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Law Firms Should Pay Higher Bonuses When Associates Are Close To Thresholds

Even if you missed the threshold for a bonus, it should count for something.

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1077817Many people keep an eye on Above the Law during the end of the year to see what types of bonuses top law firms are awarding associates. Although many top law firm award bonuses based on the class year of an associate, a number of law firms distribute bonuses based on other factors, including the hours an associate billed during the preceding year. Under such systems, associates usually pull long hours to ensure they meet a given bonus threshold and earn a higher bonus. In many instances, it is usually best if law firms award associates a higher bonus even if they just miss a higher bonus threshold since this can boost morale and generate goodwill between associates and an employer.

I once worked for an employer that offered output-based bonuses. I really wanted to earn a bonus that was based on a given level of output, and I spent many long days working hard at increasing my output so that I earned that particular bonus. By the end of the bonus season, my rough calculations showed that I had just made the bonus threshold, which was a relief, and I looked forward to being paid the higher bonus.

To my surprise, when the official report came back evaluating my work, it turned out that I just missed the bonus threshold. This was because some of the work I performed was not being counted toward bonus calculations. This was upsetting since the difference in bonus thresholds was massive, and I had worked so hard trying to meet the threshold.

In some correspondence to my superior, I gently mentioned that I slightly missed the higher bonus threshold, and that I worked hard in order to meet that given threshold. I also mentioned that I thought I had satisfied the threshold but due to the way that the bonuses were calculated, some of my work would not count toward determining if I was owed a higher bonus. I did not think my employer would take any of this into consideration when awarding my bonus, but I figured it didn’t hurt to try. Although the employer was clear that bonuses were determined based on a clear mathematical formula, perhaps it was possible that extenuating circumstances could impact the bonus determination.

To my surprise, my employer decided to bump me up to the next bonus amount even though I had just missed the threshold. The employer acknowledged that I was very close to meeting the threshold and related that some of the calculations used when determining if work counted toward the bonus were confusing. This was a big deal for me, since the differences between the bonus I was entitled to based on the lower threshold and the bonus I received was massive and definitely impacted my bottom line.

Basing bonuses on clear mathematical guidelines makes a lot of sense. This prevents people from receiving disparate bonuses based on how much partners like an associate and eliminates ambiguity about how bonuses are calculated. Clear bonus thresholds also give associates an incentive to work hard and increase output, which typically benefits the law firms that employ them. However, law firms that employ clear-cut bonus criteria should still be flexible and award higher bonuses in situations such as when an associate just misses a threshold for a variety of reasons. The extra bonus amount will likely have a small impact on a law firm, but can increase the morale of an associate and tighten the connection an associate has with an employer.

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Rothman Larger HeadshotJordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at [email protected].

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