Biglaw, Bonuses, Money

Associate Bonus Watch Wars: Cleary Strikes Back!

Cleary will not be outdone by Davis Polk and Sullivan & Cromwell.

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Shortly after our post about Cleary Gottlieb’s 2014 bonuses, one CGSH tipster wrote in with a small complaint: “Given your post about holiday parties, you may like to know that Cleary is once again hosting a wonderful Monday night holiday party in our offices.”

Well, who cares about the holiday party venue when you’re getting showered with cold hard cash? In the wake of Davis Polk beating Simpson Thacher and Sullivan & Cromwell matching Davis, Cleary Gottlieb has upped its bonus payments to match DPW and S&C:

On behalf of the partners of the Firm, we are pleased to announce that year-end bonuses for associates in the class of 2008 have been increased by $5,000 and year-end bonuses for associates in the classes of 2009, 2010 and 2011 have been increased by $10,000.

Quipped one CGSH associate: “This is no good for my Amazon Prime addiction.”

This is a blast from the past — in a good way. As we noted in covering the Davis announcement:

So what happens next? Will Simpson and Cravath and others revise their bonus scales after the fact to match Davis? Firms used to make such retroactive adjustments to their year-end bonus scales in the pre-ATL glory days of Biglaw, but that hasn’t happened in years.

Yet it’s happening again. With Davis, S&C, and now Cleary all on the same bonus scale, there’s no doubt that Simpson and Cravath will at least match.

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Simpson and Cravath, unlike Davis and Cleary, historically have been compensation leaders in Biglaw. Is there a possibility that one of them might unveil a new and even higher bonus scale, to put Davis in its place? Or raise base salaries, which have haven’t budged since Simpson’s January 2007 pay raise?

Here’s a thought. As reflected in the bonus scale, Biglaw is most concerned about keeping midlevel and senior associates, who are significantly more lucrative than junior associates (for whom clients often refuse to pay). And midlevel and senior associates have better alternatives to Biglaw than junior associates do. Midlevels and seniors, with a few years of coveted Biglaw experience under their belts, have opportunities to go in-house or into finance. Juniors are just desperate for jobs that will help them service their law school loans.

So how about a new pay scale that keeps starting salaries at $160,000 but pays more to more-senior classes? How does this look, for example (with current pay and the pay increase in parentheses)?

1st year – $160,000 ($160,000) (no change)
2nd year – $170,000 ($170,000) (no change)
3rd year – $190,000 ($185,000) (+$5K)
4th year – $220,000 ($210,000) (+$10K)
5th year – $250,000 ($230,000) (+$20K)
6th year – $280,000 ($250,000) (+$30K)
7th year – $300,000 ($265,000) (+$35K)
8th year – $320,000 ($280,000) (+$40K)

Just a thought. I was going for round numbers in the scale — everything ending in zero. Feel free to suggest tweaks based on your perceptions about the value of associates of different seniority levels.

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If this happens in 2015 — you’re welcome, Biglaw associates. In the meantime, congratulations to Cleary associates on joining the club.

(Flip to the next page for the full memo.)

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