Many of the world’s best law firms capped a tumultuous year with big bonuses for young lawyers and the end of austerity measures imposed at the height of the global pandemic.
US law firms have announced bonuses of up to $ 100,000 for entry-level staff in recent weeks, matching levels set last year. These amounts are in addition to a series of “special bonuses” that leading US companies announced in the fall to recognize the work of associates during the Covid-19 crisis, bringing the total of bonuses to $ 140,000 for some.
Bonus season comes at the end of the calendar year for most US businesses, many of which have performed better than expected during the pandemic, allowing them to end a initial period of relative austerity.
“Financially, 2020 has turned out to be a great year for revenue and profit after a wrenching spring,” said Bruce MacEwen, chairman of consulting firm Adam Smith Esquire.
He added that there was “a whiff of ‘we dare you to match this’ in the air,” putting pressure on less flush companies to match a new market rate for big end bonuses. year.
Cravath, Swaine & Moore, whose bonus scale sets the benchmark for Wall Street’s legal elite, said in November that it made year-end payments ranging from $ 15,000 for freshmen to 100,000 USD for those who joined the firm in 2013.
In November and December, UK “magic circle” firms, including Allen & Overy, Linklaters and Clifford Chance, said they would pay premiums of the same level to their US-based lawyers. All four of the Magic Circle companies have reported moderate revenue increases this year, but have been dragged into an increasingly difficult situation bidding war for young legal talent in the United States.
Earlier this year, competition intensified when California-based Cooley announced it would hand out “appreciation bonuses” of between $ 2,500 and $ 7,500 based on the experience of all non-partner employees. The bar was quickly raised by Davis Polk, who set a maximum special bonus of $ 40,000.
Freddie Lawson, director of legal recruiter Fox Rodney, said: “These US law firms have had stronger years than expected and have recognized that staff have been going through a particularly difficult time. Law firms are built on cultures of cohesion and these bonuses are a good way to reward loyalty. “
Most of the London associates, who will learn in the spring what their bonuses will be for 2020, have not benefited from the special Covid-19 payments online with their American peers.
Instead, the city’s major international law firms have focused on undoing austerity measures imposed at the start of the pandemic, including temporary pay cuts or payroll freezes and deferred payments to partners.
Osborne Clarke, headquartered in London reimbursement of government support for staff on leave and reimbursed the 7% pay cuts initiated earlier in the year after meeting their earnings targets, while Hogan Lovells reversed pay cuts in the US two months ago and reinstated pay reviews in the UK, reversing pay increases until May.
In November, Pittsburgh-based Reed Smith reinstated partners’ monthly payments and restored full salaries to partners, lawyers and associates whose salaries had been temporarily reduced.