Associate Bonus Watch: Wachtell Bonuses Go Below 100 Percent
It’s getting ugly out there. For the first time since 2005, associate bonuses at Wachtell Lipton have dipped below 100 percent of base salary.
For those of you who aren’t familiar with the subject, here’s how bonuses at WLRK work. First, they’re lockstep, not tied to any billable-hours requirement or performance review. Everyone in the same class receives the same bonus.
Second, Wachtell bonuses are calculated as a percentage of base salary. Sometimes the percentage is the same from class to class; sometimes it’s not. In 2006, for example, there were divergences from year to year. When there are divergences, they generally favor seniority, with more-senior associates receiving bonus percentages that are higher than those given to juniors.
In 2006 and 2007, total bonus compensation at Wachtell (including midyear bonuses in 2006) clocked in at or above 100 percent of base salaries . This year, however, the bonus percentage sank below that threshold. We don’t have the exact number, but we’re hearing around 70 percent of base salary — “good” and “better than expected,” say two sources, but not as good as recent years.
(If this figure isn’t consistent with what you know, please email us. Please mention the class year that is the basis for your information, since sometimes the bonus percentage varies from class to class. Due to that variability, plus the lack of a firm-wide bonus memo, bonuses at Wachtell are less transparent than at other firms.)
Recall also that Wachtell base salaries are on a scale that is slightly above market. First-year associates at WLRK earn a base of $165,000 rather than the usual $160,000 (no Latham shenanigans here). A base salary of $165,000 and a 70 percent bonus would bring total compensation for a (non-stub-year) first-year to just over $280,000.
A Wachtell associate earning under $300,000 is a sad thing. But these are sad times.
Even the Wachtell holiday party was scaled back. More details, plus predictions about the firm’s future, after the jump.
The Wachtell Lipton holiday party took place on Monday night at The Pierre. The party was supposed to be toned down to reflect the dire times, and it was slightly more sober than in past years. For example, there was no band for dancing, just a piano player.
In other respects, however, the party was business as usual. Guests enjoyed lobster, and oysters, and an open bar with top-shelf liquor. Not bad for a recession.
Some celebration is not completely surprising. On the whole, Wachtell had a very good year.
When profit-per-partner figures for 2008 roll in next year, expect PPP at WLRK to remain high. Thanks to firm co-chair Ed Herlihy, who along with Sullivan & Cromwell’s Rodge Cohen dominates the world of banking M&A, Wachtell received tons of work related to the Wall Street meltdown. From the WSJ’s Deal Journal:
[Herlihy] has become something of a one-man league table. By Dealogic’s count, he and his team has provided legal advice on more than $73 billion of deals this year, including Bank of America’s $2.5 billion acquisition of Countrywide Financial; J.P. Morgan Chase’s $1 billion acquisition of Bear Stearns; Lone Star’s $1.5 acquisition of CIT Group’s mortgage business; Bank of America’s pending $44.7 billion acquisition of Merrill Lynch and near-acquisition of Lehman Brothers Holdings; Mitsubishi UFJ’s 21% stake in Morgan Stanley as well as Morgan Stanley’s brief talks with Wachovia; and Wells Fargo’s pending $15.1 billion acquisition of Wachovia. And that isn’t even including the U.S. Treasury’s takeover of Fannie Mae and Freddie Mac, which was another of his deals.
But that was then, and this is now. Think of the flurry of bailout- and meltdown-related M&A work as a prisoner’s last meal. Wachtell’s profits are driven by merger work, which is drying up due to credit market conditions. Denizens of 51 West 52nd Street expect 2009 to be ugly.
Based on its 2008 results, Wachtell easily could have paid bonuses equal to base salaries — especially since it’s so small compared to its competitors, with just over 200 lawyers, and has such a low associate-to-partner ratio. In going below the magic number of 100 percent, it’s sending a message to its associates. In the immortal words of Margo Channing (Bette Davis) from All About Eve, “Fasten your seat belts. It’s going to be a bumpy night.”
P.S. Even if 2009 is a bad year for Wachtell, “bad” is a relative term. We were at Wachtell from 2000 to 2003, and even during the 2001 recession, WLRK bonuses were still much higher than those at peer firms. To read more about our experience at the firm, click here.
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Comments
first!
blah blah
first!
oh damn -- i thought i had number 8 all wrapped up.
nicely done, 1, nicely done.
