Davis Polk & Wardwell has introduced a new spring bonus for associates this year and a repeat of its pace-setting fall bonuses from last year, raising the compensation bar as Big Law’s richest firms seek new ways of retaining talent.
Davis Polk will pay associates based on seniority between $4,500 and $24,000 on April 26, and follow up with bonuses in a range of $7,500 and $40,000 on Sept. 30, according to a memo viewed by Bloomberg Law on Monday. The firm, which has already offered its associates luxury gifts in recognition of their hard work, expects to also pay associates traditional end of year bonuses reaching at least last year’s rates, the memo said.
“The Firm is experiencing exceptionally high activity levels, and sharing our financial good fortune with you is an important part of our commitment to you,” Davis Polk managing partner Neil Barr wrote in the memo.
Big Law firms have vastly outperformed expectations set at the beginning of the pandemic and in some cases brought in record profits. This appears to be fueling an active lateral market, including for associates.
Associate lateral hires among the nation’s top 50 law firms dropped to 1,912 in 2020, around 1,000 fewer hires than in the previous year, according to Bloomberg Law data. The hiring rate has surged back so far this year, with roughly 566 lateral associate hires among the top 50 firms.
It’s the busiest season for associate hiring that Michelle Fivel, a partner at lawyer recruiting firm Major Lindsay & Africa, has seen in 15 years. Law firms are offering associates sign-on bonuses and speeding up interview processes as they compete for lawyers to staff an ongoing surge of work in capital markets and transactional practices, she said.
“The closest I’ve ever seen to this kind of market was before the 2008 recession, but even back then it didn’t have this kind of frenzied feeling to it,” she said. “Firms are keenly aware they are competing for the top talent they are interested in, and they are doing things I haven’t seem them do in a long time.”
The spring-and-fall bonuses are both a way to attract new lawyers as well as to encourage a firm’s current group of associates to stay put, Fivel said.
Davis Polk was an early mover on fall bonuses in 2020, setting a bonus scale that was then followed by other firms like Akin Gump Strauss Hauer & Feld, Debevoise & Plimpton, Latham & Watkins, Shearman & Sterling, Simpson Thacher & Bartlett, Sullivan & Cromwell, and Willkie Farr & Gallagher.
Willkie Farr announced its own round of spring bonuses late last week.
In addition to handing out cash, Davis Polk also expanded its ability to attract talent last year with the elimination of its strict lockstep pay system.
Recruiters expect most firms will match the bonuses given the financial success the industry experienced in 2020 and a continued strong market for firms this year.
“I am sure that more will follow,” said Wendy Schoen, CEO and founder of Schoen Legal Search, who noted that Orrick Herrington & Sutcliffe is offering 40 extra hours of billable and bonus-eligible “unplugged” time off. “Everyone is trying to come up with something as a retainer incentive.”
-Roy Strom and Chris Opfer contributed to this report.