Firstey!!!!!!!!!!!!!!!1

FRIST! and i like the term "half-skadden" well done

Uno

4th! Eat my asshole!

boomshakalaka!

Not first, but I won't be last.

Last. shut it down.

Not first, but I won't be last.

What is it with ATL constantly linking to crappy websites that nobody reads? Are these paid promotions? Enough with What About Clients and Corporette already.

You might as well interview one of the 2L commenters from Hofstra - they know more about the economics of large law firms and their clients than does Dan Hull.

T10 Comment.... wow, so this is what it's like to be a prestige-whore?

BITCH SPREAD THE BUTT CHEEKS AND LET ME SMELL THE JUICY INSIDES!

AND WHEN WILL IT BE 6PM ALREADY?!

Elie, you are starting to get on a roll with good posts.

come on S&C...step up to the skadden level.

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Cravath offers less than Skadden?

- Really?

My guess is that they're trying to keep profits per partner as high as possible for rankings and good ol' fashioned greed.

Clients don't care. Last year they looked at the "record" bonuses as cute. The average employee at Goldman Sachs made over $600K last year (and that includes the secretaries). While this year a partner at any top firm will make more than the Goldman CEO, the people working for that CEO will still make way more than any associate at any firm, Wachtell included. Clients aren't dumb, they know that the money has already been paid to the firm, bonuses are just a matter of who gets to keep it, the associates or the partners. Skadden partners decided to let their associates keep a little more, Cravath partners clearly dont care about their associates.

And the argument that partner profits are down, so associate comp should go down by the same percentage is nonsensical unless associate comp when up by the same percentage as partner comp also. Profits per partner at top firms has roughly doubled in the last 6 or 7 years; while first year pay has gone from $165K ($125 plus the $40K bonuses paid in 2000) to either $195K (Skadden) or $177K (Cravath), while the number of hours associates bill and the time commitment expected (on call 24 hours a day) has greatly increased. Partners are buying second vacation homes thanks to the work of their associates, all the associates want is a slice of the pie.

Put your tongue in my butthole!

What a depressing year it has been for the associate. I hope 2009 is better. I hope I still have a job this time next year.

Clients don't care. Last year they looked at the "record" bonuses as cute. The average employee at Goldman Sachs made over $600K last year (and that includes the secretaries). While this year a partner at any top firm will make more than the Goldman CEO, the people working for that CEO will still make way more than any associate at any firm, Wachtell included. Clients aren't dumb, they know that the money has already been paid to the firm, bonuses are just a matter of who gets to keep it, the associates or the partners. Skadden partners decided to let their associates keep a little more, Cravath partners clearly dont care about their associates.

And the argument that partner profits are down, so associate comp should go down by the same percentage is nonsensical unless associate comp when up by the same percentage as partner comp also. Profits per partner at top firms has roughly doubled in the last 6 or 7 years; while first year pay has gone from $165K ($125 plus the $40K bonuses paid in 2000) to either $195K (Skadden) or $177K (Cravath), while the number of hours associates bill and the time commitment expected (on call 24 hours a day) has greatly increased. Partners are buying second vacation homes thanks to the work of their associates, all the associates want is a slice of the pie.

My guess is that they're trying to keep profits per partner as high as possible for rankings and good ol' fashioned greed.

Yeah. Clients don't care about associate bonuses.

If anything they'd be pissed about $2.5MM+ PPP in this economy. That is the place to cut fat, not $10k per associate.

@20 - easy there, Spitzer

Clients are businesspeople who know that

1) Good employees aren't fungible
2) If they want solid work product, firms have to pay for it.

Cheaping out on bonuses means that the employees who can (i.e. those who are good enough) may start to look elsewhere. And those firms with strong bonuses can exploit this cheapness to their gain; I bet Skadden recruiters are looking through their Cravath lists today.

I never believed the BS that clients actually cared whether associates were getting paid 25k in bonus, 45k in bonus, or 17.5k in bonus. As someone said above, the clients have already paid their fees. They could care less how it's divvied up.

