Bonus Waiting Game Reveals Shift in Big Law Compensation Race

The dog days of summer bring a measure of respite for junior lawyers at the country’s largest firms.

The human billing machines are still expected to crank out hours, but many can do it without senior partners hovering over them or lurking down the hall. Those folks are on the golf course, at the beach, or wherever else the well-heeled take their leisure.

Big Law associates are using the extra breathing room to ponder life’s important questions, like: Are we going to get more money?

It’s been more than two weeks since Milbank LLP announced summer bonuses, up to $25,000 apiece, and no other Big Law firm has matched them. The smart money is that they eventually will, and maybe even push the scale a notch higher. But that they didn’t rush out of the gate to do it is a signal that the winds have shifted.

Special and summer bonuses, apart from Big Law’s usual handsome year-end awards, popped up more frequently during the pandemic, when a rush of work forced top firms to expand recruiting to places like Canada, Australia, and even the back half of the Am Law 200. When a major firm announced it was giving lawyers more money in those days, others hurried to keep pace.

That wave has crested. The new arms race is aimed at high-end rainmakers with guarantees of $20 million or more.

“The fundamentals of the economy and in most law firms don’t support special bonuses for associates across the board right now,” law firm management consultant Kent Zimmermann told Bloomberg Law’s Meghan Tribe and Tatyana Monnay of the Milbank move.

If that sounds familiar, it’s because Zimmermann had a similar reaction when Milbank hiked its associate salary scale in November. It came at the end of a year in which some major firms laid off associates and pushed back new lawyer start dates as demand fell from the frothy heights of 2021 and 2022.

Cravath waited a full three weeks late last year to tell lawyers that it also would raise salaries, boosting the scale even higher than Milbank for senior associates. Many Big Law firms had matched the new scale—although some attached hours and other eligibility requirements—by the time the winter holidays came around. These included at least a few who cut headcount earlier in the year—just like they have done with previous bonuses and salary raises.

Who’s Your Daddy?

Big Law is a monolith when it comes to associate compensation. Recently, that’s meant following Milbank.

“Milbank has done more for my mental and financial well being during my law journey than anyone and I don’t even work there,” said one associate.

Some play the match game because they can afford to give junior lawyers a little more dough. Others do it because they feel they have to keep pace with the top firms to be considered part of the club.

Scott Edelman, Milbank’s leader, cited brisk demand as driving the new extra payments and last year’s raises. Milbank is a highly profitable firm whose attorneys advise Wall Street’s major players, and there’s no doubt it claims some branding value in being the first to move.

Edelman is likely not the most popular person at Big Law leader happy hours these days. It’s hard, however, for his peers to cry “poor.” For one thing, demand is up at many of the largest firms. For another, most firms pay top dollar only to associates in premium markets like New York, DC, and San Francisco. And for another: Firms have shown they have plenty of cash to throw at top partners.

And yet the “fundamentals” seem to have firms taking their time with associates. Less than a week after Milbank announced the bonuses, regional law firm Bass, Berry & Sims delayed the start date for its incoming class of first-year students.

It comes down to whether the firms want to be seen as more Milbank than BB&S. Given how badly most of Big Law wants to fit in, look for them to forget fundamentals.

This time.