Why Hogan Lovells and Perkins Coie Reversed, Will Now Pay Out Special Bonuses to Associates
By Abigail Adcox
After facing backlash for initially opting not to pay special bonuses to associates, Hogan Lovells and Perkins Coie are changing course, the firms confirmed Monday. The two firms are now offering special bonuses ranging from $6,000 to $25,000, depending on their class year, in addition to year-end bonuses.
It’s not the first time a firm has changed its mind about associate bonuses, and it likely won’t be the last. Backlash from associates, concerns from partners about losing key associate talent, and peer firm pressure are just some of the reasons why a firm may reverse a decision when it comes to associate bonuses, according to legal industry observers.
Meanwhile, as firms collect more client payments and get closer to settling 2024 financials, some may be growing confident about their ability to match total bonus packages.
Perkins Coie will now hand out special bonuses following a scale set by Milbank in the summer, which other Big Law firms have followed, in addition to year-end bonuses announced earlier this month.
A firm spokesperson for Perkins Coie said the decision “reflects the firm’s strong financial performance this year.”
“This decision is consistent with our commitment to paying market-competitive compensation and reflects the firm’s strong financial performance this year,” a firm spokesperson said in a statement to the National Law Journal.
Hogan Lovells will also follow suit, offering special bonuses on the same scale, in addition to year-end bonuses. Hogan Lovells made the decision "following discussions with associates, partners, and other stakeholders. An important part of our culture as a firm is that we listen, and we have made this decision after careful consultation," a spokesperson said in a statement to Law.com.
"As an entrepreneurial firm, we have created a bonus structure that rewards top performers, as well as provides origination, business generation, and other discretionary bonuses. The additional bonuses announced [Sunday] will be paid on top of the other associate bonuses awarded. This means that many of our associates who qualify for the hours-based bonuses can earn bonuses above the announced scale of many other top firms," a spokesperson said.
"We are committed to making sure our associates feel valued and know that we appreciate all of their hard work and many contributions to our firm," the spokesperson said, adding, "We want Hogan Lovells to be a place where associates want to develop their careers."
Washington, D.C.-based recruiter Jeffrey Lowe, of CenterPeak, said backlash is typically one of the motivators for firms to reconsider their bonus decisions.
“When you consider the amount of money saved versus the amount of bad press you get and the general low morale of the workforce that you depend on, it becomes a very difficult situation,” said Jeff Lowe. “And I'm not surprised each time this happens that firms then go back and reconsider, and then come back and present the matching bonus.”
Consultant Lisa Smith, of Fairfax Associates, echoed that associate backlash can be one reason a firm changes its mind. Smith, talking generally about the market factors that may play into a firm’s decision-making process, added that firms may also hear concerns from partners about losing key associate talent if the firm doesn’t match the market on compensation and bonuses.
Peer firm pressure from more firms adopting the market bonus can be another factor, Smith added.
Within the past week, more Big Law firms, including Alston & Bird and Arnold & Porter Kaye Scholer, have announced that they will hand out special bonuses following a scale set by Milbank back in the summer.
However, in some cases of firms reversing course, the damage may already be done.
“The problem is the damage has already been done, and maybe associates have a short memory span, maybe they don't, but it’s always hard to be the firm that doesn't match and get singled out, and the market can be a very cruel place,” said Lowe.
Amid what is expected to be a lucrative year for Big Law, a growing number of big firms have announced year-end bonuses starting at $15,000 for the class of 2024 and running up to $115,000 for the class of 2017 and beyond.
While a number of those firms have also matched the scale set by Milbank for special bonuses as well, some have placed billable-hour thresholds or other requirements on them. For instance, both Covington & Burling and Arnold & Porter have said associates will have to hit a certain billable-hour threshold to receive the special bonuses.
It highlights the uneven approach Big Law is taking to bonuses so far in 2024, with fewer firms apparently in lockstep with the bonus decisions of the industry elite and several firms delaying their bonus decisions compared with others.
Read the full post at law.com
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