Another law firm informed associates that their hard work was worth half of what it was a year ago. DPW is the latest firm to announce Half-Skadden bonuses.

The official structure is as follows:

Class of 2008: $17,500 (prorated)

Class of 2007: $17,500

Class of 2006: $20,000

Class of 2005: $22,500

Class of 2004: $25,000

Class of 2003: $27,500

Class of 2002: $30,000

Class of 2001 and senior $32,500

So much for elite law firms paying their associates at the top of the market. Instead, Cravath has succeeded in opening the door to the "thank you sir, may I have another" theory of associate retention and company morale.

It could be worse. These guys are are still getting a bigger bonus than law students who interviewed with Skadden this year. Yay seniority!

What is particularly annoying about the DPW memo is that they act like they are meeting the market with these bonuses, as if Skadden doesn't even exist.

We are pleased to announce that associates in good standing will receive a bonus payment as outlined below. ...

We thank all our associates for their diligent and skillful efforts as we support our clients in this challenging economic environment.

"Pleased to announce." Not "horribly embarrassed that we are slavishly short-changing our associates because Daddy-Cravath said it was okay."

Read the full memo after the jump.

Thacher Proffitt & Wood has been struggling for some time. A memo sent by Managing partner Paul Tvetenstrand to TPW staff the Wednesday before Thanksgiving provides the latest evidence for the firm's faltering state:

From: Paul D. Tvetenstrand

To: Non-legal staff

As you are aware. The past year has posed many challenges for the firm given the downturn in the economic climate which has affected our clients and ultimately the firm. Unfortunately given this continuing downturn the firm will not be able to pay any bonuses or year end service awards this year. We truly appreciate the contributions each of you has made in these trying times and we wish we were able to recognize each of you as you deserve.

Paul

I'm not at all sure why TPW tried to bury this information within the Thanksgiving news cycle. Did they think TPW staffers were not going to notice? Maybe they were thinking of maintaining their industry reputation, but most people who have been paying attention already know that TPW is in serious trouble.

More TPW back story after the jump.

"Not God Bless America, God-damn America."

We are now able to report that Simpson Thacher Bartlett has matched bonuses with Half-Skadden:

On behalf of the partners of the Firm, I would like to announce that year-end bonuses for associates in good standing will be as follows:

Class of 2008: $17,500 (pro-rated)

Class of 2007: $17,500

Class of 2006: $20,000

Class of 2005: $22,500

Class of 2004: $25,000

Class of 2003: $27,500

Class of 2002: $30,000

Class of 2001: $32,500

Class of 2000: $32,500

Cravath has doomed us all.

After the jump, more analysis and the full STB memo.

In the two weeks since our ATL / Lateral Link survey on bonuses, we've talked about when bonuses were and will (or won't) be paid, how your billable hours look this year, and what you expect bonuses to be for 2008.

Or, at least, what you expected them to be before the Skadden and half-Skadden bonus announcements late last week.

But we haven't yet reported on your answer to the following question: "If getting a lower bonus this year meant that your firm could completely avoid layoffs, what's the minimum bonus that you would consider fair?"

Some initial comments were a bit dismissive of the question, and were more than happy to dismiss a few associates, too:

Don't care about layoffs, and so wouldn't sacrifice a nickel in bonus to avoid them. Layoffs, if any at my firm, won't reach my class (2004). If they do, they won't reach my practice area (litigation). If they do, they won't reach me.

lay off the lazy a-holes. I billed 3000 this year.

Would prefer higher bonus with layoffs

But as a severe rash of layoffs followed, hearts began to soften, much like the market for structured finance associates:

  * Almost one fourth of practicing respondents would accept a bonus of zero this year to avoid layoffs.

  * More than half would accept a bonus of $20K or less.

  * Only about 5% still insist on bonuses of at least $75K.

Results: What were your hours and bonus in 2007, and what do you expect for 2008?

See breakdowns of morale by seniority, market and practice, as well as a Cravath vs. Skadden comparison, after the jump.

If you work at Cravath, Swaine & Moore, prepare to be very, very angry. From the bonus memo just issued by presiding partner Evan Chesler:

Both 2006 and 2007 were extraordinary years for our Firm. In 2006 we paid large year-end bonuses to our associates, and in 2007 we further supplemented those bonuses. As a result of the deterioration of the business environment, the Firm's financial performance in 2008 will not be in line with those earlier years. While the Firm believes that we should pay year-end bonuses this year, in light of the current business climate we do not think it is appropriate to pay the full bonuses that were paid in 2006 and 2007 or the additional supplemental bonuses paid in 2007.

