Yesterday I got to chat with H. Rodgin Cohen, one of the nation’s leading corporate lawyers. Cohen has been accurately described by the New York Times as “the dean of Wall Street lawyers” as well as the “trauma surgeon of Wall Street” (for his heroic work rescuing the nation’s financial system during the 2008 financial crisis).
When he’s not working on bank mega-mergers, Cohen plays a major role in running the venerable firm of Sullivan & Cromwell, where he has spent his entire legal career (except for two years as an Army lawyer). He served as chairman of the firm from 2000 until 2010, when he passed his crown to Joseph Shenker, but Cohen continues to serve in the role of “senior chairman.”
So of course I asked Rodge Cohen about a very hot topic: spring bonuses. What did he have to say?
Let’s back up a bit. How did I have the occasion to ask Cohen about spring bonuses? Have I been following the poor man around the country, like Michael Moore in Roger & Me, constantly confronting Cohen about why S&C has not yet announced spring bonuses (despite heavily hinting, in its year-end bonus announcement, that they’d be forthcoming)?
No, I haven’t been carrying out a “Rodge & Me” stalking campaign. Yesterday I happened to be up in New Haven to speak to the Yale Law & Business Society and Yale APALSA about the business of law school and possible reforms to legal education. I noticed that Rodge Cohen was delivering the annual Raben Lecture later that afternoon, so I decided to stick around for his remarks.
(I then remained at the Law School for yet another event, an evening presentation by Wachtell Lipton partner David Anders, which was also a great talk. Anders, a former federal prosecutor, discussed his work as an AUSA on such high-profile matters as the WorldCom fraud and the Frank Quattrone trials.)
In his Raben Lecture, Cohen delivered a deeply thoughtful and impressively detailed analysis of regulatory responses to the financial crisis. His address was meaty, detailed, and technical at times; I will summarize it here merely by observing that Cohen is something of an optimist about the post-crisis regulatory response. He believes that a combination of a strengthened supervisory approach, additional formal regulation and legislation, and more-aggressive enforcement policies have resulted in a safer and sounder banking system. He does not believe that breaking up the big banks is the solution to the “too big to fail” problem; to the contrary, he notes that size has its virtues, such as diversification and synergies. He also pointed out that banks are in the risk-taking business — credit risk, interest-rate risk — and you can’t eliminate all the risk without eliminating the business as well.
So yes, about those spring bonuses. During the Q-and-A session, after various Yale law professors asked hyper-technical finance questions, I posed two questions to Cohen. First, as something of a diversionary tactic, I asked him for his thoughts on how we could improve regulation of the “shadow banking” sector, which he discussed in his speech as one area left relatively untouched by recent reform. Then I asked: “Second, on behalf of the readers of the website I run, AboveTheLaw.com: spring bonuses?”
This resulted in uneasy laughter in the Yale faculty lounge. Cohen blushed and was speechless for a few seconds, but he quickly regained his composure.
“Let me take your second question first. Spring is not yet done,” he said, with a merry twinkle in his elfin eye. “We go by the calendar, not by the weather,” he added, to laughter from the audience (an apparent allusion to warm weather that arrived in New York well before the official start of spring on March 20).
Spring is not yet done. The fat lady has yet to sing. That sounds encouraging, right? I and several others in the room read Cohen’s comments as a sign that spring bonuses will be announced, in the fullness of time. And if S&C announces, it’s highly likely that S&C’s “peer firms” will follow suit, just as they did last year.
(As for why S&C hasn’t yet announced, perhaps they want to hold off in order to keep potentially departing associates at the firm for a while longer? Spring bonuses can be thought of as a retention tool; at the margins, some associates might stick around for a few extra weeks or months in the hope of an extra bonus.)
But then Cohen dialed it back ever so slightly. After his “spring is not yet done” comment, he added, “But I’m no longer chairman, so it’s not fair for me to comment on that.”
I’d like to thank Rodge Cohen for being such a good sport about my question, which did put him on the spot. He fielded my query with a smile and gentle grace — and then proceeded to give an excellent answer to my first question about shadow banking. After his talk was done, I approached him and we chatted again, and he raised with me a subject of keen interest to him: student loan debt (an area where he has done some work). He noted that even though student loans have done great things for this country, the dynamics of this have changed, as a result of tuition increasing at a much faster rate than either incomes or inflation — a situation that law students know about all too well.
Student loans. That’s one reason why spring bonuses, even if the amounts are far from life-changing, do get people so excited. Anything that can bring a young lawyer closer to that coveted life benchmark of a zero net worth is a good, good thing.
Spring Has Officially Sprung. Now, About Those Bonuses… [Am Law Daily]