So, what, exactly is going on with Biglaw bonuses? After the September rash of special COVID-19 appreciation bonuses, we’ve gone silent. After Cravath followed Kirkland into the whole “let’s just wait till the end of the year” camp, no other firm has stepped up with a Fall bonus. But speculation continues among the rank and file associates as to why the firms are delaying anteing up market bonuses.
A sort of answer came when Paul Weiss told their associates no Fall bonuses were coming. Firm Chair Brad Karp said special bonuses would not be “appropriate” and “[p]roviding a special cash reward in direct response to the pandemic does not feel right at this time.”
Above the Law has also heard murmurings from tipsters at other elite Biglaw firms that espouse a similar logic:
[H]ave heard from a few partners who would be in the know that partnership view is that giving COVID bonuses would not be a great look in this economic / social climate
I’m sorry, whaaaaa? Are these firms also not collecting on outstanding bills during a pandemic? Are they donating all of the firm’s profits this year to charities supporting those hit hard by COVID-19? Or is the money sitting in the firms’s coffers rather than being distributed to people who actually did the work? Cool. Cool. Coo-coo-cool.
It’s just so backwards for the top of the Biglaw pyramid to suggest giving money to the bottom rungs isn’t a “good look.” Real talk: if the money isn’t going to employees, it just gets divvied up between the (equity) partners. And here’s the thing, for the most part, Biglaw firms are doing pretty well during the pandemic, so there’s even more money to go around. In fact, revenue went up in the first half of 2020 over 2019, due, in part to annual rate hikes, as Sara Randazzo writes for the Wall Street Journal:
At 125 firms surveyed by Wells Fargo Private Bank’s legal specialty group, revenue rose an average of 6.4% in the first half of the year, compared with a year earlier. With demand roughly the same from last year, according to Wells Fargo, the boost stemmed from annual hourly-rate increases and momentum from a lucrative 2019.
And net income is up even more than that — 25.6 percent — largely because of lower expenses like travel.
King & Spalding’s chair also told the Journal the firm is doing well during the pandemic:
“It’s like building bridges in wartime—you prefer a different environment,” said Robert Hays, the Atlanta-based chairman of King & Spalding LLP. “But we’ve built the bridge. So in terms of the business of the firm, we’re doing quite well.”
And no, King & Spalding isn’t one of the firms that have handed out special bonuses. And yes, insiders at the firm have absolutely noticed:
K&S Chairman has large picture and indicates that the firm is doing quite well, but has not mentioned sharing any largesse with associates (as most people assumed, all bonus announcement have ceased since the cravath announcement). The article also mentions that firms have saved millions on routine costs (i.e., travel). Further, despite the fact that cravath and kirkland partners pocket 4-5 million/year, they are unwilling to share 7.5k with the first year associate who is saddled in law school debt, working day and night in his/her tiny NYC apartment, and potentially taking care of kids or family simultaneously. Please make a bigger deal out of this. Demonstrates that law firm partners are making out like bandits in his pandemic and keeping all the record profits to themselves (outside of the dozen firms that are paying bonuses)
Biglaw firms can talk all they want about how appreciation bonuses are somehow gauche, but the truth is they’re making more money. (And obviously, this rant only applies to firms on strong financial footing. No firm should collapse itself trying to keep up with the Davis Polks of the legal world. Though note, just because firms are laying off people does not necessarily mean there are rocky financials. As Janet Stanton, a New York-based legal consultant, said, “I think a lot of firms are using 2020 as cover to do things they wanted to do anyway.” If we want to talk about things that are a bad look, that’s a far better target.)
For those increasingly profitable firms, the question is really about who gets the benefits of those profits, not whether making money during a pandemic is a good look. And yes, maybe — hopefully — these firms will account for the fall bonuses their competitors have doled out at the end of the year. But, as they well know, times are hard out there. And while it’s true Biglaw associates are generally well-compensated, even absent bonuses, you have no idea what someone else is going through. Maybe an associate has a relative who’s facing eviction or is supporting an out-of-work family member, or any other hardship, and the bonus money now — not in 3-5 months from now — could make a difference.
Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).