EOY Bonuses Forum

[TigerIsBack]

New asso at a bonus-below-market firm, just wondering if anyone knows generally how much the difference would be (for stub/junior levels) or is it a firm-by-firm thing (found no internal info anywhere) ... Trying to figure out whether it is worth it to try to hit that bonus billable req.

When does your bonus year end? I assume everyone's year is already done.

[Anonymous User]

We're not getting a bonus raise. Read the room.

What "room?" I'm at a V10 and our profits are up YoY. Bonuses are set in the industry from the top and the rest of the V50 will follow (more or less) and just accept it in order to stay market. How the bonus season plays out depends on the influence of a very small number of firms in the scheme of things.

My V50 is super busy too. Sure, deal volume is down, but rates are up so the overall revenue is still up. Management showed us the yoy comparable of hours(down), rates(up), and revenue(up) during one of the recent townhalls. It’s going to look like a “normal” year (e.g., 2019).

Sorry, what part of revenue going up mandates raising bonuses? Prior to COVID, revenue increased all the time while bonuses stagnated.

Welcome to the new world baby (maybe!). COVID changed a lot of things for various reasons. The connection between firm financial performance and associate compensation feels tighter now than it’s been for a long time. It was that way before ITE too (i.e., most of the 2000s) and it took a global financial crisis to give firms leverage to reorient and do what you allude to (spend roughly a decade growing profits while screwing non-equity attorneys with stagnant compensation). Hopefully we don’t go back to that. Even a pro forma raise, like we’ve been discussing, would be a good sign in that regard.

But things are nothing like the "new world" we experienced over the last couple years. No rage quitting. No crazy lateral market. No outsized profits. No insano hours across the board for corporate groups. There's a looming recession. Deal volume is down. And even if profits are up, I haven't heard anything earth-shattering that would suggest more of the same.

Firms reorient in a way that makes sense for the bottom line. That's why bonuses changed post-recession, that's why firms threw around cash during COVID, and that's why firms are going to do the bare minimum at EOY. 2008 and what followed made PPP even more important (e.g., for retaining partners), so it's not like firms are going to go back to pre-08 bonus structures just because we want them to.

Unless I hear some credible intel from Milbank/DPW that the partners there think otherwise, it's pointless to engage in wishful thinking. I'm always shocked by how much mental gymnastics people will jump through to make it sound like raises make sense from the perspective of moneygrubbing partners.

I have a few issues with this take. (This is, btw, my favorite time of the TLS bonus season, i.e., before there's any real information so we all just bullshit with each other for a few weeks.)

It isn't e.g., 2010 anymore. One way I mean this is that the associate classes of the prior decade were deeply affected by the Great Recession and were willing to "take" a lot more from employers than I think was true either of the dotcom classes on one side or the COVID classes on the other. The effect of COVID on associate classes coming up in 2020, 2021, 2022 and forward is the opposite of what ITE did: associates I think feel more empowered and mobile than at maybe any prior time. We can debate whether that's a good or bad thing but it's a thing, regardless.

The second way it isn't 2010 anymore is that one of the big lessons of the 2010s was firms misjudged how much they rely on good midlevels and seniors (this was when the business was really transitioning away from doc review by juniors driving profits). There were some rough years after the Great Recession because firms let their mid and upper ranks thin out in a way that hurt the bottom line and made it hard to staff. I think firms are much more sensitive to this attrition issue than they were ten years ago (it shows in how comp. growth has been seniority-biased vs. the 90s and 00s when everyone fetishized junior associate comp.)

Another way it's different from ten years ago is that word seems to have gotten out in a much more real way that the prospects for actual equity partnership at most of these firms are very slim, even for "good" attorneys. The brass ring is increasingly ephemeral and it feels like law students and younger attorneys have grasped this in a way that they still hadn't a decade prior. Which in turn means they're less willing to put up with bullshit because "one day, it'll be mine"; they recognize it's more of a short-to-medium term game and want what they can get now.

Hard to predict exactly how all this lands. But I think all else being equal there is more pressure on firms about associate compensation than at maybe any time since the height of the dotcom boom (when there was similarly high pressure but for a different reason--financial and tech poaching). And I think there is less willingness to use e.g., the perception of an economic downturn as an excuse for screwing people on compensation. Given all this, it also wouldn't surprise me to see at least a marginal raise in bonus levels this year, even if it isn't sizeable, so that firm leadership can message that it's listening and responsive and "cares."

