Mamas, don’t let your babies grow up to be cowboys
Don’t let ’em pick guitars or drive them old trucks,
Let’em be doctors and lawyers and such — Willie Nelson and Waylon Jennings
Great news moms: If you raised young lawyers, you should expect expensive presents from your daughters and sons this Christmas.
A dozen large corporate law firms operating in Texas have informed their associates that they will be receiving year-end bonuses ranging from $21,000 for first-year lawyers to $140,000 for associates in their eighth year, which will be up for partner next year. Combined with recent hikes in base salaries, the most senior associates this year will be paid more than $575,000.
Two Houston-based firms — Baker Botts and Ahmad, Zavitsanos & Mensing — are the most recent business-focused firms to announce year-end bonuses for the associates it employs in its seven U.S. offices.
“We are going to match the Cravath bonus scale,” AZA’s John Zavitsanos told The Texas Lawbook in an interview Tuesday. “We don’t charge the hourly rates that Cravath and these other firms charge their clients, but we are going after the same top of the market talent.”
New York-headquartered Milbank kicked off the associate bonus season more than a month ago. The Wall Street firm Cravath announced last week that it would match the Milbank bonuses and other firms have been falling in line.
On Monday, Dallas-founded Akin Gump Strauss Hauer & Feld and Houston-based Vinson & Elkins told its younger lawyers that they would match the bonuses. Several large corporate law firms with offices in Texas — Katten, O’Melveny & Myers, Paul Hastings, Sidley Austin, Skadden Arps, McDermott and Weil Gotshal, to name a few — have also publicly confirmed they are joining the seasonal bonus wave.
The pressure even flows down to smaller operations. Fort Worth energy litigation boutique Vartabedian Hester & Haynes announced two weeks ago that it also would match the Milbank bonuses for its associates.
Baker Botts managing partner Danny David, in a memo to its hundreds of associates, said the firm “will provide additional enhanced bonuses for exceptional contributions where applicable.”
“I am continually inspired by the skills, determination and integrity of our associates and special counsel,” David wrote in the two-page memo. “You are core to the success of our law firm. And while money is certainly not the only way we demonstrate our commitment to retaining the best talent, today’s announcement is an investment in the future of Baker Botts.”
In an email to the firm’s associates, V&E chair Keith Fullenweider wrote that he “expects to pay supplemental bonuses to associates who had an exemplary year.”
“We remain committed to paying competitive compensation to our attorneys and continue to be excited about future opportunities for Vinson & Elkins and for you,” Fullenweider wrote.
According to the Texas Lawbook 50, which tracks headcount and revenues of law firms operating in Texas, the dozen law firms who have confirmed their associate bonuses employ more than 1,600 associates in Texas. Legal analysts say that the bonuses paid to just those 1,600 associates will cost their respective law firms an estimated $80 million.
Scott Barnard, partner in charge of Akin’s Dallas office, said the generous bonuses are a sign of a strong legal market and the competition for talent in Texas.
“We had a record financial year in 2023 and we are seeing another strong year,” he said.
Barnard pointed out that Akin has strengthened its energy transitions practice due to heavy client demand and the firm’s leading regulatory and public policy practices are hotter than ever because clients are needing guidance with the upcoming change in presidential administrations.
First-year associates, who have an annual base salary of $225,000, will receive a year-end bonus of $15,000 and a special bonus of $6,000, which will be prorated for their time at the firm and based on the lawyers meeting specific performance measurements.
Associates in the hiring class of 2020 can expect a year-end bonus of $75,000 and an additional special bonus of $20,000 to go on top of their $365,000 annual compensation.
Eighth-year associates — those who graduated from law school in 2017 and are up for partnership next year — are receiving a $115,000 year-end bonus and a $25,000 special bonus. When combined with the eighth annual salaries standing at $435,000, total compensation for senior associates will top $575,000.