Today, McDermott Will & Emery completed its “2008 compensation cycle.” There is (shockingly) some good news for associates at the firm.

According to a firm wide memo:

In recognition of strong performance, the Committee approved 2008 bonuses that are in keeping with the Firm’s merit-based approach to total compensation and that in many cases exceeded the market.

According to sources we’ve spoken with over the past few weeks, this is largely true. While MWE’s bonuses were nominally half-Skadden, high performers and top billers report that they received substantially more money than that. One tipster reports:

Pretty much everyone to whom I talked was pleasantly surprised. We pretty much expected them to go with the Cravath scale, but they actually went above by a bit. [For first years] the class the median was $21,250, the average was $22,266, and the high was $40,000.

It gets progressively better up the scale, with some 4th years reporting that they received as much as $60,000 in bonus.

We understand that these figures include the $10,000 bonus advance MWE associates received in December.

Of course, stub-first years didn’t receive any bonus. But given the fact that McDermott recently laid off 60 associates, the stub-first years that are left have to be pretty happy to still have a job.

But there is some bad news too. Details after the jump.

We reported yesterday that Paul Hastings laid off a bunch of associates. In that report, we mentioned that a firm wide meeting was scheduled for 11:00 a.m. today. We’re getting the first reports from that meeting, and not surprisingly, associates received more information about the layoffs.

A tipster reports that Paul Hastings management emphasized that yesterday’s layoffs were the first round of “economic” layoffs. Apparently, all of the other PH layoffs that we’ve reported were performance based:

Previous terminations were performance based. But for world-wide economic downturn, the associates let go at this time would still be with the firm. Firm looked at past three months of performance and projected hours for 2009 and adjusted headcount to meet those expected hours. The decision was made on a department and office basis. It was not a flat 5% reduction. Some groups had no attorney or staff reductions and some offices had only very small reductions.

But there is also some good news for the remaining Paul Hastings employees.

More details after the jump.

Let’s pretend for a moment that yesterday didn’t happen and associates were A) employed, and B) expected to be compensated.

Everybody with me? Okay.

You might remember that Orrick, Herrington & Sutcliffe announced its 2008 bonus structure way back in March of 2008. Once the market collapsed, people started wondering if Orrick would keep its word. But at the end of October, Orrick stated that they would keep bonuses at Skadden levels:

Today, Orrick assured us that the firm would not look to change their bonus plan. A firm spokesperson put the issue succinctly:

“We are committed to using the previously announced bonus schedule.”

But something happened on the way to actually making good on that promise. Details after the jump — and an update from the firm.

We have been waiting a long time to get a look at the Morgan Lewis & Bockius bonus structure. The firm announced way back on October 30th that it would be delaying their bonus decision until the market settles.

Since then, the firm has found time to institute a salary freeze and fire maybe as many as 50 associates.

Now that the bonus information is finally in, the results are somewhat anticlimactic. Individual memos are out at Half-Skadden levels.

But the real news from MLB is contained in this little memo that went out on Friday night:

Most of counsel and associates have had discussions by now with respect to annual evaluations, so this is a good time to remind lawyers of our policy with respect to taking late time-recording into account when we determine bonus amounts. For the year just ended, there were 55 lawyers whose bonuses were affected by their unexcused late time entries. The impact was larger for repeat offenders.

Ouch. I supposed this is a “good time” to remind lawyers about how late time keeping can affect the year end bonus. Let’s hope that Morgan Lewis also reminded people at the much, much better time — which would have been before people lost money for being tardy with accounting.

Tipsters weigh in and the full Morgan Lewis email after the jump.

It’s a little bit late in the bonus season, but there are still firms trickling in with bonus news.

It’s not terribly surprising bonus news. Winston & Strawn has matched the Cravath scale:

I am pleased to announce on behalf of the Firm the amounts of year-end bonuses for eligible New York associates for fiscal 2009, as follows:

Class of 2008 (1st Year) $17,500 (pro-rated)
Class of 2007 (2nd Year) $17,500
Class of 2006 (3rd Year) $20,000
Class of 2005 (4th Year) $22,500
Class of 2004 (5th Year) $25,000
Class of 2003 (6th Year) $27,500
Class of 2002 (7th Year) $30,000
Class of 2001 (8th Year)
$32,500

There’s a 1900 hour billiable requirement.