[Anonymous User]

But things are nothing like the "new world" we experienced over the last couple years. No rage quitting. No crazy lateral market. No outsized profits. No insano hours across the board for corporate groups. There's a looming recession. Deal volume is down. And even if profits are up, I haven't heard anything earth-shattering that would suggest more of the same.

Firms reorient in a way that makes sense for the bottom line. That's why bonuses changed post-recession, that's why firms threw around cash during COVID, and that's why firms are going to do the bare minimum at EOY. 2008 and what followed made PPP even more important (e.g., for retaining partners), so it's not like firms are going to go back to pre-08 bonus structures just because we want them to.

Unless I hear some credible intel from Milbank/DPW that the partners there think otherwise, it's pointless to engage in wishful thinking. I'm always shocked by how much mental gymnastics people will jump through to make it sound like raises make sense from the perspective of moneygrubbing partners.

I have a few issues with this take. (This is, btw, my favorite time of the TLS bonus season, i.e., before there's any real information so we all just bullshit with each other for a few weeks.)

It isn't e.g., 2010 anymore. One way I mean this is that the associate classes of the prior decade were deeply affected by the Great Recession and were willing to "take" a lot more from employers than I think was true either of the dotcom classes on one side or the COVID classes on the other. The effect of COVID on associate classes coming up in 2020, 2021, 2022 and forward is the opposite of what ITE did: associates I think feel more empowered and mobile than at maybe any prior time. We can debate whether that's a good or bad thing but it's a thing, regardless.

The second way it isn't 2010 anymore is that one of the big lessons of the 2010s was firms misjudged how much they rely on good midlevels and seniors (this was when the business was really transitioning away from doc review by juniors driving profits). There were some rough years after the Great Recession because firms let their mid and upper ranks thin out in a way that hurt the bottom line and made it hard to staff. I think firms are much more sensitive to this attrition issue than they were ten years ago (it shows in how comp. growth has been seniority-biased vs. the 90s and 00s when everyone fetishized junior associate comp.)

Another way it's different from ten years ago is that word seems to have gotten out in a much more real way that the prospects for actual equity partnership at most of these firms are very slim, even for "good" attorneys. The brass ring is increasingly ephemeral and it feels like law students and younger attorneys have grasped this in a way that they still hadn't a decade prior. Which in turn means they're less willing to put up with bullshit because "one day, it'll be mine"; they recognize it's more of a short-to-medium term game and want what they can get now.

Hard to predict exactly how all this lands. But I think all else being equal there is more pressure on firms about associate compensation than at maybe any time since the height of the dotcom boom (when there was similarly high pressure but for a different reason--financial and tech poaching). And I think there is less willingness to use e.g., the perception of an economic downturn as an excuse for screwing people on compensation. Given all this, it also wouldn't surprise me to see at least a marginal raise in bonus levels this year, even if it isn't sizeable, so that firm leadership can message that it's listening and responsive and "cares."

I'm the previous quoted anon, and I in no way intended to say things are like they were in 2010. They aren't. What I was saying is things aren't like they were in 2020/2021, which came with a host of reasons why firms thought they had to pay us all more (that I listed in my post). That was the time with "more pressure on firms about associate compensation" than any other year, and it also looks little like that today.

I agree with most of the rest of what you said except the conclusions in the last paragraph. I don't see how any of your points line up with partners wanting to pay us more. Sure, associates are less willing to put up with bullshit, but I see that playing out more with refusing more work/RTO than with leaving. In order to move the needle on bonuses, partners need to perceive real consequences, and I just don't see people jumping ship en mass (like they did during the pandemic for burnout) just because Cravath, DPW, and Millbank offer us base Cravath scale rather than Cravath + DPW special bonuses. If the partners agree with me (and I think they do), then they will offer us base Cravath. You even take your argument a step further to say that partners will INCREASE bonuses this year. Maybe I'm wrong, but I don't think partners are going to expect a hit to their bottom line if they refuse to offer a bonus increase on the eve of a recession. You may think the recession is just an excuse, but we're talking about partner logic, not yours.

[Monochromatic Oeuvre]

New asso at a bonus-below-market firm, just wondering if anyone knows generally how much the difference would be (for stub/junior levels) or is it a firm-by-firm thing (found no internal info anywhere) ... Trying to figure out whether it is worth it to try to hit that bonus billable req.

