Orrick increases assistant bonus targets to compensate for slump

Bonus qualification levels move out of reach, knocking back assistant pay; insiders predict other firms will follow suit

Orrick Herrington & Sutcliffe has become one of the first US firms to alter its associate bonus system as the economic downturn continues to blight lawyers' workloads.

The firm, which was one of the first West Coast outfits to pay huge salaries to associates at the height of the dotcom boom, is raising the level of hours needed to qualify for a bonus, as levels of corporate work remain under pressure.

According to Ralph Baxter, chairman and chief executive at Orrick, the firm has four levels of productivity that associates must reach to gain extra compensation.

Baxter said that the number of hours needed to reach the lowest rung of the system had been increased, but the highest level of remuneration had been trimmed back.

In 2000, Orrick reworked its pay system for first-year associates, who saw their potential pay rise from $100,000 (£64,000) to $160,000 (£102,000), while seven-year associates were in line to earn as much as $270,000 (£172,000).

Baxter told The Lawyer: “We're in this together and we're going to have to make the economics of the firm justify the compensation, so we've made adjustments to the compensation levels.”

Baxter said it is possible for associates to earn more if they hit the increased numbers in billable hours, but admitted: “We don't want people hitting the highest number of hours, because that's working too hard.”

West Coast sources predict that Orrick will be just one of a number of firms that will alter their bonus schemes to compensate for the huge increases in pay that associates received in headier times.

One lawyer commented: “It's more than likely that US firms will raise the number of hours you need to qualify for a bonus, because there's not enough work around to make reaching the higher levels a possibility.”