As 7th year associates at Half-Skadden and Skadden-Mart come to grips with the fact that they will be getting a smaller bonus than 1st years at Skadden, let’s take a look at a curious article that came out on November 20th. The same day Cravath announced their reduced bonuses (and threatened their people about 2009) Chairman Chesler spoke to American Lawyer:
Evan Chesler, the presiding partner of Cravath Swaine & Moore, stresses that firms do not need lots of offices to be diversified. “It is too easy to confuse geography with geographic reach,” he says. “It is not the same thing.” …
Although Cravath has just one small outpost in London, the firm is highly diversified, Chesler maintains. “We certainly do Wall Street work, but we always have done work for companies not on Wall Street, companies that make things and are located all around the world, and will continue to do so.”
Apparently, for Chesler “it is too easy to confuse” words with deeds. Either the firm is diversified and is in a good position to weather this economic storm, or it is not. I’m sure that Chesler’s employees do not really appreciate Chesler running around publicly talking about the health of the firm, on the same day he sends around internal memos warning:
[A]ssociates should be prepared for the likelihood that the economy and the Firm’s financial performance next year will not show a significant improvement over this year and they may receive significantly reduced or no year-end bonuses next year.
If you want to criticize Cravath associates, don’t call them “greedy and entitled,” instead call them “foolish” for believing their own management. Believing their own firm is a mistake I’m sure most Cravath associates will not make again.
After the jump, guess who else was talking.
In the same article, Simpson, Thacher & Bartlett personnel were talking about the future:
Simpson certainly hasn’t had an easy time of it this year. Lehman is gone, and its marquee private equity clients are hurting. Chairman Richard Beattie recognises the severity of the situation — “I strongly suspect we have got a rough period of time ahead” — but sounds unruffled. He sees the markets turning around within a year or two, and does not expect big changes ahead for his firm and its closest competitors.
Okay. No “big changes.” Bonus sounds safe, doesn’t it?
“I do not think [the market changes] will impact fees,” he says. “The M&A work will come back, and Goldman Sachs and Morgan Stanley will be advising the companies doing M&A, and I do not see the fees being different… The private equity firms will be back. They are sitting there with huge piles of money.” In the meantime, Simpson will be kept busy by, among other things, representing the US Department of the Treasury as it manages the $700bn (£466bn) bailout fund.
You almost have to admire the boldness of such statements. “Oh, FEES will be the same, it’s just the associate bonus that is going to be halved. Not that, that is a big change!”
Good job Half-Skadden and Skadden-Mart. Way to create an environment of mistrust where your senior associates feel significantly underpaid and under valued.
Update (7:25): It turns out that the article quoted above originally appeared in American Lawyer at the beginning of November. It just happened to run in Legal Week on the same day that Cravath announced it’s bonuses. Prescient story by AmLaw, hilarious timing for Half-Skadden.
Chronicle of a Future Foretold [AmLaw]
A landscape that’s changed forever [Legal Week]