Associate bonuses are first to get the chop as the Valley starts to panic
Silicon Valley firm Wilson Sonsini Goodrich & Rosati has withdrawn August bonuses from associates as it battles to cut costs in the face of a corporate slump. The firm has warned its associates not to expect much in the way of bonuses at year-end, even though last year it paid out as much as $50,000 (£34,500). Lawyers will also not be receiving the usual August advance on the payouts. Wilson Sonsini's managing director of operations Donna Petkanics issued a memo to the firm's 600 associates to warn them that bonuses in December would not come close to last year's levels. She made the announcement in response to a flood of enquiries from worried assistants. The move adds the firm to the growing list of technology law firms striving to cut costs in the face of a drop in work. Earlier this month, San Francisco's Brobeck Phleger & Harrison offered all of its lawyers the chance to take unpaid sabbaticals or move onto three-day weeks to avoid having too many lawyers in the office without work (The Lawyer, 6 August). In June, two of Silicon Valley's most high-profile firms took moves to cut costs. Venture Law Group, the firm which would work only with start-up companies and then refer them to Orrick Herrington & Sutcliffe when they grew, laid off more than 20 staff and changed its strategy. And Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, the firm which first sparked the salary war last year by hiking pay by 30 per cent across the board, abandoned its policy of guaranteed bonuses for all lawyers (The Lawyer, 18 June). Wilson Sonsini operates two bonus plans. One is a merit-based bonus scheme that is paid to most associates at the end of the year, which in the past has ranged from $10,000 (£6,900) to $50,000 (£34,600). The other scheme is a quarterly performance bonus that is paid to associates who rack up particularly high billable hours - that scheme remains untouched. Petkanics said that she was expecting the second half of the year to be even worse than the first.