Wonder if Obama will get pissed about that? Congratulations to Winston associates on your belated windfall.

Read the full Winston memo after the jump.

Mayer Brown already announced that New York bonuses would match the New York market. Last night, the firm announced its bonus structure for offices in Chicago, Palo Alto and Washington, D.C.

We are pleased to announce that the Firm’s bonus structure for work done in 2008 will be the same as it was for work done in 2007.

Yay?

We couldn’t find last year’s Mayer Brown bonus memos for offices outside of New York. But based on what peer firms paid out last year, it certainly doesn’t look like associates will be getting more than their counterparts in New York.

Still, given that we are living in a time of salary freezes and layoffs, anything that resembles 2007 is probably a good thing.

Read the full Mayer Brown memo after the jump.

Major news coming out of Wilson Sonsini Goodrich & Rosati. The firm just announced that 45 attorneys and 68 staff were laid off:

[I]t is with regret that we announce that the firm will be downsizing our associate, legal support, and administrative ranks, with 45 attorneys and 68 staff directly affected. Members and staff managers will meet with their teams today and tomorrow to inform them of the details of this decision. Please know that the firm is extremely grateful to all of the affected employees for their contributions, and we will work with them and provide resources to ease their transitions.

In light of that news, the salary freeze and bonus news for those who are left doesn’t really sting that much:

[W]e will not be making associate step salary increases this year, but we will be paying out bonuses based on the criteria and structure developed by the Associate Bonus Program Steering Committee and announced last fall (additional details to follow shortly). Legal support and administrative staff will not receive merit bonuses in January, but the firm will be making profit-sharing contributions in the spring to all eligible plan participants equal to 9.5 percent of their eligible compensation, as we have in previous years.

Best of luck to the 113 people suddenly out of work. Keep your heads up.

Check out the full firm statement, after the jump.

We haven’t yet gotten our hands on the Chadbourne & Parke bonus memo, but a firm spokesperson confirmed what the general numbers look like. According to the spokesperson:

“Our bonuses are on Cravath, Half-Skadden, scale. Individual bonus determinations are based upon individual performance and pro rated for part time attorneys and attorneys who have been with the firm for less than the full year.”

I wonder if somewhere, Cravath’s Evan Chesler is thinking about ways to kill me?

Meanwhile, Chadbourne also announced a salary freeze:

As you know, the world economic outlook for 2009 is uncertain. Accordingly, as a matter of prudence, the Firm is reserving decision on associate salary levels for 2009. We will make a decision on this matter within the next several months as the global economic picture becomes clearer.

Half-Skadden bonus, Latham salary — but no layoffs, so there’s that to be happy about.

Earlier: Prior ATL coverage of associate bonuses
Prior ATL coverage of associate salary freezes

Latham & Watkins might be leading the charge for salary freezes, but that’s not going to stop the firm from paying out associate bonuses. Right?

Latham is not a lockstep bonus firm. As a tipster explains it:

Our bonuses are not lock-step- so those people working their tails off usually do end up doing better than market … It’s usually those who are at the threshold (1900 hours) who do worse than market or get no bonus at all.

Well bonus information just went out and it looks like those hours thresholds have shifted. Latham goes through great (and ultimately futile) lengths to make sure that the firm’s bonus information doesn’t appear in the press. A tipster explains:

The way they announced them was via an email with a link in it that took you to a page that listed both your specific bonus, as well as an “un-cut-and-pasteable” bonus memo.

After the jump, we post the first screenshot of the Latham bonus structure.

When Hughes Hubbard released bonus information last year, a lot of associates were angry. Last year, Hughes Hubbard tied the “special bonus” to billable hours.

At the time, the firm promised that 2008 bonuses would be better.

