Associate Bonuses
 December 12, 2004

Perhaps law firms do learn from their mistakes. For the third year in a row, it appears that most major firms are holding the line on associate salaries. But some leading firms are bumping associate bonuses to provide increases in total compensation. Sullivan & Cromwell has announced that 2004 year-end associate bonuses will range from $20,000 to $30,000. Last year’s bonuses were $17,500 to $27,500. This is in addition to the surprise October bonuses which were between $10,000 and $20,000. This pushes total average first year compensation to $155,000.

The philosophy is that the use of bonuses allows adjustments in associate compensation during lean times without having to actually cut base pay. Large bonuses are not new but, in the past, most have been tied to specific billable hour performance levels. Apparently, the new bonus system will be subjective based on overall performance. It is expected that other New York firms will follow suit. This is actually a trend that has been in place for several years in some mid-western firms where bonuses make up as much as one-third of total compensation.