Asking whether "clients should care about associate bounuses" is misleading. It make it seem like clients want to play a role in determining associate bonuses.

I would imagine that none would.

However, I think the answer would be different if we ask "will clients be inclined to put more downward pressure on legal fees if they see first year associates carting off $25K on top of $160K?"

Clients care about three things: quality of work, efficiency of work, and billing rates. They don't give a shit what associate bonuses are, and they don't give a shit what PPP are -- except in so far as one month later the firm tries to raise rates.

Where's Kirkland?

Cool graphic.

Actually, most state laws don't require an explicit agreement to form a partnership. The courts will look at various factors and sometimes could find an implied partnership. One of the important factor is how an alleged "employee" shares the profit and losses of the partnership. So if Associate Comp. changes based on partnership profitability, we could make a colorable argument that all associates have just been made partners implicitly!!

Actually, most state laws don't require an explicit agreement to form a partnership. The courts will look at various factors and sometimes could find an implied partnership. One of the important factor is how an alleged "employee" shares the profit and losses of the partnership. So if Associate Comp. changes based on partnership profitability, we could make a colorable argument that all associates have just been made partners implicitly!!

isn't this a bit of an overgeneralization? and based on what? i don't see any quotes.

bonus is just another part of pay, and if what this post claims is true, then why are they bitching all the time about associate compensation? every time there's information about a possible pay increase, GCs are crying bloody hell.

Yeah. Clients don't care about associate bonuses.

If anything they'd be pissed about $2.5MM+ PPP in this economy. That is the place to cut fat, not $10k per associate.

good bonuses make sense. lockstep doesn't

but overall, meh

Halverson will move to Canada

http://overlawyered.com/2008/11/obese-have-right-to-2-airline-seats-canada-court/#comments

Cravath low-balled the market? What market? Why do associates still think that all (vs. some) are entitled to an f'ing bonus for any year, much less a year like 2008? So that you'll stay? Yeah, right. Trust me, those whom the firm really wants to keep already got private convo.

All that "analysis" without talking about PPP?

FIRST!

"[M]ost people are still just trying to understand why Cravath low-balled the market yesterday."

Really? Take a look at the news and the DOW, it shouldn't come as a shocker, genius.

Clients are businesspeople who know that

1) Good employees aren't fungible
2) If they want solid work product, firms have to pay for it.

Cheaping out on bonuses means that the employees who can (i.e. those who are good enough) may start to look elsewhere. And those firms with strong bonuses can exploit this cheapness to their gain; I bet Skadden recruiters are looking through their Cravath lists today.

Half-Skadden: wow. Honestly witty, good writing. A rare congrats to Elie.

42, shame that most firms don't get it. Was it White or Link at CWT who said that associates weren't fungible after a certain year?

Clients only care about associate comp and bonuses to the extent they perceive it as justification for raising their rates. Remember the Walmart letter? Walmart didn't instruct firms not to raise associate salaries -- they did say they would not be paying any rate increases. In this economy, firms will have a difficult time getting clients to accept rate increases. Kudos to Cravath for declaring they would not be raising their rates. However, bonuses are still small in relation to overall associate pay and will costs firms even less this year, since fewer associates are hitting 2400+ hours. Firms should be able to pay normal (though perhaps not "special") bonuses, not raise rates, and still keep PPP at reasonable levels. The question is whether partners will take one for the team this year or whether they will force associates to bear the full brunt of the economic downturn.

It's wishful thinking that clients don't care. You can come up with a reasonableness argument for anything. But it's all perception. CEOs and CFOs that complain about legal bills don't turn away nine-figure pay deals. Think Jamie Dimon.

Also, it's funny how we all used to regard the "performance-based" bonus as a way for partners to subjectively screw most associates but now expect everyone to regard it as pure objective merit.

LMAO @ "Half-Skadden"!!! Get 'em, Elie!

