Hogan Lovells, Perkins Coie Ignore Special Bonuses This Year

Bonus season is in full swing, but not all firms are making it rain.

While most law firms that have announced matches of the year-end bonus and an additional special bonus scale set by Milbank, two firms—Hogan Lovells and Perkins Coie—have opted out of the latter.

“Firms just don’t feel the pressure anymore to follow,” said Katherine Loanzon, a managing director at search firm Kinney Recruiting.

Associates receive year-end bonuses annually, but special bonuses are discretionary and are typically given when law firms are having a good financial year and are looking to get an edge in recruiting young talent.

Law firms are taking a realistic look at their finances and budget in terms of what they can afford while maintaining who they are in the market, she said. They also no longer feel the same level of pressure in recruiting associates as in recent years.

“It may not be always about the money if they’re able to retain the associates without having to keep up with or compete in compensation,” Loanzon said.

Perkins Coie and Hogan Lovells are handing out year-end bonuses ranging from $20,000 to $115,000 based on seniority. However, the two aren’t handing out special bonuses that range from $6,000 to $25,000 that have been handed out by most firms that have announced bonuses in recent weeks.

Hogan Lovells’ bonus announcement on Tuesday said that associates who exceed the minimum hours will receive additional bonuses that exceed the base bonus amounts.

“Our bonus structure goes beyond the year-end billable hours bonuses, and we believe our bonus structure is aligned with our strategy,” said a Hogan Lovells spokesperson in a statement to Bloomberg Law.

Milbank—which has solidified itself as a first-mover in associate compensation—surprised the legal market this summer when it announced it would be handing out special bonuses to its associates. Even more surprising was that none of its peer firms immediately moved to match.

They instead waited until Cravath Swaine & Moore announced its year-end bonuses, which included special bonuses for its associates. Many top law firms have moved to match both year-end and special bonuses.

“When August passed without a match of the special bonuses, I assumed they were done,"said Kate Reder Sheikh, a recruiter for Major, Lindsey & Africa. “It has been a pleasant surprise to see them alongside annual bonuses.”

A few law firms, like Fish & Richardson and Katten Muchin Rosenman, have tied special bonuses to a minimum of 2,000 hours.

The market for associate talent has been muted compared to the frenzy of 2021 when firms were handing out special bonuses and salary increases in an attempt to retain and recruit talent to meet historic demand levels. That was followed by a period of belt tightening in which some firms laid off associates.

“Once the dust settled, the firms that were always going to be market leaders have pretty much maintained that reputation,” Loanzon said.

“The firms that tried to compete and weren’t on the same footing as the top firms were affected the most when the market turned and I think a lot of firms are just learning from that.”

Reder Sheikh said she assumes that firms declining to match the special bonuses are reticent to create a new expectation for bonuses next year. More may join Hogan Lovells and Perkins Coie, she said.

“Once a few firms set this as an alternative standard, it become a lot easier for others to follow suit,” Reder Sheikh said.

“I don’t think associates will be pleased, though,” she said.