Summary List Placement
For some, their jobs advising financial firms and corporations just got a lot more lucrative. At least 25 Big Law firms are awarding special bonuses up to $64,000 to high-performing associates in 2021.
But many of these bonuses aren’t just a straightforward reward for all the hard work that’s already been done. Some are being announced months before they hit bank accounts, which is unusual by industry standards.
Recruiters and other industry experts say the payouts are an effort to keep burned-out associates from leaving after a grueling year of high-volume remote work. And some associates Insider spoke to said that, while the money is nice, what they’d really like is to see the workload lighten.
Long hours aren’t new for the field. Big Law associates, who range from mid-20-year-olds fresh out of law school to senior associates in their 30s with years of practice under their belts, can expect to work 60-70 hours per week in normal times, including late nights and weekends. While more junior lawyers spend their time drafting documents and learning on the job, older associates are expected to find clients and take the lead on some engagements. After about a decade of hard work and meeting billable-hour requirements, some lucky associates succeed in their quest to make partner, which can mean sharing in the firm’s profits.
Still, this year has been different for the notoriously old-fashioned industry, with lawyers tackling a wave of restructurings, an onslaught of SPAC work, and an uptick in work in other areas all while working from home. While firms are looking to make lateral hires to help relieve the pressure, they’re also scrambling to hold onto talent they already have.
Willkie Farr & Gallagher kicked off the bonus bonanza on March 19 when it announced rounds of special bonuses for associates in good standing, according to a firmwide memo published by legal blog Above The Law. Davis Polk followed the news by announcing even larger bonuses, paid out in two installments. More than two dozen other Big Law firms, including Willkie, quickly matched Davis Polk’s offer, according to memos published online and confirmed by law firms to Insider.
Kirkland & Ellis, the world’s top-earning law firm, is paying senior associates slightly smaller bonuses than peer firms — up to $59,200 — and is reserving its $64,000 checks for nonequity partners, according to a memo published by Above the Law.
Associates are ‘absolutely crushed’ by their workloads
Wall Street has been incredibly busy in recent months thanks to a high volume of deal work, and many in the junior ranks are on the brink of burnout. Investment banking analysts at Goldman Sachs created a pitch deck outlining their dissatisfaction with working conditions, and Apollo Global Management is paying some associates special retention bonuses to hang onto talent.
Big Law associates are also feeling the strain after a particularly busy year. One associate in his firm’s corporate practice group told Insider that 100-hour weeks have recently become the new normal.
“It seems that across the board, people in the mid-level — third years to seventh years — are absolutely crushed,” said another associate, who asked to remain anonymous because she wasn’t authorized to speak on the record. She said the bonuses felt like an effort to keep junior lawyers from leaving for competing law firms.
Another associate at a Silicon Valley law firm said recruiters call his peers often to talk about a move. But he added that his own firm is trying to poach associates to relieve the strain its junior lawyers are feeling: “They’re definitely in need of help,” said the associate, who also asked to remain anonymous. “And I think our partners also say that — help is on the way. We’re recruiting.”
Big Law firms are trying to keep junior lawyers happy
Associates at Big Law firms typically make from $190,000 to $340,000 a year, with a year-end bonus of $15,000 to $100,000, depending on seniority.
Additional spring or summer bonuses aren’t unprecedented — Cahill Gordon & Reindel has issued midyear bonuses before, and Quinn Emanuel Urquhart & Sullivan has also reportedly cut checks to associates in recent years — but announcing payments months ahead of time is unusual.
“What’s different about these, which is kind of clever, is how they’ve basically spaced out the payments, which is a very smart way of getting people to stick around during a time when laterals are so highly coveted,” said David Lat, a legal journalist-turned-headhunter. “I’ve had candidates who were like, ‘let’s go, I’m ready to move,’ who are like, ‘can we talk in 2022?'”
In announcing the bonus payments, law firms said they wanted to reward associates for their hard work. But most firms won’t be paying associates their full bonuses until the second half of the year.
Legal insiders say the two-payment bonus system is an important retention tool for associates who might otherwise be looking for other opportunities.
“Bonus are a short-term Band-Aid in terms of retention, and they will be more effective at keeping people than doing nothing,” Bruce MacEwen, a consultant at Adam Smith, Esq., said in an email. He expects the firms paying out bonuses will have lower attrition rates, at least for the duration of the payments.
Joshua Holt, a former Goodwin Procter attorney who now runs the finance website Biglaw Investor, put it this way: if an associate sticks around for the spring bonus, they might as well stick around for the fall bonus. And if they stay for the fall bonus, they might as well stick around for the end-of-year-one.
It’s unclear whether the special bonuses will work
A combination of slowed hiring and increased work spread law firms thin last year, particularly in the M&A space, according to Ru Bhatt, a Major, Lindsey & Africa recruiter who places associates. Law firms are actively searching for young M&A and capital markets talent, but many are struggling to keep existing associates happy in the meantime.
Bonuses are important from a recruiting standpoint because many firms are hiring in a competitive market, and each unsatisfied departing associate opens another spot that needs to be filled. Matching the bonus structure is a good way for firms to stay competitive.
“The fear of burnout is there, which is why hiring is up — you have to spread the wealth in terms of workload,” Bhatt said.
It remains to be seen whether more firms hop on the bonus bandwagon, but the trend is creating an uphill battle for firms that haven’t offered up extra pay. London-based law firm Clifford Chance said in an internal email published by Above the Law that US associates won’t be getting a spring bonus because they got one in the fall. Dozens of other top law firms haven’t said whether or not they were giving out bonuses this spring.
It’s also unclear whether generous bonuses will do enough to keep overworked associates happy in the long run.
“At the end of the day, it’s not what most of us want,” said a San Francisco-based associate who works at one of the firms that announced a special bonus. “I think most of us want to work less.”
These are the law firms that have announced special bonuses for associates:
- Akin Gump Strauss Hauer & Feld
- Cleary Gottlieb Steen & Hamilton
- Cravath, Swaine & Moore
- Davis Polk & Wardwell
- Debevoise & Plimpton
- DLA Piper
- Goodwin Procter
- Gunderson Dettmer Stough Villeneuve Franklin & Hachigian
- Kirkland & Ellis
- Latham & Watkins
- Lowenstein Sandler
- Morgan Lewis
- Paul Hastings
- Morgan, Lewis & Bockius
- Paul Hastings
- Paul, Weiss, Rifkind, Wharton & Garrison
- Pillsbury Winthrop Shaw Pittman
- Ropes & Gray
- Sidley Austin
- Simpson Thacher & Bartlett
- Skadden, Arps, Slate, Meagher & Flom
- Weil, Gotshal & Manges
- White & Case
- Willkie Farr & Gallagher
- Wilson Sonsini Goodrich & Rosati