Lateral Associate Bonuses: An FAQ
Lateral associate hiring at BigLaw firms across the country is at an unprecedented level and the competition for talent is tight. But the financial incentives that firms provide to lateral associates who receive an offer can vary quite a bit.
When it comes to signing bonus amounts and making associates "whole" on both year-end and special bonuses, several factors are at play:
Whether the firm matches the pay structure of the firm you are departing
Whether the practice area and/or specific opening is especially busy
What types of internal policies the firm has on bonus incentives and whether exceptions are made to these policies
What is the fiscal calendar and the billable hours period for the firm (January to December? October to November? etc.) and when are their bonus payout dates
How strong and well-credentialed is the candidate in question
Here are answers to some FAQs about lateral associates and bonuses.
Will my new firm automatically "make me whole" for my year end bonus and any special bonuses if I leave my firm before I receive them?
Right now, typically. Most BigLaw firms that pay at the top of the market will "make associates whole" for any same-year bonuses they will lose by leaving their current firm. This includes both the year-end bonus and any special or COVID bonuses that firms have been paying out (provided both your current and new firm have announced they are doing this.)
The most common way that firms make candidates "whole" is to say that if you meet the new firm's hours requirements on a pro-rated basis (given your start date and their fiscal calendar), then they will pay out your full bonuses. But review your offer letter carefully on this point. Some firms may only promise a pro-rated bonus based on pro-rated hours. Other firms may have additional conditions for receiving the bonus.
I've heard that firms are giving out $100,000 signing bonuses. Is this true?
Very few BigLaw firms are offering signing bonuses this high, and for very few positions. The typical signing bonus range is more in the $0-$30,000 range. And if the signing bonus is higher, it's usually part of the firm's way of covering any lost bonus that you are giving up from your old firm. The very high signing bonuses are reserved for candidates at a handful of firms for really difficult to fill openings (capital markets associates in New York, for example).
Should I negotiate higher bonuses than what is provided in the offer letter?
It depends. Most BigLaw firms at the top of the market will include some form of bonus amount or coverage in initial offer letter. Work with your recruiter to discuss the firm's approach and policy to bonuses and what your goals are for any bonus negotiation. First, make sure the language is clear and understandable. Some offer letters can include a series of math problems and/or ambiguous language. You may be reading the letter differently from the firm and a small language change or clarification may be satisfactory.
Is my recruiter incentivized to get me a higher bonus? Will they get paid more if I get paid more?
Typically, no. Most fee agreements that recruiters have with BigLaw firms provide a fee to a recruiter for a successful placement as a percentage of the candidate's base compensation alone. So your bonus amounts do not typically factor into the recruiter's compensation.
If I do negotiated my bonus amounts, who should do it? Me or my recruiter?
It depends. Your recruiter can work with the firm's internal recruiter on bonus terms and questions. But in negotiating the amounts, it may be better for you to negotiate directly with the firm. This is especially the case when there has been one main partner contact for your interview and offer process. You may have developed a close relationship and be more successful in a negotiation if you do so with that partner directly. In other cases, you may not have a person like this in your hiring process and the recruiter can be more involved. Either way, I suggest consulting your recruiter before you start any negotiation process.
Do I risk getting my offer pulled if I try to negotiate on my bonus?
No, as long as you negotiate in a respectful and reasonable manner. Make sure your requests are clear and based in logic. Try to consolidate your bonus negotiation into a single phone conversation (NOT email). But the saying "You don't ask, you don't get" is applicable here. The period between receiving your offer and accepting it is the best time to negotiate any kind of compensation issue. You may not have another chance to do that as an associate.