It all hinges on how far below you are, what your baseline is otherwise, and what kind of work you have to do to hit it. A third-year 400 hours away with two months left who can count 100 hours of pro bono? I'd say go for it. A first-year 1300 hours away with six months left? I'd say don't bother and just ride out the year. With more specifics, I could give you a more specific answer.

This late in this year, you probably have a great idea about whether you can hit it, although you have to keep in mind what you can actually do (in addition, of course, to whether you'd ever want to). As a junior there was no way I could've gotten 250/month from a way lower baseline than that even if I begged and pleaded to be put on every deal there was.

[Itsalovestory]

Wall St layoffs all over the news. Adjust your expectations.

[Anonymous User]

Wall St layoffs all over the news. Adjust your expectations.

A handful of banks trimming ranks after two of their most profitable years ever and it getting picked up by CNBC =/= “Wall St layoffs all over the news.” I swear sometimes associates in biglaw deserve what they get with this Eeyore mentality.

[Anonymous User]

So do we think there's a chance of an announcement this week? Even if it's not a stellar amount, I would think someone might try to match last year's amount to keep anyone form announcing an increase (even if one is unlikely).

[Anonymous User]

So do we think there's a chance of an announcement this week? Even if it's not a stellar amount, I would think someone might try to match last year's amount to keep anyone form announcing an increase (even if one is unlikely).

I think firms that have tried to come out early to "set the market" (e.g., Baker a few years ago) have realized what they do is irrelevant if they don't belong to the very small number of actual market-setters (Cravath, DPW, Milbank, maybe STB)--this is particularly the case if they're trying to come out early to reinforce the prior scale; no one cares and if it changes they always end up matching anyway, so what's the point?

The traditional announcement date is either early in the week before Thanksgiving or early in the week after, keyed to when Cravath's partnership meets. So think like 21st / 22nd or 28th / 29th this year. Doesn't mean something wacky couldn't happen but that's when I'm expecting we'll first get news. The more interesting thing for me isn't when it starts but how other firms react. Going to be an interesting year.

[Anonymous User]

My sense is that partners at my firm would push back on a bonus if they could, but would pay it if the firms ranked around it do too. I know we've basically stopped hiring, except in a few groups that are still on fire. And the partners make comments that make me think that they think a deep recession is imminent. This is a little frustrating. Sure, I make a lot more than I thought I would. But rent/house prices are still super high and hard to afford even at the top of the Cravath scale. And I'm in one of the groups that's on fire still, so I certainly don't see this slow down. I'm getting older, so the long hours are wearing on me more than ever.

[Anonymous User]

The mitigating factor for many (if not most) firms is they only pay up if you hit the required hours threshold. So long as recovery is at an acceptable level, that means the firm is making a respectable profit from the associate who gets paid. If economic conditions next year are such that firms don’t have enough work to go around, then most associates aren’t getting a bonus regardless of the headline numbers.

Using myself as an anecdotal example. I’ve billed around $1.7mm this year so far, with a recovery rate of 100%. It’s clearly emotionally driven (or disingenuous) if a firm argues that it cannot afford to pay me a bonus at 2021 levels or higher, given they would still have approximately a 60% profit margin from my labor at year end.

Also, a lot of firms do have cash on hand to weather financial storms. My firm is perceived as being financially vulnerable at times, but we’d be able to ride out a substantial period of financial difficulties with our existing reserves.

[Anonymous User]

It’s clearly emotionally driven (or disingenuous) if a firm argues that it cannot afford to pay me a bonus at 2021 levels or higher, given they would still have approximately a 60% profit margin from my labor at year end.

It's worse than that. My sense both internally and from talking w/ friends at other firms in the V50 is that most firms in the V50 are going to be on one side or the other of essentially a stable year vs. '21 -- maybe a few % growth in equity partner profits, maybe a few % decline. But this is after two prior years of mind-blowing profit growth at most of these places; in some groups you have partners who have literally doubled what they made between EoY 2019 and EoY 2021 and they'll come in right around there again for '22. But, partners being partners, you're right, I'm hearing the same grousing you're hearing that because someone is going to make only e.g., $4.5m this year instead of $4.7m last year (no mention of the fact he was making "only" $3m in 2019) that everyone needs to be prepared for some "belt-tightening." It's a good reminder that we really and truly are working in a pyramid-scheme portion of the industry.

