Biglaw, Bonuses, Money, Skaddenfreude

Associate Bonus Watch: The Natives Are Getting Restless

associate bonus watch 2007 law firm Above the Law blog.jpgWe’re bored (and so are you). We’re just passing time until another major law firm announces year-end bonuses, in the wake of Monday’s Cravath announcement.
In today’s New York Times, Ellen Rosen has this interesting article on law firm bonuses:

Cravath, Swaine & Moore has raised the salary bar for law firm associates in Manhattan.

The firm has announced that it will award a special one-time bonus for associates in addition to the traditional year-end bonus that the firm, like most others, already pays. All but the newest associates will receive $10,000 to $50,000, depending on seniority, which was first reported by Abovethelaw.com.

Thanks for the shout-out, Ellen!
What about other law firms? Read more, after the jump.


Expect announcements soon from Debevoise and S&C:

Surprisingly, several partners at other firms said they had not yet heard about the increases — either from other partners or their associates, who are not shy about mentioning what other firms pay. But a spokesman at Shearman & Sterling said, “We’re aware of recent developments, but are not prepared to comment.”

Martin F. Evans, Debevoise & Plimpton’s presiding partner, said in an e-mail message that the firm expected “to announce this week fully competitive annual and special bonuses.”….

Sullivan & Cromwell, which began a round of salary wars in 2006 when it increased first year pay to $145,000, is likely to match soon. A law firm partner, Gandolfo V. DiBlasi, said, “We’ve always paid at the top and we intend to this year.” He declined, however, to say whether Sullivan & Cromwell would bifurcate its bonuses like Cravath or increase the total year-end bonus.

Some good final thoughts on Cravath’s unusual approach to bonuses this year:

The structure matters. By awarding a special bonus, Cravath is not tied to the amount for next year. Mr. Chesler said that “it’s an uncertain economy,” and said that unlike a corporation that had retained earnings, law firm partnerships “distribute net income above expenses, and part of that is what we pay our employees.”

The bifurcated bonus structure is a shrewd move on Cravath’s part. It allows CSM to be a market leader on compensation, while at the same time (1) controlling bonus expectations for 2008 and (2) giving competitors a fig leaf for not matching the full, total bonus (as opposed to matching just the year-end bonus). It will be interesting to see whether other Biglaw shops adopt the Cravath approach.
Law Firm Is Giving Its Associates Two Year-End Bonuses [New York Times]

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