With Great Raises Come Great Increased Billing Requirements -- The Other Side Of Raises
A month and a half after announcing raises, associates start getting the bad news.
When Crowell & Moring matched the Cravath scale through fifth-year associates, it officially marked the “what is going on here?” moment of raise-a-palooza. This was no longer an overdue market correction where Cravath, S&C, Simpson, Davis Polk, Cleary, etc. recognized that firms across the country had reached $160K and it was time to recreate some daylight between the top-tier firms and the rest. No, now the rest of the country was hell-bent on staying on pace with the big dogs for at least another furlong.
But even in the early days of this cycle, we speculated that firms trying to follow suit would see administrative changes in the aftermath of raises. We’ve already seen a few firms announce changes to hourly minimums along with raises. But now comes a stealthy policy change, an increase in hours a full month and a half after handing out raises.
Crowell & Moring had a meeting on Friday laying out some changes for its promotion-track associates and counsel (at Crowell, associates are eligible to join the ranks of counsel after their fifth year).
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Increasing billable hour requirement to 2,000 per year, with 50 pro bono hours counting as billable until you hit 2,000, and above that, all pro bono counts. This is an increase from the old requirement of 1,900, same 50 hour pro bono rule.
A rough announcement to receive mid-year, but not a terribly surprising one. Many have speculated that an increase in base salary would trade off with bonuses. Frankly, the risk-averse lawyer population should be pleased to accept the guaranteed money over the possibility of going a year with a terrible bonus. That said, it’s never fun to find out that your “raise” may completely evaporate.
Capping the pro bono credit at 50 hours is a bit low, but this isn’t a change for Crowell, and at least pro bono hours count.
Those who hit the 2,000 hour requirement in Years 1-5 will receive “market” bonuses as long as they are in good standing and don’t have bad reviews. It’s not clear what this means or how many “bad” reviews would be sufficient to deny you a bonus. The market bonuses are the 2015 New York market scale (15k to 80k). Seems to be all-or-nothing bonus structure.
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While this, understandably, scares associates, this “good standing” rhetoric is a mainstay of bonus structures. While it’s exactly the kind of vague condition that a lawyer would never accept imposed on their client by contract, it seems to work out at most firms. It’s basically the “implication” discussion from It’s Always Sunny In Philadelphia — everything’s going to be fine, but associates work overtime to comply with partners because they’re afraid things won’t work out.
Here’s where it starts to get real weird. If you’re a 5th year and do not make counsel that year (few do, maybe 20% of the class each year?), your salary freezes at 260k (assuming you’re on the 2000 hour track) until you make counsel. No clear statement on what your bonuses would be at that point, but it is discretionary and less guaranteed that you would continue to receive the 5th year (and no word whether you could be eligible for 6th or 7th year level) market bonuses even if you continue to hit your 2,000 hours and remain in good standing.
Once one makes counsel, it appears that everything continues apace, but until that happens, senior associates are stuck. In fairness to the firm, this may just be a formalized version of the natural winnowing process of firm advancement. If so, taking a haircut on compensation may be better than an uptick in passive-aggressive hassles.
Another weird point — we were told that promotion-track associates/counsel had to decide by Sept 1 whether we wanted a reduced hours target for the coming year (Sept 1 to August 31). This seems to be effectively prohibiting you from going part-time mid-way through your working year.
Apparently compensation at Crowell is like playing Spades. But bidding on what’s going to happen over the next year is a stressful endeavor. Better not get pregnant in October! And what are the incentives here? If one bids for the increased schedule and misses, do they get no bonus at all? Should associates always bid on the reduced schedule to guarantee they get a reduced bonus rather than nothing? This seems confusing, and according to tipsters who weren’t in the central office, they couldn’t even see the slides, making this even more confusing.
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But here’s the real concern when it comes to pushing up hourly requirements:
There’s not enough work for this move…. Now, associates will be scrounging for what little extra work there is, and it is very unlikely to me that more than a small minority of associates would be able to bill 2,000 even if they wanted to, especially in slower groups (of which there are many).
And this brings us back to how some firms probably couldn’t afford the full Cravath raises they announced. If lawyers aren’t busy, throwing money at associates and asking them to “just do more” isn’t going to fix those utilization problems.
We’ll see how rampant hourly minimum changes and discount bonuses become in the coming months, but this is doubtless the final “adjustment” we see in the wake of raises.
Remember, when your firm matches, please text us (646-820-8477) or email us (subject line: “[Firm Name] Matches Cravath”). Please include the memo if available. You can take a photo of the memo and send it via text or email if you don’t want to forward the original PDF or Word file.
Earlier: Crowell & Moring Matches — Wait, What In The Holy Hell Is Going On Here?
Dear Biglaw Firms, Please Don’t Raise Salaries
Joe Patrice is an editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news.
