On Friday, firm leaders at Heller Ehrman gave associates two reasons to celebrate over the weekend: more money, and a new program that gives first-years more enriching work, without making clients pay for it.
The firm made its annual associate compensation announcement, revealing 2008 pay and reinstating the part of the 2007 bonus that was sacrificed to increasing first-year salary to $160,000 in June.
The firm also unveiled a new initiative designed to satisfy young associates' desire for career-developing opportunities without riling clients opposed to being billed for it. First-years will be able to spend 300 hours on career development that will count toward billable and bonus benchmarks, but won't be charged to clients. The firm employs about 330 associates.
"It's an investment we are making," said firm Managing Partner Robert Hubbell.The investment allows associates to be involved in strategy sessions, negotiations, depositions and various trial activities that they wouldn't bill for, and thus normally wouldn't have time to attend.
"It's a win-win-win," said Daniel Kaufman, an associate in the San Francisco office. "It's great for clients who don't want to have first-year associates who really don't know what they're doing working on these projects. It's great for shareholders ... and it's obviously great for associates, because they're not stuck doing document review."
In not only returning to a 2,000-hour bonus for 2008, but restoring the bonus for 2007, the firm fires what may be the final shot in last year's chaotic salary war. Last year, New York firms gave first-year associates a big bump to $160,000.
Like several leading California firms, Heller answered New York's new pay scale by raising first-year associates to $145,000 in California. But when California firms broke ranks and began paying the New York salaries here, Heller eventually went to $160K as well.
Firms found different ways to pay for the second round of raises, including eliminating all or part of the bonus structure to fund the salary hikes, a strategy Heller adopted.
"Other firms were altering the mix of the base compensation and the bonuses and that's what we did," Hubbell said.
The firm redistributed the $15,000-to-$25,000 bonus for billing 2,000 hours to hike base pay up to $160,000. Bonuses for higher milestones remained in place.
"And then, as we looked at it, we determined that while there were some other firms that did that, most firms didn't," said Chief Human Resources Officer David Sanders. "And so we decided we needed a 2,000-hour bonus to be competitive."
The firm normally pays associates bonuses after the year-end due to calculations and a bonus review process, Hubbell said. Associates receive compounding bonuses for each 100 hours billed starting at 2,000, up to 2,400 hours. Associates also receive a merit-based bonus, with a maximum from $15,000 to $25,000, depending on how long the associate has been with the firm.
The firm is investing more than money in its associates, though. The career development hours for first-years constitute nearly 15 percent of the 1,900 hours expected of all associates.
The changes sounded good from the in-house perspective, (or at least the recently in-house).
"That's a pretty significant investment. I salute the firm," said Jeffery Fromm, a vice president and director of intellectual property for Hewlett-Packard who left the company in December to run his own private practice.
The current billable-hour structure gives associates a disincentive to sit in on meetings for which they wouldn't receive billable credit, Fromm said.
"I reflect back 15 to 20 years ago where first-, second- and third-year associates did that all the time and clients sometimes got billed, but rarely did," he said. "It's a back-to-the-future kind of thing. But it sounds like a good idea."