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Speaker 1: This is Bloomberg Law with June Brussel from Bloomberg Radio.

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Speaker 1: The ladder you've got from Bendini Lambert Lock was the

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Speaker 1: only one set out we want you do you have

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Speaker 1: boom an offer in mind. It includes a bonus schedule

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Speaker 1: and we at least you in your Mercedes plus law

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Speaker 1: interest mortgage as at home with Grassomer Cartilage. Did you

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Speaker 1: ever think I make a six sound? Absolutely? But the

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Speaker 1: six figures salary and perks Tom Cruise got to join

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Speaker 1: the firm are less than what many young lawyers are

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Speaker 1: getting today, and exorbitant signing bonuses that can go as

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Speaker 1: high as two hundred fifty thousand dollars and bonuses for

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Speaker 1: senior associates of as much as one forty thousand. And

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Speaker 1: there are also the perks, luxury gifts, additional vacation time

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Speaker 1: and extended work from home arrangements, all part of the

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Speaker 1: new dynamic in the law firm war For associates who

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Speaker 1: often work a grueling one hours a week, it is

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Speaker 1: definitely bananas. It's hard to call it anything else. I mean,

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Speaker 1: I've been doing this now for eight years and I've

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Speaker 1: never seen the market as crazy as that it is

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Speaker 1: right now, especially in terms of compensation and bonuses and

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Speaker 1: signing bonuses and kind of everything firms can do to

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Speaker 1: get in routine talent, and some are ever hard. Managing

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Speaker 1: director at legal recruiter Major Lindsay in Africa says it's

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Speaker 1: corporate associates who are most in demand transactional work, specifically

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Speaker 1: in the corporate space. So talking about mergers and acquisitions,

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Speaker 1: capital market, some emerging companies work, that part of the

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Speaker 1: legal practice has just boomed over the last probably six

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Speaker 1: to eight months, and because of that, the demand for

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Speaker 1: corporate associates is way beyond what the supply it There's

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Speaker 1: just not enough corporate associates to fill the number of

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Speaker 1: roles that are out there, and so firms are turning away,

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Speaker 1: clients are turning away work because they don't have enough

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Speaker 1: people to do it. And so that I think is

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Speaker 1: where we're seeing so much of these signing bonuses come

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Speaker 1: into play, is that they're wanting to pay that because

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Speaker 1: they need to get attorneys to be doing some of

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Speaker 1: that work that they are turning away. Joining me is

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Speaker 1: Megan Tribe, Bloomberg Law correspondent. So Megan tell us about

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Speaker 1: this hot market for associates. So it's a far cry

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Speaker 1: from where I think firms thought they would find themselves

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Speaker 1: in March of last year, as the pandemic shuttered offices

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Speaker 1: and sent folks home. For most, big law firms really

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Speaker 1: had very, very successful and they were called upon to

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Speaker 1: do a whole bunch of work, from restructuring to m

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Speaker 1: and a particularly couple of markets. Once the markets picked

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Speaker 1: up towards the end of last year, and so associates

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Speaker 1: along with partners have been exceptionally busy. So as a

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Speaker 1: way to both reward associates for their work, but also

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Speaker 1: in order to retain and attract new associates, firms have

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Speaker 1: turned to a series of bonuses to incentivize those folks

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Speaker 1: to stay, but also to recruit amid a incredibly frenzied

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Speaker 1: lateral market for associates. So last year, in the fall,

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Speaker 1: firms issue special bonuses for the first time in addition

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Speaker 1: to year end bonuses, and earlier this spring, big law

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Speaker 1: firms have issued a pair of bonuses, a spring and

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Speaker 1: a fall bonus ranging from fifteen thousand dollars for first

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Speaker 1: year associates all the way up to a hundred thousand

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Speaker 1: dollars for senior associates that combined with a potentially year

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Speaker 1: in bonus could see some senior associates getting an excess

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Speaker 1: of a hundred fifty thousand dollars this year. So it's

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Speaker 1: more to try to keep them rather than to keep

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Speaker 1: them happy. It's a little bit of both. Very big

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Speaker 1: part of it is to keep them. It really goes

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Speaker 1: back to the act that these associates are working sometimes

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Speaker 1: thirteen fourteen hours a day and this is a way

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Speaker 1: to get them to stay as a firm. But the

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Speaker 1: other half of this is in order to keep them happy.

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Speaker 1: Some firms have started experimenting with things beyond just purely cash.

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Speaker 1: So some firms like Orick have offered unplugged time, so

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Speaker 1: forty hours of vacation time a week in order to

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Speaker 1: give associates a chance to recharge. So they're really kind

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Speaker 1: of sticking out as a box in order to keep

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Speaker 1: associates happy. But it does always kind of begs the question,

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Speaker 1: you know, is the money enough to keep you happy?

