David Lat's Embarrassing Take on 2020 Bonuses

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legalpotato

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David Lat's Embarrassing Take on 2020 Bonuses

Post by legalpotato » Fri Aug 21, 2020 3:07 pm

relevant portion quoted below, but cliffs:
-biglaw generally is doing better than expected, revenues predicted slightly down to flat
-but don't expect 2019 bonus scale because of "optics" of paying big bonuses when other industries/people suffer
-predicts 2013 pay scale (10k - 50k)
-no one should complain
-associates actually better of financially because they don't have to pay for gym

In other words, it will be seen as optically bad for partners making millions to come out of pocket to pay bonuses to associates w/ student loans and otherwise starting up their lives, and it would be better optically for partners to keep that money for themselves.

As someone on track for a 2900 billable year, I will go work in smalllaw if I get paid a bonus like that, as it is not worth the time to get a 25k or whatever bonus.

Lat's take is so bad, so pro-status quo, that it smells a bit fishy to be honest (e.g., someone paying him to manage expectations?)
But I don’t think we’re going to see that — not because of firm finances, but because of optics. In dark times for the country — COVID-19 deaths closing in on 200,000, millions of Americans out of work, companies filing for bankruptcy left and right — it might strike some as unseemly for Biglaw to take a “business as usual” approach.

General counsels who are seeing their companies suffer — well, at least if their companies aren’t named Apple or Amazon — probably won’t take kindly to seeing associates at their outside law firms taking home the same amount of money as last year. In fact, keeping bonuses the same would mean that many associates at firms that didn’t cut salaries would actually fare better financially in 2020, since many of their expenses — dining out, entertainment, commuting costs, gym memberships — have disappeared or dipped dramatically during the pandemic.
Attribution: https://abovethelaw.com/2020/08/some-ca ... uses/?rf=1

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by JusticeSquee » Fri Aug 21, 2020 3:17 pm

Lat's business right now is to get people to leave biglaw and go in to some shitty midlaw/boutique firm (his colleagues have personally cold called me and invoked his name as if it carries any weight LJL). This screed is designed to get biglaw associates to be scared bonuses will go down so that he can convince them to jump ship to some equally shitty midlaw/boutique firm.

I wouldn't be surprised if we get flat bonuses, in fact I expect it. Maybe things get worse and some TTT firms go down to 2017-18 bonuses. Lat's prediction of bonuses going back to the 2013 scale is laughable. He doesn't have any credibility. He is just another annoying recruiter that used to be a popular blogger.

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by Anonymous User » Fri Aug 21, 2020 3:22 pm

"On average, profits per partner for the Amlaw 100 rise by $200,000 (10%)" is a better headline than "Big law bonuses stagnant for the fifth year in a row"? Get out of here, what trash.

Unless firms are donating all excess money to charity for "optics", this article seems so absurd I can't imagine ATL isn't receiving some compensation for writing this "take".

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by nixy » Fri Aug 21, 2020 3:37 pm

Lol at being financially better off because you can’t go out to eat or for entertainment or to the gym in a pandemic. First, that’s a crappy tradeoff; second, what my employer pays me shouldn’t be dependent on what and how much I choose to spend my disposable income on. Does that mean if you have a kid in college it’s okay for your employer to pay you less once the kid graduates and you don’t have to pay tuition any more?

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by Joachim2017 » Fri Aug 21, 2020 3:48 pm

I think the one aspect of Lat's take that might be true is that because of when the information is made public, it does look worse in Dec of 2020 to broadcast that associates have not taken a hit on their bonuses while the rest of the country is reeling; the consequence that partners are actually profiting based on that hit will not be broadcast until much later. That's a fair inference about the optics, much as I agree with everyone else here that it's not the right thing for law firms to do (or for clients to perceive).

You would think optics wouldn't matter that much for sophisticated Big Law clients/GCs. In the end, what partners do this winter will say a lot more about their true values than the empty slogans and cliches on websites and associate recruiting materials.

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by Anonymous User » Fri Aug 21, 2020 5:03 pm

It's a hilariously out of touch take. My firm sends us regular emails about our finances and how we're doing perfectly fine this year with revenues matching last year. That seems to be standard for top firms across the board.

If a firm advertises to their employees they are doing well all year around, and then pulls the carpet under them at the end of the year when it comes time to pay, that firm is going to have some very pissed employees (and for good reason). Bragging about how much money you're making and then not paying your employees as much as you did last year, is a quick way to demoralize your ranks. They won't do that - flat bonuses this year.

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by snehpets » Fri Aug 21, 2020 6:41 pm

I found the pitch of his company’s recruiter emails pretty off-putting. It was very “congratulations on us deigning to notice that you might be worthy of further consideration from The David Lat, noted former king of website with business model focused almost entirely on talking about how terrible biglaw is and how stupid people are for working in it. Oh and have you heard that David Lat went to Yale AND worked at Wachtell?”