Even if Clients did care (which I suspect they don't), firms like Cravath and the rest of the market could match Skadden and have the perfectly reasonable and easy explanation to clients that they have to match the market because otherwise the effects on recruiting, etc. would be too costly in the long term.

19: WELL SAID!!!

Tonight will be a very special night for myself and my CWT NY 05 associate girlfriend as she will be the recipient of a Full Skadden with whipped cream.

Shouldn't bonuses be seen as, well a bonus. It seems to me everyone expects them EVERY year. Why keep calling it a bonus then?

Why is nobody looking into a potential antitrust violation by CSM? By writing such an elaborate email about clients and the economy Cravath may have intended to communicate a pricing signal to the other players (ie, "it's inappropriate for anyone to go higher than us so here are the talking points so we can all coordinate").

Of course clients care about increased associate compensation if the fees that law firms charge those clients rise along with associate compensation. And fees have gone up. Clients would be indifferent to associate pay if higher associate pay was a function of partner's rebalancing the fees they collected, but it isn't.

Clients hire Firm X because Partner Y works there and the only way associates factor into that hiring decision is (a) if the associates at Firm X are generally incompetent, the client might hire a different firm despite Partner Y or (b) if the billing rate/amount of hours for associates at Firm X is appreciably higher than at a firm where a partner comparable to Partner Y works, then the client might give the business to that other firm. Since there are only a few really good partners at bad firms (i.e., firms with terrible associates), you don't see a lot firms losing business because of scenarion (a). You see firms losing business because of scenario (b) on a regular basis and that is only going to get worse. Clients are being forced to settle for Cheapo Firm's version of Partner Y on a regular basis now.

How much would a female CWT NY 05 associate cost for the weekend?

Well 52, how about the fact that the communication was only among their own form, i.e., an internal memo.........for information dissemination to lead to antitrust concerns, it must be disseminated to other market players. Just because ATL posted the memo does not mean the internal memo was disseminated between other market participants. Come on.

A lot of clients (like me and my boss) just generally think BigLaw lawyers are paid too much--from associates all the way up. Not all clients (and certainly NOT going forward) make investment bank money, but still generate plenty of fees to lawyers ... certainly more than the Lehman's of the world will be going forward. We're still around. They're not.

Elie, I like you more and more with each post. Keep it up.

I am about to disseminate all over my CWT NY 05 girlfriend's face. $ Shot Stylie.

52: you're naive to think that Cravath or any other firm would need "an eleaborate email". there are these quaint things called phones and drinks with buddies. do you really think that partners at major firms don't talk to each other?

now i will definitely be padding

52 = TTT 1L

i really need some S and C or Weil bonus news in my life

How much would a male CWT NY 05 associate cost for the weekend?

Gotta love the ATL pity parties...

Bonuses of ONLY 17+ K this year...poor us...wah wah wah

How much would a male CWT NY 05 associate cost for the weekend?

65, if you work at Skadden, give me your bonus and you can have me. If you work at Cravath, not so much.

Even if clients did care (which I suspect only a few pay attention to, and even fewer actually care very much), firms like Cravath and the rest of the market could match Skadden and have the perfectly reasonable and easy explanation to clients that they have to match the market because otherwise the effects on recruiting, etc. would be too costly in the long term.

66 -- What if I worked at SkaddenDC, could you milk me then?

The real clients (the business side) don't pay attention to associates. You know they are the ones who pull the all nighter when you call the partner and want something on your desk in the a.m., but otherwise don't give a rats ass what they are paid or that they even exist, unless they are hotties.

Now, the legal department does pay attention to that shit. They use it to whine about how much they could be making if they could cut it in a firm and and try to use it as justification for raises, but are mostly laughed at behind their backs and are cut out of the loop.

i don't hire lawyers based on how they pay their associates. i hire based on track record and cost to me.

this site has become completely useless--this mysTTTal character just wrote something about nothing (14-kill yourself), and the comments are mostly stupid, except for a few like 25.

