As we recently reported, summer bonus season for large law firms was kicked off by Milbank, and some firms have followed suit while others have had to decide what to do. And employees are also wondering what might happen to their summer bonus.
When it comes to bonuses, the record is mixed. While some small firms have taken the lead in announcing summer bonuses, many larger firms are taking a more cautious approach following Milbank’s move.
Hueston Hennigan, a well-known boutique law firm in California, caused a stir when it announced summer bonuses ranging from $10,000 to $25,000 for associates and legal counsel who meet certain billing thresholds.
This was followed by Texas-based McKool Smith (a “strong litigation firm”), which presented a similar bonus structure ranging from $2,500 to $30,000.
And New York-based litigation firm Desmarais Law Group had already announced “recognition bonuses” in February to be paid out in late June, along with salary increases for junior associates.
However, the trend has not yet caught on at larger law firms. Bill O’Neil, senior partner in the Chicago office of Winston & Strawn, expressed skepticism about the widespread adoption of summer bonuses. He explained that while firms are busy, they are not desperate enough to attract talent to offer such incentives. He predicted that these bonuses would not gain traction in the marketplace.
The legal industry is currently in an extremely competitive market for talented employees, leading some firms to consider different compensation strategies.
While summer bonuses were one approach, other firms focused on increasing base pay. Milbank, for example, increased first-year associate pay from $205,000 to $215,000, with corresponding increases for associates with higher seniority.
Davis Polk subsequently adapted to this new salary scale by offering summer bonuses ranging from $4,000 to $23,000, depending on the associate’s year of study.
And then of course (since they are the Salary scale for large law firms) Cravath Swaine & Moore came with their bonuses.
Some companies have also introduced retention bonuses to counteract turnover. Goodwin Procter, for example, announced a one-time special bonus of between $20,000 and $50,000 for employees who stay with the company until a certain date.
Large law firms appear to be taking a cautious approach to salary adjustments, trying to balance the need to remain competitive with the broader impact of broad-based bonus programs.
All in all, companies seem to be in a monitoring phase, with many of them monitoring market developments before taking any significant steps in the area of bonus payments.
It is notable that the focus on compensation in large law firms has led to some comparisons with other high-paying professions. The enormous pay packages for top lawyers, especially those favored by private equity clients, have drawn parallels with the NBA’s star-centric system, as the New York Times observed.
Inevitably, concerns have been raised about the sustainability of ever-increasing remuneration levels and the potential strain on law firms’ budgets.
As the legal profession continues to evolve, it remains to be seen whether summer bonuses will become common practice or remain limited to select firms.
Associates will no doubt be waiting with bated breath, but right now there is a mix of anticipation on their part and caution on the part of partners at large law firms who are having to balance expectations with the realities of the balance sheet.
Read more –
Milbank’s bonus payout for associates could lead to bonus increases for other large law firms
The 80 firms that make it into the pay scale of the major law firms?
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(4) https://www.reddit.com/r/Residency/comments/11flknk/big_law_salary_scale_for_new_lawyers_change_my/
(5) https://legaltalknetwork.com/podcasts/thinking-like-a-lawyer/2024/06/law-firm-summer-bonuses-have-started-will-they-continue/
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(7) https://www.lawsociety.org.nz/assets/Branches-Sections-and-Groups/Women-in-the-legal-profession/Working-towards-gender-diversity-in-NZ-law-firms .pdf
(8) https://www.thelawyermag.com/nz/news/general/morning-briefing-have-law-firms-got-bonuses-wrong/209189
