Biglaw bonus in 08? Assuming we keep our job this year, any chance of a bonus?

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If I lose my job but associates get their bonuses, which at year 3 exceed my annual salary, I'm going to sharpen the guillotine.

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A3- I hear you and I’m not trying to be the bearer of bad news but I’m behind the curtains and I can tell you- without reservation- that firms will be - at a minimum 10-15% off top line revenue in 2020 conservatively. Unless you are all restructuring/BK and going gangbusters and have no other practice exposure, 10-15% off is a most likely result.

So extrapolate that. 10-15% off top line budgeted revenue means a multiple of that off of net income distributable to partners. So do the math. If your budgeted income was $200m for the year, and the net income to partners after expenses (again budgeted) was $75m across the partnership, then 15% off top line is $30m. Now subtract that from 75m, and you are left with partners net income at 45m. So if you are an equity partner with a 1% profit allocation, your expected income just went from 750k for the year to 450k for the year. Again before expense cuts, salary cuts, terminations, etc, but more likely than not, partners’ comp is getting slashed by 30% or more in 2020. And- oh by the way- don’t forget that equity partners have to put capital into the firm at their *expected* budgeted income level - so if you’re capital requirement is 40%, then that partner has to put in 300k that he or she is still taxed on. Following?

Now for most, bonuses are an equitable distribution of profits in a year to associates (so the equity partners aren’t the only beneficiaries of going above budget). Agree with all of that wholeheartedly. However in a year where very few if any firms will be above budget, bonuses scream entitlement and are tone deaf to the worst degree. How about being thankful for having a job into 2021?

likeupliftinghelpfulfunny

Why is one taxed on a capital contribution? Do you mean new partners fund their capital contribution over time via deductions from their draws so it’s still taxable income?

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In most law firms in the country manager teams are fighting to save jobs, partners are deferring some or all of their pay, associates and partners are struggling to balance caring for families with work demands, and. clients are laying people off and unsure how long they can last. And as of today 2,600 Americans have died from this disease. Do you think you could defer your concern about your bonus for a little bit?

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Idk, bonuses as a discussion topic doesn’t seem any more or less trivial than most raised on this site. Virtually all of the work anyone on here does - and all of the attendant cares and anxieties - is meaningless when compared to a global pandemic. No need to get all sanctimonious.

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I’ll sum it up: don’t expect a bonus, save your money, update your resume, and keep hustling. You can only control what you can control, so please do yourself a favor and don’t worry about the other stuff (firm wise, stay in your house). I had to get a job during the last recession and this is why I (a) check my resume every year and update it; (b) talk and respect all recruiters who call me; and (c) take interviews where it makes sense. Oh and I’m well regarded with no fear of being let go (as of this writing), but my firm rents me every year the same way they lease me every year and I never know if the rent (comp) I need and what they are willing to pay will be the same and, if not, if they will want to keep me or leave me. Some will be let go and some will not, but focus on whether YOU be able to weather the storm because whether it’s a good economy or bad, you bonus (and job) is never guaranteed.

likesmarthelpful

Amazing

My firm said they were going to honor the bonus we earned last year (we are late to pay) and I thought that was generous. Every week I have hours to Bill I feel fortunate.

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Can we all just wait a little. All of these questions about what are firms going to do at year-end compared to what they did in 2008 are so premature. I was only in college in 2008 so I’m not an expert, but it’s my recollection that Lehman Brothers didn’t fail until September. No one knows anything about what firms will do in nine months because we have no idea how long this will go on for or what the real impact on clients and firms will be. We’re all just trying to tread water until the picture starts to be a little clearer.

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That’s all well and good but my firm are not paying bonuses for 2019 FY which was a year the firm performed very well. Will be delighted if I keep my job in 2020 but for a firm to use 2019 bonus pool to manage cashflow after a difficult 2/3 weeks is a big redflag

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A6, suppose the firm had paid out bonuses at year end using cash it now is using to keep the lights on and your paychecks coming. In that case, today you would be; (a) unemployed; (b) unable to find anyone else to hire you anytime soon; (c) sad that your (former) firm didn’t manage its cash more carefully; or (d) all of the above. Take your time.

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And it starts.. Womble cuts staff and associate pay. Won’t be the last (watch the dominoes fall now over the next 2-4 weeks).

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If you really think details will help you (rather than just giving you something else to obsess over), there’s this thing called Google ...

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But the 2008-9 crash did not bring 90% of the economy to a complete standstill overnight.

If I get to keep my job this year I’m more than happy

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Tricky one. For half the bonus year at my firm (Sept - Feb) we'll have accrued hours without the virus having had any impact, and we've just announced $4 billion in FY19 revenues. So I'd like to think they'll press on but if layoffs are contemplated then they'll obviously sacrifice bonuses first (providing the employees who would have been laid off are high-performing). Definitely no summer bonuses...

It’s actually not at all obvious that a firm would sacrifice bonuses over laying people off. If layoffs can be done stealthily and without much bad press, the firm would likely prefer to do that to maintain its ability to pay market bonuses at the end of the year for optics reasons.

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Do I have to know all this math to become partner? Just asking LOL

Maybe if partners gave us an education we would know. They keep us in the dark until we are more senior. I ask questions about the economics of my firm, and the partners obfuscate and tell me to focus on the work

Hi Partner 1. What do you think firms are more likely to do

1) Get the layoffs done now in anticipation of a revenue decline that has not yet materialized but is very probable, conserve cash and deal with the reputational/brand image damage;

Or

2) Avoid layoffs for as long as possible take the consequences as they come?

I’m sure most firms are probably going for somewhere in the middle - but given the 2008 history, I think firms would be more likely to be more proactive since this will be a long “winter”.

A1: It depends entirely on the firm. Some firms obviously have laid people off and others will do so in the future. But many firms (including mine) didn’t lay off anyone in 2008, and many won’t lay off people now. It’s all about the relative strength of the firm’s finances, how much revenue it’s able to sustain now, the skill of its management team, and the firm’s values.

My practice group head called a Zoom meeting on Friday to reassure us that the firm had always been conservative with its cash position and that they were aware of the human factors involved etc (which is good). But I can’t help feeling that, at least in my practice group, we had some associates (with average to poor work product) that were on borrowed time even before this, but were still there due to excess work. Not sure what’s going to happen to them (or me). Maybe they will wait a while to pull the trigger to be more humane.

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