Fall bonuses Forum

[2013]

Kirkland will probably announce monster bonuses in December. It emphasized that it was a market leader in comp in that email. If I were a betting person, I’d say it pays Susman-size bonuses come December.

[TigerIsBack]

Pretty surprised no announcements today on a Friday afternoon...

Is Kirkland's plan working?

[Anonymous User]

Where does the $30k come from? That's 1.375x market. From what I hear, average KE bonuses have been down to 1.15-1.25x these days. $142,500 calculation would match that:

$32,500 fall bonus
$16,250 fall bonus bump for hours to match Milbank (assume if you're average at KE you're above 2200)
$80,000 end of year bonus
$13,750 end of year bonus bump for KE shatters the market at ~1.17x
$142,500 total bonus comp

My last two bonuses have been 1.33x and 1.4x, so I averaged those. Tweak the math however you want, but the bottom line is that KE won't be paying most fifth years 1.4x-1.5x end of year market plus 1.5x fall bonus market (as Milbank did).

[Anonymous User]

Pretty surprised no announcements today on a Friday afternoon...

Is Kirkland's plan working?

A lot of partnerships (including Cravath's) only meet to make formal decisions like these on certain days, often on Mondays. So I'd expect more news Monday afternoon/Tuesday.

[Anonymous User]

Where does the $30k come from? That's 1.375x market. From what I hear, average KE bonuses have been down to 1.15-1.25x these days. $142,500 calculation would match that:

$32,500 fall bonus
$16,250 fall bonus bump for hours to match Milbank (assume if you're average at KE you're above 2200)
$80,000 end of year bonus
$13,750 end of year bonus bump for KE shatters the market at ~1.17x
$142,500 total bonus comp

My last two bonuses have been 1.33x and 1.4x, so I averaged those. Tweak the math however you want, but the bottom line is that KE won't be paying most fifth years 1.4x-1.5x end of year market plus 1.5x fall bonus market (as Milbank did).

How many hours do you bill?

[Anonymous User]

Where does the $30k come from? That's 1.375x market. From what I hear, average KE bonuses have been down to 1.15-1.25x these days. $142,500 calculation would match that:

$32,500 fall bonus
$16,250 fall bonus bump for hours to match Milbank (assume if you're average at KE you're above 2200)
$80,000 end of year bonus
$13,750 end of year bonus bump for KE shatters the market at ~1.17x
$142,500 total bonus comp

My last two bonuses have been 1.33x and 1.4x, so I averaged those. Tweak the math however you want, but the bottom line is that KE won't be paying most fifth years 1.4x-1.5x end of year market plus 1.5x fall bonus market (as Milbank did).

How many hours do you bill?

The 1.33 year was ~2300 and the 1.4 year was ~2500.

[Dcc617]

Skeptical because if Kirkland were going to exceed all bonuses, etc., then why didn't they just do it? Why the delay unless to fuck people over?

[chilover691]

Skeptical because if Kirkland were going to exceed all bonuses, etc., then why didn't they just do it? Why the delay unless to fuck people over?

Exactly what I'm thinking

[Ultramar vistas]

Skeptical because if Kirkland were going to exceed all bonuses, etc., then why didn't they just do it? Why the delay unless to fuck people over?

I can’t believe it’s really this opaque to people smart enough to get biglaw jobs but the obvious answer is that the biggest debtor counsel in America outside of maybe Weil didn’t think it was a good idea to have their name attached to special fall bonuses when they can true up their associates 3 months later.

[legalpotato]

Skeptical because if Kirkland were going to exceed all bonuses, etc., then why didn't they just do it? Why the delay unless to fuck people over?

I can’t believe it’s really this opaque to people smart enough to get biglaw jobs but the obvious answer is that the biggest debtor counsel in America outside of maybe Weil didn’t think it was a good idea to have their name attached to special fall bonuses when they can true up their associates 3 months later.

lol no, just no. there are a bunch of other potential reasons (e.g., balance sheet / liquidity reasons, tax reasons, credit facility obligations, avoiding duplicate administrative process of paying out two bonuses in a short time period), but this certainly is not one of them. Who would be surprised that any company that is a leader in an industry having a banner year would pay out bonuses? This isn't like banks getting a bailout then paying themselves bonuses -- this is earned money.

more importantly, the point you might be missing, despite their being legitimate reasons to defer payment, the opaqueness (to borrow your word) of the email ("we will take into consideration") is why ppl are unhappy. If they truly intend to match DPW/Milbank/Cooley and match last year's bonus scale, they should have said "we will at the very least match last year's bonus scale and the DPW/Milbank bonuses, on top of our standard multiple".