[Anonymous User]

TBF Senior Associate comp also went up like $100k from 2019-2021. I'm class of '15, when I was interviewing for Summer Assoc jobs, 8th year's made $340k, last year it was $550k. I'll be super salty if bonuses are down this year, but it's been a good run lately - how much do Sr. Associates have to make before it's not a "pyramid scheme", $1m?

It’s clearly emotionally driven (or disingenuous) if a firm argues that it cannot afford to pay me a bonus at 2021 levels or higher, given they would still have approximately a 60% profit margin from my labor at year end.

It's worse than that. My sense both internally and from talking w/ friends at other firms in the V50 is that most firms in the V50 are going to be on one side or the other of essentially a stable year vs. '21 -- maybe a few % growth in equity partner profits, maybe a few % decline. But this is after two prior years of mind-blowing profit growth at most of these places; in some groups you have partners who have literally doubled what they made between EoY 2019 and EoY 2021 and they'll come in right around there again for '22. But, partners being partners, you're right, I'm hearing the same grousing you're hearing that because someone is going to make only e.g., $4.5m this year instead of $4.7m last year (no mention of the fact he was making "only" $3m in 2019) that everyone needs to be prepared for some "belt-tightening." It's a good reminder that we really and truly are working in a pyramid-scheme portion of the industry.

[Anonymous User]

TBF Senior Associate comp also went up like $100k from 2019-2021. I'm class of '15, when I was interviewing for Summer Assoc jobs, 8th year's made $340k, last year it was $550k. I'll be super salty if bonuses are down this year, but it's been a good run lately - how much do Sr. Associates have to make before it's not a "pyramid scheme", $1m?

It’s clearly emotionally driven (or disingenuous) if a firm argues that it cannot afford to pay me a bonus at 2021 levels or higher, given they would still have approximately a 60% profit margin from my labor at year end.

It's worse than that. My sense both internally and from talking w/ friends at other firms in the V50 is that most firms in the V50 are going to be on one side or the other of essentially a stable year vs. '21 -- maybe a few % growth in equity partner profits, maybe a few % decline. But this is after two prior years of mind-blowing profit growth at most of these places; in some groups you have partners who have literally doubled what they made between EoY 2019 and EoY 2021 and they'll come in right around there again for '22. But, partners being partners, you're right, I'm hearing the same grousing you're hearing that because someone is going to make only e.g., $4.5m this year instead of $4.7m last year (no mention of the fact he was making "only" $3m in 2019) that everyone needs to be prepared for some "belt-tightening." It's a good reminder that we really and truly are working in a pyramid-scheme portion of the industry.

If you adjust for inflation, an eighth year associate was paid $440k in 2015. In any event, the earlier posts were directed towards the argument that firms cannot afford to pay 2021 bonuses in the current economic environment. If the argument is instead, “we’ll pay less because we can (i.e., we don’t think enough of you will leave in the current environment, and we think our competitors will form the same view, regardless of how much our partners will make), and frankly you make enough already”, well at least that’s a more honest articulation of the rationale. Namely, partners are taking advantage of the economic conditions (and the accompanying FUD) to squeeze out some more PEP, rather than being forced to make cuts as a result of those economic conditions.

[Anonymous User]

Not sure if anyone is in a similar situation but I am going to be close but likely not quite make hours and my firm (big law nyc) does not do performance review until February 2023 with any bonus paid at the of that month (and firm policy is that a bunch of factors in addition to hours threshold are considered). So I am looking at the prospect of waiting for 4 months to find out if I get a bonus…….

[Anonymous User]

TBF Senior Associate comp also went up like $100k from 2019-2021. I'm class of '15, when I was interviewing for Summer Assoc jobs, 8th year's made $340k, last year it was $550k. I'll be super salty if bonuses are down this year, but it's been a good run lately - how much do Sr. Associates have to make before it's not a "pyramid scheme", $1m?

It’s clearly emotionally driven (or disingenuous) if a firm argues that it cannot afford to pay me a bonus at 2021 levels or higher, given they would still have approximately a 60% profit margin from my labor at year end.

