Cravath screws associates on bonus CSM.jpgLast year, we reported on a nice perk for Cravath associates abroad: a hefty cost of living allowance, which had junior associates in London making over $300,000.

It looks like the half-Skadden mentality has made its way across the Atlantic. From a tipster:

Cravath Swaine & Moore cuts its COLA in the London office from $110,000 to $60,000 as of January 1, 2009. [A]ll the associates, one after one, where called into the office of a partner, Philip Boeckman, to receive the news. The reason mentioned for the cut is the evolution of the dollar-pound exchange rate.

The COLA is the same for all associates in London regardless of the level of seniority. The COLA gets paid together with the base salary on a bi-weekly basis.

That’s a big cut for the 20 associates in the London office. Before the COLA was raised to $110,000 last year, it was at $85,000.

RollOnFriday is not overly sympathetic:

Clearly the firm’s partners have now got wise. This week associates were hauled in one by one and told that the COLA would be reduced by $50k from 1st January, in response to weakness of Sterling. One associate complained to RollOnFriday that this comes on top of bonuses being halved and the ski weekend being cancelled, and says that these measures “pretty badly affect associate morale”. OK, no one likes to get less wedge – but low morale because of only getting £40k to live in London, when everyone else is being made redundant? Bring out the violins.

The other side of the pond just got a lot less attractive.

Earlier: Biglaw Perk Watch: Working Abroad

Cravath London associates lose £34k bonus [RollOnFriday]

economy freezes over.JPGMcDermott Will & Emery has already announced that associates will be eligible for their bonus “advances” that they were already promised. We reported that MWE associates can expect $10K to $20K now, while the final numbers will be released in March. At the time we said:

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.

Having already announced this good news, it was a little weird yesterday when McDermott announced the same news again. The same numbers, the same plan, the same “final decision in March” language. Did MWE management simply forget that they had said all of this before?

Not quite. Buried in the third paragraph of this “new” announcement was the line:

In addition to the final bonus determinations, Associate base salaries for 2009 will be determined and announced in March at the conclusion of the 2008 compensation process. Until then, current base salaries will remain in effect

No raises until March (if at all)? Is MWE really hurting or just really, really cheap?

After the jump, the freezing future.

double red triangle arrows Continue reading “The Next Wave of Cost Cutting: The Pay Freeze”

Secretary.jpgWith the holidays two weeks away, many are starting to think about the frantic search for gifts for loved ones… and loved support staff. A Consumer Reports survey indicates that 76% of Americans will cut back on gift giving this year. Surprise, surprise. But what does it mean for planning your gift for your secretary and/or paralegal?

Writes one ATL reader:

I’m a NYC 4th year and for three years have given my secretary $100 per year I’ve been at my firm (plus a small — $25 — physical gift as well). If I follow that pattern, I’d give her $400 cash in a few weeks.

My secretary is great and I would like to show my appreciation. But this year, with my job hardly safe and my bonus likely to be at Half-Skadden levels (if I even survive long enough to get a bonus), does the $100 per year rule still apply in NYC?

I think we need a full post on this. It’s not 2007 anymore.

$400 seems high, even for New York. We thought $150-200 was the going rate.

For the uninitiated, it’s customary for associates at large law firms to give a cash gift to their administrative assistants, often along with a card or small gift. Not everyone opts for cold, hard cash– some do AmEx or Visa gift cards. (If you do choose to go with bills, please make sure they are not of the soiled, dog-eared variety.)

One secretary wrote to us this year to voice opposition to the inter-office gift giving (and she’s not the only one):

How should a legal secretary ask her lawyers to not give her gifts? I don’t think Christmas has any place at work, and, though I respect and appreciate my lawyers, I don’t want them giving me gifts. I find it awkward and embarrassing on many different levels. I’ve been at my current job 5 years and tried at first simply not reciprocating. But they never got the message. I’m dreading this year’s ordeal like the plague. They make a little ceremony of calling me into an office as if I were in trouble. Please ask your readers what I might say that would stop the gifts without offending my guys. Thanks!

So, here’s an open thread to discuss your gift-giving plans in the current economic environment. Are you scaling back this year due to a diminished bonus? What’s the scale in your town? Does your paralegal get to sit on Santa’s lap as well? And if your secretary wants no part in the 12 days of Christmas, how should she let you know?

NYLJ top 100 logo.JPGAs we’ve explained before, overall head count numbers can be misleading. In these days of layoffs, acknowledged and stealth, firms could still be cutting associates while putting up big head count numbers.