38 - amen brother or sister

I think it's nuts that I am going to be paid $160K for being a first year associate and then if I do what they expect of me, I'm going to get $20K extra. I like the money and I say thank you, but if they paid no bonuses, I wouldn't freak out. You don't like being an associate? Make partner.

"Half-Skadden (f/k/a Cravath)"

Nicely done Elie

38 - amen brother or sister

I think it's nuts that I am going to be paid $160K for being a first year associate and then if I do what they expect of me, I'm going to get $20K extra. I like the money and I say thank you, but if they paid no bonuses, I wouldn't freak out. You don't like being an associate? Make partner.

1. No client cares about associate bonuses. They care about results and the bottom line on their invoice. Thus, they would only care if excessive bonuses affected their invoices.

2. Keeping attorneys is not a concern. If you choose to jump ship to a lower firm right now, you are running a risk of ending up worse off than you were.

Plus, firms like Cravath can fill their needs at any time. You can debate all you'd like about class rank, school attended - et cetera - but at the end of the day, a good lawyer is a good lawyer.

Now, if you wanted to get into how much money partners make off the blood and sweat of associates, then I'd be willing to think like your typical entitled, self-absorbed douchey associate.

Clients don't care about associate bonuses, or else they'd be belligerent about firms that have high bonus thresholds or grant additional bonuses beyond a certain number of hours, because that means associates have every incentive to bill the hell out of their client.

A client would know that means that associates have incentives to overbill, work inefficiently, and prolong cases by engaging in needless motion practice. And we know clients don't support these things...right?

Ok, yeah, then the answer is that clients don't care because they're about to file Chapter 7 and don't intend to pay their legal bills anyway.

Clients don't care about associate bonuses, or else they'd be belligerent about firms that have high bonus thresholds or grant additional bonuses beyond a certain number of hours, because that means associates have every incentive to bill the hell out of their client.

A client would know that means that associates have incentives to overbill, work inefficiently, and prolong cases by engaging in needless motion practice. And we know clients don't support these things...right?

Ok, yeah, then the answer is that clients don't care because they're about to file Chapter 7 and don't intend to pay their legal bills anyway.

Client's care about the firms ridiculous rates and inflated billing. We realize that law firms are poorly run and managed and inefficient, but that's the firms problem and we shouldnt be overbilled because partners can't manage a business and pull out too much money for themselves.

Partners should reward their star performers realizing that its the stars who help the firm from getting hit even harder in bad times and contribute the most in the good times.

In short clients want legal process outsourcing. India to 5k starting!

There's a market rate law firms pay for top associates and there's a market rate clients pay for top law firms. Despite what so many self-centered associates seem to think, there's really not much correlation between the two and I think most clients recognize that. If you can't bill the top rate, changes are you can't afford to take on top associates to do the job.

For clients (like me), the issue isn't bonuses per se. It's the overcompensation levels at most law firms, starting with the first-year associates. Bonuses, particularly those paid not in relation to performance, merely serve as another reminder of this problem. Thus, a firm that takes affirmative steps in this market to rein in salaries (including bonuses) will get my positive attention.

give me a break - the clients care about whether an associate makes an extra 20k and not the partners making 2 milllion!!!

As a major client, I definitely care. These bonuses get passed on to clients in the form of increased rates. I have told my firms that they would be very ill-advised to pay full bonuses or raise rates this year. In the short term, what are associates going to do, leave? Absolutely not, there is nowhere else to go except for regional firms, and i'd love to see a bunch of NYC associates hit the regional firms. They can then continue to do the same work for less billings, works great for me. There isn't that much that deserves the NYC biglaw premium anymore. In the longer term, now is the time to take bonuses back to what they were, boom year bonuses, not an expected part of compensation. As for the posts above talking about rewarding stars, how much of a star can an associate be? They'll get theirs when they make partner, or they won't. Give me one good junior partner over an army of associates any day, I'll pay a lot less.