[Stillblade]

Skeptical because if Kirkland were going to exceed all bonuses, etc., then why didn't they just do it? Why the delay unless to fuck people over?

I can’t believe it’s really this opaque to people smart enough to get biglaw jobs but the obvious answer is that the biggest debtor counsel in America outside of maybe Weil didn’t think it was a good idea to have their name attached to special fall bonuses when they can true up their associates 3 months later.

Lol putting aside the idiocy of pretending that K&E is a mere "debtor's counsel" like all of its groups haven't been doing very well this year, what does having a strong RX practice have to do with not wanting to pay special bonuses? Do you think they're going to lose out on potential RX clients by signalling to them that they're so good at what they do that they can hook their employees up? Do you think RX partners quake in their Allen Edmonds when they see New York Post articles shaming them for their exorbitant fees?

If you're gonna write a super douchy post like this, maybe make sure you're saying something smart.

[Anonymous User]

Can we stop talking about K&E, which by its own definition doesn’t set the market, it follows (by +5%). Where is the crowd that carries the center of gravity (PW, Latham, Simpson, Gibson, Wilmer, MoFo)?

[Anonymous User]

I’m in lit at KE. A rainmaker share partner talked about this with a few of us today. He basically said that client perception played a big role here. I think KE’s breadth of client type compared to an old school white shoe like DPW could explain the difference in strategy. Many clients for whom I work have furloughed employees over the last few months.

I am cautiously optimistic that KE will come through in December, when clients already expect bonuses to hit, rather than make a big splash all by itself now. We’ll see.

[sms18]

I’m in lit at KE. A rainmaker share partner talked about this with a few of us today. He basically said that client perception played a big role here. I think KE’s breadth of client type compared to an old school white shoe like DPW could explain the difference in strategy. Many clients for whom I work have furloughed employees over the last few months.

I am cautiously optimistic that KE will come through in December, when clients already expect bonuses to hit, rather than make a big splash all by itself now. We’ll see.

Of course that's what a KE partner would say. DPW's oldest "white shoe" clients include bulge bracket banks, and those clients are also laying off/furloughing their employees too (look up some of the recent developments at Citi). So that explanation from your partner sounds like total bs to me.

[Anonymous User]

Well if the partner said it, I mean, it's not like they're personally keeping a shit load of money by not doing fall bonuses or something.

[Anonymous User]

Can we stop talking about K&E, which by its own definition doesn’t set the market, it follows (by +5%). Where is the crowd that carries the center of gravity (PW, Latham, Simpson, Gibson, Wilmer, MoFo)?

Gibson, Wilmer and Mofo? Seriously? If we are talking about NY, Wilmer and Mofo are on the periphery and K&E is much closer to the center.

[Anonymous User]

Skeptical because if Kirkland were going to exceed all bonuses, etc., then why didn't they just do it? Why the delay unless to fuck people over?

I can’t believe it’s really this opaque to people smart enough to get biglaw jobs but the obvious answer is that the biggest debtor counsel in America outside of maybe Weil didn’t think it was a good idea to have their name attached to special fall bonuses when they can true up their associates 3 months later.

This is a hilariously bad take.

[Anonymous User]

Can we stop talking about K&E, which by its own definition doesn’t set the market, it follows (by +5%). Where is the crowd that carries the center of gravity (PW, Latham, Simpson, Gibson, Wilmer, MoFo)?

GDC associate here. There is zero chance we move before Latham does, but its common knowledge among partners that there would be an open associate revolt if Latham matches and GDC doesn't.

[Anonymous User]

Can we stop talking about K&E, which by its own definition doesn’t set the market, it follows (by +5%). Where is the crowd that carries the center of gravity (PW, Latham, Simpson, Gibson, Wilmer, MoFo)?

GDC associate here. There is zero chance we move before Latham does, but its common knowledge among partners that there would be an open associate revolt if Latham matches and GDC doesn't.

(GDC associate who is a former Latham associate)

Agreed. And Latham isn’t a market leader either, they will wait to hear if others move first.

[Anonymous User]

Well if the partner said it, I mean, it's not like they're personally keeping a shit load of money by not doing fall bonuses or something.

