Legal Commentary

Associate Bonuses and Value Billing

By Patrick J. Lamb

It's that time of year for the associate set.   The payoff for surviving a year of crazy partners and even crazier hours.  We're past Thanksgiving, when every associate who still has a job gave thanks for still having a job.  Now we are into payoff season.  Bonus time.  And this annual seasonal frenzy has yielded some stellar posts on bonuses and whether clients should care about them.    The story started with Above The Law, a post that has generated nearly 1500 comments.  Carolyn Elefant followed up in Legal Blog Watch, asking "Should Firms Cut Bonuses In Response To Clients?"  My friend Dan Hull then offered an inspired post in  What About Clients, aptly titled "In any year, just firms--not sophisticated clients--should care about associate bonuses."  The discussion was brought to a head in an f/k/a post entitled "smart clients care about bonuses and marketplace "value"."  All are worth a careful read.  The discussion veers toward a discussion of value billing, which is interesting but really off target.

For what its worth, I find myself falling into the Dan Hull camp.  For this reason:  clients need to care about their own cost structure.  That means, how much they pay for firms to perform legal work that needs to be performed.  Let the firms worry about their own cost structure.  If a firm pays huge bonuses and, as a result, charges too much (under whatever billing structure), wish them well and find a replacement.  It is asking too much for clients to manage their own law departments, advise the business they represent, understand the industry in which their company competes and micromanage each of the law firms that does work for their company.  Set the bottom line and let the firms worry about how best to get there.

Full post as published by In Search of Perfect Client Service on December 01, 2008 (boomark / email).