probably ask someone at your firm. On the other hand, if you're still a law student who hasn't started at a firm but has a clerkship already lined up, you're kind of putting the cart before the horse re: bonus questions.

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Re: Clerkship Bonus Questions

Postby Anonymous User » Sat Aug 05, 2017 6:08 pm

What about gap year clerkships? I.e. can you get bonus if you work a year, then clerk, then try to come back?

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Re: Clerkship Bonus Questions

Postby BulletTooth » Sat Aug 05, 2017 8:54 pm

Anonymous User wrote:What about gap year clerkships? I.e. can you get bonus if you work a year, then clerk, then try to come back?


Again, probably depends on the firm, but I'd bet most would give you the bonus when you came back.

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OutCold
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Re: Clerkship Bonus Questions

Postby OutCold » Mon Aug 07, 2017 10:27 am

I switched firms after my second clerkship and collected another bonus, but my first firm was willing to pay another bonus if I returned.

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Re: Clerkship Bonus Questions

Postby Anonymous User » Mon Aug 14, 2017 10:29 am

Anonymous User wrote:
rpupkin wrote:
Anonymous User wrote:This is a totally naive question, but when do most firms pay out the clerkship bonus (the money you get for clerking, not the normal associate firm bonus). So in other words, if I finish a clerkship and join a firm in September, do I get that 50K in my first paycheck, or not until normal bonuses go out?

Again, this kind of thing will vary from firm to firm but, in general, firms pay your clerkship bonus at the same time you start. So if you start in September, you'll probably get your bonus in September.

A couple of exceptions I've heard about: one firm (maybe Quinn?) wouldn't pay a clerkship bonus until you completed a full year at the firm post-clerkship. And I've also heard of firms paying all or part of a clerkship bonus before a start date.


Quinn pays it up front but you have to stay for at least a year (if not you have to pay it back).


Lexaholik wrote:
Anonymous User wrote:This is a totally naive question, but when do most firms pay out the clerkship bonus (the money you get for clerking, not the normal associate firm bonus). So in other words, if I finish a clerkship and join a firm in September, do I get that 50K in my first paycheck, or not until normal bonuses go out?



The V5 firm I worked at paid my clerkship bonus right at the beginning. No strings attached. I specifically asked if I had to return any part of it if I left the firm before a year and they said no. Not sure if this is still the policy, or if this is common.


What is the norm among firms (if there is such a thing)? No strings attached? 1 year? 2 years?

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Re: Clerkship Bonus Questions

Postby clerk1251 » Mon Aug 14, 2017 12:01 pm

Anonymous User wrote:
Anonymous User wrote:
rpupkin wrote:
Anonymous User wrote:This is a totally naive question, but when do most firms pay out the clerkship bonus (the money you get for clerking, not the normal associate firm bonus). So in other words, if I finish a clerkship and join a firm in September, do I get that 50K in my first paycheck, or not until normal bonuses go out?

Again, this kind of thing will vary from firm to firm but, in general, firms pay your clerkship bonus at the same time you start. So if you start in September, you'll probably get your bonus in September.

A couple of exceptions I've heard about: one firm (maybe Quinn?) wouldn't pay a clerkship bonus until you completed a full year at the firm post-clerkship. And I've also heard of firms paying all or part of a clerkship bonus before a start date.


Quinn pays it up front but you have to stay for at least a year (if not you have to pay it back).


Lexaholik wrote:
Anonymous User wrote:This is a totally naive question, but when do most firms pay out the clerkship bonus (the money you get for clerking, not the normal associate firm bonus). So in other words, if I finish a clerkship and join a firm in September, do I get that 50K in my first paycheck, or not until normal bonuses go out?



The V5 firm I worked at paid my clerkship bonus right at the beginning. No strings attached. I specifically asked if I had to return any part of it if I left the firm before a year and they said no. Not sure if this is still the policy, or if this is common.


What is the norm among firms (if there is such a thing)? No strings attached? 1 year? 2 years?


As far as I'm aware - the norm is usually that they pay it up front but require some commitment (most commonly, one year).

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OutCold
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Re: Clerkship Bonus Questions

Postby OutCold » Tue Aug 15, 2017 12:07 pm

Some firms will provide the bonus unconditionally. Others will require you to repay a prorated portion of the bonus if you leave before a certain point.




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