Did Your Firm Give Associate Bonuses Tied to Billing Targets? You May Need to Start 2021 With Damage Control

January 11, 2021

Considering the dire predictions of legal industry watchers back in the spring of 2020, the fact that law firms recovered their positions, and in some cases saw massive profits, is cause for celebration. Associates who fueled revenue by meeting and exceeding their billing targets, in the midst of a global pandemic, social revolution and unprecedented uncertainty in the federal government, were rightly rewarded with bonuses. Nobody could argue with that. Right?

Well . . . while it’s certainly understandable that firm leadership wanted to reward the foot soldiers for their tremendous efforts, the optics of some associates receiving bonuses at this particular moment may create two PR problems for firms, one external and one internal (with an external twist).

Problem #1: Billing bonuses may irk clients. Lavish bonuses for outside counsel may raise the eyebrows of chief legal officers and GCs on the corporate side, who saw 2020 revenue drop and in many cases had their own pay cut. News that the outside lawyer serving their legal department celebrated the new year cashing a fat check could create more than a little tension. On top of that, GCs are under pressure to trim expenses. How will they receive the news that some of the law firm bonuses are tied to exceeding billing targets? They couldn’t be blamed for wondering if the bonuses incentivized overbilling while their own companies faced big financial losses.

Problem #2: Who received bonuses — and who didn’t? Take a look at the demographics of the associates who were rewarded for billing more hours than ever before. Are they representative of the makeup of your associate class overall? How many attorneys of color are on that list? How many women with children at home? One way to conceive of these bonuses is that the firm rewarded the associates who worked the hardest. Another take is that the firm further punished attorneys from groups that have already paid the biggest price in the pandemic. Four times as many women as men dropped out of the labor force in September alone, and many more cut their hours and stepped back from key assignments due to lack of childcare and the need to oversee remote schooling. This amounts to $64.5 billion per year in lost wages and economic activity. In June, 31% of Black people in America knew someone who had died of Covid-19, a figure that is likely higher than that today. We are just now beginning to understand the long-term impact of the virus on people who survive it, some of whom may need specialized care. The pandemic has made it very clear who has the privilege to work overtime and who is too overwhelmed with survival and family responsibilities to continue the career they worked so very hard to build. Not only does a disparity in bonuses present an internal communications problem, but we all know clients are more focused than ever on diversity and inclusion on their outside legal teams. What might they say about which of your associates received bonuses?

What marketers can do about these problems depends on the specific culture at their firms, the clients they serve and whether their leaders appreciate the sensitivity of the issues. But just because you didn’t make the decision to award the bonuses doesn’t mean you can’t use the tools at your disposal to counter unpleasant optics and bring the firm’s messaging back into line with its values.

Facing the threat of a tricky backlash? Call us and we can help you strategize.