| 
Last year was a good time to be an associate with Dallas-based Jackson Walker, where some associates received six-figure bonus checks.
"I think we have some pretty happy campers," says T. Michael Wilson, the firm's chief executive officer.
Wilson says his firm was not affected by the economic downturn because it does not handle matters such as large, highly leveraged mergers and acquisitions. "We are not playing in that arena, and therefore we felt no adverse effect from the subprime collapse," he says. The firm's corporate practice was active, even through the fourth quarter of 2008, because its clients are middle-market companies that were still able to borrow money, he says.
The firm, which employs 345 lawyers, distributed the bonus checks in December based on criteria including an associate's billable hours and business development, Wilson says. The 2008 associate bonuses, which top out in the low-six figures, are similar to the bonuses the firm paid its associates in 2007, he says.
Other large Texas-based firms and out-of-state firms with large Texas operations also paid 2008 associate bonuses in December or plan to pay them during the first quarter of 2009. Twenty of the 25 firms with the most Texas lawyers provided information about their 2008 associate bonuses. The firms are identified on Texas Lawyer 's "The Texas 100" poster published in April 2008. Lawyers with most of the firms say the 2008 associate bonuses are similar, or at the same level, as the bonuses the firms paid to their associates for 2007.
Wilson's prediction for 2009 echoes that of the other managing partners. "We are guardedly optimistic," he says. "Who knows what the next six months will bring in terms of the economy and the practice of law?"
San Antonio-based Cox Smith Matthews paid 2008 associate bonuses in December that ranged from $2,000 to $45,000, amounts similar to those paid in 2007, says James "Jamie" Smith, managing director of the 135-lawyer firm. "The bonuses were pretty much in line with what we've done in prior years and consistent with our compensation plan for associates," he says. The firm expects most associates, after their first 16 months on the job, to bill about 1,900 hours, he says. The bonus payouts depend on how much associates exceed the 1,900 hours, the quality of their work and other contributions to the firm, he says.
Houston-based Andrews Kurth also distributed 2008 associate bonuses in December, ranging from $5,000 to $75,000, which are amounts similar to those paid in 2007, says Jeffrey E. Spiers, a partner in the more than 400-lawyer firm and one of the chairs of the associates committee. "A well performing, 2,000-hour billing associate, at the entry level, received $5,000," he says.
At Houston-based Baker Botts, associate bonuses for 2008 were distributed in mid-December that were equivalent to those distributed the previous year, although the criteria used to determine the bonuses has changed, says George C. Lamb, a partner in Dallas and chairman of the firm's associate compensation committee. The 822-lawyer firm pays a standard bonus for associates who work 2,000 or more hours and in 2008 added a discretionary bonus for a combination of hours exceeding 2,000 and for the quality of the work performed, he says. "We wanted to make work quality a more significant factor rather than just have a formulaic calculation based solely on hours," Lamb says. He declines to discuss the dollar amounts paid in bonuses for 2008 but last year the firm paid associate bonuses ranging from $5,000 to $77,500. [See "Large Firms Pay Many Texas Associates Bigger Bonuses," Texas Lawyer, Jan. 14, 2008, page 1. ]
Dee J. Kelly Jr., managing partner of Fort Worth's Kelly Hart & Hallman, says the 125-lawyer firm paid associate bonuses in December, but he declines to reveal the bonus amounts. "Bonuses are merit-oriented, that's all I can say," Kelly says. He says criteria used for determining bonuses include work productivity, client development and expertise.
Austin-based Clark, Thomas & Winters also paid 2008 associate bonuses in December in amounts equivalent to the bonuses paid in 2007, according to Larry McNeill, president and managing shareholder of the 120-lawyer firm. "I was very pleased that the national economic downturn did not cause us to vary our normal procedures for bonuses, either in qualifying requirements for consideration or in amounts awarded," McNeill writes in an e-mail. He declines to discuss the amounts of the bonuses.
