A commonplace occ-urrence in the City for many years, it has been a long time coming to law firms. Now bonuses have seriously entered our operation, if not yet our culture. Where will it all end?
Bonuses for employees in big City institutions frequently see salary levels as only the start in terms of measuring remuneration and contribution to the business. Those around during the recessionary years will remember the disbelief and culture shock among friends and contacts in City finance houses over zero or token bonuses.
Legal bonuses are probably not yet in that category. Headline sala-ries are likely to remain the way to attract the highly sought-after and not over-large pool of assistants – hence the current high profile, but probably not over-hyped, war waged annually by law firms for a high ranking in terms of assistant salary levels.
Nonetheless, bonuses are an integral part of the recruitment/retention conundrum.
It is relatively recently that the rising tide of calls from talented assistants for a share in the greater profits of their firm has been addressed by an increasing number of practices. These assistants work at full capacity under significant pressure, undertaking complicated transactional work at profit margins that underpin the partners’ bread, butter and jam.
It does not take much to see how, in boom times, assistants will be tempted to cross the threshold and reap the greater financial rew-ards of their counterparts in City financial institutions, unless law firms act to redress the imbalance.
The recent, probably only minor, seepage to dotcom companies from the traditional City institutions is just one indication of how market forces can so quickly impact on the jobs market.
The Lawyer columns record many firms taking the first steps down the bonus track. But how can these be best structured to retain the traditional goal of the overall good?
Formulae aimed at giving assistants certainty focus on individual performance – for example a percentage dependent on achieving or exceeding targets for hours worked or fees billed – and/or on firm performance – for example a percentage share in any increase in firm turnover above a given threshold. The proportion geared towards overall results are often included at the insistence of those who say that “eat what you kill” can only end in tears.
These are early days in trying to get it right. Working for the right partner whose practice is on a particular roll will facilitate bonus accretion but may not be the best measure of individual performance or contribution.
Pedestrian partner performance does not equal pedestrian assistant. And good partner performance is likewise.
Bonuses are here to stay and the successful firm will be keeping an open mind as to how to make them work.
Martin Winter is a senior partner at Biddle.