Just yesterday, Skadden announced that they would match the 2006/2007 bonuses less the "special" bonus paid in 2007. For Cravath to come in under that number is pretty surprising. The official Cravath bonus structure for 2008 is as follows:

Class of 2008 -- $17,500 (pro-rated) Class of 2007 -- $17,500

Class of 2006 -- $20,000

Class of 2005 -- $22,500

Class of 2004 -- $25,000

Class of 2003 -- $27,500

Class of 2002 -- $30,000

Class of 2001 -- $30,000

Suddenly, the question is no longer "Is Skadden the ceiling?" Instead, we must ponder "Is Cravath the floor?"

Done being angry? Okay. Now prepared to get very, very frightened:

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.

Update (6:22 PM): Of all the tips that have crashed ATL's inbox in the last 45 minutes, this one best captures the raging rage people are feeling:

WTF does Cravath think it's doing? They're basically threatening no bonus for NEXT YEAR? They're not being Nostradamus, they're trying to force people out. Cravath associates will get that memo, collect their garbage 2008 [bonus] and lateral the hell out before they get screwed again.

Why not just conduct stealth layoffs? Forced attrition is the same thing. Go home, Cravath. You're embarrassing yourself.

Read the full memo after the jump.

We expected this. Skadden has announced that they will discontinue the "special" bonuses from last year. Instead, they'll be giving out the 2006/2007 standard package. From the memo, sent out by executive partner Bob Sheehan:

[W]e will pay the year-end discretionary bonus at the same levels by class seniority which associates received in 2007 and 2006. However, we do not think it is appropriate to repeat the "special" supplemental bonus that was instituted last year. That bonus reflected a strong and growing economy that contributed to a record level of profitability.

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.

You will receive a memo early in December discussing your individual bonus. We appreciate the efforts you have all put in this year. You have contributed enormously to the success that we have achieved.

That should pretty much set the market.

The 2007 bonuses weren't bad. And Skadden isn't laying people off. It'll be pretty hard to complain if this is where the market ends up.

And, not for nothing, it shows good form by Skadden for telling people what to expect before the holiday season starts. That winter vacation to the Dominican Republic can now proceed full speed ahead.

Read the full memo after the jump.

We've received over a thousand responses to last Monday's ATL / Lateral Link survey on bonuses, and so far we've talked about when bonuses were and will (or won't) be paid and how your billable hours look this year.

Today, we get down to the hardest numbers of all: what do you think you'll actually get paid?

2007 was a very good year for bonuses, with over 90% of respondents (not counting stub years) reporting a bonus even though only 70% made 2000 hours.

Roughly half of you reported bonuses of at least $45,000. About 15% of you made $70,000 or more, and 7% of you claim to have broken six figures.

This year, well . . . not quite so much.

Details after the jump, so nervous T-10 1L can take a moment to prepare himself.

We've tentatively started the Associate Bonus Watch for 2008, with news of Orrick's and McDermott's bonus plans, and the not-really-news that Morgan Lewis will not make bonus decisions until after the holidays.

With the dismal economy and the frequency of law firm layoffs, we speculated last month that regular bonuses may be less than last year, and special bonuses would likely disappear. The New York Law Journal agrees with us, and suggests two other reasons for it:

The scale of the expense and the almost compulsory nature of the market are widely resented by partners. But they also realize bonuses play a huge role in associate morale, recruitment and retention. Most managing partners who spoke to the Law Journal about bonuses cited potential problems with associates in requesting anonymity. But this year they all also mentioned another interest group keeping a watchful eye on bonuses: clients.

So, reason one: If they give you a bonus, you might tell someone, um, like Above The Law. And reason two: pressure from clients to control costs. Anonymous firm leaders say they fear the effect a big bonus announcement would have on their fee negotiations with belt-tightening clients, especially those in the financial sector.

Orrick chairman Ralph Baxter notes that while Orrick will still pay bonuses, "performance factors, including billable hours, will reduce the number of associates at the firm" who actually get a bonus.

The article suggests that the dismal economy could provide the opportunity that some firms have been looking to escape the bonus bidding war, and eliminate associate bonuses all together. We know you're worried. In a recent Lateral Link survey by Justin Bernold, one out of every thirteen respondents was unsure when, or if, bonuses would be paid. But as The New York Law Journal notes:

Of course, much will depend on what Cravath and Sullivan & Cromwell do.