Lower Payouts
Although Houston-based litigation firm Susman Godfrey, with 87 lawyers, is not one of the 25 firms with the most lawyers in Texas, it is a firm that has garnered attention by paying large associate bonuses in recent years. But the bonuses the firm paid in December 2008 ranged from $34,000 to $75,500, amounts lower than the $60,000 to $120,000 bonuses paid to its associates in prior years.
"Our income was lower than the previous year," says partner Stephen D. Susman. He says the firm warned associates in early December that bonuses were going to be lower than in the recent past. "We wrote all the associates a memo and explained that a large fee that we expected in the amount of approximately $22 million had not been received on Dec. 1 when it was expected," he says. Susman declines to identify the case, which he says settled prior to December. Susman says if the $22 million, which the firm now expects to receive in 2009, had arrived in December 2008, the firm would have paid bonuses equivalent to the $60,000 to $120,000 paid in 2007 and 2006.
Driven by associate bonuses paid by large firms in the New York market, bonuses are lower this year for associates with New York City-based Weil, Gotshal & Manges, says Mary R. Korby, a partner in Dallas and chairwoman of the 1,373-lawyer firm's compensation committee for associates. The bonuses, which will be distributed later this month, range from $17,500 for first-year associates to $32,500 for eighth-year associates, she says. "Our firm philosophy is to take a look at the New York market and keep in line with what other New York firms are doing," Korby says. The firm's 2007 associate bonuses ranged from $35,000 to $65,000, and were "based on the New York market at the time," she says. She adds that some associates, in the fourth-year class and above, will receive a "distinguished bonus," which is a higher-than-market bonus. That bonus is awarded based on the quality of the associate's legal skills, analytical ability, work product, leadership skills and pro bono participation, she says. "We look at all of those criteria, and if somebody has been a real standout for the year, then that person will get more than the market bonus," she says.
At Dallas-based Haynes and Boone, bonuses distributed to senior associates in December were $50,000 to $70,000, says Terry W. Conner, managing partner of the 510-lawyer firm. The averages for associates overall were in the $20,000 to $25,000 range, he says. Conner says the bonuses are "somewhat smaller" than those paid for 2007. The lower bonuses in 2008 were driven by a reduction in associate productivity due to the slowdown in the economy, he says.
Dallas-based Munsch Hardt Kopf & Harr also paid slightly lower associate bonuses for 2008 than it paid in 2007, according to Glenn B. Callison, chairman and chief executive officer of the 100-lawyer firm. The range for 2008 associate bonuses, like the previous year, topped out at about $50,000, he says. But the lower end of the associate bonuses, which were paid in December, was a nominal bonus of $500 rather than the $2,700 lower-end bonuses paid for 2007 work, he says.
"It appeared that because of the disruption we were seeing in the economy, certain areas of business were falling off and some associates were not performing as strongly as they had in the past and as a result bonuses were being reduced," he says.
The upper end of the 2008 associate bonuses at Dallas-based Winstead is $38,000, slightly lower than the $45,000 top-end bonus the firm paid its associates for 2007, says Denis C. Braham, chairman and chief executive officer of the 292-lawyer firm. The firm paid the bonuses, which had a low-end amount of $5,000, in December.
Braham says the economy was not a factor in the bonus payments, which are based on a combination of productivity and an associate's contributions to the firm. "We try to reward people for a wide spectrum of value, not just narrow defining on billable hours," he says. To receive the $38,000 bonus, an associate needs to be a solid performer in terms of work quality and billable hours and also make other contributions to the firm such as serving on the recruiting committee, participating in pro bono activity and mentoring newer associates, he says.
Bonuses to Come
Several firms with large Texas operations will pay 2008 bonuses during the next few weeks or months.
Year-end bonuses for Texas associates with Houston-based Vinson & Elkins, which will be distributed in mid-January, will range from $5,000 to $45,000, the same range the firm paid for 2007, says Joseph C. Dilg, managing partner of the 768-lawyer firm, 555 of whom are in Texas. The bonuses are productivity-based depending on the associates' class level, although first- and second-year associates do not have billable-hour requirements, he says. An eighth-year associate with 2,300 billable hours will qualify for the top bonus level, he says. He notes that the $5,000 to $45,000 bonuses are for Texas associates. The firm will pay associates in its New York office $17,500 to $32,500 — the same bonus levels adopted by most of the major firms in New York, he says.
