DF Thread Forum

[Monochromatic Oeuvre]

This assumption that firms will give more to associates just because partners are making more seems weird to me. Did you people not watch the ratio of Cravath's PPP to total first-year compensation go from 10 in 2000 to 20 last year? Did you not watch the confused associates as partners told them just because PPP returned to 2007, it doesn't mean that they would get paid 2007 bonuses?

External pressure probably really is the only way to make a difference. Who raised salaries in 2000, when start-ups were poaching people left and right? A Silicon Valley firm. Who raised them in 2007, when PE was poaching people? A firm heavily involved in PE.

[mvp99]

.

[Big Dog]

I'll be starting with $280k in total debt. I don't care how many banks are hiring, I need a big law salary for several years to reasonably service that debt. Rising law school debt works to big law's favor.

Let me fix this for you: Extremely foolish decisions by OL's works to big law's favor.

[FSK]

[*]

This assumption that firms will give more to associates just because partners are making more seems weird to me. Did you people not watch the ratio of Cravath's PPP to total first-year compensation go from 10 in 2000 to 20 last year? Did you not watch the confused associates as partners told them just because PPP returned to 2007, it doesn't mean that they would get paid 2007 bonuses?

External pressure probably really is the only way to make a difference. Who raised salaries in 2000, when start-ups were poaching people left and right? A Silicon Valley firm. Who raised them in 2007, when PE was poaching people? A firm heavily involved in PE.

There doesn't seem to be pressure anywhere in the economy to raise wages for anyone. This structural issue isn't unique to biglaw.

[Old Gregg]

Not to be all "I'm more experienced than you," but it really is a junior associate meme that "X% of people will leave if salaries/bonuses don't go up, so surely they will go up!" Inevitably, a number close, but not quite at, that percentage does end up leaving. And yet compensation doesn't move one bit. It's a junior associate meme because more senior associates have seen this happen year after year.

[lonerider]

I'll be starting with $280k in total debt. I don't care how many banks are hiring, I need a big law salary for several years to reasonably service that debt. Rising law school debt works to big law's favor.

Let me fix this for you: Extremely foolish decisions by OL's works to big law's favor.

I actually am happy with my choices and I would do them over again if I had to. If you go to CCN at sticker, you're going to be in the $280k ballpark upon graduation.

[nsideirish]

I'll be starting with $280k in total debt. I don't care how many banks are hiring, I need a big law salary for several years to reasonably service that debt. Rising law school debt works to big law's favor.

Let me fix this for you: Extremely foolish decisions by OL's works to big law's favor.

What do offensive linemen have to do with this discussion?

[patogordo]

I'll be starting with $280k in total debt. I don't care how many banks are hiring, I need a big law salary for several years to reasonably service that debt. Rising law school debt works to big law's favor.

Let me fix this for you: Extremely foolish decisions by OL's works to big law's favor.

What do offensive linemen have to do with this discussion?

they bet everything on one high-paying job that often only lasts a few years and leaves them in debt, with few prospects and likely brain injury

[sideroxylon]

I'll be starting with $280k in total debt. I don't care how many banks are hiring, I need a big law salary for several years to reasonably service that debt. Rising law school debt works to big law's favor.

Let me fix this for you: Extremely foolish decisions by OL's works to big law's favor.

What do offensive linemen have to do with this discussion?

they bet everything on one high-paying job that often only lasts a few years and leaves them in debt, with few prospects and likely brain injury

i think this is some of your best work

[Monochromatic Oeuvre]

[*]

This assumption that firms will give more to associates just because partners are making more seems weird to me. Did you people not watch the ratio of Cravath's PPP to total first-year compensation go from 10 in 2000 to 20 last year? Did you not watch the confused associates as partners told them just because PPP returned to 2007, it doesn't mean that they would get paid 2007 bonuses?

External pressure probably really is the only way to make a difference. Who raised salaries in 2000, when start-ups were poaching people left and right? A Silicon Valley firm. Who raised them in 2007, when PE was poaching people? A firm heavily involved in PE.

There doesn't seem to be pressure anywhere in the economy to raise wages for anyone. This structural issue isn't unique to biglaw.

The majority of BB raised salaries by 20% a month and a half ago, which is a positive sign because they draw from the same talent pool.