-2
Wow, a clear post that explains everything with a minimum of snarkiness (and humor, sparingly and appropriately used).
Must be a Lat post.
It *is* a Lat post.
I'll be sure to keep WLRK associates in my prayers. Please.
OMG NO ONE IS EVER GOING TO WORK AT WACHTELL EVER AGAIN!!!
they totally screwed themselves over. i blame wachtell.
i'm totally going to OMM. wachTTTell totally screwed their own associates over too and all the partners are greedy. they are so going to be 100 on vault next year.
good post. Can't wait till elie comes up with some clever name like Quad-skadden or whatever it works out to be. GOOD TIMES.
"For the first time since 2006..."
Aw, come on David. You mean that they were 100% base for a whole two years. That alone doesn't make today's news as scary as you wish it were.
There are a lot of sad things in the world. ANYONE making $280,000 is not on that list.
"For the first time since 2006, associate bonuses at Wachtell Lipton have dipped below 100 percent of base salary."
So, basically, Wachtell paid 100% bonuses in 2007 - or one year running. Quite a streak.
Second, what's up with this quote "We were at Wachtell from 2000 to 2003"? We?
"A Wachtell associate earning under $300,000 is a sad thing. But these are sad times."
REALLY? No, REALLY? Most ridiculous statement of the year.
There are a lot of sad things in the world. ANYONE making $280,000 is not on that list.
12 -- You are missing the irony gene, aren't you? So sad.
12, 13 - Obviously tongue in cheek. Why is everyone here so serious?
First to say that Ellie is a douch for disabling the comments on the Michigan 2L story.
Wow, you natives are getting seriously restless.
Come on, there was humor at that post.
Anything dealing with the big W's bonus system has to taken with a grain of salt. A big grain of salt, in the shape of a dollar symbol. A dollar symbol that is worth more than your salary, usually.
Anyway, I thought the post was funny. And I wish my bonus were that big.
11 - He has been using the royal "we" since this blog started (and, actually, on his previous blog). Get with it.
14---No, I honestly thing you guys are that delusional and self-obsessed.
-12
Lat! Come back!!!
S&C, why have you forsaken us?
Hole. E. Shit.
Perspective is going to come down like the angry fist of god in 2k9.
(> $300k = sad) = idiocy
16 -- Haha. Good point, just saw that.
Stopped the commenting on that post just in time, right after the 358th.
Trust me, you just knew comment 359 was going to be nasty and uncalled for.
11 - he must've meant 2005. it was 100% in '06 and '07. My understanding is that 100% is in good years (i.e. 1999 or 2006) and slightly less in bad years (i.e. 2003 or 2008)...
This post sucked! MysTTTal.
Oh--it's by Lat?
This post rocked!
11 - he must've meant 2005. it was 100% in '06 and '07. My understanding is that 100% is in good years (i.e. 1999 or 2006) and slightly less in bad years (i.e. 2003 or 2008)...
CRAVATH SPREAD THE WLRK CHEEKS SO I CAN SMELL THE NOT SO JUICY INSIDES!
hmm...so does that make wachtell hexa- or hepta-skadden?
maybe S&C should match so that elie can cream his pants and then eat it afterwords - it'd be a nice afternoon snack.
mmmm....cream
I CANNOT BELIEVE DAVID LAT SAID MAKING UNDER $300,000 IS A CAUSE FOR "SADNESS." THINK OF ALL THE LAID OFF AUTOWORKERS!
29 - yes, I'm thinking of the greedy UAW members who would rather see the Big Three go down than make any concessions.
The royal "we". You know, the editorial.
WLRK has juicy insides? Thats just nasty.
10/13 here. Yes I do have a sense of irony. But as a govnt lawyer there is only so much whining about bonuses and salary freezes that I can take. Then again, I will go home at 5pm today and every day.
First!
10/13 here. Yes I do have a sense of irony. But as a govnt lawyer there is only so much whining about bonuses and salary freezes that I can take. Then again, I will go home at 5pm today and every day.
Lat did change it: "For the first time since 2005, associate bonuses at Wachtell Lipton have dipped below 100 percent of base salary."
In other words, 2006 and 2007 = 100 percent bonuses.
idiots--he was being sarcastic about the $300,000
33 -- big deal, I'll stay the extra few hours a day to make 4X more than you do.
16, are you kidding? That threat is still in need of some serious moderation.