That's not necessarily true. KE's leverage ratio is like 4.77. If we assume the average associate at KE is class year 2016 (so the average bonus is ~$27,500) and half of those get the extra Milbank 50% (average modifier would be 1.25x), I'd ballpark the value of these bonuses eating up 4.77 x $27,500 x 1.25 = $164k per partner. That's more than 3% of the average PPEP ($5.2 million). Sure, it doesn't sound like much when you're making millions, but it's not like this is a drop in the bucket either. And remember that's on top of what the firm will already be paying for bonuses.

Also, with 1,512 associates we're talking about a $52 million payout on short order. Even if the firm is doing well through the pandemic, collections/realization are probably low (they are at my firm), meaning they could be cash strapped. It's possible the firm ready to drop that kind of cash at a moment's notice, but will be able to get their ducks in order for their normal bonus season. I know my firm typically has a year-end collections push that rakes in more cash for bonuses and partner distributions, which doesn't appear to have started yet.

[Anonymous User]

Well if the partner said it, I mean, it's not like they're personally keeping a shit load of money by not doing fall bonuses or something.

That's not necessarily true. KE's leverage ratio is like 4.77. If we assume the average associate at KE is class year 2016 (so the average bonus is ~$27,500) and half of those get the extra Milbank 50% (average modifier would be 1.25x), I'd ballpark the value of these bonuses eating up 4.77 x $27,500 x 1.25 = $164k per partner. That's more than 3% of the average PPEP ($5.2 million). Sure, it doesn't sound like much when you're making millions, but it's not like this is a drop in the bucket either. And remember that's on top of what the firm will already be paying for bonuses.

Also, with 1,512 associates we're talking about a $52 million payout on short order. Even if the firm is doing well through the pandemic, collections/realization are probably low (they are at my firm), meaning they could be cash strapped. It's possible the firm ready to drop that kind of cash at a moment's notice, but will be able to get their ducks in order for their normal bonus season. I know my firm typically has a year-end collections push that rakes in more cash for bonuses and partner distributions, which doesn't appear to have started yet.

K&E associate here. I have it on good authority from a very-well connected NSP that this is simply a matter of logistics. K&E is much larger than Davis Polk and Milbank with a different structure (associates that are W-2, NSPs that are K-1). The approvals needed to pay bonuses and process/implementation of making payment is simply not worth the time and hassle now when the firm can get everyone to the same place (if not better) in 3 months. They matched in Summer 2018, but heard it was a pain then to orchestrate from top to bottom on the admin side.

Also heard from a different source (this was from a share partner) that the firm is ripping and whatever the aggregate payout number is, it's a drop in the bucket and the firm can pay it no problem. They were surprised that the firm didn't match now, but understood that the logistics of paying an unanticipated bonus at K&E just isn't worth it when the firm is so busy and they're going through the process in 3 months time anyway.

Not a great reason in my opinion, but I've been there for 5 years now and they've always paid me considerably above market (1.5x at least), so I have no reason to think they won't come through at bonus time this year.

[Anonymous User]

Well if the partner said it, I mean, it's not like they're personally keeping a shit load of money by not doing fall bonuses or something.

That's not necessarily true. KE's leverage ratio is like 4.77. If we assume the average associate at KE is class year 2016 (so the average bonus is ~$27,500) and half of those get the extra Milbank 50% (average modifier would be 1.25x), I'd ballpark the value of these bonuses eating up 4.77 x $27,500 x 1.25 = $164k per partner. That's more than 3% of the average PPEP ($5.2 million). Sure, it doesn't sound like much when you're making millions, but it's not like this is a drop in the bucket either. And remember that's on top of what the firm will already be paying for bonuses.

Also, with 1,512 associates we're talking about a $52 million payout on short order. Even if the firm is doing well through the pandemic, collections/realization are probably low (they are at my firm), meaning they could be cash strapped. It's possible the firm ready to drop that kind of cash at a moment's notice, but will be able to get their ducks in order for their normal bonus season. I know my firm typically has a year-end collections push that rakes in more cash for bonuses and partner distributions, which doesn't appear to have started yet.

K&E associate here. I have it on good authority from a very-well connected NSP that this is simply a matter of logistics. K&E is much larger than Davis Polk and Milbank with a different structure (associates that are W-2, NSPs that are K-1). The approvals needed to pay bonuses and process/implementation of making payment is simply not worth the time and hassle now when the firm can get everyone to the same place (if not better) in 3 months. They matched in Summer 2018, but heard it was a pain then to orchestrate from top to bottom on the admin side.

Also heard from a different source (this was from a share partner) that the firm is ripping and whatever the aggregate payout number is, it's a drop in the bucket and the firm can pay it no problem. They were surprised that the firm didn't match now, but understood that the logistics of paying an unanticipated bonus at K&E just isn't worth it when the firm is so busy and they're going through the process in 3 months time anyway.

