According to a memo circulated internally on Wednesday (20 September), the New York law firm will set aside a pool for the new bonuses, which are for associates at the fifth-year level and up as well as counsels and which will be paid in addition to base salaries and normal year-end bonuses.
The memo stated that the 2007 pool was currently anticipated to be around $2.5m (£1.24m) but that the final amount would be determined in February 2008 based on factors including the firm's financial results and its overall activity level.
Though it retained discretion, the firm said it expected most associates at the same level to receive the same bonus.
One Sullivan partner said the supplemental bonuses would probably range from around $15,000 (£7,460) for fifth-years to around $30,000 (£14,910) for eighth-years.
With the supplemental bonus, the most senior associates at Sullivan & Cromwell can expect to earn total compensation of around $400,000 (£198,850) based on the current top base salary of $310,000 (£154,110) and last year's $60,000 (£29,830) year-end bonus.
The partner said the new bonus plan had been one of the ideas put forward by a group of partners and associates tasked with trying to "change the architecture" of associate compensation as well as addressing quality-of-life issues.
With a plan targeting senior associates, the partner said the firm hoped to hold on to more of its most experienced associates, who he said made an inordinate contribution to the firm. He said the firm hoped to keep the new bonus explicitly tied to firm financial results.
The current year-end bonus began life as a "boom year bonus" but has since become an entrenched part of associate pay packages.
The New York Law Journal is a US sister title of Legal Week.
Talkback: Does this 'change the architecture' of associate pay? Click here to have your say.