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Speaker 1: You have the unplugged time, the one week thank you

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Speaker 1: and luxury gifts, what's that? So earlier this year, Davis

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Speaker 1: Polk in Wardwell allowed some of its associates to pick

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Speaker 1: from a series of gifts ranging from I Believe a

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Speaker 1: wine experience to entertainment centers, to travel accessories and a

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Speaker 1: shopping spree to thank their associates. Um Davis Polkis should

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Speaker 1: be noted was one of the firms that moved on

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Speaker 1: special bonuses last year and set the new bar for

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Speaker 1: bonuses this year as well. The bar usually law firms,

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Speaker 1: the big law firms pay the same for first year associates.

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Speaker 1: It's sort of across the board. Does that remain the same. Yeah,

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Speaker 1: so salaries haven't moved. So salaries have been static in

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Speaker 1: big losses about two thousands eighteen and they all move

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Speaker 1: in locksteps. So that means essentially you're paid based salary

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Speaker 1: based on your class year, So a first year associate

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Speaker 1: can expect to get a hundred and nineties thousand based

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Speaker 1: salaries before the year. And then bonuses also operate in

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Speaker 1: the same structure, so they're structured by class year. The

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Speaker 1: salaries are in lockstep. Are the bonuses and lockstep or

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Speaker 1: is that difference? Yes? Essentially, yes, they all operate in lockstep.

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Speaker 1: They aren't competing with each other on a bonus amount.

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Speaker 1: But what we are seeing is law firms turning to

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Speaker 1: signing bonuses for example, to offset that signing bonuses and

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Speaker 1: excess of you know, six figures in some cases for

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Speaker 1: really sought after attorneys. And that's in addition to the

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Speaker 1: spring fall and potential year end bonus. New York City

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Speaker 1: usually has the highest associate salaries. Is that true of

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Speaker 1: these bonuses. That's the really interesting thing about this front

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Speaker 1: of bonuses. When firms announced bonuses or even salary increases,

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Speaker 1: they're pretty much typically isolated to major markets like New

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Speaker 1: York or San Francisco or Chicago. But this time what

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Speaker 1: we're seeing is that they're permitting out to places you

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Speaker 1: wouldn't necessarily expect, like Minneapolis, for example. A big law

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Speaker 1: firm is handing out bonuses, market bonuses in Minneapolis or Seattle,

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Speaker 1: even down in Atlanta, for example, which is really unique.

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Speaker 1: And part of that goes back to just the competition

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Speaker 1: for associates, but also of firms now because of remote working,

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Speaker 1: are able to hire associates to sit in different markets

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Speaker 1: than they typically would. Is it just the big law firms,

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Speaker 1: the top one hundred that are doing this, Yeah, so

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Speaker 1: this is fairly isolated to the top one hundred. I

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Speaker 1: believe there's over sixty firms have decided to match this scale.

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Speaker 1: But what we are seeing is down market pressure because

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Speaker 1: of the amount of money that is being thrown at associates.

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Speaker 1: The demand for particularly corporate associates, is so high that

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Speaker 1: law firms are willing to shell out top dollars for

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Speaker 1: example of Capital markets associate perhaps residing in Denver. And

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Speaker 1: what that does is that affect local and regional law

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Speaker 1: firms because they're pulling from their talent pool. We haven't

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Speaker 1: seen any compensation changes in mass at local firms or

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Speaker 1: regional firms, but it's definitely something law firm leaders are

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Speaker 1: thinking about in those markets for sure. But you talked

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Speaker 1: to one associate unnamed associate, who said I was having

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Speaker 1: such bad day and nights where I felt like I

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Speaker 1: wasn't being treated as a human. We all know what

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Speaker 1: we signed up for, but you can't work seven days

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Speaker 1: a week NonStop. So even the money isn't enough to

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Speaker 1: keep some associates. Yes, some associates are leaving. I mean

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Speaker 1: the tricky thing with big laws, attrition is built into

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Speaker 1: the model. So at firms they bring first years in

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Speaker 1: knowing that a portion of them, a percentage of them

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Speaker 1: will leave year after year, typically around third fourth year

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Speaker 1: after their loans they are paid off, so go and

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Speaker 1: do something else. A lot of them will move in house.