It's worse than that. My sense both internally and from talking w/ friends at other firms in the V50 is that most firms in the V50 are going to be on one side or the other of essentially a stable year vs. '21 -- maybe a few % growth in equity partner profits, maybe a few % decline. But this is after two prior years of mind-blowing profit growth at most of these places; in some groups you have partners who have literally doubled what they made between EoY 2019 and EoY 2021 and they'll come in right around there again for '22. But, partners being partners, you're right, I'm hearing the same grousing you're hearing that because someone is going to make only e.g., $4.5m this year instead of $4.7m last year (no mention of the fact he was making "only" $3m in 2019) that everyone needs to be prepared for some "belt-tightening." It's a good reminder that we really and truly are working in a pyramid-scheme portion of the industry.

If you adjust for inflation, an eighth year associate was paid $440k in 2015. In any event, the earlier posts were directed towards the argument that firms cannot afford to pay 2021 bonuses in the current economic environment. If the argument is instead, “we’ll pay less because we can (i.e., we don’t think enough of you will leave in the current environment, and we think our competitors will form the same view, regardless of how much our partners will make), and frankly you make enough already”, well at least that’s a more honest articulation of the rationale. Namely, partners are taking advantage of the economic conditions (and the accompanying FUD) to squeeze out some more PEP, rather than being forced to make cuts as a result of those economic conditions.

$550k is still a lot more than $440k. Anyway I'm a little removed from caring what the "argument" behind the scale is, because I know that my bosses will ultimately pay me whatever the managing partner of Davis Polk or Milbank decides to pay his employees. Whatever the motivation is I'm sure it's cynical and self-interested, no one is doing anything in this business out of the kindness of their hearts.

[Anonymous User]

The mitigating factor for many (if not most) firms is they only pay up if you hit the required hours threshold. So long as recovery is at an acceptable level, that means the firm is making a respectable profit from the associate who gets paid. If economic conditions next year are such that firms don’t have enough work to go around, then most associates aren’t getting a bonus regardless of the headline numbers.

Using myself as an anecdotal example. I’ve billed around $1.7mm this year so far, with a recovery rate of 100%. It’s clearly emotionally driven (or disingenuous) if a firm argues that it cannot afford to pay me a bonus at 2021 levels or higher, given they would still have approximately a 60% profit margin from my labor at year end.

Also, a lot of firms do have cash on hand to weather financial storms. My firm is perceived as being financially vulnerable at times, but we’d be able to ride out a substantial period of financial difficulties with our existing reserves.

I'm surprised you know how much of your billables the firm has collected on. That is not information that any associates at my firm would be given access to.

[Anonymous User]

The mitigating factor for many (if not most) firms is they only pay up if you hit the required hours threshold. So long as recovery is at an acceptable level, that means the firm is making a respectable profit from the associate who gets paid. If economic conditions next year are such that firms don’t have enough work to go around, then most associates aren’t getting a bonus regardless of the headline numbers.

Using myself as an anecdotal example. I’ve billed around $1.7mm this year so far, with a recovery rate of 100%. It’s clearly emotionally driven (or disingenuous) if a firm argues that it cannot afford to pay me a bonus at 2021 levels or higher, given they would still have approximately a 60% profit margin from my labor at year end.

Also, a lot of firms do have cash on hand to weather financial storms. My firm is perceived as being financially vulnerable at times, but we’d be able to ride out a substantial period of financial difficulties with our existing reserves.

Except that's not how it works. I understand you to suggest that your firm should only care about realized profits not billables. No associate is on your side for that because realization/recovery is entirely out of our control. I'd be pissed if I found out the firm gave people who worked the same amount different bonuses merely because one got lucky with a client that always paid their bills while the other got stuck with a penny pinching client with a discounted rate. You're just being selfish and making up new metrics to excuse your low hours.

[Monochromatic Oeuvre]

Using myself as an anecdotal example. I’ve billed around $1.7mm this year so far, with a recovery rate of 100%. It’s clearly emotionally driven (or disingenuous) if a firm argues that it cannot afford to pay me a bonus at 2021 levels or higher, given they would still have approximately a 60% profit margin from my labor at year end.

Oh okay cool, my firm's partnership has zero emotional car wrecks, bullshitters or flat-out sociopaths in it so I've already pre-ordered my Lambo to come filled to the brim with caviar.

[TigerIsBack]

Using myself as an anecdotal example. I’ve billed around $1.7mm this year so far, with a recovery rate of 100%. It’s clearly emotionally driven (or disingenuous) if a firm argues that it cannot afford to pay me a bonus at 2021 levels or higher, given they would still have approximately a 60% profit margin from my labor at year end.