Of course, that was before the great 2008 whatever the hell we’re living through. Few expected HHR to keep their bonus promise. But the structure that HHR released Sunday seems very generous and fair in light of market conditions:

Class of 2001 and above: Tier 1: $32,500 Tier 2: $65,000 Tier 3: $85,000 Tier 4: $105,000

Class of 2002:
Tier 1: $30,000
Tier 2: $60,000
Tier 3: $80,000
Tier 4: $100,000

Class of 2003:
Tier 1: $27,500
Tier 2: $55,000
Tier 3: $75,000
Tier 4: $95,000

Class of 2004
Tier 1: $25,000
Tier 2: $50,000
Tier 3: $70,000
Tier 4: $90,000

Class of 2005:
Tier 1:$22,500
Tier 2: $45,000
Tier 3: $ $60,000
Tier 4: $75,000

Class of 2006:
Tier 1: $20,000
Tier 2: $40,000
Tier 3: $55,000
Tier 4: $ 70,000

Class of 2007:
Tier 1: $17,500
Tier 2: $35,000
Tier 3: $50,000
Tier 4: $65,000

Tipsters are happy:

That’s pretty sweet - everyone’s pretty happy for now (although 2009 bonuses and salaries are still “under consideration”). Tier 1 is 1950 hours, tier 2 is 2100, … tier 3 is 2300 and tier 4 is 2500. … Since HHR counts pro bono hours 1 for 1 as billable, and a number of associates have TONS of pro bono it’s not quite as hard to meet the “tiers” and rake in a pretty sweet bonus.

Good news for Hughes Hubbard people. Congratulations.

Read the full memo after the jump.

A solid ice salary freeze is on at Arent Fox:

As a result of this comprehensive review, the Executive Committee (the “EC”) decided that based on global economic conditions, the Firm will freeze associate base compensation at the current 2008 rates for 2009.

But that’s not all:

Additional adjustments to the associate compensation system, also discussed below, include a somewhat more stringent 150-hour cap on non-billable creditable hours that can be increased only in limited circumstances, the reintroduction of a limited deferred compensation (“hold-back”) system, and modifications in the manner that hours are calculated for the purposes of qualification for productivity bonuses.

And if you’re concerned about bonuses:

The Firm will continue to make lump-sum bonus payments for above standard hours. Eligible associates who, during the evaluation year (or such later 12-month period as may be selected by the Firm), record more than 2050 billable hours, 2150 billable hours, 2250 billable hours, or more than 2350 billable hours will be eligible to receive productivity bonuses as follows.

So if you do bill 1950, you’re not getting any bonus at all. In fact at 2050 juniors are only getting $5K (considerably less than what juniors are getting at Cravath). Even 2250 hours doesn’t guarantee you a full Half-Skadden bonus.

No matter how annoyed you are at your firm’s pay structure, there always seems to be at least one other firm willing to pay a little bit less.

And that’s not even the interesting part. More on that after the jump.

Goodwin Procter just came out with their 2008 bonus news. Like other peer firms in Boston, Goodwin is going with a Cravath scale, though the firm does have a 1,850 hours requirement:

For 2008, we maintained our bonus eligibility threshold of 1,850 hours, though many of our peer firms set significantly higher thresholds for bonus eligibility this year. Attorneys who met the 1,850 threshold, which could be achieved through billable and pro bono work, were considered for bonuses, taking into account the factors noted above.

One very interesting note is that stub-first years will be receiving no bonus at all:

Target bonuses by class are listed below. Individual bonus awards may be above or below the targets based on the mix of relevant factors and will be prorated as appropriate for leaves. Because of their short tenure, attorneys in the class of 2008 who started in October were not included in the bonus program this year.

Onto the salary freeze after the jump.

The outlook for Texas based law firms is … bright? Texas Lawyer today reports that most top Texas firms are paying associates 2008 bonuses on par with what they received in 2007:

Lawyers with most of the firms say the 2008 associate bonuses are similar, or at the same level, as the bonuses the firms paid to their associates for 2007.

Vinson & Elkins is one of the firms that could be paying Texas associates a bigger bonus than New York associates.

In fact, Texas lawyers seem positive about the future of the Texas market:

[T. Michael] Wilson’s prediction for 2009 echoes that of the other managing partners. “We are guardedly optimistic,” he says. “Who knows what the next six months will bring in terms of the economy and the practice of law?”