As always, we welcome bonus news and memos via email (subject line: "Associate Bonus Watch").

Firms Rethink the Value Of Associate Bonuses [New York Law Journal]

Earlier: Associate Bonus Watch: McDermott Will & Emery is Sticking to the Plan ... For Now
Associate Bonus Watch: Orrick Stands Behind Bonus Structure
Associate Bonus Watch: Morgan Lewis Pushes Back Bonus Decisions
Open Thread: Associate Bonus Speculation

We've received over 900 responses so far to Monday's ATL / Lateral Link survey on bonuses, which is still open here.

Although ATL had predicted that bonus announcements may come later this year, McDermott Will & Emery actually announced the "December Bonus Advance" portion of their bonus plan mere hours after our survey went live, quickly proving a portion of us wrong, and rendering a portion of their associates reassured.

Overall, most respondents expect that their firms will pay bonuses on roughly the same schedule as they did for 2007:

Results: When Did, Or Will, Your Firm Pay Bonuses?

The results above only include responses from people who were at firms last year, are still at firms now, and can actually remember that sweet, sweet day when their bonuses were paid for 2007. While the overwhelming majority of these respondents received a bonus last year, and expect at least the timing of bonuses to remain the same for 2008, a meaningful number are definitely concerned: roughly one in thirteen of these respondents either aren't sure about when their firms will be paying bonuses or, worse yet, don't think their firms will pay bonuses at all for 2008.

Find out which firms paid when last year, and see some preliminary results on whether your peers would trade their bonuses for better job security, after the jump.

We've gotten the first hard numbers of the 2008 bonus season, in part. McDermott Will & Emery has announced that they will pay their associates the bonus advance they were expecting. A firm-wide email announced the relatively positive news:

December Bonus Advances: As we have previously communicated, the following payments will be made in mid-December to Associates who are on target to receive a bonus: (a) $10,000 for Associates in the class of 2006 or 2007, (b) $15,000 for Associates in the class of 2004 or 2005 and (c) $20,000 for Associates in all other classes. The determination of whether an Associate is on target for a bonus will be made by the ACC using the CPAs and the general evaluation criteria already described in prior presentations and communications by the Compensation Committee. For some Associates, the December payment may be the only bonus the Associate receives. The bonus determined by the ACC to be paid in March, 2009 will be reduced by any advance received in December.

That's good news to the attorneys that are on target to make their hours. That's almost everybody, right? Many people have pointed out that bonuses might be depressed this year, not because firms will be offering less money, but because many associates are struggling to make their hours.

The other wrinkle here is that MWE is leaving the door open on what their "final" bonus package will look like. They could match last year's market, or not. There is a lot of time to read the market between now and March.

Still, $10K - $20K just in time for holiday shopping is a good thing for those on track. And if you're low on hours, this you at least know for sure that there is at least some money available to you if you can make up the hours in the fourth quarter.

Congrats and good luck, MWE associates.

Read the full memo after the jump.

Last week, our ATL / Lateral Link survey focused on when raises happen at your firms. But we've also been wondering about another prong of compensation: bonuses.

In 2007, Cravath kicked off bonus season early, on October 29th, but it's much more common for firms to announce in December. Indeed, this year the first major announcement of October came from Morgan Lewis, who announced that they won't be announcing bonus until January. (That said, though, Orrick announced their 2008 bonus structure back in June.)

But timing isn't everything. There's also the quantum of solace cash. On that front, comments in last month's associate bonus open thread suggest some pretty diminished expectations. As one reader put it:

This year's bonus in biglaw: you're not fired. Let's hope most of us can get it.

But a second reader posits that firms can leave last year's bonus structures in place . . . because billable hours are actually low enough to avoid a cash crunch:

If firms keep the same bonus structure, they will still be spending *way* less on bonuses this year. That's because so few people will make their hours. Most associates are way down compared to last year, and November and December are only going to be worse in terms of finding work to do. It wouldn't surprise me if many firms will save 50% or more without making any adjustments to the bonus structure. That's what gives me some hope that bonuses will remain the same. Of course, firms would be happy to use the remaining 50% of bonus money on other things. But they won't want to chase away the few associates who are actually competent enough to make their hours.

Now, if I can just find a way to stay busy through November and December. . .

Sort of a "glass half full, so you don't really have to tip" approach.

Do you agree? Are your billables really so low that you won't get any bonus this year?

For that matter, would you actually give up your bonus this year if it would reduce the risk of layoffs?

