CC overhauls bonus system in move away from billable hours focus

Clifford Chance (CC) is to abandon its current bonus system of using billable hours targets as the key benchmark for associate bonuses.

CC previously determined associate bonus payouts based on performance, but only if individuals had first reached a target number of hours billed.

The magic circle firm will continue to take billable hours into account when determining bonuses, but will now also give more importance to other criteria, independent of how many hours associates have billed.

Factors under consideration will now include overall achievement, effort, business and technical skills, client satisfaction, teamwork and community work.

The firm has also reworked its bonus levels, with the previous maximum bonus payment of 40% of base salary now only available to senior associates. Previously, any associates with at least four years’ post-qualification experience (PQE) were eligible for the top payout.

However, CC said the change would have little effect, as most 4PQE lawyers will have already been promoted to the senior associate rank, and if not, would not normally have been eligible for a 40% bonus payment based on their level of achievement.

No changes have been made to the maximum payout for lower-level associates, with associates with between six months and one year PQE still eligible for a maximum bonus of 20% of base salary and those with more than one and a half year’s experience eligible for a 30% payout.

A CC spokesperson said: “Bonus allocations will be discretionary. There will be no fixed correlation between hours and bonuses. Most importantly, there will be no hours target.”

The new bonus scheme will come into effect for the 2010-11 financial year.

The news comes after CC last week announced that it is to unfreeze progression through its pay bands and increase the levels of the bands, which will now range from £61,500 for newly-qualified lawyers through to £88,250 at three-and-a-half years’ PQE.

Clifford Chance on the Legal Week Wiki