Biglaw, Bonuses, Money

Associate Bonus Watch: Cahill Gordon Brings the Heat

It’s getting hot in herre [sic] — and not just due to the scorching temperatures we’re experiencing here in New York City. Today we’re experiencing a flare up of Biglaw bonus news. And maybe some partners are starting to sweat, thinking about whether they might have to cough up some extra cash to keep their associates happy.

Okay, that might be a bit of a stretch. The notion of widespread midyear bonuses, comparable to the spring bonuses we saw in 2011, remains laughable an outside possibility. But it’s a little less crazy than it might have seemed a few weeks ago, now that multiple firms have plunged into the summer bonus pool.

This morning we wrote about June bonuses at Quinn Emanuel. Around the same time, we started receiving preliminary reports of July bonuses at Cahill Gordon.

The reports are accurate. Let’s learn about the amounts, as well as Cahill compensation more generally….

UPDATE (11:55 PM): Please note the correction below regarding amounts paid to junior associates.

Mid-year bonuses are nothing new at Cahill. The firm paid them in 2011 and 2010 (and perhaps in other years as well).

What is Cahill doing this year? We haven’t heard from all class years, but based on the reports that we have received, it seems that members of most classes are receiving $10K each. First-year associates, members of the class of 2011, are receiving $5K each.

CORRECTION (11:55 PM): First-year through third-year associates are receiving $5K each, while more-senior associates are receiving $10K each.

These amounts are roughly consistent with prior years at Cahill. They’re a bit lower than the 2011 midyear bonuses, which ranged from $5,000 to $25,000, and closer to the 2010 midyear bonuses, which ranged from $2,500 to $15,000. The 2012 midyear bonuses have less variation: the $5K floor is higher, while the $10K ceiling is lower, and it seems that $10K is the across-the-board amount, without regard to seniority, hours, quality of work, or other such considerations. (Of course, if we’re wrong, please let us know.).

The Cahill midyear bonuses, at the levels of $5K and $10K, are definitely higher than the Sullivan & Cromwell spring bonuses, which ranged from $1K to $5K. The Cahill midyear bonuses are tougher to compare to the Quinn Emanuel June bonuses, since the QE bonuses, which ranged from $2K to $30K, were not lockstep.

Here’s one thing we do know for certain: Cahill associates are doing better financially than their counterparts at Cravath and Cravath-following firms. In December 2011, Cahill paid a special bonus of $10,000 to its associates. This was followed, later in the winter, by bonuses on the Cravath scale. And now the firm is paying another $5K to $10K to its associates.

So, if you count the December 2011 special bonus, the Cravath-level bonus paid later in the winter (around January 2012), and the July 2012 bonuses just announced, most Cahill associates are earning $15K to $20K more than their colleagues at most other major New York law firms. Twenty thousand dollars isn’t a life-changing amount — one might very well prefer to work at Cravath or Davis or Simpson or Cleary, even if it means earning less than at Cahill — but $20K is nothing to scoff at either, and it should be taken into account.

Here’s what one Cahill source shared with us:

I know that this might be “strategic” timing by Cahill (right before summer offers and fall recruiting), but I think it’s a good idea. Cahill doesn’t get enough credit for how well we are doing, which is a factor of how well we are viewed in the New York legal market. Basically, I think our client cred is a lot higher than our layman and law school cred, and I hope our big bonuses will help change that.

The power of pay to shape reputation should not be underestimated. It played a significant role, for example, in Wachtell Lipton replacing Cravath at the top of the law firm prestige rankings.

Will Cahill’s “show them the money” strategy pay off? We shall see. Regardless, it’s nice to have some positive, compensation-related news to report in these pages. Let’s hope that more is on the way.

Here’s some food for thought. Law firm year-end bonuses (and base salaries) have been stagnant for the past few years. Take Cravath, whose bonus scale makes it the market “leader” (in the sense that it’s followed by the highest number of other firms, not in the sense that it pays the highest bonuses). Aside from some tweaks at the top, Cravath’s 2011 bonus scale was pretty much the same as the firm’s 2009 bonus scale.

Given that we’re so far into 2012, it seems unlikely that Cravath or Cravath-following firms will pay midyear bonuses. But could the midyear bonuses of firms like Cahill, Quinn, and S&C exert some upward pressure on year-end bonuses from Cravath et al.? Could 2012 be the year that Biglaw finally breaks out of the 2009 mold in terms of bonuses?

Earlier: Associate Bonus Watch: Summer Fun at Quinn Emanuel (And news from Cahill Gordon too.)
Associate Bonus Watch: It’s Cahill Time (aka Time for Cravath Associates To Feel Bad, Again)

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