A burnout bonus that one firm handed out as a one-time payment is quickly snowballing into an international race to raise wages in the legal industry. It all started in September 2020, when Cooley LLP of Palo Alto handed out $2,500 to $7,500 one-time payments to associates. Like Cooley LLP, many other big-law firms, who were sitting on deep cash reserves and struggling with workplace burnout soon began dishing out payments that were heftier and came earlier than the traditional annual bonus.
It didn’t just end there. The bonuses kept rolling in as the big-law firms seemed to be falling over each other to hand out bonuses to associates. In firms like Davis Polk & Wardwell LLP and Willkie Farr & Gallagher, senior associates enjoyed bonus windfalls of up to $140,000 last year.
This year, the bonuses for senior associates could get as high as $164,000. Firms are also promising longer breaks and more convenient work-from-home policies.
This all comes off the heels of a monumental increase in demand for associate services resulting from developments in the wake of the pandemic. As more companies are now pursuing financing deals, merger and acquisition deals, restructuring plans, and a series of other initiatives to adapt to new realities, attorneys in the mix are getting swamped with caseloads. Talents at Big Law firms have been putting in a staggering 100-hours of work every week to keep up with growing demands.
With the pandemic in full swing in early 2020, some law firms were bracing up for a bumpy ride ahead. But what began as a year that was shrouded in uncertainty became a “barrier breaker” for the legal industry. Later that summer, things began to turn around, and revenues topped record levels before the end of the year. The industry’s top 100 law firms raked in $111 billion in revenue – a record 6.6% year-on-year increase.
“We’re not seeing firms ask us for one or two associates. Some are coming to us saying we need 10,” said Summer Eberhard, managing director in the associate practice group of the West Coast base of legal recruiter Major Lindsey & Africa.
This reality globally, with firms across Canada, UK, the EU, and rich Asian countries following their U.S counterparts’ strategy to attract and retain top talents.
“It has forced the hands of a lot of smaller markets to increase their compensation because in order to compete with talent, they have to compete with the big firms’ compensation,” Eberhard added.