Associates' bonuses up at top Hub law firms

Associates at some top Boston law firms are having a very happy holiday season.

Year-end bonuses awarded by Ropes & Gray, Seyfarth Shaw, and Nutter McClennen & Fish are sharply higher than 2003 bonuses because of a surge in business from clients amid a strong economy, a hot commercial real estate market, and investigations into the mutual-fund industry. Higher bonuses also indicate competition is intensifying for talented young lawyers to meet clients' growing demands.

One of Boston's largest, most prestigious firms, Ropes & Gray, is paying 2003 law school graduates now completing their first full year at the firm a $25,000 bonus, said partner John Donovan, a member of the management committee. That more than doubles the $10,000 bonus paid to 2002 graduates during their first full year with the firm. Bonuses are paid in addition to starting salaries of $125,000 for each entering class.

Salaries for 2002 graduates employed by Ropes & Gray rose to $135,000 this year, and bonuses rose to $30,000. Bonuses are expected to be deposited in bank accounts today, he said.

Ropes & Gray represents some of the nation's largest mutual fund companies at a time the industry is under regulatory scrutiny or change. Clients include Putnam Investments, Scudder Investments, MFS Investment Management, and PIMCO Advisors. Ropes & Gray also successfully represented Lloyd's of London in an April jury verdict that slashed member-underwriters' liability for insuring the World Trade Center towers, which collapsed in the 2001 terrorist attack.

"We deliver the best service for clients when we attract and retain the highest-quality attorneys, and compensation is a significant element in recruiting and retaining," Donovan said.

"Because the firms are faring better this year, they're sharing the wealth," said Mark Weber, assistant dean for career service at Harvard Law School.

Boston law firms this year had enough work to ensure associates rack up the minimum billable hours -- between 2,000 and 2,250 a year -- typically required to qualify for a bonus. Associates must work anywhere from seven to 10 years before becoming partner, elevating them to a level at which they may share in their firm's annual profits. As associates progress, however, they take on more responsibility and total compensation can be substantial in later years. For example, the large Boston firm Wilmer Cutler Pickering Hale and Dorr listed 2004 salaries on its website reaching $191,000 for fifth-year associates.

The big money does not come until -- and if -- they make partner. There are two types of partners: income and equity partners. Income partners continue to receive a salary, while equity partners have an ownership stake and receive a percentage of profits. Total 2003 compensation for all partners at Boston firms ranged from $910,000, on average, at Ropes & Gray to $470,000 at Mintz Levin Cohn Ferris Glovsky and Popeo, according to American Lawyer magazine's 2004 ranking of the top US law firms.

Partners' profit distributions vary each year, depending on total firm profits and on how much business their individual practice areas produce. They receive draws from expected profits throughout the year, and final profits distributions are usually around the same time associates' bonuses are tallied -- after the final, year-end revenue figures are in.

In a record year for commercial real estate transactions, the top bonus awarded senior associates in the Boston office of Chicago-based Seyfarth Shaw, "probably could be $60,000 to $70,000," said managing partner Lisa Damon. That would compare with 2003 bonuses of $20,000 for new hires to as much as $50,000 for a senior associate with prior experience. Associates' bonuses will likely be distributed in February, and partners are expected to receive profit distributions in April, Damon said. "It's a great year," she said.

In November, Nutter McClennen & Fish's 100 associates received bonuses ranging ranged from $7,500 in their first year to $66,000 for some senior associates, said Michael Mooney, managing partner. That range is 15 percent higher than 2003 bonuses, he said.

Nutter's double-digit growth in revenue and in profits paid to partners last year and again this year resulted from a diverse group of practices, including intellectual property litigation and patent applications for biotech and pharmaceutical companies in the Boston area.

"The Greater Boston area is really strong in that," Mooney said, "and there is a lot of business."

Kimberly Blanton can be reached at blanton@globe.com.