Oh okay cool, my firm's partnership has zero emotional car wrecks, bullshitters or flat-out sociopaths in it so I've already pre-ordered my Lambo to come filled to the brim with caviar.

Won't that ruin the seats?

[Anonymous User]

The mitigating factor for many (if not most) firms is they only pay up if you hit the required hours threshold. So long as recovery is at an acceptable level, that means the firm is making a respectable profit from the associate who gets paid. If economic conditions next year are such that firms don’t have enough work to go around, then most associates aren’t getting a bonus regardless of the headline numbers.

Using myself as an anecdotal example. I’ve billed around $1.7mm this year so far, with a recovery rate of 100%. It’s clearly emotionally driven (or disingenuous) if a firm argues that it cannot afford to pay me a bonus at 2021 levels or higher, given they would still have approximately a 60% profit margin from my labor at year end.

Also, a lot of firms do have cash on hand to weather financial storms. My firm is perceived as being financially vulnerable at times, but we’d be able to ride out a substantial period of financial difficulties with our existing reserves.

Except that's not how it works. I understand you to suggest that your firm should only care about realized profits not billables. No associate is on your side for that because realization/recovery is entirely out of our control. I'd be pissed if I found out the firm gave people who worked the same amount different bonuses merely because one got lucky with a client that always paid their bills while the other got stuck with a penny pinching client with a discounted rate. You're just being selfish and making up new metrics to excuse your low hours.

Weird how you go from my post to an angry rant (classic internet). Including pro bono I’ve already hit my hours target this year... Aren’t we all talking about how much the market bonus will be this year (not how many hours we need to record to achieve a bonus, which is firm dependent)?

In terms of recovery, it was a throwaway line…but the point is someone billing 2000 hours or more should be highly profitable in *any* market. So, talk about economic conditions influencing bonus amounts is a red herring if a firm has a minimum hours requirement. If someone is recovering so little such that it affects their profitability as associates on a long term basis, there has to be an issue with either the originating partner (who is effectively gaming the system with unprofitable clients) or the billing associate (who is recording time inefficiently or padding their timesheets). Of course, down years do happen for reasons outside everyone’s control, but it should be the exception as opposed to the rule. That is, unless the firm has lawyers working in an unprofitable area for strategic reasons. FWIW I understand our firm keeps an eye on associates who drop below 80% recovery.

Also again I never suggested people who have lower recoveries should have a lower bonus (reread my post). However, my firm does happen to give higher bonuses to people over 2100 hours where the recovery is at a decent level.

[Anonymous User]

Using myself as an anecdotal example. I’ve billed around $1.7mm this year so far, with a recovery rate of 100%. It’s clearly emotionally driven (or disingenuous) if a firm argues that it cannot afford to pay me a bonus at 2021 levels or higher, given they would still have approximately a 60% profit margin from my labor at year end.

Oh okay cool, my firm's partnership has zero emotional car wrecks, bullshitters or flat-out sociopaths in it so I've already pre-ordered my Lambo to come filled to the brim with caviar.

I was challenging the notion that economic conditions (especially now c/f post GFC) are a reasonable excuse for paying lower bonuses in a minimum hours firm. In terms of what will actually happen…my firm is never going to set market, but it is right now full of chicken little partners, some of which are very close to having emotional breakdowns. This is despite our group having a better 2022 than 2021/20, including both by measures of total revenue and revenue per lawyer. It’s amazing to me that anyone would pay these car wrecks for impartial analysis (the anxiety is clearly affecting at least one partner’s legal work). So yeah I’m not optimistic, otherwise I wouldn’t be whining about it on TLS.

[Anonymous User]

The mitigating factor for many (if not most) firms is they only pay up if you hit the required hours threshold. So long as recovery is at an acceptable level, that means the firm is making a respectable profit from the associate who gets paid. If economic conditions next year are such that firms don’t have enough work to go around, then most associates aren’t getting a bonus regardless of the headline numbers.

Using myself as an anecdotal example. I’ve billed around $1.7mm this year so far, with a recovery rate of 100%. It’s clearly emotionally driven (or disingenuous) if a firm argues that it cannot afford to pay me a bonus at 2021 levels or higher, given they would still have approximately a 60% profit margin from my labor at year end.

Also, a lot of firms do have cash on hand to weather financial storms. My firm is perceived as being financially vulnerable at times, but we’d be able to ride out a substantial period of financial difficulties with our existing reserves.

