Have COVID-19 bonus wars begun? Milbank matches higher scale for special bonuses
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Updated: Milbank is paying special bonuses to its associates that match those of Davis Polk & Wardwell while sweetening the payout for top performers.
Associates “below 80% utilization” will get only half the bonus, while those “above 110% utilization” will get a bonus that is 50% higher, according to the firm memo posted by Above the Law.
Milbank also promised to pay its usual year-end bonus and said it wouldn’t be less than the 2019 bonus. Davis Polk & Wardwell and Cooley have also promised year-end bonuses that at least match last year’s levels.
All three law firms paid year-end bonuses of up to $100,000 last year.
“We called it yesterday,” wrote Above the Law. “The COVID-19 bonus wars are upon us.”
Cooley was the first to announce what it called “special appreciation bonuses.” The amounts range from $2,500 to $7,500 for associates and are set at $7,500 for special counsels and of counsels. Those on pace to bill more than 1,950 hours, however, will receive a bonus that is “materially higher” than those promised amounts.
Davis Polk followed with its decision to pay special bonuses up to $40,000 for U.S. associates.
After Milbank’s announcement, Above the Law reported that boutique law firm Hueston Hennigan has also matched the higher special bonus scale. The law firm also plans year-end bonuses.
Then on Friday, Above the Law reported that Irell & Manella is also paying a special supplemental bonus ranging from $7,500 to $40,000.
This is the bonus scale at Milbank, which tracks the Davis Polk scale:
• Class of 2019: $7,500
• Class of 2018: $10,000
• Class of 2017: $20,000
• Class of 2016: $27,500
• Class of 2015: $32,500
• Class of 2014: $37,000
• Class of 2013: $40,000
• Class of 2012: $40,000
While Above the Law declares “bonus wars,” Bloomberg Law sees little chance that the majority of the nation’s top 200 law firms will match. Many firms have cut associate salaries during the COVID-19 pandemic, and they are just now beginning to roll back their decisions.
“Unlike past episodes of associate salary wars,” according to Bloomberg Law, “wealthy firms are putting the pedal to the floor at a time when many competitors are struggling to maintain the prior speed limit.”
A prior Bloomberg Law article points out that, in the first half the year, the nation’s top 50 law firms grew revenue at 7.1%, compared to 3.4% among the next 50 firms and only 1.4% among the next hundred firms.
The gap between the wealthiest law firms and others could widen if top firms raise salaries for new associates this year above last year’s $190,000 level. If that happens, said Michelle Fivel, a partner at legal recruiting firm Major, Lindsey & Africa, firms with lesser profits will have to consider whether to break ranks.
“Firms will have to look inward and be honest with themselves about what they can handle financially,” Fivel told Bloomberg Law.
Updated Sept. 17 at 11:05 a.m. to include Hueston Hennigan bonuses. Updated Sept. 18 at 1:25 p.m. to include Irell & Manella bonuses.