COMMENTARY BY ELIE MYSTAL
(Added as an UPDATE around 3:35 p.m.)
Elie here. First of all, I don’t know why Dealbook has trouble remembering how things were like in the good old days, but these bonuses do not represent a return to greatness. Dealbook says — or said, before the line got edited out — “Indeed, the figures are now back to pre-financial crisis levels.”
That is plainly not true. In 2007, the last “pre-financial crisis” year for Biglaw bonuses, the “special” bonus was $10,000 for first year associates. That was $10,000 on top of regular year-end bonuses of $35,000 for first year associates. The most-senior people received a $60K regular bonus and a $50K special bonus. Here was the scale in 2007:
Class of 2007 — Year end bonus $35,000 (prorated), no special bonus
Class of 2006 — Year end $35,000, special $10,000
Class of 2005 — Year end $40,000, special $15,000
Class of 2004 — Year end $45,000, special $20,000
Class of 2003 — Year end $50,000, special $30,000
Class of 2002 — Year end $55,000, special $40,000
Class of 2001 — Year end $60,000, special $50,000
Class of 2000 — Year end $60,000, special $50,000 (same as 2001)
Now those are salad days.
This is… nice? Acceptable? The new normal? For junior associates, these bonuses aren’t even as good as the 2008 “Half-Skadden” bonuses that came out just months after Lehman collapsed.
Bonuses are up this year for the first time since Lehman collapsed, and that is worth celebrating. I see this as bonuses going “up,” as opposed to staying static or going down, because I view the 2011 spring bonuses as additions to 2010 total bonus comp, not 2011.
And you never know — there could be “spring bonuses” on top of this in 2013, once all the big firms get their final collections in. Some partners are making bright predictions about the M&A market for the rest of 2012.
Either way, these numbers make me hopeful that firms are trying to keep their top talent from jumping ship in-house or to other lucrative business opportunities. These bonuses could be an indication that the job market has finally started to ease up for the people at the top. That’s a good thing.
But it’s not pre-financial-meltdown level. It’s not even close. And people also need to remember that Biglaw firms will be paying these bonuses to far fewer people than they did before the crisis. The bonuses aren’t the only thing down from 2007; class sizes are down too.
Still, if you have managed to hang onto your BIglaw job, Cravath put a number on the board that should make you happy. Or at least not murderously angry given the past few years. And I’m sure CSM partners can still expect to get high-fives from partners around Biglaw as other firms rush to match.
UPDATE (11/28/2012, 9:30 p.m.): The reference to bonuses being “back to pre-financial crisis levels” seems like an honest mistake by DealBook. Their write-up now reads, in pertinent part: “[T]his year’s numbers are still far below the year-end bonuses before the 2008 financial crisis. For 2007, for example, Cravath paid bonuses ranging from $35,000 to $110,000.”
COMMENTARY BY ABOVE THE LAW READERS
(Added as an UPDATE around 3:55 p.m.)
From a Cravath source:
The fact they emailed it out, rather than printing hard copies (like is sometimes done), suggests they want this to be sent around easily. Also, pro-rating for stub first years is not always done….
I thought [X] was about where it would come out for my class, so I am pleased. I wouldn’t mind getting paid a little earlier than December 21, but I can wait. [This year's scale] is a definite improvement over last year’s scale.
From a Skadden source:
This is ridic. Skadden will crush this.
UPDATE (11/27/2012, 4:00 p.m.): Additional reader reactions. From a Cravath correspondent:
Satisfied. Glad firm is stable. Understand reality of market — minimal associate leverage. Work this year was reasonable [for me]…. so crushed associates may have a different view.
From a Debevoise source:
[The Cravath number for my year] is more than [X], which I received last year, and more than [Y], which I was expecting this year. So, yes, I am happy.
Feel free to add additional opinions in the comments. Here’s the full memo.
CRAVATH SWAINE & MOORE — MEMORANDUM — YEAR-END BONUSES
We are pleased to announce that the year-end bonus amount for each associate class is as follows:
Class of 2012 — $10,000 (pro-rated)
Class of 2011 — $10,000
Class of 2010 — $14,000
Class of 2009 — $20,000
Class of 2008 — $27,000
Class of 2007 — $34,000
Class of 2006 — $40,000
Class of 2005 — $50,000
Class of 2004 — $60,000
Bonuses will be paid on Friday, December 21. Absent special circumstances (approved by the Managing Partners), an associate must still be at the Firm on December 21 to be eligible for the bonus. The Firm does not apply any billable hour or similar criteria in determining eligibility for associate bonuses. As always, while receipt of the bonus for each individual attorney is dependent on suitable performance at that attorney’s experience level, virtually all of our associates will receive the full bonus.
Attorneys who were with the Firm for only part of the year or are working part-time will receive a pro-rated portion of the applicable class-level bonus. Bonuses for senior attorneys, specialist attorneys, discovery specialist attorneys and foreign associate attorneys will be determined on an individual basis.
Thank you very much for your hard work during 2012. We wish you a happy holiday season and new year.
E. R. Chesler
C. A. Parker
R. H. Baron
W. V. Fogg
Earlier: New Partner Watch: Does Cravath’s Bumper Crop Bode Well for Biglaw Bonuses?
If Partners Really Have Souls, Bonuses Will Be Early This Year
Breaking: Cravath Bonuses Are Out; Welcome to the 2011 Bonus Season!
Cravath Bonuses Are Out: The 2010 Bonus Season Is Under Way!
Breaking: Cravath Bonuses Are Out and Down (2009)
Associate Bonus Watch (2008): Cravath Offers Less Than Skadden
Cravath Announces Bonuses — ‘Special’ and Otherwise!!!