The highest-grossing law firm, Kirkland & Ellis LLP, brought in $4.8 billion in revenue last year, while the runner up, Latham & Watkins LLP, brought in $4.3 billion. Across the industry, the average equity partner—a senior lawyer who shares in the firm’s profits—took home $2.23 million, an increase of 13% from the prior year. Top performing associates at big U.S. law firms can earn potential payouts in excess of $500,000, based on seniority.

The ripple effects are unusually being felt beyond just New York City and Silicon Valley—smaller firms and international firms now find themselves in a battle to keep pace with Big Law’s richest to keep their younger talent. Remote work options have complicated local salaries.

“The bonuses are more impacting the industry beyond the walls of what it typically has,” Eberhard said. “This has broken that barrier.”

Big Law firms are paying in top of the market in regions where it would have previously been completely unheard of, like Atlanta, Milwaukee, and Seattle, she said.

International Spread
“It has forced the hands of a lot of smaller markets to increase their compensation because in order to compete with talent, they have to compete with the big firms’ compensation because the firms are so much more willing to have people sit in other markets,” Eberhard said.

The bonus bonanza has also made its way to international markets: U.S.-based firms including Milbank LP, Paul Hastings LLP and others extended bonuses to their London associates. Some of the elite U.K.-based firms in the so-called “Magic Circle” have followed suit—handing out one-time payments amounting to 5% of salary.

A newly qualified lawyer at one of London’s top firms can earn as much as 100,000 pounds ($142,000) a year. That mark is still well below what some U.S. firms pay in London. Houston-based Vinson & Elkins LLP, for example, offers their junior lawyers in London 147,500 pounds a year.

Canada’s top firms, known colloquially as the “Seven Sisters,” as well as other national and international firms have instituted a pair of bonuses for their associates, each equaling 10% of their base salary as well as signing bonuses, said Dal Bhathal, legal recruiter and managing partner of the Canada-based Counsel Network.

“Associates are very busy, and these bonuses help compensate them for the additional work that they’re doing coupled with trying to do it in a pandemic,” she said.

Many top U.S. law firms are also handing out “exorbitant” signing bonuses, ranging from $20,000 up to $100,000 for corporate practice attorneys, Eberhard said. Business Insider reported that mergers and acquisitions associates at Kirkland & Ellis are getting signing bonuses as high as $250,000.

Retention Bonuses
“Firms are being much more willing to pay what they need to pay in order to get really quality associates in the door,” Eberhard said.

Once they have the lawyers, some firms have turned to retention bonuses to entice associates to stay—splitting payments so that workers get one in the spring and another in the fall, or even in 2022. “It’s just about keeping associates at the firm,” said Joshua Holt, a former Goodwin Procter associate and founder of Biglaw Investor. “I think it has a huge impact on retention,” Holt said.