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Speaker 1: There's a pleas or of choices for them. But the

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Speaker 1: amount of work that associates, that particularly corporate associates, are

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Speaker 1: being called upon to do, has led a lot of

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Speaker 1: them to question their future a lot sooner than perhaps

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Speaker 1: they would have. Just the mountain of work is forcing

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Speaker 1: them to ask whether or not this is sustainable, whether

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Speaker 1: or not they can keep going like this, whether the

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Speaker 1: money is worth it in the end, And some are

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Speaker 1: saying no, it's not. That is some thing that big

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Speaker 1: law is going to have to really confront. Is money

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Speaker 1: enough to keep these folks happy and in the profession,

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Speaker 1: especially after they've spent so much money training and recruiting them.

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Speaker 1: Thanks Megan, that's Megan Tribe of Bloomberg Law. Johnson and

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Speaker 1: Johnson will have to pay two point one billion dollars

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Speaker 1: to twenty women after the Supreme Court refused to consider

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Speaker 1: its objections to a St. Louis jury's finding that its

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Speaker 1: iconic baby patter was contaminated with asbestos and helped cause

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Speaker 1: ovarian cancer. Joining me is Professor Richard Austiness of the

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Speaker 1: University of Kentucky Law School. This is a staggering amount,

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Speaker 1: especially the punitive damages. But why do you think the

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Speaker 1: justices didn't take this case? Well, who knows. Possibly they're

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Speaker 1: just tired of hearing cases involving either personal jurisdiction or

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Speaker 1: more likely punitive damages. They've issued a series of opinions

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Speaker 1: over the years on the due process aspects of excessive

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Speaker 1: punitive damage awards, and they may have felt that it

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Speaker 1: was time to move on to something else. They're pretty

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Speaker 1: picky about taking cases on cert for discretionary review. It's

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Speaker 1: a very small percentage of the petitions that they get

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Speaker 1: are actually acted upon, So this is one they didn't

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Speaker 1: make the cut. So I want to talk a little

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Speaker 1: bit about some of the arguments that J and J

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Speaker 1: put forth in order to try to get the court

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Speaker 1: to take the case. So they said the trial was

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Speaker 1: unfair and it was two dozen plaintiffs from twelve different states.

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Speaker 1: Does that sound like a good argument, Well, I think

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Speaker 1: it does. Now, I'm not an expert in civil procedures,

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Speaker 1: so as far as the technical requirements for personal jurisdiction

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Speaker 1: are concerned, it struck me as being a bit of

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Speaker 1: a stretch. But I'm told by my civil procedure colleagues

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Speaker 1: that especially state courts are are pretty generous when it

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Speaker 1: comes to allowing non residents to participate in cases of

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Speaker 1: this sort. But in terms of just gut reaction, the

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Speaker 1: fairness issue, uh yeah, it seems that it's hard enough

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Speaker 1: to defend a case like this, and when you have

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Speaker 1: twenty two planets lawyers coming after you, that's uh makes

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Speaker 1: it all the more difficult. As the defendants pointed out, well,

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Speaker 1: what boggled my mind is the judge needed five hours

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Speaker 1: to instruct the jury. Yes, that's how you under what

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Speaker 1: the jury instruction sounded like, it seems to me. Of course,

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Speaker 1: it took the appellate court a hundred pages to write

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Speaker 1: an opinion, so it was a complicated case obviously, But yeah,

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Speaker 1: I don't think the average jury is likely to sit

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Speaker 1: still for five hours and and absorb instructions of that sort.

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Speaker 1: Another thing that Johnson and Johnson said is that the

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Speaker 1: jury awarded each plaint if the same thing. So that

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Speaker 1: Johnson and Johnson said, well, they didn't consider the harm

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Speaker 1: to each individ dual plaintiff. Is that a problem? Well,

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Speaker 1: it certainly doesn't look look very good when you're talking

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Speaker 1: about personal injuries. You know they're going to vary. You know,

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Speaker 1: some people might have had to undergo chemotherapy, some some

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Speaker 1: might have died, but it's unlikely that they were all

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Speaker 1: exactly the same. So at least in theory, the compensatory

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Speaker 1: awards should have reflected those differences. The major part of

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Speaker 1: this was the punitive damages, and the appellate Court did

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Speaker 1: knock down the punitive damages. Has the Supreme Court said

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Speaker 1: what punitive damages should be in comparison to the compensatory

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Speaker 1: they have? Of course, they don't lay down an iron

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Speaker 1: clad rule, but there is language in some of the

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Speaker 1: Supreme Court cases saying it shouldn't be more than ten times,

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Speaker 1: and more reasonable amount would be maybe four times the

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Speaker 1: compensatory awards. At least when the compensatory awards are substantial,

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Speaker 1: it's opposed to nominal. And I didn't do the math,

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Speaker 1: but it appears to me, just eyeballing it that the

