Second

FIRST

Wow! Someone at Simpson proofread their own memo! Nary a typographical error in site.

Nice

Nice

The Treasury department deal is cool but they are getting paid peanuts for their time.

I was thinking today. Part of the reason I took a higher paying BIGLAW job was to save more money than if I was starting out in say the federal government making 75k or whatever it is. Now that I think of how much money I've lost in the market this year it makes me wonder what the point really is. I mean if I've lost 45% of my investments that nearly covers the post-tax difference between a BIGLAW job and a federal job. And then you factor in the added stress of BIGLAW and it just makes me want to do something bad to myself, like lock myself in a room and listen to Sarah Palin all day.

8: very nice.

however, if you could lock yourself in a room and boink palin all day, would that be so bad? (assuming she isn't allowed to talk)

8 - glad to hear you're upset. Perhaps you should think everyday. It must be nice not to have private law school loans to repay.

7: that may be true, but the long-term benefits are pretty impressive. I would imagine that, given the special expertise so many STB attorneys will have, they'll get more work long term--especially as they have not agreed to turn down any other work in agreement for taking the bailout deal.

-not a Simpson attorney

Hopefully this will translate into them handing out generous bonuses . . . or maybe just bonuses. Which will translate into bonuses for the market followers. Go STB!

9: 8 said "listen" to Palin, not boink her. What's on your mind these days?

I second that, 12: Go Simpson! Bill, bill bill!

14 (or should I call you Biden) -

It's actually, "Bill, baby, Bill!"

-Boink Me Palin

8- I was just doin some thinkin myself and I thought about how glad I am to finally get some cream for my STB which feels much better.

I'm just sayin.

Any thoughts on what BIGLAW bonuses will be this year? Will the top 10 Vault firms make any effort to match bonuses in previous years in an attempt to separate themselves from the pack, or do you expect a significant drop off?

12: I believe the preferred term is bonii, rather than the comparatively gauche "bonuses."

Any thoughts on what BIGLAW bonuses will be this year? Will the top 10 Vault firms make any effort to match bonuses in previous years in an attempt to separate themselves from the pack, or do you expect a significant drop off?

Any thoughts on what BIGLAW bonuses will be this year? Will the top 10 Vault firms make any effort to match bonuses in previous years in an attempt to separate themselves from the pack, or do you expect a significant drop off?

I wish someone would send me a happy letter *tear*

Any thoughts on what BIGLAW bonuses will be this year? Will the top 10 Vault firms make any effort to match bonuses in previous years in an attempt to separate themselves from the pack, or do you expect a significant drop off?

Any thoughts on what BIGLAW bonuses will be this year? Will the top 10 Vault firms make any effort to match bonuses in previous years in an attempt to separate themselves from the pack, or do you expect a significant drop off?

17: here's my take, which is based on nothing but personal opinion (and hope). I think the Cravaths and STBs out there, who are presumably having a good year regardless, will give bonuses. I think those bonuses will match the market bonuse of last year, without the "special" bonus - don't expect that.

A market bonus alone may very well separate some of the usual BigLaw followers from the major players. If, by chance, the market bonus was increased, or a "special" bonus is again given, then that will surely cause some drop off by your typical followers.

My gut is that the Cravaths or STBs are doing as good - if not better - than last year, and will give a bonus equal to the market bonus of last year.

19 ,20, 22, 23: My thought is: no bonus for you.

Way to go STB. Here is hoping the T10 firms can raise above market. It's about time to get some compensation differentiation.

bonuses wont be as big anywehre, because there are no i-banks with which to compete. its a pipe dream if you think that those in the V10 will be handing out bonii simply to prove they are better than everyone else.

Correct. No bonuses for you this year.

Now get back to work, slaves.

~Grinch Partner

Simpson TTThacher

27, seriously. i-banks having nothing to do with this. they would be handing out bonuses not to prove they are better than anyone, but because they have done well for the year. consequential drop off is a result, not a reason.

