Triggered by significant profit and revenue boosts as well as one of the strongest associate markets in more than a decade, large law firms are on the verge of another bonus battle.

Several legal industry observers said special bonus announcements by Willkie Farr & Gallagher and Davis Polk & Wardwell could cause a chain reaction in which top firms try to match or one-up each other on special payments for associates. And for some firms, bonuses—instead of salary raises—are the preferred reward because they allow flexibility to change total associate compensation in future years, observers said.