Read carefully, because Kaye Scholer is hoping you won’t.
Last night, Kaye Scholer announced a match of the Cravath bonus scale from this season. And a match of the Cravath spring bonus from last season. But that has nothing to do with 2012 spring bonuses, which Sullivan & Cromwell alluded to last night. So even as Kaye Scholer associates are being “made whole” from the firm’s cheap stance on the last bonus season, it looks like they’re already starting this bonus season in the hole.
Keeping you updated about the latest bonus shenanigans is what Above the Law is here for….
Last spring, Kaye Scholer took a lot of heat for refusing to match spring bonuses. Eventually, the firm promised to offer a “make whole” bonus at the end of the year, but clearly Kaye Scholer partners were reluctant to stay near the top of the New York associate compensation market.
Perhaps Kaye Scholer partners were reluctant for good reason. The firm made our list of firms that are paying the most (as a percentage of profits per partner) to keep up with Cravath. That doesn’t mean that Kaye can’t afford to pay a market-level bonus; it just means that it hurts them a little more to do so. In a rational world — one in which law firms paid bonuses based on their own financials, as opposed to following what Cravath does — Kaye Scholer bonuses would probably be a little bit less than Cravath bonuses.
Of course, in a rational world, Cravath bonuses would probably be much larger to begin with, and lawyers wouldn’t be working 80-hour weeks just to keep up. Just because rational people work in Biglaw doesn’t mean that the business operates reasonably.
But it is difficult to pull a fast one on groups of trained attorneys. If you look too quickly, the bonus chart Kaye Scholer circulated internally yesterday makes it look like the firm is paying spring bonuses for this year’s cycle. Kaye Scholer has two “tiers” of associates. One is on a 1950-hour scale, the other is on a whopping 2400-hour scale. Here’s how the bonuses for the two tiers are expressed in the Kaye Scholer memo:
You can see the conceit here. Kaye is putting together last spring and this fall’s bonuses into one payment, but that’s not what really happened. What really happened is that Kaye withheld the spring bonus from last spring until now, matched Cravath’s low-ball, year-end bonus, and makes no promises about paying a spring bonus this spring when S&C (and most other firms) most likely will make an additional reward.
I warned you in September that some firms would probably try to pull this. The people at Kaye Scholer know exactly how much they are getting paid relative to their Biglaw colleagues, and when. But if putting it like this can confuse some media types who aren’t paying attention, or new recruits, so be it.
At least Kaye Scholer did keep its word. When the firm came out with this wacky spring bonus withholding program, many associates thought the firm would be too cheap to even follow through on the promise. Kaye Scholer is also paying a stub year bonus for the class of 2011. So, there’s that.
But I wouldn’t expect Kaye Scholer to be a timely follower of spring bonuses for this cycle. Maybe they just can’t afford it?
Click ahead to the next page to view Kaye Scholer’s full bonus memo (or just click here).
UPDATE (12/21/11): Here’s a more positive take on the Kaye Scholer bonuses.