I'm calling BS on the rosy picture painted by this memo. The Treasury work is paying Simpson peanuts, as someone else here has pointed out. Simpson's primary transactional business was driven primarily by the LBO market, which has basically dropped off of a cliff, leaving legions of associates idle (I have this confirmed from a number of law school classmates who work there now). And their biggest investment banking client was Lehman Brothers.

Now, I'm not saying that Simpson is going to go out of business, but I certainly wouldn't be looking for them to lead the bonus market this year either.

25 - NO SOUP FOR YOU!!!

Apparently STB is making billing a whopping $300,000 for the Treasury matter.
http://blogs.wsj.com/law/2008/10/21/simpson-thachers-bargain-basement-rates-for-bailout-work/

30 - that's simply not true. The top shops paid the large bonuses they have over the last two to three years to keep their talent from leaving for i-banks/PE funds/hedge funds. Now, the remaining I-banks are slashing bodies. A fair amount of hedge funds are imploding. And PE can't do anything because credit is essentially frozen. Think any lawyers are first in line for jobs at those types of places (on the business or legal side)? Go read Dealbreaker and you'll see what I mean.

Partners don't open their pockets and share their loot just becuase the firm had a "good year." That's the way they spin it in public because they want to appear like they are sharing the wealth. But partners will not, without exception, pay an associate a penny over what the market dictates (unless the associate has some extraordinary rainmaking ability). The market for the last two years at the top of food chain was heavily influenced by the above mentioned exit options, none of which are realistic opportunities any longer.

34: absolutely right. I think that it is not true, though, that BigLaw - at least not STB - management has presented bonuses or pay hikes as "sharing in profits" of a firm in a good year. STB, responsible for the last pay hike, expressly mentioned PE shops and IB as their main competitors for mid-levels.

35- true. I definitely remember partners on record saying as much, I was just to lazy to search for links to the quotes. However, I've seen the "generosity" spin with bonus announcements though too.

31- The peanuts STB is making off TARP has nothing to do with how busy associates are. They could be working for free and the associates would still be as busy as if the Gov was paying $1M.

I'm sure competition from PE firms and I-banks may have helped the bonus situation the last couple of years, but what about litigators, T&E and all the other specialities that got bonuses? Its not like funds were banging down firm doors for those types. Yet they get the same lockstep bonus at STB. So I'm not sure the argument is that persuasive, even in a corporate heavy firm.

I think the biggest thing driving firm financial health these days is leverage. First, firms that have really uneven collections and finance their operations through debt are probably in a bad place (although the situation in the credit markets has improved somewhat). Second is the traditional idea of leverage for firms, namely the ratio of partners to associates. I think most of the NYC lock-step, no minimum billable firms have fairly low leverage (with associate to partner ratios of somewhere between 2 and 3 to 1) compared to some of the huge national firms. Those firms should be feeling less pressure to layoff and more room to pay bonuses.

how about sending a letter like this to current associates?

ATL needs to cover the Simpson layoff rumors!

how about sending a letter like this to current associates?

ATL needs to cover the Simpson layoff rumors!

39/40 - see the ATL coverage from about couple of months ago confirming that they were just rumors.

Simpson might be making headlines, but it is a very questionable choice for 2Ls. First of all, the treasury work is BS. it's 4 weeks worth of boilerplate contracts for $300k. Secondly, as has been noted, their bread and butter work is evaporating (lehman, LBOs, etc.), which explains why they didn't turn down the gov't work for conflict reasons like other firms. Finally, the firm has been leveraging like a motherfucker the past few years. they have ~130 partners and ~520 associates in their NY office. That's about 33% more leverage than peer firms. you can guess how this affects bonuses, partnership odds, and layoff potential in the upcoming years.

Simpson is a bloated whale that is going to transition from feast to famine in the near future.

31 -

First Lehman was not remotely the largest STB ibank client. JPMorgan is.

