There’s some not great compensation news on the horizon for attorneys at Nelson Mullins — specifically non-equity partners, of counsel, and associates. Beginning in 2023 the firm is changing how those attorneys’ compensation is calculated “in light of current economic conditions, including increasing concerns about a recession next year.” That… doesn’t sound good at all.
The firm’s plan is to have compensation include a fixed component as well as an “earn-up” component based on collections goals. So… associate compensation will now be based in part on something (collections) they have absolutely no control over? That sounds terrible.
From internal documents at the firm:
“For Non-Equity Partners, Of Counsel and Associates, in light of current economic conditions, including increasing concerns about a recession next year, we are implementing an “earn-up” component to base incomes next year. Over the past two years, we have increased compensation significantly based on competitive market expectations and, like the legal profession in general, we are now experiencing a slowdown in the demand for our services in certain practices. Accordingly, we are taking proactive measures to mitigate potential negative financial implications next year. The intent of the earn-up is also to encourage all of our attorneys to begin 2023 with a faster start towards achieving their collection goals and to bill and collect cash at a more accelerated pace given the recession predictions. Thus, the base incomes in 2023 will include two components – a fixed component and an earn-up component. The earn-up component may be earned and paid quarterly to those who meet their pro-rata collection goal each quarter. Details will be provided to you next week in a separate email prior to this being communicated to the rest of our attorneys.”
This system is similar to what the firm did during the height of COVID when 9 percent of an associate’s salary was held back pending collections.
As was true then, this kind of a system is demoralizing for associates. Associates have virtually no ability to influence collections, so all they can do is bill and cross their fingers that clients pay. As one tipster noted:
This will be an effective salary cut for most associates who have no control over collections and whether partners give discounts to clients.
All this is very concerning for folks at Nelson Mullins — particularly since there’s been no word from its peer firms of similar moves. For the record, last year the firm took in $680,826,000 in gross revenue making it 70th on the Am Law 100.
We reached out to the firm for comment, but have yet to hear back.
If your firm or organization is similarly changing up how salaries are calculated, please don’t hesitate to let us know. Our vast network of tipsters is part of what makes Above the Law thrive. You can email us or text us (646-820-8477).
Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter @Kathryn1 or Mastodon @Kathryn1@mastodon.social.