Lat here. Going into the 2013 Biglaw bonus season, indicators were looking mixed.
Cravath, the supremely prestigious and profitable law firm that’s the traditional market leader on bonuses — as in the firm most widely followed by other firms, not necessarily the firm that pays the biggest bonuses — announced another large partner class. Last year, that boded well for bonuses.
On the other hand, Biglaw’s overall performance has been somewhat anemic this year. The stock market might be hitting new highs, but many law firms are running in place.
How are they looking? What’s getting stuffed inside associate stockings this holiday season?
When we asked for your bonus season predictions, 54 percent said bonuses would be similar to last year, 34 percent said they would be better than last year, and 12 percent said they would be worse than last year. Perhaps this could be viewed as guarded optimism, with 88 percent of readers saying bonuses would be the same or better.
It turns out that the wisdom of crowds was right. The 2013 Cravath bonus scale is exactly the same as the 2012 Cravath bonus scale. Here is this year’s Cravath scale:
Class of 2013 — $10,000 (pro-rated)
Class of 2012 — $10,000
Class of 2011 — $14,000
Class of 2010 — $20,000
Class of 2009 — $27,000
Class of 2008 — $34,000
Class of 2007 — $40,000
Class of 2006 — $50,000
Class of 2005 — $60,000
And here is Cravath’s 2012 bonus scale. As you can see, they’re identical. You can flip to the next page for the full memo, which states that bonuses will be paid on Friday, December 20, and includes the standard fine print (e.g., that Cravath doesn’t have an hours requirement, that bonuses for certain other non-associate lawyers will be determined individually, etc.).
My take on the Cravath bonus numbers: this is good news. Biglaw’s performance has been rather weak in 2013 to date, but the Cravath partners are basically absorbing any downside risk themselves and keeping their associates whole. Of course, we’ll see when Cravath’s partner profits come out next year how accurate this assessment is — but as a general matter, in a climate of significant uncertainty about the Biglaw model, holding bonuses steady for associates is a positive development.
UPDATE (5:20 p.m.): Here is my colleague Elie Mystal’s take on the Cravath bonuses.
Elie here. The normal isn’t all that “new” anymore. To understand these Cravath bonuses, you need to look at history. In 2007, the last year of truly “good” bonuses, Cravath paid the full first-year associates, the class of 2006, a $35,000 regular bonus and a $10,000 “special” bonus, for a total of $45,000. This year, the class of 2006 is getting $50,000. So… it took these people only SIX YEARS to get a bigger bonus than they did when they were first-years.
So when you hear these “rich” or “entitled” associates bitching about their five-figure “bonus payments,” understand that people don’t work hard for six years with the hopes of making about the same in bonuses as when they were young and didn’t know anything. Understand that to the extent bonuses are supposed to represent a reward for skill and commitment, these payments are underwhelming. Yes, $50,000 bucks “extra” just for doing your job is UNDERWHELMING. They’ll take it, they’ll spend it, they’ll sign up for more of the same, but when associates are getting about the same in bonuses that they got six years ago, you can forgive these people for feeling a little bit like they’ve been screwed over.
Of course… if you only got on this train in 2009, and you are still there while stepping over the bodies of the many comrades who didn’t make it all the way to Biglaw, you’ll take your $27,000 and like it. You’ll keep your mouth shut and you’ll love it and you’ll continue to dream of the day when your loans are paid off and you can leave Biglaw in peace.
It’s okay, midlevel associates. I feel your pain. Feel free to bitch, don’t pay those poors who never had a shot at what you thought you were getting no nevermind.
UPDATE (5:32 p.m.): Lat again, with a one-sentence rebuttal to Elie: I own a calendar, and it says on it “2013,” not “2007.”
UPDATE (5:45 p.m.): Here are a few reader reactions:
- “As a current 1L, this is still enough money for me to work my ass off for. Any hints of hope as to Biglaw hiring are very welcome.”
- “As someone who has worked at non-profits all her life, these numbers make my head explode.”
- “I think I went into the wrong field (although I managed to marry a lawyer, so that’s something.)”
But those are opinions from non-Biglaw folks. Any associates, at Cravath or elsewhere, who’d like to share anonymous opinions?
UPDATE (5:47 p.m.): From a Cravath associate:
This was the minimum. Cravath has recently been reversing some “Great Recession”-era cuts (the holiday party is no longer in the Cravatheteria, they are making lots of new partners, etc.), so prospects looked better than in recent years. Mid-levels and seniors seem stretched too thin, so it also seemed plausible they might try to fight attrition by giving bigger bonuses to older classes.
However, I don’t think there’s any point for them to pay more than the minimum if whatever they choose will become market anyway, so this is not surprising. So I’m a bit disappointed but not at all surprised.
- @CJoeBlack: “Sounds about right.”
- @perkyanda: “A bonus higher than my salary, how lovely. *cries the tears of justice and public service and helping others.*”
- @gideonstrumpet: “$60,000 bonus for 9-year practitioner? I’m in the wrong line.”
- @scottygaffield: “BigLaw is MUCH more attractive from outside looking in.”
UPDATE (12/3/2013, 2:55 p.m.): Thoughts from another Cravathian:
I thought there was very little chance that bonuses would go up from last year, so staying the same is a “good” outcome. Not great, but ok. I think the firm probably wanted to give lower bonuses than last year but decided paying the same in bonuses was worth avoiding the hit in morale and public image. Most of the midlevel glut from the pre-recession hiring has left the firm, but there are not that many second- or third-years. The firm can’t really afford to have a bunch of junior associates leave, even if they want some of the fourth and fifth years to leave.
Feel free to share your reactions to the Cravath bonuses by email or by text message (646-820-8477). And when your firm makes its bonus announcement, please let us know ASAP.
Thanks, and Happy Bonus Day!
(Flip to the next page to read the Cravath 2013 bonus memo in full.)