That’s a lot different than what is coming out of New York. Remember this nugget from the Cravath bonus memo:

Given the uncertainty of the economy and the business climate going forward, we will not be able to address the issue of whether there will be any year-end bonuses in 2009 until this time next year. However, associates should be prepared for the likelihood that the economy and the Firm’s financial performance next year will not show a significant improvement over this year and they may receive significantly reduced or no year-end bonuses next year.

Better bonuses, lower cost of living, and great barbeque … Texas is looking very competitive isn’t it?

2008 Associate Bonuses at Large Firms in Texas on Par With 2007 [Texas Lawyer]

Earlier: Prior ATL coverage of associate bonuses

Sonnenschein is the latest firm to adopt a creative approach to associate compensation during the financial crisis. The firm announced bonuses that can go much higher then their peer firms, but also announced a salary freeze.

First the bonus news:

We are pleased to announce that Associate productivity bonuses for 2008 range from $10,000 to $70,000. The Policy and Planning Committee has approved the attached bonus schedule which, as we have discussed during recent Firmwide Associate meetings, remains unchanged from last year and includes a step up for seniority. These bonus levels will result in some of our Associates receiving significantly higher bonuses than their peers at many of the firms with whom we compete for talent and clients, and reflect our strong belief that it is important to recognize and reward our most productive Associates.

You don’t often see a firm go the “significantly higher bonuses than their peers” language. Clearly, Sonnenschein wants its people to know they are valued.

However, no firm is an island in this economic storm. The salary freeze reflects that reality:

With respect to our Associate salary schedule, Policy and Planning has concluded, after consultation with our Practice Group Leaders and Office Managing Partners and consideration of marketplace and client factors that, effective January 1, 2009, Associates moving to the next class year in 2009 will continue to receive the same base compensation as they did in 2008.

As with Quinn Emanuel, the top bonuses are available for highest billers. But, if you were a top biller, the extra bonus offsets the lack of a pay raise.

But perhaps the larger point here is that every firm needs to come up with individualized answers to the economic client. Sonnenschein laid off 25 attorney, acquired 100 Thacher Proffitt attorneys, is paying very high bonuses to associates who bill more than 2450 hours, and is freezing associate salaries. Put another way, Sonnenschein is just another entity trying to navigate through the new economy as best it can until things settle down.

Read the full memo after the jump.

Back in October, we reported that Morgan Lewis & Bockius was one of the first firms to say anything about associate bonuses. The firm said it wasn’t going to make a decision about associate bonuses until sometime in January of 2009, but at least they said something.

Notably, at the time the firm also reported:

As in past years, base compensation adjustments will continue to be effective as of January 1 and will be reflected in your January paycheck.

We now know that the announcement was a much bigger deal than it seemed at the time.

Morgan Lewis has still not announced what they plan to do with 2008 bonuses, but the firm has announced that 2009 bonuses decisions will be made on a different basis. Instead of a 2000 hour requirement in effect for 2008, in 2009 associates will not be required to reach 2000 hours.

But on the other hand, hitting 2000 hours will no longer “guarantee” a full bonus.

Read the firm’s specific wording after the jump.

A few bonus announcements trickled in over the holidays. Here’s a round-up of recent bonus announcements that have not yet been covered in these pages. If you have new news, e-mail us at tips@abovethelaw.com.

1. Sheppard Mullin (New York): Sheppard Mullin is paying above market rate for attorneys who racked up the hours this year. Baseline hours are 2000 in New York (and 2100 outside of New York, see below). Bonuses range from $20,000 to $70,000, plus discretionary bonuses of $20,000 to $50,000. Reaction at the firm, after the jump.

2. Sheppard Mullin (outside New York): Associates in California and D.C. had to rack up a few more hours than their NY brethren to qualify for bonuses, with 2,100 as their baseline. And their lockstep bonuses for additional hours are not as generous. Details after the jump.

3. Akin Gump (outside New York): We posted on the New York market/ half-Skadden bonuses for Akin New York associates, announced on New Year’s Eve. Associates outside of New York received an e-mail saying that “merit bonuses” will be given based on “productivity, quality of work and Firm citizenship.” Check out the e-mail, and news of a freeze watch there, after the jump.