31, 42 -

Blackstone, KKR and JPM on each represent no more than 10% of STB"s revenues in any year. The remaining 70% comes from a wide variety of work, including (i) one-off M&A deals (which STB is still cranking away on), (ii) litigation matters (still very busy), (iii) other ibanking work and (iv) now bailout related matters, such as JPM/Manu, Wachovia/Wells Fargo, all Lehman sales as corporate counsel.

Revenue will be up this year. Period.

Frankly, STB should pay regular + special (as should other T-5 firms that have increased or equal revenues and PPP as last year). It is simply a differentiation from other firms who have taken an economic impact. The true "Top Firms" make money regardless of whether times are good or bad because whatever work is out there (corp or litigation) continually goes to them.

No way are revenues up this year. Everything I've seen, including the interview with the Citibank guy who does the AmLaw numbers, says numbers will be down. Down from a record year, but down never the less.

44 is a delusional Simpson troll! Revenues are definitely down.....My friend works at Simpson and tells me that NO ONE has work...everyone leaves the building around 5:30/6:00pm

44: they're only there till 5:30 because of the MANDATORY OFFICE HOURS. otherwise they'd be out by 2.

This Simpson happy letter is bull!!! Why dont they send some sort of happy letter to current associates who are definitely worried about the lack of work and layoff rumors

47 is right on the money!!!!

A thought to put out there---the demise of Lehman may not have as huge an impact as everyone thinks. Barclays just announced the team that is leading its North American operations and it appears that it is pretty much headed by former Lehman veterans. Workflow from i-banks is highly dependent on relationship with bankers and perhaps to a lesser or same degree by in-house counsel. The recent Barclays announcement might mean that STB hasn't quite lost a client--it just has one under a different name. Of course, deal volume is down everyone and banks are conducting massive layoffs. But this would affect all firms with big i-bank clients, not just STB. And, I don't work at STB.

Schwartzman left a voicemail to all employees last week saying that although things are bad, this is when they make money. Assets are cheap, and those with the money are going to go out and find good deals in the near future. Yes, the Treasury work is peanuts, but that's not the point. Everyone working there will be in private practice in a few months and these could be new STB relationships. And, yes, I'm sure their securities practice is slow right now, but that's the case everywhere -- no one is going into the market right now.

49 is right -- people are clients, not firms. And, STBs other "lost clients":

WaMu? Nope; now JPM.

AIG? Not really; STB only represented their board members, and they've probably had more AIG-related work this year than in the last five combined.

52 here; I mean 50, not 59.

44 is misguided. I know many junior associates at Simpson who are going to end the year billing 1000-1200 hours. They have been quite badly affected by this crisis - there is no way you can spin it otherwise.

TESSSST

54 = you do not know "many" junior associates who are going to bill 1000-1200 hours. There are, however, many juniors who will end up billing 1500-1700 hours. AND, this is no different than at any other firms. The credit freeze, worldwide market collapse, and housing crisis are not STB things.

42,

Your numbers are wrong. Partner/associate ratio at STB NY is 1/3.3. This is certainly higher than DPW, S&C, and Latham, but it's considerably lower than Cleary. (I was too lazy to research Skadden with their weird attorney search system.)

I do think there's no question that the Capital Markets attorneys at S&C working with Goldman are in better shape than those at STB, but it's not like STB is on the brink of major layoffs or anything.

And the Treasury Dept. work is obviously not important for its substance or fees; it's purely prestige work. It seems that the V5s (except one) wanted to stay on the conservative side regarding any potential conflicts of interest, which probably speaks to them being on safer financial footing than STB. But it's foolish to think that STB would have taken the work if it thought it would be disqualified from working with any of the relevant investment banks on similar matters.

On NALP, STB had 175 associates to 674 associates, which is more like 1:4 (and this doesn't take into account "other attorneys" which are invariably salaried). If that information is wrong, STB should fix it.

58,

57 here. I was responding to a post w/r/t the partner/associate ratio in STB NY, not all of STB.

Flight to quality my ass.