The law firm of Kirkland & Ellis has a colorable claim to being the nation’s best overall law firm. It’s so big, it’s so profitable, and it’s so strong across such a wide range of practice areas, from bankruptcy to products liability litigation to private equity to M&A.
(No, my holiday punch wasn’t spiked with Kirkland Kool-Aid; I think this is an objective assessment. I’m not saying K&E definitively is the best firm, just that it has a decent claim to the crown. And note the “overall” qualifier: different firms may beat Kirkland in different specific practices, but K&E has an impressively broad range of strengths.)
So Kirkland might be the best firm in the country. Does it pay the best bonuses?
In years past, you’d often hear the refrain that “Kirkland SHATTERS the market” on bonuses. But this year, according to our K&E sources, it seems like the firm is content to merely scratch the bonus ceiling….
Now, don’t get us wrong — Kirkland associates will still do better than the Cravath scale. K&E bonuses are individualized — based on seniority, hours, and performance (e.g., “above class, “with class,” “below class”) — but even the lowest-paid Kirkland associate will beat the market. Here are some numbers from a K&E source, with Cravath amounts in brackets:
Class of 2012: range of $12-29k, avg of $15.7k ($16.2k avg in 2012) [Cravath: $10k]
Class of 2011: range of $14-41k, avg of $22k [Cravath: $14k]
Class of 2010: range of $20-59k, avg of $32k ($35.8 avg in 2012) [Cravath: $20k]
Class of 2009: range of $27-79k, avg of $48.2k ($55k avg in 2012) [Cravath: $27k]
Class of 2008: range of $35-80k, avg of $56k [Cravath: $34k]
Class of 2007: range of $50-90k, avg of $75.6k [Cravath: $40k]
So it’s not a question of beating Cravath; it’s just a matter of the margin of victory. And on that front, there’s some disappointment. Here is a representative message from one Kirkland associate:
Kirkland is announcing tonight, at least in some offices. Here’s the dirt: had a couple hundred hours above 2k; bonus somewhere between [1.5x and 2x Cravath].
My take: In a way, kind of same exact news as last year. Yes we beat Cravath and the other locksteps. But not by the multiples like in the old days. Remember, profits and revenue are both up again.
We don’t have numbers on Kirkland’s financial performance for 2013, but in 2012 — when my colleague Elie Mystal noted that “if 2012 PPP numbers come out and show that things are going well, associates who helped the firm get there are going to be even more disgruntled” — K&E in fact did very well. According to the latest Am Law 100 rankings, the firm enjoyed $3.25 million in profits per partner in 2012, up 6.6 percent from 2011.
Back to our tipster:
To me, this “same as last year” feeling is the big news. People billing [a little over 2000] are the core K&E associates. This is now the second year in a row where they’ve been satisfied to compensate that group in a sort of limbo world of better than Cravath — not that was ever a question — but not “how many multiples of Cravath?”
That’s not what the word on the street was about K&E when I was doing OCI. Not to come across as ungrateful; more an observation: it seems like they’re just moving to a new normal. Everyone thought 2011 was a return to how things used to be before the downturn here; that year is looking like the exception now.
Here are a few more reactions from Kirkland sources to the 2013 bonuses:
- “A little over 1.5x Cravath. Not the market-shattering bonuses of yesteryear.”
- “I’m happy with it, all things considered. My hours were very high [above 2500], so I was hoping for something like this.”
- “Not horrible, but certainly not a market shattering number.”
- “The averages are more than market, but less than last year, which is disappointing.”
As is always the case with K&E’s individualized system, how you feel about the bonuses will depend on your hours and your rating. This person was quite pleased:
Junior associate, pretty low billables, [around 2x Cravath]. Super happy.
I know people who billed pretty low for the year and got close to double Cravath. Close to double Cravath seemed to be the floor for the vast majority of associates. I also know people who billed tons of hours who are kind of pissed.
Always a calculated risk every year whether each and every hour above 2300 is truly worth it in terms of the potential bonus money.
Another reader offered a similar summary:
Low billers extremely happy. High billers with no “above class” or “top of class” rating — not happy. High billers with “above class” or “top of class” rating — very happy.
To get the big money at K&E, you can’t simply bill more hours. The quality of those hours has to be above your class year.
Fair enough. One shouldn’t reward the mere churning of hours; instead, big bonuses should go to people who bill many hours and do top-notch work.
In any event, even low-billing Kirkland associates did better than their counterparts at lockstep shops. Congratulations to Kirkland & Ellis associates on another year of market-beating, even if not “market-shattering,” bonuses.