Associate Bonus Plateau

Law firm associate bonuses generally were flat in 2006 compared with the year before. Few would argue that year-end perks up to $65,000 for senior associates were skimpy, but with business brisk and law firms scrambling to attract and keep good associate help, the question is: 'Why?'

Effect of Prior Raises

The decision by law firms to stay the course was due in part to a raise in associate pay in late 2005 ' about $20,000 across the board for associates at many big firms, which brought first-year salaries in New York to $145,000. As a result, first-year associates in New York stood to make $175,000 in 2006.

Bonuses elsewhere also fell in line with 2005. DLA Piper's, for example, ranged from $35,000 to $65,000 for New York associates who billed 2000 to 2299 hours. Senior associates in New York who billed more than 2500 hours could earn up to $92,500. Bonuses for associates in non-New York offices ranged from $20,000 for first-year associates who billed between 2000 and 2100 hours and up to $92,500 for senior associates who billed more than 2500 hours.

Bryan Cave LLP, with its largest office in St. Louis, said that its bonuses were comparable to those in 2005. Junior-level associates were eligible to receive up to $25,000, while bonuses for senior associates were up to $85,000. Salaries for first-year associates started anywhere from $95,000 to $145,000, depending on the city.

Although bonus amounts in 2005 for Los Angeles-based Gibson, Dunn & Crutcher LLP were not disclosed, the firm in 2006 doled out up to $35,000 for New York first-year associates and $27,500 to first-year associates elsewhere. The 833-attorney firm also raised its first-year salaries last year to $145,000 in New York and $135,000 in other offices. Morrison & Foerster LLP's bonuses were on par with 2005. Associates at the 1062-attorney firm received anywhere from $30,000 to $65,000 in year-end awards.

Houston-based Vinson & Elkins LLP kept its bonuses the same as in 2005. In its New York office, which has 45 attorneys, associate bonuses went as high as $65,000. The 759-attorney firm also raised salaries to $145,000 in New York and to lower levels elsewhere.

Nashville's Bass Berry & Sims PLC, with 194 attorneys, has abandoned a rigid bonus program but still will give some attorneys a perk of up to 10% of base pay.

Other Factors

Other factors may have contributed to static bonus amounts in 2006, including a decision to keep profits in partners' pockets and an attempt to offset client perceptions that firms are operating with an excess of riches. 'Law firms are beginning, quite rightly, to be a little uncomfortable with their profits in view of their increasing scrutiny from clients,' said Joel Henning, a consultant with Hildebrandt International, Inc., a law firm consultancy.

Determining bonus amounts requires a delicate balancing act, said Ward Bower, principal of Altman Weil, Inc., a law firm consultancy. 'You've got to make everybody happy,' he said. At the same time, however, law firms are keenly focused on keeping their profits-per-partner numbers high, which affects the associate bonus column, he said.

A competing factor is the availability of talented associates. Bower estimates that the average class size of Am Law 200 law firms has increased to 50 new associates. Recruiting and retaining talented associates has grown ever more cutthroat, Bower said. At the same time, attrition has reached record levels, with some 78% of associates leaving by their fifth year of practice, according to NALP, formerly known as the National Association for Law Placement.

Leigh Jones writes for A&FP's affiliate The National Law Journal, in which a longer version of this article originally appeared.

Law firm associate bonuses generally were flat in 2006 compared with the year before. Few would argue that year-end perks up to $65,000 for senior associates were skimpy, but with business brisk and law firms scrambling to attract and keep good associate help, the question is: 'Why?'

Effect of Prior Raises

The decision by law firms to stay the course was due in part to a raise in associate pay in late 2005 ' about $20,000 across the board for associates at many big firms, which brought first-year salaries in New York to $145,000. As a result, first-year associates in New York stood to make $175,000 in 2006.

Bonuses elsewhere also fell in line with 2005. DLA Piper's, for example, ranged from $35,000 to $65,000 for New York associates who billed 2000 to 2299 hours. Senior associates in New York who billed more than 2500 hours could earn up to $92,500. Bonuses for associates in non-New York offices ranged from $20,000 for first-year associates who billed between 2000 and 2100 hours and up to $92,500 for senior associates who billed more than 2500 hours.

Bryan Cave LLP, with its largest office in St. Louis, said that its bonuses were comparable to those in 2005. Junior-level associates were eligible to receive up to $25,000, while bonuses for senior associates were up to $85,000. Salaries for first-year associates started anywhere from $95,000 to $145,000, depending on the city.

Although bonus amounts in 2005 for Los Angeles-based Gibson, Dunn & Crutcher LLP were not disclosed, the firm in 2006 doled out up to $35,000 for New York first-year associates and $27,500 to first-year associates elsewhere. The 833-attorney firm also raised its first-year salaries last year to $145,000 in New York and $135,000 in other offices. Morrison & Foerster LLP's bonuses were on par with 2005. Associates at the 1062-attorney firm received anywhere from $30,000 to $65,000 in year-end awards.

Houston-based Vinson & Elkins LLP kept its bonuses the same as in 2005. In its New York office, which has 45 attorneys, associate bonuses went as high as $65,000. The 759-attorney firm also raised salaries to $145,000 in New York and to lower levels elsewhere.

Nashville's Bass Berry & Sims PLC, with 194 attorneys, has abandoned a rigid bonus program but still will give some attorneys a perk of up to 10% of base pay.

Other Factors

Other factors may have contributed to static bonus amounts in 2006, including a decision to keep profits in partners' pockets and an attempt to offset client perceptions that firms are operating with an excess of riches. 'Law firms are beginning, quite rightly, to be a little uncomfortable with their profits in view of their increasing scrutiny from clients,' said Joel Henning, a consultant with Hildebrandt International, Inc., a law firm consultancy.

Determining bonus amounts requires a delicate balancing act, said Ward Bower, principal of Altman Weil, Inc., a law firm consultancy. 'You've got to make everybody happy,' he said. At the same time, however, law firms are keenly focused on keeping their profits-per-partner numbers high, which affects the associate bonus column, he said.

A competing factor is the availability of talented associates. Bower estimates that the average class size of Am Law 200 law firms has increased to 50 new associates. Recruiting and retaining talented associates has grown ever more cutthroat, Bower said. At the same time, attrition has reached record levels, with some 78% of associates leaving by their fifth year of practice, according to NALP, formerly known as the National Association for Law Placement.

Leigh Jones writes for A&FP's affiliate The National Law Journal, in which a longer version of this article originally appeared.