Many readers of Above the Law eagerly await news about annual bonuses around the end of the year. Most Biglaw law firms award those bonuses based on seniority and perhaps other performance-based metrics. Some smaller law firms also have institutionalized year-end bonus initiatives through which attorneys may receive a bonus equal to one or two months of salary. However, most attorneys work at small law firms and are much less likely to receive an annual bonus at such firms.
After leaving Biglaw, I started working at a small insurance defense shop that was a small fraction of the size of the large law firm at which I previously worked. I was amazed at how this shop operated differently than the Biglaw firm that had previously employed me. For instance, this shop did not reimburse associates for bar dues and did not fund training and conference attendance.
Around bonus season, I wondered whether I would receive an annual bonus like attorneys at many Biglaw shops got. Veteran lawyers at the firm could not tell whether the shop would award bonuses. I was told that in some previous years, the firm provided holiday bonuses, which were relatively modest in comparison to the bonuses awarded at Biglaw firms. However, in some years in which the law firm faced financial challenges, they skipped awarding holiday bonuses to associates.
When it came time for my annual review at that shop, I was told I would be receiving a pay raise for the upcoming year, which I was happy about. However, the managing partner of the firm told me that the shop was not awarding holiday bonuses because of difficult economic realities at the shop. I remembered that one of our court-reporting vendors gave gift baskets to all of the attorneys of our firm, and this was the only holiday cheer provided to me as a result of work.
Additionally, smaller shops are much more likely to forgo giving individual associates a bonus based on performance issues even if they provide bonuses to other attorneys at a firm. I once worked at a law firm directly before starting my own shop. In the months leading up to my departure from that firm to open my own practice, my productivity declined, since I was relatively checked out from my job at the firm. I knew that I would be opening my own practice soon, so I figured it did not make too much sense to work hard to line the pockets of partners at the firm from which I would soon be departing.
When it came time for my annual review, I was shocked to discover that I had still earned a pay raise at the firm, which did not matter much since I left the shop shortly into the new year. However, partners told me that I would not be receiving a bonus since my performance had slacked off toward the end of the year. In my opinion, it is more common for Biglaw to just award lock-step bonuses according to seniority rather than withhold bonuses for performance reasons. This is probably because bonuses impact the bottom lines of smaller shops more, and it is more difficult to do a case-by-case analysis for bonuses at larger firms.
In any case, readers of this website and others should not think bonuses are common practice across all law firms. Smaller shops are more likely to forgo annual bonuses together or deny bonuses to individual attorneys.
Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jordan@rothman.law.
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