In the New York Times Dealbook, Andrew Ross Sorkin takes a look at the recent, Cravath-initiated wave of “special bonuses.” Sorkin feigns puzzlement— “this herd mentality seems absolutely irrational, economically speaking”—until concluding the whole thing is purely a function of status anxiety: “Within their risk-averse, insular world, it’s a way of saying, ‘We’re in the top tier.’ But it doesn’t necessarily make good business sense.”
Whatever the other merits or flaws in Sorkin’s reasoning (see here for discussion), he definitely errs when he asserts that the bonuses have “very little to do with recruiting,” because “[b]onuses are for people who already have jobs.” This statement underestimates how competitive and obsessive the legal recruiting market has become. Without a doubt, 2Ls bound for BigLaw jobs (not to mention their envious classmates) are keeping score in all facets of the compensation game.
Apart from recruiting, there a retention angle. Orin Kerr at The Volokh Conspiracy highlights an interesting point about bonuses and associate retention which popped in his comments section:
“I believe bonuses don't so much encourage associates to bill 2,300 hours instead of
2,000 hours, as they encourage the associates who bill 2,300 hours to stick around.”
Full comment (& post) here.
-posted by brian
Want to be found by top employers? Upload Your Resume
Join Gold to Unlock Company Reviews