Dilg says in New York firms have been harder hit than Texas firms by the downturn in the financial markets and are paying lower associate bonuses for 2008. He also points out that, although V&E first-year associates in Texas and New York are paid a base salary of $160,000, in New York the salaries of senior associates are higher than the salaries paid senior associates in Texas.
Dallas-based Gardere Wynne Sewell, which ends its fiscal year on March 31, will pay associate bonuses in March that are in the same range as last year — $2,500 to $50,000 — says Stephen D. Good, managing partner of the 280-lawyer firm. "I think they will be in that same range, and some may be higher," he says.
At Houston-based Bracewell & Giuliani, associate bonuses will be paid in February and will be similar to bonuses paid last year, generally at $5,000 for newer classes and $70,000 to $75,000 for more senior associates, says Jennifer Mays Weston, a partner in Houston and the 450-lawyer firm's general counsel for professional development. A senior associate who billed 2,300 or 2,400 hours could receive a higher bonus amount, "but that would be an extraordinary result," she says.
Thompson & Knight is in the process of determining 2008 bonuses, which will be distributed to associates in March, says Bruce S. Sostek, a partner in Dallas and a member of the firm's partners compensation committee. The Dallas-based firm has 461 lawyers. Sostek estimates the bonuses will be consistent with those paid last year, with an upper range slightly higher than $50,000.
Dallas-based Thompson, Coe, Cousins & Irons will decide its 2008 associate bonuses in mid-January, according to an e-mail sent by Jack M. Cleaveland, chairman of the firm's management committee. Cleaveland declines to reveal the dollar ranges of the bonuses the 107-lawyer firm will pay associates but he writes that "we expect them to be similar to last year."
At Dallas-based Strasburger & Price, associates will receive 2008 bonuses equivalent to the firm's 2007 bonuses, says Daniel L. Butcher, managing partner of the 185-lawyer firm. "We're in the process of making those decisions now," Butcher says. The firm pays associate bonuses based on billable-hour targets and an additional discretionary dollar amount for contributions such as extraordinary service to a client, business development or training other associates, he says
At Washington, D.C.-based Patton Boggs, the 500-plus lawyer firm won't decide its bonuses for several weeks, according to Stanley Mayo, managing partner of the firm's 101-lawyer Dallas office. "It is premature to discuss associate bonuses at this time," he writes in an e-mail.
At Dallas-based Locke Lord Bissell & Liddell, associate bonuses will be in ranges similar to those paid last year, says Julie Gilbert, the firm's chief communications officer. "There will be some additional compensation for those at 2,000 hours or more," she says. The firm does not release associate bonus amounts, she says.
Akin Gump Strauss Hauer & Feld will pay associate bonuses, which are merit-based, at the end of January, says Sheila Turner, director of communications for the Dallas-based firm. "The bonuses are competitive for each particular market," she says. The firm does not release information about bonus amounts, she says.
Cleveland-based Jones Day does not pay year-end associate bonuses, says George T. Manning, partner-in-charge of the firm's Dallas office. The firm employs more than 2,400 lawyers with 247 lawyers in Texas. "We don't have lockstep compensation," says Manning. He says associates are paid merit-based salaries. "We do not pay for billing hours," he says. "We rate each associate individually; it's a meritocracy, and we pay them accordingly."
Two other firms, Austin-based Brown McCarroll and Atlanta-based King & Spalding, which has offices in Austin and Houston, did not respond to requests for information about 2008 associate bonuses.
Patrick E. Mitchell, managing partner of the Houston office of Richmond, Va.-based Hunton & Williams, and Craig W. Budner, administrative partner in the Dallas office of Pittsburgh-based K&L Gates, did not return calls for comment before presstime on Jan. 8.
Houston-based Fulbright & Jaworski declines to release associate bonus information.