Wait.....so last year, a Wachtell 6th year made over $500,000 (base of $255 plus 100% bonus?) Well hallelujah, and holy shit! Where's the Tylenol?
Lat, may I suggest making some typos in your next post? Nothing too glaring, we'll realize what you're trying to do, but just enough so you don't make Elie look/feel bad.
16: Agreed, Elie is a douche, not just for closing comments in the Michigan 2L thread, but in general as well.
Wow. First time I've ever heard a Wachtell guy acknowledge the existence of "peer firms."
I'm not an Elie hater, but there is a big, big difference between Lat posts and Elie posts.
Of course, Lat worked at Wachtell.
really--who cares about bonuses anymore???
"Then again, I will go home at 5pm today and every day."
And that is precisely why you need a nice, warm cup of STFU.
really--who cares about bonuses anymore??? I'm just happy to have a job!
firsty mcfirsterson.
TIME FOR CADWALADER'S RISE TO THE TOP!!!
firsty mcfirsterson.
I'll admit to being stupid, ignorant and confused, but can someone please confirm that this means that Wachtell paid 1st year associates a bonus of $115,500 this year, which is contrasted with a bonus of $17,500 for 1st year associates at most other top big law firms?
I wouldn't like to have bonuses close to 100% That just means the partnership is being greedy all year long earning YOUR interests, only to cash it out in december at a discount.
And besides, who wants money this days. All I ask for is peace of mind and good ol' extra time to frolic.
Yes 51 -- that's what it means.
The comments about the 2006 post bitched about Lat's writing. Elie just has to wait two more years until he will be accepted.
Latty, you are so in thrall to your former firm
As an associate at Wachtell, all I can say is...
...THIS IS EXCELLENT NEWS FOR JOHN MCCAIN!
Hey MysTTTal:
Get off your fat ass and figure out the bonus situation at CWT. NOW!
Cadwalader bonus just arrived on my desk ... about an ounce of some pretty kind bud. Note said I should need this starting on Friday, cuz I won't have shit to do ... curious.
Where you at Quinn Emmanuel??
so S+C is waiting until... another day?
Amazing..there is no first year worth 280k, let alone 300k+. Still, not bad if you can get it..
Give me a 115k bonus and I quit tomorrow. Life is too short.
52 = jerkoff.
Complain all you want about 3k (max) in interest. I'd take my $115k in bonus and shove 3k of it down your pie hole just to make you shut up
"there is no first year worth 280k, let alone 300k+"
61, WLRK's clients would apparently disagree with you, seeing the rates they pay for those first years' services.
lol at 54 for thinking fat people are ever accepted and lol at 57 for thinking mysTTTal can get off his fat ass.
he's eating a brownie, so leave him alone.
They must have really scaled back if they hired a "piano player" rather than a "pianist." There is, in fact, a difference.
They must have really scaled back if they hired a "piano player" rather than a "pianist." There is, in fact, a difference.
38,
Unless you make 300k or so, I doubt you make 4X what a govt lawyer makes. Considering he/she works 40 hrs per week, actually gets (and takes) 4 weeks off per year, plus every federal holiday, you all probably make about the same per hour.
63, 52 here. What if they are pulling a ponzi scheme? Who's telling you they aren't doing that?
And what about the extra time to frolic? What about the frolicking?
Not such a jerkoff now, am I? Dillweed.
68,
Actually, my base is $300K not including bonus, and I actually take 4 weeks vacation.
So go crawl back into your hole with your little hourly wage calculations, k?
"In 2006 and 2007, total bonus compensation at Wachtell (including midyear bonuses in 2006) clocked it at or above 100 percent of base salaries ."
did you mean "clocked in at or above"
and there's a space between "salaries" and the period.
i am worrk at BIG BIG-law; me make 220000000 base + 400% boneus ...
70,
Why are you so angry? I'd think you'd be a bit more pleasant...
70 - I call bullshit. There is no fucking way you take a full 4 weeks of vacation working in BigLaw, unless you are SUPER efficient and smart as a whip. In which case, good for you, but I think you're full of shit; if you were that smart, you'd be at a hedge fund or at least a mutual fund, not a fucking lame ass BigLaw associate.
what about paul hastings?
I donno.. Assuming a relatively efficient market, there must be a reason Wachtell associates get paid so much... i.e. a communal bukkake on new associates....