Let's find out.

Update: This survey is now closed. You can see results here, here, here, and here.

--
Justin Bernold is a Director at Lateral Link, the sponsor of this Associate Life Survey.

When we kicked off our associate bonus speculation, we mentioned that Orrick, Herrington & Sutcliffe had already locked themselves into a 2008 bonus structure. We wondered if Orrick might rethink their bonuses in light of the current state of the economy. Morgan Lewis has already announced that they will not be making bonus decisions until 2009, when they hope to have a better read on the economy.

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.

This year's bonuses are secured, but Orrick is still considering a much longer term change: ending the lockstep structure of associate salary.

Orrick chairman Ralph Baxter has spoken about this issue before. In an article for the American Lawyer this summer, Baxter pointed out the value of the current, lockstep system. But he also said:

Given the changing nature of the law practice, the changing expectations of clients, the changing outlook of Generation Y, law firms would be remiss if they did not re-examine the associate model.

We understand that Baxter has been cautiously talking to people and gauging interest in this idea.

But it is not this day. More after the jump.

A central theme running through this week's bonus speculation was that bonus decisions would be made much later this year than last year. As first reported here, Cravath kicked off the bonus season last year on October 29th, 2007. But in 2006, Milbank didn't get the ball rolling until December 8th.

The first solid information that bonus decisions could be made a lot later this season came in today from Morgan, Lewis & Bockius. MLB associates were notified that bonuses would not be paid before the holidays via a firm wide email.

Read the email after the jump.

A year ago tomorrow (Wednesday), Cravath kicked off the 2007 bonus season by announcing bonuses which ranged from $35K to $60K and "special" bonuses that ranged between $10K and $50K.

Don't expect Cravath to come out of the gate early this year. We asked Cravath whether they would be bonus leaders this year, but they declined to comment, citing their longstanding policy of not talking about associate compensation issues.

But remember how surprisingly early last year's bonus announcement was for Cravath. In 2007 they announced on October 29th, but in 2006 they didn't announce until December 11th. In '06, Milbank came out with the first bonus announcement, but they waited until December 8th to announce.

From what we are hearing, bonus announcements could come even later in 2008 than they did in 2006. Sources are telling us that their firms are trying to wait until the last possible minute to announce bonuses. Managing partners are still trying to lock down their fee collections, which are lagging given the economic difficulties.

In addition, some firms are still trying to figure out which clients will exist going forward.

With all the uncertainty, late bonus announcements seem likely.

More bonus speculation after the jump.

The 2007 bonus season ended some time ago, even for firms on the late side. We're almost halfway through 2008, and you know what that means: time to look ahead to the next bonus cycle.

In the 2007 bonus cycle, the top New York-based firms generally still paid lockstep bonuses, both year-end and "special," at the market levels set by Cravath as first mover. We called this a "true match" of Cravath.

Beyond that small group of firms, however, there was a trend towards squishiness greater customization and tailoring. Firms already winded by the nationwide sprint to a $160,000 starting salary were understandably not eager to pay everyone, star performers and laggards alike, Cravath-sized bonuses. Instead, they paid individualized bonuses, tailored to factors such as the specific associate's billable hours and quality of work. Some firms tried to make it appear as if they had matched the Cravath bonuses, even if they hadn't (e.g., by pasting the Cravath numerical table into their own bonus memo, but then saying they paid bonuses "up to" the listed amounts, or to associates "in good standing," or to associates who met a certain hours threshold).

Anyway, enough about 2007 -- on to 2008. Most firms don't announce bonus levels in advance. But some firms do, and prominent among them is Orrick, Herrington & Sutcliffe.

Orrick, you will recall, is the firm that took $160K beyond Gotham. A little over a year ago, in May 2007, Orrick raised its California offices (except Sacramento) to a $160,000 starting salary. That pay raise then rippled out across the country, to Washington, Chicago, and other major legal markets.

(So if you blame the latest associate pay raise for causing the latest associate layoffs, blame Orrick. They fired the first shot in that battle.)

Orrick just released its 2008 bonus memo. We didn't receive the text of the memo, but we're guessing it's similar to last year's memo.

We did, however, receive the numerical table of Orrick bonus ranges. The good news: the numbers are the same as last year. The bad news: the numbers are the same as last year.

Of course, in these dreary economic times, stasis should be considered good news. If you're curious -- maybe you're at a peer firm to Orrick, and curious about what your counterparts' "standard" and "discretionary" bonuses -- the table appears after the jump.