"These bonuses get passed on to clients in the form of increased rates."

Do you have any proof of this? Increased rates are a result of increasing PPP. Bonuses pretty much stay flat year to year. So how can rates be increasing if bonuses stay nearly the same?

To poster number 83 - Do I have proof? Yes. Rates rose dramatically once bonuses became standard. Did PPP? Yes, they did as well. I guess I could ask if you had proof bonuses had nothing to do with rates. At the end of the day, bonuses are part of all-in compensation. If partners want to pay associates more in the form of automatic yearly pay increases and bonuses while keeping their PPP stable or rising, then they need to raise rates. This doesn't have to be about bonuses, as you are suggesting. If firms wanted to continue to pay bonuses but say no raises this year, would be fine with me. Hell, if firms wanted to cut salaries and raise bonuses, also good. What is not good is that my rates increase. When are law firms going to realize that they are just a service that is becoming increasingly commoditized. Any firm that tries to raise rates in an enrionment when their clients are all being told to cut, at the same time they give "customary" bonuses, is begging to be cut from my roster of firms and that of many of my colleagues. The days of feasting on investment bank fees are over. The firms that get this will be the ones that survive. And to som eof the others saying that clients care more about what partners make? No, that's not accurate. The partners provide me value. They have the depth and breadth of experience to answer technical questions and provide me with strategic advice. They have the experience and judgment to help me on my most complicated issues. Associates do none of these things. I already have a policy in place that no associate thrid year or below can bill on my matters. They can work if they want as training, but that is on the firm dime. They just do not provide value equal to their billings. Partners do, if they are selected correctly. What NYC associates can do, so can associates in my local firms, for a lot less money, or my less experienced inhouse staff. I increasingly have less and less need for expensive NYC associates. And I think over time the partners will see they have less and less need for associates and will de-leverage. Some national firms are already doing this, with mostly partners only in NYC offices, using associates in lower-cost areas. This model makes a lot of sense. The partner compensation model makes sense to me based on the value they bring to me. This is the same reason why our CEO makes a lot more than our more junior folks.

From the author of message 82.

To poster number 83 - Do I have proof? Yes. Rates rose dramatically once bonuses became standard. Did PPP? Yes, they did as well. I guess I could ask if you had proof bonuses had nothing to do with rates. At the end of the day, bonuses are part of all-in compensation. If partners want to pay associates more in the form of automatic yearly pay increases and bonuses while keeping their PPP stable or rising, then they need to raise rates. This doesn't have to be about bonuses, as you are suggesting. If firms wanted to continue to pay bonuses but say no raises this year, would be fine with me. Hell, if firms wanted to cut salaries and raise bonuses, also good. What is not good is that my rates increase. When are law firms going to realize that they are just a service that is becoming increasingly commoditized. Any firm that tries to raise rates in an enrionment when their clients are all being told to cut, at the same time they give "customary" bonuses, is begging to be cut from my roster of firms and that of many of my colleagues. The days of feasting on investment bank fees are over. The firms that get this will be the ones that survive. And to som eof the others saying that clients care more about what partners make? No, that's not accurate. The partners provide me value. They have the depth and breadth of experience to answer technical questions and provide me with strategic advice. They have the experience and judgment to help me on my most complicated issues. Associates do none of these things. I already have a policy in place that no associate thrid year or below can bill on my matters. They can work if they want as training, but that is on the firm dime. They just do not provide value equal to their billings. Partners do, if they are selected correctly. What NYC associates can do, so can associates in my local firms, for a lot less money, or my less experienced inhouse staff. I increasingly have less and less need for expensive NYC associates. And I think over time the partners will see they have less and less need for associates and will de-leverage. Some national firms are already doing this, with mostly partners only in NYC offices, using associates in lower-cost areas. This model makes a lot of sense. The partner compensation model makes sense to me based on the value they bring to me. This is the same reason why our CEO makes a lot more than our more junior folks.

From the author of message 82.