William Reid IV, founding member of Reid Collins & Tsai. Courtesy photo

Austin-based trial boutique Reid Collins & Tsai has already paid its associates bigger bonuses for 2019 than Big Law firm Milbank announced for its associates last week, and there's still more in the works for Reid Collins associates, the firm's leadership said.

"We just pay as we go. This year we are having a record year, so our bonuses are in record territory," said founding partner William Reid IV, noting that he expects to pay another round of bonuses before year-end.

While the 35-lawyer Reid Collins isn't in the same market as Am Law 100 firms such as Milbank, Reid said lawyers need not jump into Big Law to make a lot of money.

Houston law firm consultant William Cobb said the size of the bonuses goes a long way in sending a message to prospective hires that the firm is successful.

"If I was in the litigation section of a big firm … I'd be pretty interested" in Reid Collins, Cobb said.

Reid said junior associates at Reid Collins with one to three years of experience have been paid $85,000 to $95,000 in bonuses so far this year, while senior associates, those with four or five years of experience, have received $85,000 to $102,500.

Junior partners, who Reid describes as salaried, nonequity partners, have been paid bonuses of $100,000 on the lower end to as much as $312,500 so far this year. Junior partners have six to 10 years of experience as a lawyer.

"It makes all those other dumb bonuses look like crap," Reid said.

Earlier this month, Milbank announced an associate bonus scale for 2019 in which first-year associates will receive $15,000 at year-end, while senior associates will receive up to $100,000. Milbank's early bonus announcement serves to show competitors and potential associate hires  that the firm is financially stable, and a marketplace leader, industry watchers have said.

Reid acknowledged that his 10-year-old trial firm is in a different position than Milbank, which may have set the market rate with its early November bonus scale announcement. Reid Collins hasn't had a summer associate program for three or four years, he said, and the boutique typically hires associates who have already worked two to four years at another firm.

Reid Collins pays salaries of up to $180,000 for junior associates, $210,000 for senior associates and $240,000 for junior partners, he said. Considering the salaries and the bonuses, associates and junior partners do well at his firm, Reid said.

"I'm hoping to convey out there that you don't have to go to a big firm to make money," he said.

Reid said his boutique, which handles litigation on a contingent-fee basis, has no debt and pays out bonuses on a rolling basis as revenue comes into the firm.

According to Reid, the firm maintains a $1 million working capital account to fund litigation and expenses. When money comes in, the firm first replenishes that $1 million account, and then puts 20% into a bonus pool for associates, junior partners and staff. The rest is paid to equity partners, he said.

Since the beginning of the year, revenue for Reid Collins has totaled about $30.5 million, said Reid, who expects about another $2.5 million to be paid into coffers by the end of the year, creating a fourth bonus pool for the year.

Most of the firm's litigation work has resulted in settlements with confidential terms. Settlements paid this year include one in which the firm represented the liquidator of a pair of Bear Stearns-affiliated hedge funds, which had sued Reed Smith in a $500 million legal malpractice case.

Reid Collins has offices in Austin, Dallas and New York, and has lawyers based in Washington, D.C. The firm also expanded into California a year ago by hiring former Munger, Tolles & Olson litigator Marc Dworsky as a partner.

The firm celebrates its 10th anniversary this month, and to mark the occasion it sent lawyers and their spouses, along with a few veteran staff, to a resort in Mexico for a few days. Staffers who joined the firm more recently were given a week off with pay, Reid noted.

"It was really nice to be unplugged," Reid said.

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