By Andrew Maloney for Law.com
With their younger lawyers facing all-consuming deal work and longer hours, big firms are throwing extra cash to associates to motivate them to stick around.
The special bonuses are working, to an extent, said legal market observers and recruiters. While bonuses have kept some associates from moving to midsize firm competitors or outside Big Law entirely, large firms must also be more creative and holistic in the long run to retain top associates when the barriers between home and work life are eroding, law firm leaders and others said.
The demand for associate talent has reached a fever pitch, amid long working hours for deal work related to special-purpose acquisition company transactions, initial public offerings and other types of mergers and acquisitions. The battle for associate talent has become so intense that, besides offering five- or six-figure signing bonuses, some firms are even making counteroffer bonuses to motivate their top associates to stay if they have an offer to move, said Alisa Levin, a New York-based recruiter at Greene-Levin-Snyder.
“Signing bonuses are being met with staying bonuses,” or what some in jest call “bribes” to stay, Levin said. “There are firms that won’t look at resumes at certain competitors because they know the other firm will counteroffer with a staying bonus.”
Firms originally sought to be competitive with each other through special bonuses in 2020 and then 2021. After Willkie Farr & Gallagher introduced special bonuses this year, Davis Polk & Wardwell one-upped the maneuver by offering bonuses ranging from $12,000 to $64,000, through two installment payments, in the spring and September. Dozens of firms ultimately followed suit with the same scale, which depends on class year.
And the bonuses have paid off: some associates aren’t budging, despite the grueling hours, because they know they will get the same pay at another firm, recruiters and others said.
“I absolutely think that enters into the calculus,” said Michelle Fivel, a partner at recruiting firm Major, Lindsey & Africa, who noted that having bonuses broken up into two pieces is another factor in retention in 2021. “Obviously, that second bonus is conditioned on that associate being in their seat.”
If associates are looking to go down-market to another law firm, or leave the law altogether, they might wait it out until they get their bonus or bonuses, she said.
And even though the partner profit gulf is growing among Am Law 200 firms, firms with lower-partner profits can retain top talent by offering the same associate compensation, including bonuses.
“If a firm is not keeping up with its peers [in partner profits],” it doesn’t matter as much to associates, Levin said, because many associates are “not planning to be partners” in Big Law and will instead go in-house or to a smaller firm after paying off student loans.
“They will be paid the same at another firm. The work will be just as all-consuming,” she said. “There’s no reason to move unless something is going to be better.”
But firm leaders, consultants and recruiters stressed that extra cash isn’t the only thing firms should do to keep associates at the firm, and it won’t last that long as a retention tool.
“If you were to do the analysis, the years following the big bonus rushes and the years following the big salary increases don’t materially change the attrition rate,” said Tim Corcoran, a law firm management consultant on compensation issues at Corcoran Consulting Group. “They don’t materially change the number of people making partners at those firms. So it’s a short-term effort to keep pace with the competition.”
Lawyers aren’t just drawn to or convinced to stay at a firm because of its cash perks. Firms can offer extra time off as an incentive. Fivel, of MLA, said she’s seen the idea batted around, noting that millennials are saying in surveys they’d be more willing to take jobs that paid less if they knew they’d work less.
But it’s not always practical. ”Everyone is already stretched thin,” Fivel said. “I think if you take an associate and give them extra time off, then just leave them on the bench, it increases the pressure everywhere else.”
Retention is a holistic evaluation, said Paulita Pike, Chicago office managing partner at Ropes & Gray. ”People need to be happy and rested. It can’t be just the money and the vacation. The environment has to be supportive, because if people don’t feel that, they’re not going to stay,” Pike said.
Ropes is one of the firms offering special cash bonuses to associates this year. Pike, who just assumed leadership of the firm’s Chicago office this month, said the firm also encourages its employees to take time off if they need it and that the firm always tries to keep its finger on the pulse of its professionals.
“A bonus is a nice way to recognize just how busy we’ve all been and just say thank you. But ultimately if you don’t have the right fabric at the firm, that’s not the thing that keeps people at the firm. Nor should it be,” she said.
Brad Karp, chairman of Paul, Weiss, Rifkind, Wharton & Garrison, said it’s “a given” that his firm pays top compensation for its lawyers, including for bonuses. The pay is a reward for associates for their hard work, not intended to prevent associates from leaving, he said.
“When we speak to associates about what they want, which we do constantly, the feedback we receive is that what really matters are the connections with their colleagues, finding meaning in their work, and feeling supported in their career development,” Karp said in an email, citing, for instance, a new mentorship program at the firm and certain firm benefits such as backup child care services.
Lawyers, in general, want more from their firms besides compensation, especially in the COVID-19 era. Steve Pflaum, co-chairman of the litigation department at Neal, Gerber & Eisenberg in Chicago, said his firm’s existing wellness initiatives have become even more critical over the last year.
“When a law firm makes a conscious choice to not only allow but encourage people to devote time during business hours to things other than activities that go directly to the bottom line, but instead are directed to the well-being of people associated with the firm, I think that’s important and laudatory,” Pflaum said.
Still, special bonuses and other perks are even on the table partly because firms are able to share some of the largesse from 2020 and 2021. Corcoran said well-being and special bonus programs are ultimately impermanent.
“The existence of most special bonus programs, off-cycle bonuses, or well-being programs, or other investments in the firm and its professional staff, are all subject to partner profit,” Corcoran said. “They will persist possibly for a while, but inevitably they will revert to the norm, if we have some financial pressure.”
Christine Simmons contributed to this report.