Bonuses For Associates? Smaller Firms Saying Yes

In important news for young lawyers at small to midsized law firms, more associates are in line for bonuses. Christine Simmons of New York Law Journal wrote in a February 19 article highlighting how bonuses are more becoming more common for associates at smaller and midsize law firms. Typically, this has only been the case for the large top-tier firms, many of which follow, to some degree, the bonus structure set each year by Cravath Swaine & Moore. Currently, Cravath’s associate bonuses range from $10,000 for 2012 class-years to upwards of $60,000 for 2005 class-years (and above). In some cases, bonuses for top performing associates at smaller firms may align with the Cravath scale, but generally they are lower as Simmons says, to reflect “lower billing rates to more mid-market clients”.

The good news for associates in New York and elsewhere is that smaller firms seem to be catching on to the why. Smaller firms are starting to see the benefits of offering merit-based pay and compensation incentives in order to retain and motivate their young talent.

To confirm this view, in a recent interview Simmons had with Eric Wagner, head of the corporate group at Klienberg, Kaplan, Wolff & Cohen, Wagner gave this reason for the firm’s decision to now offer associate bonuses: “We’re smaller and we have to be in some ways more bottom line thoughtful and more creative.” To do so, Kleinberg offers their associates profit-sharing plans that fully vest in 5 years, “similar to an extra 401K.” They also incentivize associates by rewarding those who bring clients to the firm, and stand by the idea that most of the firm’s equity partners should come from their own associate classes.

Yet Klienberg isn’t the only smaller firm being more thoughtful and creative. Below is a sample list of 6 other firms now offering bonuses, and a look at their packages. One thing you notice…every firm has their own take:

  • BuckleySandler (AmLaw #194, 152 attorneys): Bonuses are not guaranteed. Based on the firm’s financial performance and associate performance, work ethic, teamwork, and an associate’s overall commitment to the firm.
  • Otterbourg (55 attorney NY firm): Bonuses are not guaranteed, but likely. Based on quality of work, responsiveness to client needs, billable hours and an associate’s class level/seniority.
  • Wolf Haldenstein (74 attorneys in 3 offices): Moved from a seniority system to a merit-based system based on quality of work, performance, billable hours, as well as client and partner feedback.
  • Hiscock & Barclay (NLJ #209, 194 attorneys): Bonuses are not tied to a firm’s financial performance, but based on quality of work, client service, teamwork, client feedback, billable hours, and fees collected.
  • Morrison Cohen (90 attorney NY firm): Based on associate and firm performance, with a target of 1,900-2, 2,100 hours (with no more than 2,100-200 to avoid burnout). Associates are also incentivized by receiving 20% of business they originate.
  • Phillips Nizer (74 attorney NY firm): Based on annual associate evaluations, billable hours, and nonbillable performance with a billable hour threshold of 1,850 hours.
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