Associate Bonus Watch 2008, Bonuses, Money, Skaddenfreude

Associate Bonus Watch: Davis Polk & Wardwell Joins Cravath/Simpson in Race to the Bottom

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Another law firm informed associates that their hard work was worth half of what it was a year ago. Davis Polk & Wardwell is the latest firm to announce Half-Skadden bonuses.

The official DPW bonus structure is as follows:

Class of 2008: $17,500 (prorated)

Class of 2007: $17,500

Class of 2006: $20,000

Class of 2005: $22,500

Class of 2004: $25,000

Class of 2003: $27,500

Class of 2002: $30,000

Class of 2001 and senior $32,500

So much for elite law firms paying their associates at the top of the market. Instead, Cravath has succeeded in opening the door to the “thank you sir, may I have another” theory of associate retention and company morale.

It could be worse. These guys are are still getting a bigger bonus than law students who interviewed with Skadden this year. Yay seniority!

What is particularly annoying about the DPW memo is that they act like they are meeting the market with these bonuses, as if Skadden doesn’t even exist.

We are pleased to announce that associates in good standing will receive a bonus payment as outlined below. …

We thank all our associates for their diligent and skillful efforts as we support our clients in this challenging economic environment.

Sponsored

“Pleased to announce.” Not “horribly embarrassed that we are slavishly short-changing our associates because Daddy-Cravath said it was okay.”

Read the full memo after the jump.


The news from DPW is particularly grating because DPW has been doing great and getting big name work during this market collapse. After all the high-profile work they’ve gotten, you’d think they would trickle some of those fees down to their associates. All indications are that DPW associates have been very busy throughout the market crisis.

But there were some people at DPW who saw this coming. On Saturday a tipster let us know:

[T]here was some sort of partners meeting on Friday 11/21. … [G]iven the timing (the day after Cravath’s announcement) it might have been about [associate bonuses].

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Cravath, Simpson Thacher, and now Davis Polk have all skimped on associate bonuses. And those firms were supposed to be “elite.” Can you imagine what is going to happen with bonuses among firms that weren’t considered to be among the best of the best?

We’ll keep you posted.

Update (12:50 PM): DPW announced the move to AmLaw earlier today. They are reporting that DPW is hoping to save $13 million thanks to this reduction in associate compensation:

By our calculations, the reduction should save the firm roughly $13 million — or about a 3 percent cost savings — based on last year’s Am Law 100 reporting of revenue and expenses.

Read the full memo below.

DAVIS POLK & WARDWELL — MEMORANDUM — ASSOCIATE BONUSES

We are pleased to announce that associates in good standing will receive a bonus payment as outlined below. Bonuses will be paid on December 24, 2008 in the same manner as the regular December monthly payroll, and will be subject to proration for those who arrived after January 1, 2008 and those on part-time schedules or other special arrangements. Bonuses for counsel and other attorneys will be determined on an individual basis and will be communicated and paid according to the normal time schedule.

Class of 2008: $17,500 (prorated)

Class of 2007: $17,500

Class of 2006: $20,000

Class of 2005: $22,500

Class of 2004: $25,000

Class of 2003: $27,500

Class of 2002: $30,000

Class of 2001 and senior $32,500

We thank all our associates for their diligent and skillful efforts as we support our clients in this challenging economic environment.

The Management Committee

Following Pack, Davis Polk to Halve Bonuses [AmLaw Daily]

Earlier: Prior ATL coverage of associate bonuses.

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