Earlier this week, Kirkland & Ellis associates started receiving phone calls about their bonuses. Many associates are reporting that their bonuses “shattered the market.” In the words of one K&E source, “It is mad money. Huge year for everyone here.”
It’s important to note that Kirkland has a “black box” bonus structure, in which the payouts are highly individualized and based on performance and hours. Every year, there are some winners and losers.
Right now we’re hearing a lot of chatter from K&E winners. Many are reporting bonuses that are significantly higher than Cravath — which really isn’t hard to do, given how terribly low the Cravath bonuses are this year (so low that partners at other firms are thanking their Cravath counterparts). More to the point, we’ve got K&E people saying they made more than they would have at Quinn Emanuel (which is impressive!).
But, there’s a catch. While some firms like Sullivan & Cromwell anticipate paying spring bonuses, some of our Kirkland friends are telling us that this bonus is inclusive of a spring payout. So K&E might not pay a spring bonus, even if other firms do…
At Kirkland, they pay high rewards for people who bill a ton of hours. This tip seems exemplary of the riches that are available at the top of the Kirkland scale:
Tipster #1: [Fairly junior associate], 2700 hours, with class, [almost $40K]. Wasn’t expecting anything close to this high. Almost four times the Cravath scale is awesome.
Christ monkeys, 2700 hours? I hope the $40K can buy family and friends.
But you don’t have to kill yourself to make better than Cravath at K&E:
Tipster #2: Calls are being made. I’m [the same class as Tipster #1], more than doubled the Cravath scale (with 2250-2350 hours).
Tipster #3: As a member of the [same class as Tipsters #1 and #2], with reasonable hours, I’m getting almost twice the New York market. Still very pleased that I turned down multiple lock-step V10s to come here….
But there might be a catch. Some (but not all) of our sources report that this bonus is all Kirkland associates will be getting in bonus money associated with 2011. Here’s one associate’s report:
The firm announced bonuses to its associates yesterday by phone (per usual practice). The bonuses were announced in two categories: (1) merit bonus and (2) hours bonus. The message from the firm to its associates is that the bonuses reflect a top of the market bonus, including any expected spring bonus that other firms might pay (i.e., K&E does not expect to pay a spring bonus even if other firms pay one). Based on my conversations with other associates, it appears that the hours bonus have followed the Cravath scale, while the merit bonus has been significantly more.
The following are the figures I have determined:
Class of 2010: $20,000 ($7,500 hours bonus + $12,500 merit bonus)
Class of 2008: $35,000 ($15,000 hours bonus + $20,000 merit bonus)
A second K&E source partially corroborated this, reporting that “[s]ome other people mentioned that they were told that this is inclusive of any ‘spring’ component (but it didn’t come up on my call).”
If other firms do pay spring bonuses, there should still be some K&E associates who come out on top relative to their colleagues at peer firms. But the margins between where Kirkland is versus where lockstep firms end up might be a lot smaller, making the marginal return on billing those extra 100 (or 200 or 500) hours more slight.
On the other hand, other Kirkland sources think there will be spring bonuses (depending on what other firms do). As one of them told us, “No news re: spring bonuses, but if the market pays them, I am sure K&E will follow suit.” (As you may recall, K&E did pay spring bonuses this past year.)
But the spring bonus is an issue for another day. Right now, high-performing K&E associates should rejoice. While Cravath has put everybody in a sour mood heading into the holidays, Kirkland seems to be making people happy.