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by legalpotato » Fri Aug 21, 2020 7:34 pm

snehpets wrote:
Fri Aug 21, 2020 6:41 pm
I found the pitch of his company’s recruiter emails pretty off-putting. It was very “congratulations on us deigning to notice that you might be worthy of further consideration from The David Lat, noted former king of website with business model focused almost entirely on talking about how terrible biglaw is and how stupid people are for working in it. Oh and have you heard that David Lat went to Yale AND worked at Wachtell?”
He is also responsible for this amazing piece of literature (this is just a recap of the excerpt, wish I could find the full thing, it is even worse than the recap below):
“Girl, what you looking at?” When Audrey, rendered speechless, does not respond, Harvetta pushes again, asking “are your ears as small as your tiny white ass?” Audrey responds with a smile, an extended hand, and an apology—which Harvetta accepts by playfully suggesting that Audrey was “just checking out [her] big black booty.” Relieved, Audrey wonders to herself whether Harvetta would become her “Sassy African American Friend.”

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Monochromatic Oeuvre

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by Monochromatic Oeuvre » Fri Aug 21, 2020 8:06 pm

Leaving the rest aside, unless the wheels seriously fall off the economy in the next three months, we are absolutely not going back to 2013 bonuses. There's some chance they're flat and some chance there's a mild decline. But the profit declines will be too minor--or in some cases, not declines at all--to threaten an exodus with something like that.

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by parkslope » Fri Aug 21, 2020 8:31 pm

Monochromatic Oeuvre wrote:
Fri Aug 21, 2020 8:06 pm
Leaving the rest aside, unless the wheels seriously fall off the economy in the next three months, we are absolutely not going back to 2013 bonuses. There's some chance they're flat and some chance there's a mild decline. But the profit declines will be too minor--or in some cases, not declines at all--to threaten an exodus with something like that.
Well, bonuses aren't set by 30 firms or 100 firms. They're set by two or three: Cravath, DPW, STB I guess, Milbank. Everyone else is a follower. What is Cravath comes out after Thanksgiving with a 50% cut relative to last year? I guess one of the others might come over the top, but maybe not.

If I had to guess, I think it will be a 10-25% cut relative to last year

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by Hutz_and_Goodman » Fri Aug 21, 2020 8:42 pm

This is an absurd view and my speculation is that it benefits his company by ingratiating his recruiting firm with the Big law firms. My firm (and many firms) are doing quite well and I have no idea how they would justify lowering bonuses.

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by Auxilio » Sat Aug 22, 2020 1:03 am

I think another consideration that needs to be made is that firms don't actually have to CUT bonuses to reduce bonus payouts.

I imagine almost every firm is going to have a lot more associates below bonus cut offs, even if things return to normal 1-2 months of slow time will still keep it out of reach of many. And I know in my firm at least there are tons of associates who are going to end up below like 1400 (myself included, probably significantly under).

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by Anonymous User » Sat Aug 22, 2020 1:07 am

parkslope wrote:
Fri Aug 21, 2020 8:31 pm
Monochromatic Oeuvre wrote:
Fri Aug 21, 2020 8:06 pm
Leaving the rest aside, unless the wheels seriously fall off the economy in the next three months, we are absolutely not going back to 2013 bonuses. There's some chance they're flat and some chance there's a mild decline. But the profit declines will be too minor--or in some cases, not declines at all--to threaten an exodus with something like that.
Well, bonuses aren't set by 30 firms or 100 firms. They're set by two or three: Cravath, DPW, STB I guess, Milbank. Everyone else is a follower. What is Cravath comes out after Thanksgiving with a 50% cut relative to last year? I guess one of the others might come over the top, but maybe not.

If I had to guess, I think it will be a 10-25% cut relative to last year
Every firm's recruiting department should look at the Milbank bump if they want to increase their vault ranking and recruiting ability. There are plenty of other firms who are now rich enough to lead on setting bonuses and it clearly pays significant dividends to do so.

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by Sackboy » Sat Aug 22, 2020 3:53 am

Anonymous User wrote:
Sat Aug 22, 2020 1:07 am

Every firm's recruiting department should look at the Milbank bump if they want to increase their vault ranking and recruiting ability. There are plenty of other firms who are now rich enough to lead on setting bonuses and it clearly pays significant dividends to do so.
I doubt other firms could pull it off. Milbank was much better regarded than its rank, generally, and it had held the V25 position a few years ago. The raise served as a sort of "course correction" in a way.

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by jarofsoup » Sat Aug 22, 2020 7:25 am

Big firms are going to screw associates if they can.