I'm surprised you know how much of your billables the firm has collected on. That is not information that any associates at my firm would be given access to.

Half the time it’s knowing where to go (most of my colleagues seem to be unaware), but our firm has really pushed the message on profitability the last few years.

[Anonymous User]

The mitigating factor for many (if not most) firms is they only pay up if you hit the required hours threshold. So long as recovery is at an acceptable level, that means the firm is making a respectable profit from the associate who gets paid. If economic conditions next year are such that firms don’t have enough work to go around, then most associates aren’t getting a bonus regardless of the headline numbers.

Using myself as an anecdotal example. I’ve billed around $1.7mm this year so far, with a recovery rate of 100%. It’s clearly emotionally driven (or disingenuous) if a firm argues that it cannot afford to pay me a bonus at 2021 levels or higher, given they would still have approximately a 60% profit margin from my labor at year end.

Also, a lot of firms do have cash on hand to weather financial storms. My firm is perceived as being financially vulnerable at times, but we’d be able to ride out a substantial period of financial difficulties with our existing reserves.

Except that's not how it works. I understand you to suggest that your firm should only care about realized profits not billables. No associate is on your side for that because realization/recovery is entirely out of our control. I'd be pissed if I found out the firm gave people who worked the same amount different bonuses merely because one got lucky with a client that always paid their bills while the other got stuck with a penny pinching client with a discounted rate. You're just being selfish and making up new metrics to excuse your low hours.

Weird how you go from my post to an angry rant (classic internet). Including pro bono I’ve already hit my hours target this year... Aren’t we all talking about how much the market bonus will be this year (not how many hours we need to record to achieve a bonus, which is firm dependent)?

In terms of recovery, it was a throwaway line…but the point is someone billing 2000 hours or more should be highly profitable in *any* market. So, talk about economic conditions influencing bonus amounts is a red herring if a firm has a minimum hours requirement. If someone is recovering so little such that it affects their profitability as associates on a long term basis, there has to be an issue with either the originating partner (who is effectively gaming the system with unprofitable clients) or the billing associate (who is recording time inefficiently or padding their timesheets). Of course, down years do happen for reasons outside everyone’s control, but it should be the exception as opposed to the rule. That is, unless the firm has lawyers working in an unprofitable area for strategic reasons. FWIW I understand our firm keeps an eye on associates who drop below 80% recovery.

Also again I never suggested people who have lower recoveries should have a lower bonus (reread my post). However, my firm does happen to give higher bonuses to people over 2100 hours where the recovery is at a decent level.

Then I truly do not understand your point. Talking about your profitability in a vacuum says nothing remotely generalizable to bonuses across the industry. Without a comparison between years and more info on profitability across the board, all you're saying is they can afford to pay a bonus out of that 60% profit, which no one disputes. We're all lawyers, so we know that just because they can, does not mean they will.

[Anonymous User]

Both of the posters above are making valid, legitimate points -- I feel like you're each just talking a little past one another.

It's 100% true that, from a pure economics perspective, any (2nd year or greater) associate in the V50 turning in a 2,000 hour year is going to be wildly profitable for the firm's partnership. Full stop. Don't let them tell you otherwise, ever. And so, from that perspective, it is definitely bullshit when partners use "economics" arguments to try to suggest compensation needs to be tamped down--"oh, stormy macoreconomic seas ahead, Jimmy, so we may not be able to give you the bonus you were expecting." Do you notice how partners only use these sort of economics arguments on the downside? During up years you never hear them stressing about making sure that the gains in profitability are being transferred to the associates.

At the same time, other guy, you're right, the reality is that bonuses aren't set based on the pure economics of associate profitability. As has already been pointed out several times in this discussion, there's a pyramidal aspect to biglaw (meaning your profitability isn't for you, associate, it's for them, partner), there's a herd mentality to how bonuses are set based on the decision-making of a relatively small number of market-setting firms, and there's a consideration of other factors mostly related to retention (are we seeing undesirable poaching or quitting? are parallel industries becoming more attractive? do we have the bandwidth to staff cases?).

[Anonymous User]

Are associates being poached like they were in 2020 and 2021? It seems to me that businesses (including law firms) pay employees the absolute minimum necessary to keep them. So if there isn't a strong demand for laterals, then I think our equity partner overlords will be happy to fuck us.