The Talent

March 2, 2011 9:44 AM

Wilmer's Spring Bonuses: Market Driven, Merit Based

Posted by Julie Triedman

Coming off of one of its strongest years in recent memory, Wilmer Cutler Pickering Hale and Dorr on Wednesday announced it will be paying out supplemental spring associate bonuses in line with the those announced by Cravath, Swaine & Moore and several other Am Law 100 firms.

Wilmer's bonuses come with a twist. Given the firm's merit-based compensation system, some Wilmer associates could receive higher payments than associates of the same class at Cravath, and some less.

"We've made a commitment to compete at the top of the market," says Wilmer co-managing partner William Lee.

In December 2009, as previously reported here, the firm unveiled a new compensation system for all nonpartners (both associates and counsel) designed to move away from lockstep. Senior associates and counsel are divided into tiers, each linked to a set base salary; more junior associates receive market lockstep-derived base salaries. Associate bonuses are merit- as well as productivity- and value-based and rely on individual evaluations to determine the amount of a lawyer's bonus, not on seniority or billable hours, the firm says.

At the end of 2010, Wilmer announced year-end bonuses roughly in line with the market rate set by Cravath in late November. At that time, Lee says, the firm calculated that 43 percent of its nonpartner lawyers received compensation in excess of the market standard set by Cravath; 28 percent received compensation roughly equal to a salary based on class year; 29 percent were paid less than the amount they would have received in a lockstep system. "The idea behind a merit-based system is people can do better than the market," says Lee. 

The year-end bonuses paid by Cravath--and by firms that followed that rate, including Simpson Thacher & Bartlett, Cleary Gottlieb Steen & Hamilton, and Davis Polk & Wardwell--ranged from $7,500 for first-year associates to $35,000 for seventh-years. The supplemental bonuses announced on January 31 ranged from $2,500 to $20,000. 

Lee will not say how much higher Wilmer's bonuses ranged above the Cravath standard except to say it was a "significant" amount for some recipients. The associates who've topped the market are "aware of it," Lee adds.

Wilmer's spring bonuses will be distributed on April 29. The firm's co-managing partners, in an e-mail sent to associates Wednesday morning, noted that the firm had a strong year in 2010 and that the pace of work had placed significant demands on all lawyers. Year-end performance assessments and a review of productivity will again be used to determine individual bonuses in this round. 

According to The American Lawyer's midlevel associates survey, published last September, the median overall compensation for midlevel associates at Wilmer had fallen behind the market rate in New York in 2010. Third-years' median base salary of $170,000 last year was $15,000 lower than the median New York base salary. But the median bonus rate at Wilmer at the end of 2009 topped the average market bonus by about $5,000. That was repeated for upper classes, the survey found. The firm announced that, in 2011, first- through third-year associate base compensation will be market lockstep.

"As we shared with our associates in June, our bonuses for 2010--paid in January of 2011--will bring WilmerHale's total compensation market competitive," Wilmer's chief legal talent officer Brad Scott told Am Law Daily last September.





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I don't understand the spin that Wilmer is trying to put on this supposed merit-based base pay. Seems a little like an oxymoron to me. The definition of base pay is something fixed and not based upon performance. Supposedly performance-based pay on top of that is what we call a bonus.

So it looks to me like they've just been slashing base pay and on average not paying enough of a bonus to catch back up to the market for overall comp. Hopefully any prospective hires with a semi-decent grasp of expected value would see through this...

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