Big Law’s Flat Bonuses Tell Associates the Boom Year Is Over

Big Law bonus announcements are speaking to associates in a common voice—times are tougher than last year, so be happy with the same award you got in 2021.

The bonus scales that tops out at $115,000 for the most senior firm associates has firms returning to familiar territory, as they kept annual bonuses level from 2014 and 2020, according to data compiled by Bloomberg Law. Top awards jumped 15% in 2021 as firms battled for talent after a rise in client demand.

“Firms are not altruistic by nature,” said Tim Regan, a Houston-based managing partner at legal search consultant Engle, Lindsley & Regan. “They increase bonuses because someone else did—because they have to.”

The return to pre-pandemic consistency comes a year after firms showered their junior talent with unprecedented signing and seasonal bonuses, on top of year-end extra cash. Then, it was the unexpected boom in financial markets that spurred venture capital and merger and acquisition work, forcing Big Law to ante up for talent so they could handle all the work.

Now as firms prepare to make 2022 bonus payouts that are level with last year, they are casting an uncertain eye on the economy for the coming months. They question whether conditions that have stalled capital markets and M&A this year will bleed into subsequent quarters of 2023.

Legal recruiters said they expected the firms’ bonus announcements, given last year’s bump and economic conditions at the end of this year, and because the law market is returning to pre-pandemic norms.

“Despite certain uncertainty right now, a lot of firms had a good year,” said Stephanie Biderman, a New York-based partner at legal recruiter Major, Lindsey & Africa. “That’s why we expected the numbers to stay the same and not necessarily decrease or increase.”

Baker McKenzie was the first large firm to roll out associate bonuses, followed by Boies Schiller Flexner; Cravath, Swaine & Moore ; McDermott Will & Emery; and Skadden, Arps, Slate, Meagher & Flom. The firms matched last year’s scale set by Cravath, Swaine & Moore, with bonuses starting at $15,000 for the most junior associates.

Though they didn’t have a banner year compared to 2021, some firms tapped into revenue streams from related antitrust and litigation work as courts slog through pandemic backlogs.

Multiple rounds of layoffs this year at firms such as Cooley and Kirkland & Ellis cast a cloud of uncertainty on this year’s bonus season. Other firms have delayed first-year associate classes or fired lawyers for reasons they insist are performance related, not economic.

Associates at firms left unscathed by layoffs, and who are receiving bonuses, “are probably very thankful,” Biderman said. “It just depends on what position you’re in.”

It remains to be seen whether most firms will be upfront about economic challenges with public layoffs, or whether they instead will increase billable hour requirements for bonuses, curbing how many associates get the payouts, recruiters said.

Still, there is some optimism in the market for 2023, Regan said.

“A lot of a lot of lawyers that I talk to on a daily basis say quarter four was really slow, but we see some real good activity coming in quarter one,” he said. “And if that happens, firms are great economic engines, and will probably prosper in 2023.”