I'll be starting with $280k in total debt. I don't care how many banks are hiring, I need a big law salary for several years to reasonably service that debt. Rising law school debt works to big law's favor.

Yes, it handcuffs more people, but the high debt loads also scare away a whole bunch of talented people who would otherwise go to law school in the first place.

Not to be all "I'm more experienced than you," but it really is a junior associate meme that "X% of people will leave if salaries/bonuses don't go up, so surely they will go up!" Inevitably, a number close, but not quite at, that percentage does end up leaving. And yet compensation doesn't move one bit. It's a junior associate meme because more senior associates have seen this happen year after year.

I think there's good evidence that people do leave when the grass is greener on the other side. There's less evidence that (1) the grass really is greener anywhere else, and (2) partners give enough of a shit if associates leave to seriously consider telling their wives the third summer home will just have to wait.

[Monochromatic Oeuvre]

Also, if OCI is at all a leading indicator of bonuses, I'd be bullish. Very positive news being reported out of every T14; probably the best year since '07.

[DELG]

Also, if OCI is at all a leading indicator of bonuses, I'd be bullish. Very positive news being reported out of every T14; probably the best year since '07.

wouldn't really the only good predictor be the heat of the lateral market/hiring volume by employers that have historically eaten up biglaw alums

neither of those seem to be moving more than the past couple few years

[Old Gregg]

Investment banks raising salaries doesn't mean shit. They need to hire more JDs.

And no, improving OCI doesn't mean much either in terms of increasing compensation. There is nothing to be gained from raising salaried only to be matched by other firms, unless you're trying attract candidates going to a sector that competes with biglaw and isn't subject to what is, essentially, price fixing.

[Old Gregg]

Also, monochromatic shithead, reread my post before disagreeing with it. You've completely missed the point, but I'll spell it out again. People will always leave (you see that's the part that I agree with). My point is that partners don't give a shit.

[FSK]

Its too bad that there's no clear path for highly qualified JDs/Big Law associates to leave for greener pastures.

Maybe if these departures had some sort of visibility, more people would take notice.

[Monochromatic Oeuvre]

Also, if OCI is at all a leading indicator of bonuses, I'd be bullish. Very positive news being reported out of every T14; probably the best year since '07.

wouldn't really the only good predictor be the heat of the lateral market/hiring volume by employers that have historically eaten up biglaw alums

neither of those seem to be moving more than the past couple few years

That might be the strongest causal factor. However, OCI hiring correlates pretty well with bonuses, and the third cause there might be "Firms whose workloads are increasing beyond their current capacity need to hiring more incoming associates and also do what they can to limit defections." I agree that there's limited evidence that's improved significantly, although midlevel laterals seem to be doing pretty well due to the rarity of their classes ('10-'12).

Investment banks raising salaries doesn't mean shit. They need to hire more JDs.

And no, improving OCI doesn't mean much either in terms of increasing compensation. There is nothing to be gained from raising salaried only to be matched by other firms, unless you're trying attract candidates going to a sector that competes with biglaw and isn't subject to what is, essentially, price fixing.

High levels of entry-level hiring are correlated with high bonuses. That doesn't make it a causal effect but it's also not meaningless.

And you can't say that investment banking salaries are meaningless and also say that the only impetus for an increase is a competitive market, unless you're contend that there is absolutely no reason someone would ever raise salaries or pay a bonus, in which case it's hard to explain why they have in the past.

Also, monochromatic shithead, reread my post before disagreeing with it. You've completely missed the point, but I'll spell it out again. People will always leave (you see that's the part that I agree with). My point is that partners don't give a shit.

You'll notice I didn't disagree with you, and you'll notice I also said there's not much evidence that defections seem to actually affect compensation.

[Frayed Knot]

Something I've always wondered:

If bonuses are mostly about mid-level retention, why aren't they announced further in advance? Wouldn't a 4th year associate be more likely to stay because they'd been promised a bonus at the end of their 4th year than because they got a big bonus for their 3rd year?

[Old Gregg]

Something I've always wondered:

If bonuses are mostly about mid-level retention, why aren't they announced further in advance? Wouldn't a 4th year associate be more likely to stay because they'd been promised a bonus at the end of their 4th year than because they got a big bonus for their 3rd year?

Probably because of the way firm finances are run.

