Are In House Counsel Bonuses Designed for Long Haul?

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By Tanya Roth, Esq. on December 02, 2010 5:46 AM

As noted in a post on FindLaw's Greedy Associates, the season of rejoicing that is bonus season has arrived. Will in-house counsel have the same reasons for gladness as their outside colleagues, or perhaps even more?

Some say the in-house bonus system leads to more long term benefit, while firms, especially BigLaw, are set up for an entirely different purpose.

The bonus structure is different in BigLaw firms than in-house say the folks at Law Shucks. According their premise, the BigLaw bonus system is based on the idea that associates should be kept minimally happy until their third or fourth year at which time the investment in them is recouped and they can be replaced. 

Some evidence for this is found, according to Law Shucks, in the fact that few BigLaw bonuses are tied to performance.

For in-house folks, however, the bonus and compensation game is ostensibly aimed at long-term retention. In-house bonuses are often tied to not just individual performance, but to company performance. Law Shucks further notes that the real difference between an in-house system and BigLaw is the presence of an equity payment for more senior lawyers. Assuming the stock market is not flailing, the return on equity is what Law Shucks calls the "real opportunity at wealth."

However, the freedom that comes from the BigLaw structure works both ways. The bonus system designed to kick associates out of the nest also allows a "no-strings-attached" ability to fly off to a better job any time after the bonus is paid out. The more long-term investment made in in-house counsel also means sticking around to see it mature. The system that works best for any individual may not only be just a matter of how much, but when and what you want to do after bonus season ends.

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