Orrick Herrington & Sutcliffe has become one of the first US firms to alter its associate bonus system, as the economic downturn continues to blight lawyers’ workloads.
The firm, which was one of the first West Coast outfits to pay huge salaries to associates at the height of the dotcom boom, is raising the level of hours needed to qualify for a bonus as levels of corporate work remain under pressure.
According to Orrick chairman and chief executive Ralph Baxter, the firm has four levels of productivity, or billable hours, that associates must reach to gain extra compensation. Baxter said that the number of hours needed to reach the lowest rung of the system had been increased and the highest level of remuneration had been trimmed back.
In 2000, Orrick reworked its pay system for first-year associates, who saw their potential pay rise from $100,000 (63,400) to $160,000 (101,500). Seven-year associates were in line to earn as much as $270,000 (171,200).
Baxter said: “We’re in this together and we’re going to have to make the economics of the firm justify the compensation, so we’ve made adjustments to the compensation levels. Last year the level of productivity necessary to achieve the first level of bonus was lower than it is this year. You need a higher level of chargeable hours to get to the first threshold of bonuses than last year.”
Baxter said that it is possible for associates to earn more if they hit the increased numbers in billable hours, but admitted: “We don’t want people hitting the highest number of hours, because that’s working too hard.”