The rise of the sign-on bonus in legal
Marc Tobias is one of the founding directors of leading legal recruitment firm DMJ Recruitment. He and his team hire assistants and partners for many of the City’s and West End’s leading law firms.
The last two months has seen an unprecedented number of sign on bonuses. Since 2007 they had become rarer than a Tour de France winner without a syringe. However, with the sudden and dramatic increase in demand for candidates to fill junior and mid-level roles they are back with a vengeance.
Firms are employing bonuses in a number of ways: to help sway a candidate’s decision between multiple offers; act as a bridge until salary bandings are increased; or even to cover a bonus they would have been entitled to had they stayed put.
As a rule, the sign on bonus is the domain of candidates who have been counter-offered by their current employer or have multiple offers on the table. Where this is the case, over the last two months a significant number of candidates have been offered a sign on bonus. The size of the bonus has varied considerable but is typically between 5% and 15% of base salary.
Candidates should not enter into negotiations expecting a sign on bonus however. Those who angle for one, or having secured one try to use it a bonus as leverage with other firms, are likely to see their relationship with all parties soured. The best approach is to be straight about what you expect as a basic package and, at the moment, there is a good chance that a sign-on bonus will follow anyway.
The element that is as yet unclear is whether the sign on bonus is here to stay. While firms unquestionably find it is an effective way of influencing a candidate, it is nonetheless an additional cost at a time when salaries are starting to rise again. It is often more cost effective to bring a candidate on with a lower salary compensated for by a sign on bonus than to pay the market rate (or above) and risk needing to up salaries for other employees at the same level. As the recovery takes hold salaries are likely to stabilise, and when they do we expect the sign-on bonus market to deflate.