Not a great reason in my opinion, but I've been there for 5 years now and they've always paid me considerably above market (1.5x at least), so I have no reason to think they won't come through at bonus time this year.

How many hours do you normally bill?

[sms18]

Well if the partner said it, I mean, it's not like they're personally keeping a shit load of money by not doing fall bonuses or something.

That's not necessarily true. KE's leverage ratio is like 4.77. If we assume the average associate at KE is class year 2016 (so the average bonus is ~$27,500) and half of those get the extra Milbank 50% (average modifier would be 1.25x), I'd ballpark the value of these bonuses eating up 4.77 x $27,500 x 1.25 = $164k per partner. That's more than 3% of the average PPEP ($5.2 million). Sure, it doesn't sound like much when you're making millions, but it's not like this is a drop in the bucket either. And remember that's on top of what the firm will already be paying for bonuses.

Also, with 1,512 associates we're talking about a $52 million payout on short order. Even if the firm is doing well through the pandemic, collections/realization are probably low (they are at my firm), meaning they could be cash strapped. It's possible the firm ready to drop that kind of cash at a moment's notice, but will be able to get their ducks in order for their normal bonus season. I know my firm typically has a year-end collections push that rakes in more cash for bonuses and partner distributions, which doesn't appear to have started yet.

K&E associate here. I have it on good authority from a very-well connected NSP that this is simply a matter of logistics. K&E is much larger than Davis Polk and Milbank with a different structure (associates that are W-2, NSPs that are K-1). The approvals needed to pay bonuses and process/implementation of making payment is simply not worth the time and hassle now when the firm can get everyone to the same place (if not better) in 3 months. They matched in Summer 2018, but heard it was a pain then to orchestrate from top to bottom on the admin side.

Also heard from a different source (this was from a share partner) that the firm is ripping and whatever the aggregate payout number is, it's a drop in the bucket and the firm can pay it no problem. They were surprised that the firm didn't match now, but understood that the logistics of paying an unanticipated bonus at K&E just isn't worth it when the firm is so busy and they're going through the process in 3 months time anyway.

Not a great reason in my opinion, but I've been there for 5 years now and they've always paid me considerably above market (1.5x at least), so I have no reason to think they won't come through at bonus time this year.

Appreciate you sharing some insider info, but not sure if this explanation makes all that sense. Associates everywhere are W-2 employees - what's so "different" about K&E that it's so very complicated to circulate one-off bonuses to the W-2 associates? If the complication just has to do with the NSPs that get K-1s, can't K&E just do the one-off bonuses for the W-2 associates now and handle K-1 related stuff after the fiscal year?

And also, if the firm is doing so hot and paying these bonuses is a "drop in the bucket" as your partner said, KE should've said in their email to the associates that they will definitely match whatever fall bonuses are paid by peer firms, rather than saying that they will consider taking the fall bonuses into account. So again, not a very convincing explanation.

[Monochromatic Oeuvre]

Also, with 1,512 associates we're talking about a $52 million payout on short order. Even if the firm is doing well through the pandemic, collections/realization are probably low (they are at my firm), meaning they could be cash strapped. It's possible the firm ready to drop that kind of cash at a moment's notice, but will be able to get their ducks in order for their normal bonus season. I know my firm typically has a year-end collections push that rakes in more cash for bonuses and partner distributions, which doesn't appear to have started yet.

Note that most firms are not "cash strapped" in late September unless they literally have not had profits beyond a draw. It's simply not how the economics of firms work and no collection/realization trouble would stop big firms from having hundreds of millions in cash on hand nine months into their fiscal year. Making bonus payments is purely a matter of deciding on a short-term profit level. There's no large firm who *can't*, there are only those that *won't*.

I think in Kirkland's case you may accidentally be right because IIRC their fiscal year ends August 31 (someone correct me if I'm wrong). These bonuses are obviously more of an additional expense than you typically keep in non-dedicated cash on hand (and maybe brings total expenses past what you planned to draw on revolving credit lines), but $52 million is a rounding error on Kirkland's balance sheet, and no firm would have trouble accessing what amounts to maybe a couple percentage points of revenue in a week.

[Anonymous User]

All firms have revolving credit lines with banks to borrow against in order to fund operating expenses (often with Citi). Because of this, no firm out there can use the lack of immediate cash on the balance sheet as a reason not to pay fall bonuses.