Posted Dec 03, 2007 11:31 am CST
Lawyers at big law firms have a “herd mentality” when it comes to associate bonuses.
After Cravath, Swaine & Moore announced “special bonuses” of up to $50,000 for associates—in addition to regular bonuses of up to $60,000—other big law firms quickly fell in line.
“Lawyers are smart, but this herd mentality seems absolutely irrational, economically speaking—and not because the compensation is too high,” Andrew Ross Sorkin writes in the New York Times Dealbook.
The writer notes that the copycat compensation is, in a sense, bragging rights—a way that law firms confirm they are at the top of the pecking order. But he concludes that the salary race doesn’t necessarily make good business sense. “Though partners at elite firms routinely pocket millions, law firms have never been run as efficiently as truly great companies,” he says. “After all, they’re run by lawyers.”
But California law firms have not been as quick to announce they are matching those huge bonuses, according to an article today in the Recorder.
Firms in California often announce bonuses later than in New York, and they are often a little smaller. Heller Ehrman managing partner Robert Hubble told the legal publication his firm doesn’t pay bonuses until Jan. 31, and individual performance is taken into account.
Law firm consultant William Brennan of Altman Weil thinks the California firms will ultimately announce bonuses that are almost as big as their East Coast counterparts—because bragging rights are important. “I believe the cost of matching bonuses is not as significant as the loss in perception and image,” he told the Recorder.