Companies Should Avoid The BigLaw Bonus Structure

Law360 (March 22, 2018, 11:07 AM EDT) -- Following the passage of the Trump tax plan last year, companies have been touting bonuses they’ve handed down to rank-and-file employees. This highlights a growing trend: Employers give bonuses instead of pay raises in the belief that variable, short-term rewards are less risky to the business than permanent increases in labor costs. In theory, this approach promotes stability. In practice, law firms have been using this strategy for years with mixed results. Other industries should understand the dangers.

Law firms hand out six-figure bonuses to associates and seven-figure draws to partners at the end or beginning of the year as a...

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