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Speaker 1: compunitive awards were considerably larger than that. The attorney for

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Speaker 1: J and J, former Acting Solicitor General Neil Katyal, argued

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Speaker 1: in his brief that they put dozens of plaintiffs on

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Speaker 1: the stand and discuss their experiences with cancer, and the

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Speaker 1: jury awards billions of dollars in punitive damages, supposedly to

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Speaker 1: punish petitioners. Lawyers can then follow the script and file

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Speaker 1: the same claims with new plaintiffs and seek new outsized

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Speaker 1: awards over and over again. And J and J is

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Speaker 1: facing more than twenty six thousand similar cases. So what

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Speaker 1: does that mean for those future cases. Well, one of

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Speaker 1: the factors that the Court Um the Supreme Court mentioned

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Speaker 1: was that you don't want to award multiple punitive awards

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Speaker 1: when the chat to take account of what's already been awarded,

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Speaker 1: so it doesn't get totally out of hand, which is

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Speaker 1: I think what Jay and J is concerned with. So

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Speaker 1: it may be that subsequent awards, my punitive awards might

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Speaker 1: be less, but I wouldn't take that to the bank Um.

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Speaker 1: If the court is sending a signal that it's not

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Speaker 1: going to intervene in these cases, uh, then I would

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Speaker 1: say Jay and J is in a world of hurt,

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Speaker 1: especially if most of the cases are being tried in

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Speaker 1: New Jersey. I think that's a fairly plaintiff oriented state,

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Speaker 1: and the scenario is pretty bad for in terms of

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Speaker 1: what Jay and Jay did. At least it really sounds bad,

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Speaker 1: so they could be in for a lot of very

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Speaker 1: substantial punitive awards in the future. It certainly will encourage

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Speaker 1: more of suits to be brought to what's an defendant

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Speaker 1: strategy in cases like this where they're facing allegations of

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Speaker 1: mass towards, well, it's uh, it's an uphill battle for

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Speaker 1: the defendant. I think the strategy, which didn't work in

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Speaker 1: this particular case, but is typical. The typical approach that

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Speaker 1: defendants take is to try to get the case dismissed

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Speaker 1: before it gets anywhere near a jury. And of course

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Speaker 1: they made motions at the appropriate times to dismiss the case,

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Speaker 1: and um that was rejected by the trial court. But

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Speaker 1: I think the causation argument is a pretty good argument.

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Speaker 1: Of the amounts of asbestos in the talk was very small,

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Speaker 1: you know, the experts disagreed to some extent about whether

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Speaker 1: these concentrations of asbestos could cause ovarian cancer or not.

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Speaker 1: In other words, Jay and Jay tried to successfully in

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Speaker 1: this case but focus on the causation the lack of

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Speaker 1: scientific proof as opposed to the nature of their marketing tactics,

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Speaker 1: which were pretty bad. But one of the things that happens,

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Speaker 1: of course, is that once they are a series of

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Speaker 1: third explore the plaintiff, and especially when they're high profile.

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Speaker 1: One says was the case here, The word gets around

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Speaker 1: and planeff layers will have a way of slipping that

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Speaker 1: in if they can that. You know, they've been sued

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Speaker 1: many times before and have lost, and that's a pretty

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Speaker 1: strong signal to the jury saying go ahead, lay it on.

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Speaker 1: You know, um, they're bad guys and there seems to

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Speaker 1: be a consensus that they are. Does an award like

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Speaker 1: this followed by the Supreme Court refusing to take the case,

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Speaker 1: How hard does that make settling in other cases? For

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Speaker 1: J and J. Well, it's easy to settle. The theory

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Speaker 1: at least, question is how much are you going to

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Speaker 1: settle for the plainifts try to value the case? What

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Speaker 1: is it worth? That is, how much is the plaintiff

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Speaker 1: likely to get if the case goes to trial. And

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Speaker 1: I'd say that amount has gone substantially up as a

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Speaker 1: result of this, So that means that the plaintiffs are

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Speaker 1: going to insist on more money in order just settled,

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Speaker 1: and they perhaps would have a couple of weeks ago.

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Speaker 1: That's Professor Richard Austiness of the University of Kentucky Law School.

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Speaker 1: And that's it for this edition of The Bloomberg Law Show.

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Speaker 1: Remember you can always at the latest legal news on

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Speaker 1: our Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify,

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Speaker 1: and at www dot bloomberg dot com slash podcast slash Law.

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Speaker 1: I'm June Grasso. Thanks so much for listening, and please

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Speaker 1: tun into The Bloomberg Law Show every week night at

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Speaker 1: ten p m. Eastern right here on Bloomberg Radio.