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The concept of “eat what you kill” common to many financial groups has been mostly unknown among lawyers, and especially those on the lower rungs of the ladder. In a change of tone, major US law firms are now forking over year-end holiday bonuses as high as $315,000 to associate lawyers, figures not seen before.
Grunts typically get paid mostly in fixed salaries that vary little across the industry: typically from $225,000 to $420,000 annually based on year of service. But that system had already started to creak. For the top litigators and dealmakers, big firms have been paying as much as $25mn in the belief that future winners will be those with an all-star line-up of lawyers.
Now the talent war has reached the junior ranks, even if the numbers on offer have fewer zeroes. Not only are large bonuses being doled out, but the so-called lockstep model, where pay varies little between peers and firms, is under threat. Pallas Partners, a litigation boutique, told the FT it was paying larger bonuses for associates — meaning those who aren’t yet partners — but was also giving special rewards to the highest performers.
Law firms for decades had turned their noses up at the money-grubbing culture that defined their Wall Street clients, believing that theirs was a profession and not a career. To be sure, the firms that are today paying the biggest associate bonuses seem to be upstarts such as Pallas, which have less name recognition than old-school New York firms like Cravath, Swaine & Moore, which set the associate pay scale. As such, the newcomers must work harder to attract top talent.
There is plenty to keep bonuses aloft, following the second-best year for global mergers and acquisitions on record. A survey conducted by Hildebrandt Consulting/Citigroup showed average revenue up more than a tenth in 2025 among nearly 200 law firm respondents. Future disruption from AI notwithstanding, junior staff are valuable since they do much of the heavy lifting on deals and pre-trial preparation.
By venturing into the kind of pay associated with hedge funds or investment banks, law firms risk taking on the same problems. Bonuses are, by definition, elastic, so elation can turn into disappointment in a bad year.
But it will be hard to go back to cozy former ways. Already, some law firms are turning to mergers to better compete. The venerable Cadwalader recently merged with Hogan Lovells after losing dozens of partners last year. A year earlier, New York’s Shearman & Sterling joined forces with London’s Allen & Overy. Creative destruction has come for big law; it’s no surprise if a wave of creative remuneration is coming too.
sujeet.indap@ft.com