[Frayed Knot]

Something I've always wondered:

If bonuses are mostly about mid-level retention, why aren't they announced further in advance? Wouldn't a 4th year associate be more likely to stay because they'd been promised a bonus at the end of their 4th year than because they got a big bonus for their 3rd year?

Probably because of the way firm finances are run.

Yeah, I get that—firms make their partnership payouts at the end of the year and all that. But I guess I'm just confused about how bonuses are supposed to work to prevent attrition given that many associates lateral right after bonuses are paid.

If I were a new 3rd year thinking about looking for another job right now, I'd be looking to leave right after I get the December 2014 bonus. Thus, that bonus wouldn't be a factor in my decision to stay or go—I'd get it either way. What would make me stay longer is if I thought the December 2015 bonus would be higher. But I won't know that until November 2015—by which time I'd only be thinking about leaving after I collected that bonus. Basically, it seems like bonuses are announced too late to ever encourage people to stay.

Maybe it worked in the past, when it seemed safe to assume that next year's bonus would be about what last year's was. But with modern bonus volatility, it seems like a really poor system for retention.

[5ky]

Something I've always wondered:

If bonuses are mostly about mid-level retention, why aren't they announced further in advance? Wouldn't a 4th year associate be more likely to stay because they'd been promised a bonus at the end of their 4th year than because they got a big bonus for their 3rd year?

Probably because of the way firm finances are run.

Yeah, I get that—firms make their partnership payouts at the end of the year and all that. But I guess I'm just confused about how bonuses are supposed to work to prevent attrition given that many associates lateral right after bonuses are paid.

If I were a new 3rd year thinking about looking for another job right now, I'd be looking to leave right after I get the December 2014 bonus. Thus, that bonus wouldn't be a factor in my decision to stay or go—I'd get it either way. What would make me stay longer is if I thought the December 2015 bonus would be higher. But I won't know that until November 2015—by which time I'd only be thinking about leaving after I collected that bonus. Basically, it seems like bonuses are announced too late to ever encourage people to stay.

Maybe it worked in the past, when it seemed safe to assume that next year's bonus would be about what last year's was. But with modern bonus volatility, it seems like a really poor system for retention.

I honestly don't even know what you're talking about, this logic doesn't make any sense. You want firms to announce their bonuses a year in advance?

[Desert Fox]

http://www.law360.com/ip/articles/574975

[JusticeJackson]

.

[Anonymous User]

http://www.law360.com/ip/articles/574975

Care to copy/paste whole article so that I don't have to sign up?

[Frayed Knot]

If I were a new 3rd year thinking about looking for another job right now, I'd be looking to leave right after I get the December 2014 bonus. Thus, that bonus wouldn't be a factor in my decision to stay or go—I'd get it either way. What would make me stay longer is if I thought the December 2015 bonus would be higher. But I won't know that until November 2015—by which time I'd only be thinking about leaving after I collected that bonus. Basically, it seems like bonuses are announced too late to ever encourage people to stay.

Maybe it worked in the past, when it seemed safe to assume that next year's bonus would be about what last year's was. But with modern bonus volatility, it seems like a really poor system for retention.

I honestly don't even know what you're talking about, this logic doesn't make any sense. You want firms to announce their bonuses a year in advance?

I'm not saying they ought to announce bonuses a year out. I'm just saying that I don't see how higher bonuses announced as late as they are provide much of an incentive to stay (unless associates are assuming that next year's bonus will always be as high as this year's bonus, which seems dubious ITE.)

By the time bonuses are announced, associates are probably planning to stick around long enough to collect that bonus. So a higher bonus for one year won't make them more inclined to stay (unless they expect it to be repeated the next year). It would just give them more cash on the way out the door.

The only way to really give associates a reason to stay is to get them to expect higher bonuses in the future. ITE, I don't even know if firms have a way to do that—I certainly wouldn't expect higher bonuses in 2 years based on what Cravath does this year.

[Anonymous User]

The partners who have talked about it have told me that part of the equation is that today, firms compete for partners (and the business they bring) way more than they used to. They're reluctant to let payroll cut into PPP so much that they lose out on the games of partner musical chairs.

Also, I don't know about the early 2000's, but it's hard to imagine ibanks EVER hiring JDs without any MBA/finance background. Today, JD-only ibankers or consulting associates are like unicorns. I know like.. 2 total. It's hard to imagine there ever being enough associates being hired in droves to industries they have no qualifications for affecting compensation.