Associate Bonus Watch: Cravath Announces Its 2015 Associate Bonuses!

Welcome to the 2015 Biglaw bonus season!

As we predicted, last Monday and again last Friday, market leader Cravath Swaine & Moore has started the 2015 associate bonus season with a scale based on last year’s Davis Polk scale:

Class of 2015 — $15,000 (pro-rated)
Class of 2014 — $15,000
Class of 2013 — $25,000
Class of 2012 — $50,000
Class of 2011 — $65,000
Class of 2010 — $80,000
Class of 2009 — $90,000
Class of 2008 — $100,000
Class of 2007 — $100,000

This strikes me as very good news. Last year was a great year for bonuses, but it took two rounds — Simpson Thacher and then Davis Polk — to get there. This year, we are starting at the DPW level right out of the gate. Thanks, Cravath!

Is this the final word on Biglaw bonuses, or is it just a starting point for the discussion? Will someone come in over the top and do what Davis Polk did to Simpson last year? If you want to get real-time notification of fresh bonus announcements, just sign up for the ATL Bonus Alerts.

Feel free to let us know how you feel about these bonuses in the comments, by email, or by text message (646-820-8477). We might quote your comments anonymously if we find them to be insightful or amusing. And please help us help you: as soon as your firm’s bonus memo comes out, please email it to us (subject line: “[Firm Name] Bonus”). We keep our sources on bonus stories anonymous, of course. No need to send the memo using your firm email account; your personal email account is fine. But please be sure to include the memo as proof; we like to post complete bonus memos as a service to our readers. You can take a photo of the memo and attach as a picture if you are worried about metadata in a PDF or Word file. Thanks!

UPDATE (3:35 p.m.): Bonuses will be paid on Friday, December 18, as set forth in the memo (posted in full on the next page). The memo is signed by presiding partner Allen Parker, corporate managing partner Andrew J. Pitts, and litigation managing partner Robert H. Baron.

UPDATE (3:43 p.m.): Pat yourselves on the back, readers: 51 percent of you predicted that bonuses would be the same as last year, and it looks like you’re right — unless someone trumps Cravath….

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Would it have been nice for Cravath to have taken us higher right off the bat? Sure — but that’s not really the Cravath way. As I wrote a week ago, “Cravath could take bonuses higher if it wanted to, but I’m guessing it won’t, at least not in the initial announcement. It’s the kind of prudent, well run firm that likes to prepare for a rainy day, and it takes a long-term view of bonuses as reflecting not just the year coming to an end but the year ahead. And as stock market turbulence in August and September showed, we could have a bumpy ride in store for us.”

UPDATE (3:57 p.m.): Here’s the WSJ Law Blog’s write-up. Sara Randazzo reminds us why bonuses matter:

Associate bonuses are typically seen as a sign of how well law firms are performing in any given year. During the recession, bonuses dipped as “low” as $35,000 for the most senior associates—a tidy sum for most Americans, but one that was met with frustration from associates billing upwards of 2,000 hours a year.

Base salaries for law firms in major markets have been stable since around 2007, when many firms increased starting wages to $160,000 per year.

“Stable,” or “stagnant”? Can I get a cry of NY to 190 up in here?

UPDATE (5:04 p.m.): How are Cravath associates responding to the news? One tipster told us, “Some associates are upset because supposedly this has been a record year for the firm. Many others are treating this as a non-event because they assumed the firm would match last year’s scale (unless and until another firm forced them to match something more).”

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UPDATE (7:15 p.m.): Only a few hours have passed, and we already have two matches of Cravath (here and here). But there’s still hope; we haven’t heard from the other four members of the Fab Five.

UPDATE (12/8/2015, 9:15 a.m.): Two more reactions from Cravath associates:

  • “No one here is surprised, though maybe confused that it took so long to get to the seemingly obvious result. It’s been clear for years that the partnership here has no interest at all in leading comp higher, though will match in a second if someone else does. So come on STB, take us to 190.”
  • “It’s not surprising to me. Do I think that bonuses should be higher, given that partners are (once again) on track to make record profits? Yes. Do I think that it’s long past time to increase base salaries? Of course. But I also chose to enter a conservative field, and to work at a particularly conservative institution. The bonuses are decent, and no one honestly expected Cravath to do anything interesting with compensation.”

These strike me as fair and reasonable reactions to fair and reasonable bonuses. But does one of Cravath’s peer firms have something more exciting in store?

UPDATE (12/8/2015, 10:08 a.m.): Cravath has been having a banner year, as just noted by the WSJ:

Cravath has been involved in many of the year’s major deals, including representing Anheuser-Busch InBev in its announced $107 billion acquisition of SABMiller; 3G Capital Partners and H.J. Heinz Co. in Heinz’s $60 billion merger with Kraft, and Royal Dutch Shell in its proposed $70 billion acquisition of BG Group.

It also notched litigation wins, including for clients ESPN and ABC, PricewaterhouseCoopers International and American Express.

So maintaining but not raising bonus levels can be viewed as “a sign that law firms are cautious about where the economy is heading,” according to the Journal.

(Flip to the next page to read the Cravath 2015 bonus memo in full.)


David Lat is the founder and managing editor of Above the Law and the author of Supreme Ambitions: A Novel. He previously worked as a federal prosecutor in Newark, New Jersey; a litigation associate at Wachtell, Lipton, Rosen & Katz; and a law clerk to Judge Diarmuid F. O’Scannlain of the U.S. Court of Appeals for the Ninth Circuit. You can connect with David on Twitter (@DavidLat), LinkedIn, and Facebook, and you can reach him by email at dlat@abovethelaw.com.


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