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by ChairmanKaga » Sat Aug 22, 2020 6:48 pm

Lat's points aren't totally crazy. We all hope he's wrong, but he could turn out to be right.

Personally, I'm expecting the V10-20 (ish) to match last year's grid and most of the rest to cut. But it's all guesswork at this point. Nobody knows what will happen.

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by JusticeSquee » Sun Aug 23, 2020 11:08 am

ChairmanKaga wrote:
Sat Aug 22, 2020 6:48 pm
Lat's points aren't totally crazy. We all hope he's wrong, but he could turn out to be right.

Personally, I'm expecting the V10-20 (ish) to match last year's grid and most of the rest to cut. But it's all guesswork at this point. Nobody knows what will happen.
To be clear, Lat’s views are insane. Bonuses going down to 2013 levels while partners rake in more cash than ever (at least at the V20 level) would result in a lot of folks leaving for low COL markets. Bonuses will be flat this year. Some firms (Susman, Wachtell) will go above and beyond like they always have.

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by legalpotato » Sun Aug 23, 2020 11:35 am

JusticeSquee wrote:
Sun Aug 23, 2020 11:08 am
ChairmanKaga wrote:
Sat Aug 22, 2020 6:48 pm
Lat's points aren't totally crazy. We all hope he's wrong, but he could turn out to be right.

Personally, I'm expecting the V10-20 (ish) to match last year's grid and most of the rest to cut. But it's all guesswork at this point. Nobody knows what will happen.
To be clear, Lat’s views are insane. Bonuses going down to 2013 levels while partners rake in more cash than ever (at least at the V20 level) would result in a lot of folks leaving for low COL markets. Bonuses will be flat this year. Some firms (Susman, Wachtell) will go above and beyond like they always have.
His take makes no sense at all. But what is more insane is his rationalization of why it is the "right" thing to not pay out bonuses.

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by Anonymous User » Sun Aug 23, 2020 11:37 am

ChairmanKaga wrote:
Sat Aug 22, 2020 6:48 pm
Lat's points aren't totally crazy. We all hope he's wrong, but he could turn out to be right.

Personally, I'm expecting the V10-20 (ish) to match last year's grid and most of the rest to cut. But it's all guesswork at this point. Nobody knows what will happen.
If revenue is flat and bonuses are down (after being flat for 4 years), that means PPP is up. How is that not absolute insanity?

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by Kikero » Mon Aug 24, 2020 5:25 pm

Anonymous User wrote:
Sun Aug 23, 2020 11:37 am
ChairmanKaga wrote:
Sat Aug 22, 2020 6:48 pm
Lat's points aren't totally crazy. We all hope he's wrong, but he could turn out to be right.

Personally, I'm expecting the V10-20 (ish) to match last year's grid and most of the rest to cut. But it's all guesswork at this point. Nobody knows what will happen.
If revenue is flat and bonuses are down (after being flat for 4 years), that means PPP is up. How is that not absolute insanity?
If revenue is flat even if bonuses are flat PPP is probably up since expenses (travel, recruiting, summer programs, events, office utilities, etc.) are likely down. And as a poster above mentioned, flat bonuses may still mean lower bonus payouts depending on how hours are being allocated. Some groups are legitimately slow even at the top. The biggest question mark is probably whether revenue is really flat or mildly down. Billables being on target does not necessarily mean collections are.

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by parkslope » Mon Aug 24, 2020 6:04 pm

I'm not sure why people are dismissing the downside risk of bonuses being substantially lower than last year. It seems like some firms are doing just fine or better than last year, while others are going to be down (and that includes, apparently, some of the V5). All it takes for Cravath is to announce a cut and then no one bothering to raise. Law firms are good at being followers when it comes to stuff like that. Everyone is concerned about the economy and the future, and that includes biglaw partners. The fact that other V10s rarely raise on top of Cravath demonstrates that biglaw firms do not want to have to pay more than they have to in order to maintain parity.

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Re: David Lat's Embarrassing Take on 2020 Bonuses

Post by legalpotato » Mon Aug 24, 2020 8:58 pm

parkslope wrote:
Mon Aug 24, 2020 6:04 pm
I'm not sure why people are dismissing the downside risk of bonuses being substantially lower than last year. It seems like some firms are doing just fine or better than last year, while others are going to be down (and that includes, apparently, some of the V5). All it takes for Cravath is to announce a cut and then no one bothering to raise. Law firms are good at being followers when it comes to stuff like that. Everyone is concerned about the economy and the future, and that includes biglaw partners. The fact that other V10s rarely raise on top of Cravath demonstrates that biglaw firms do not want to have to pay more than they have to in order to maintain parity.
I don't think anyone is dismissing the risk. Think ppl are taking issue with Lat's insane take why it would be perfectly justified (and even a just result) for bonuses to regress despite revenues being flat or only slightly down.

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