Biglaw, Bonuses, Money, Skaddenfreude, Thacher Proffitt & Wood

Nationwide Pay Raise Watch: Thacher Proffitt???

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In the world of Biglaw, bad news and good news go hand in hand these days. Recall that Clifford Chance announced associate layoffs and generous bonuses in the same week.
And now Thacher Proffitt & Wood, on the heels of yesterday’s news about likely future layoffs, is raising base salaries for its senior associates. We haven’t seen the full memo yet, but here’s an excerpt:

“It has long been a primary principle of our attorney compensation philosophy in New York and Washington DC to have our base salaries and annual discretionary bonuses be competitive with the top firms in New York City. In that regard, we are announcing the following changes to associate compensation…”

Our sources describe it as basically a match for the class of 2002 and more senior: 2002 – $250,000, 2001 – $265,000, 2000 – $280,000, and 1999 – $290,000.
Update (2:55 PM): We now have the memo. It appears — together with additional discussion, including a word about bonuses — after the jump.


There apparently was a trade-off for the higher base salaries — one that, oddly enough, may have reduced total compensation for some associates:

“[P]artners were concerned that TPW wasn’t getting “credit” in the market for the firm’s 3% 401(k) contribution. So they discontinued it, and raised base salary compensation.

[But] this actually decreases total compensation for classes of 2002 and 2001 if you include the 401(k) contribution. Before, class of 2002 was paid $245,000 + 3% contribution = $252,350. Now they’re getting $250,000 with no contribution. However, for class of 2000 and 1999, the compensation goes up: $270,000 + 3% = $278,100 (versus $280,000 now).

The 3% contribution was given year end for all associates who have been with the firm 2 yrs +. So discontinuing it will lower total compensation for 3rd year – 7th year associates. However, TPW still pays above market for third year associates ($190k).”

Got that? The memo also has some information about bonuses:

“The Firm has determined that 100% of the Firm’s annual discretionary bonus will be paid in late December, 2007, rather than 50% in December and 50% in February as in past years. Please bear in mind that the final decisions regarding the discretionary bonus will be made in late December, just prior to payment.”

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One tipster wonders:

“Not really sure what this means. Since the laid off associates are technically not laid off until January, will they get bonuses? Are they going to be competitive with the special bonus, or just the regular bonus. Guess we won’t know until December.”

Here’s the full text of the memo:
THACHER PROFFITT & WOOD — MEMORANDUM — ASSOCIATE COMPENSATION UPDATE
TO: Associates and Counsel in the New York City and Washington, DC Offices
FROM: Legal Personnel Committee
RE: Compensation Update
It has long been a primary principle of our attorney compensation philosophy in New York and Washington DC to have our base salaries and annual discretionary bonuses be competitive with the top firms in New York City. In that regard, we are announcing the following changes to associate compensation:
1. Base Salaries. The base salary rates for the associates in the TPW classes of 2002 (6th year) and senior who are resident in the New York City or Washington, DC offices are being raised to the following amounts effective as of January 1, 2008 when all class year salary increases take effect, which revised salaries match the current market:
Class Year Base Amount
2002 $250,000
2001 $265,000
2000 $280,000
1999 $290,000
Associates in more senior classes and counsel will also receive corresponding base salary increases.
Associates in the Summit and White Plains offices in these classes and more senior and counsel in those offices are also receiving base salary increases.
As in the past, each associate and counsel will receive a separate memorandum confirming their base salary for 2008 reflecting their class year step up, as modified by these increases.
2. Firm Retirement Plan. As you know, the administration of the Firm Retirement Plan recently converted from the Vanguard Group to CitiStreet. In connection with this conversion, several changes have been made to the retirement plan. First and foremost, in recognition of bringing the base salaries of the senior associate class years up to market levels beginning January 1, 2008 and having brought junior and midlevel associate classes up to market levels earlier this past year, 2007 will be the last year for which the Firm will make contributions to the Retirement Plan for eligible associates. These contributions for 2007 will be made in March, 2008. Firm contributions for associates will cease after that time.
Second, your ability to make voluntary contributions is being expanded and will be described to you in a separate communication from the Plan Administrator. The net effect of the increase in base salaries and the revisions to the Retirement Plan is to put you in greater control over the amount of your compensation that you would like to save in the Retirement Plan.
3. Timing of discretionary bonus. The firm has determined that 100% of the Firm’s annual discretionary bonus will be paid in late December, 2007, rather than 50% in December and 50% in February as in past years. Please bear in mind that the final decisions regarding the discretionary bonus will be made in late December, just prior to payment.
Should you have any questions, please do not hesitate to contact any of the members of the Legal Personnel Committee.
Legal Personnel Committee
Correction: Our apologies. When we first posted this memo, there was a typographical error in it. In the paragraph about the discretionary bonus, “maid” appeared in place of “made.” The typo was introduced because our original source for the memo, who did not want to transmit the entire document, was kind enough to transcribe the whole darn thing for us.
But then a second source at TPW sent us the memo in PDF form. We reprint the PDF below, to prove to you that the “maid” typo was not in the original. Thanks, and sorry for the confusion.
Earlier: Nationwide Layoff Watch: Thacher Proffitt Announces Likely Future Layoffs
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