4. Linklaters (all U.S. offices): This Magic Circle firm announced bonuses and salary increases for U.S. associates right before Christmas. The London-based firm is following Cravath’s lead, paying half-Skadden bonuses to all U.S. associates, with no hours requirement. The firm will have normal class-year raises. Per our tipster, “the firm had a good first half, including in NY, so a Latham-style salary freeze would have been pretty shocking.”

5. Arnold & Porter (New York): Associates outside of New York got individualized bonus memos last week. New Yorkers got their bonus announcement on Jan. 2. Per our tipster, “the scale was as expected, the half-Skadden, which is significantly less than the bonus in non-NY offices, but at least is “market,” unlike our salaries.” Our tipster says the first A&P paycheck of the year remains at 2008 levels.

Bonus memos galore, after the jump.

DLA Piper’s associates received an e-mail today at 4 p.m. about bonuses. The memo says less about bonuses though than it says about 2009 salaries. (Bonus decisions will be made later in January, as they were last year.)

The salary decision for 2009? Another major firm is getting its freeze on. Here’s an excerpt from the e-mail:

DLA Piper, because of its global platform and practice diversification, is well-positioned competitively and financially to weather this downturn, but neither we nor our clients are immune from its impacts. This difficult business environment is certain to continue in 2009, and as a matter of prudent management, the firm will not increase associate salaries for 2009 in the U.S. Associates moving to the next class year will continue to receive the same base compensation as they received in 2008.

We asked our tipster about the reaction around the office:

Well, it’s only been an hour, but I think it’s a terrible move. DLAP already has a reputation as a scrimper among the top-50 - this will not help.

At least other top-50 firms did it first. Like Latham and Orrick, this pronouncement is a definite freeze, and not a maybe-we’ll-reassess-if-things-look-brighter-later-in-the-year freeze.

Full text of the e-mail after the jump.

Continuing with our rundown of the top ten Biglaw stories of 2008, we reach our fourth place story on the business end of things: the dramatic reduction of associate bonuses.

Bonus news is always a big deal around these parts, and based on the way that the 2008 bonus season started, it looked like there might be a fight for control of the New York market. Skadden led off with bonuses that matched 2006 levels (or 2007 levels, minus the “special bonus” portion). At the time, Skadden wasn’t sure they’d be at the top of the market. Skadden’s bonus memo included the following language:

The Firm has historically paid its associates at the “top of the market” in their respective local markets. While we do not know what other firms will do this year with regard to paying a supplemental bonus, we believe that our bonuses this year should be limited to the year-end discretionary bonus. What we will do in the future years, will, of course, depend on business conditions at the time and competitive compensation.

There were more than a few people who thought other firms might come in above Skadden. That didn’t happen. Instead, Cravath happened.

Half-Skadden sets the market, after the jump.

Let’s start off 2009 with some good news. Litigation boutique Kasowitz Benson announced bonuses just before the New Year, and will be paying out Skadden dollars at the end of the month.

So don’t stick a fork in the New York market just yet.

Associates at Kasowitz are understandably ecstatic:

It really is a fantastic place full of extremely smart trial lawyers that sometimes litigate, as opposed to all of the other firms where litigators sometimes do trial work.

There are a couple of wrinkles. Unlike Skadden, the Kasowitz memo contains language saying that bonuses will be “up to” Skadden levels. According to the firm, individual payouts will be based on a couple of factors:

As in prior years, the above are benchmark amounts which are subject to adjustment to reflect individual performance and hours worked.

Still, our tipsters expect that most people will receive the full amount:

I have never heard of people not getting the full amounts that are stated. We are crazy busy and have been so I would say most will.

The mere opportunity to receive an above market bonus should be enough to have Kasowitz associates singing the firm’s praises well into the new year.

Read the full Kasowitz memo after the jump.

Akin Gump sent its bonus memo around the New York office yesterday. No real surprises. Akin is giving the “New York Market Bonus” to associates in good standing.

One bit of excitement is that “associates and counsel who performed in a truly exceptional manner in terms of both quality and productivity” may get “discretionary merit bonuses.” So if you’re an Akin NY associate who billed over 2400 hours this year, it may not have been done in vain.

The memo includes the increasingly common warning about a possible salary freeze come 2009. See the full memo, after the jump.