74, that's a pretty dumbass thing to say. What you're implying is that no BigLaw associates are "smart as a whip." I think you're so full of shit that its liquid form is oozing out of all your orifices as you type stuff online.
I donno.. Assuming a relatively efficient market, there must be a reason Wachtell associates get paid so much... i.e. a communal bukkake on new associates....
Why didn't anyone catch this typo: "In 2006 and 2007, total bonus compensation at Wachtell (including midyear bonuses in 2006) clocked it at or above 100 percent of base salaries . "
Clocked it at? Not to mention the extra space between the "s" in salaries and the period.
LaTTT
79 just saw 71.
*Hangs head in shame*
can someone explain how wachtell is able to pay so much more than everyone else?? I just don't get it.
the quality of wlrk associates is unquestioned by any except morons. unlike the "other" top firms (y'know, those with as many summers as all fulltime associates years 1 - 5) the people who work at wlrk are without exception EXCEPTIONAL intellects.
79 YOU are a douche!
81, they have a strong billing rate for all of their associates. The firm is not huge so there are no ridiculous overhead expenses. Also, the firm will sometimes forgo collecting by the hour and instead take a percentage of the deal - sometimes done in the massive M&A activity that they handle.
You must also keep in mind that they are pretty much the most prominent M&A firm in the world working in the busiest finance/banking city in the world - New York. They seriously have some involvement in almost every major deal.
Thanks, 82, 84.
-81
Govt lawyers start out at 2 weeks vacation, work their way up to three weeks after 3 years of servce, and don't get four weeks until they've been there a couple decades.
So, does that mean that an associate at BSF now has the highest earning potential, assuming they're willing to put in 2700+ hours?
So the guy that goes 7 years at WLRK and then does not make partner makes about $1-1.5M more during that 7 years than somebody that goes the full track at CSM and then does not make partner.
Many Boies 1st years will be making more than Wachtell 1st years.
88: Yes, and since you work about the same hours and have little chance of getting the brass ring at either, the choice is easy.
Wachtell is magic!
http://pages.stern.nyu.edu/~wstarbuc/wachtell/butterfly.html
booo hoo hooo only $280,000 a year. so sad, too bad.
90: The chance of getting the brass ring if you want it at WLRK is far higher than at CSM. WLRK hires around 30 associates a year and makes four or five partners. CSM hires 100+ associates a year and makes four or five partners.
Do the math.
What are the odds of landing a gig at WLRK if I am coming off a Circuit Court clerkship, but didn't spend my summer with them?
94: Minimal on average but quite doable if you're a badass. Their hiring standards are much tougher for people applying outside of 2L OCI.
Nonexistent if you clerked for some psychotic who distributed anti-Catholic pr0n as "jokes" - you are fucking poison then.
WachTTTell!!!!!!
11, Lat uses the royal we when writing. It's why we miss him. SO BAD.
lat is the alpha and omega of legal blogging. dude freaking RAWKS
Expect WRLK bonuses to drop to 20-40% next year. They managed to a lot of M&A work resulting from collapsing banks and government bailouts. Expect much of that to dry up next year and the year after.
That was some serious WLRK puffery. Not like "Chairman Breeden would say that's puffery," but like "Even Chairman Cox would say that's puffery."
That said, good for WLRK associates. They work very hard and deserve some kind of extra compensation for the extra hours.
CWT announced bonuses yesterday, interesting a whole whole topic is dedicated to their holiday card, but they are the one firm that is skipped over for bonus announcements.
- not a cwt associate
CWT announced bonuses yesterday, interesting a whole whole topic is dedicated to their holiday card, but they are the one firm that is skipped over for bonus announcements.
- not a cwt associate
As a secretary who received a $100 gift card as a bonus from our Big Law firm administration, and who has endured a wage freeze for the past 18 months, I'm not feeling a bit sorry for these attorneys. A first-year associate earning $280,000 in total compensation? That is obscene. That is why Big Law is in serious trouble. Sooner or later, in-house counsel are going to figure it out and stop using Big Law. Don't you guys see that you are pricing yourselves right out of the market?
Does Wachtell do anything any better than any other biglaw firm? Say CSM, Skadden, Simpson, DPW or the likes?
What would be the added value for the client? I assume they charge higher fees, and I understand they don't do it by the hours.
to 105:
Yes. They make fewer mistakes. They work faster. They're smarter. They have more experience in their niches.
Elie is the Jason Blair of blogging. Damn affirmative action baby!