But it’s always fun to gawk at the huge Manhattan behemoths. Today, the New York Law Journal Magazine released their annual report on on the largest firms in New York:

The NYLJ 100 ranks the 100 largest private law offices as of Sept. 30, irrespective of where a firm is headquartered, whether it claims a home office or in what state or country it originated or has the majority of its lawyers. The exception this year is that in a few cases numbers are as of October, to better reflect late-breaking events.

The top fifteen biggest firms (numbers show attorneys in New York) are not surprising:

1. Skadden, Arps, Slate, Meagher & Flom: 910
2. Weil, Gotshal & Manges: 679
3. Dewey & LeBoeuf: 663
4. Simpson Thacher & Bartlett: 657
5. Paul, Weiss, Rifkind, Wharton & Garrison: 644
6. Davis Polk & Wardwell: 607
7. Debevoise & Plimpton: 535
8. Cravath, Swaine & Moore: 529
9. Sullivan & Cromwell: 499
10. Sidley Austin: 469
11. Schulte Roth & Zabel: 459
12. Cleary Gottlieb Steen & Hamilton: 450
13. Proskauer Rose: 448
14. White & Case: 443
15. Willkie Farr & Gallagher: 435

You can read the full list here. Behold the magnificence of size.

New York Law Journal Magazine [NYLJ]

axiom (2).jpgFor those attorneys back on the market, we’d like to note other firm options beyond those with ampersands. A recent issue of Fortune Magazine profiles web-based law firm Axiom. Founded in 2000 by Biglaw refugees, it appears the high-end legal temp agency has been steadily growing.

Back in December 2006, the Wall Street Journal profiled the firm–then with 150 attorneys and offices in New York and San Francisco–noting that its associates make salaries in the high-$100,000s and mid-$200,000s, work 40 hours per week, and offer legal services up to 50% lower than top law firms. It got attention again last year, when it opened a new office in London, and added more attorneys taking its count up to nearly 200.

It looks like this baby is still growing. Its office count is now up to five, with additional offices in L.A. and Chicago, and the attorney count is up to 216. Its website brags of “law redefined” and has bios for its support staff giving them nicknames, like “Last of the Faux-Hicans,” “The Hammer,” and “Jazz Hands.”

A venture capitalist tells Fortune that Axiom is “almost like an online dating service for the legal profession.” (Ed. note: No, that would be ATL Courtship Connections.) Beyond the online component, a big difference from a traditional law firm is that Axiom is a corporation instead of a partnership, and having been funded by venture capitalists, will actually have to go public at some point.

The WSJ law blog notes that some fear the idea of being consigned to “temping hell.” But in a gallery of testimonials, a San Francisco Axiom attorney praises the life-work balance at Axiom, saying, “I will passionately find creative solutions to your company’s thorniest legal issues, but I will also find time to passionately ride my dirt bike in my hot pink riding gear.”

Well, if that’s not an advertisement for temping, what is? What do you think? Ready to send your resume to Axiom?

Legal eagles set free [Fortune]

Axiom: A Different Kind of Legal Practice? [WSJ Law Blog]

Finding Happiness On the Slow(er) Track [Wall Street Journal]

Take the law into your own hands [Financial Times]

pyramid scheme capstone small.jpgAmerican Lawyer released their annual survey of managing partners at top law firms. Despite a high level of uncertainty, managing partners still remain optimistic about the future.


You’d think all of the layoff news, dissolution rumors, half-bonuses, and the terrible American economy would make Biglaw chieftains more than a little worried about the future of the industry. But no! Everything’s going to be fine. Pay no attention to the man behind the curtain:

But managing partners are still reluctant to throw away their head cheerleader pompoms. Even as uncertainty clouded the responses of the 112 firm leaders who answered this year’s survey, they remained surprisingly upbeat about their firm’s prospects. Make no mistake: Firm leaders know the boom has busted; most of them responded to the survey after September 15, the day that Lehman Brothers Holdings Inc. filed for bankruptcy and Merrill Lynch & Co., Inc., was sold. Few, however, were willing to say–at least for now–that their business will be dramatically different as a result. Even in a time of financial turmoil, they’re counting on clients to continue to demand high-end legal services.

The results are really not that surprising at all, once you become accustomed to the never ending flow of BS that law firm managers spout right up until profits per partner take a significant hit.

But it is always funny to see the disassociation between a firm’s public statements and their internal machinations. Obviously, all of this public backslapping is for the benefit of clients who are not paying enough attention:

Still, one aspect of firm management may never change. In one of the most interesting responses, law firm leaders reported that they are still planning to raise billing rates in 2009. Ninety-eight percent of respondents to our survey said that their rates will be higher next year, though 63 percent said the rise will be 5 percent or less. (By contrast, 62 percent reported in 2007 that they’d raise rates by more than 5 percent.) It may seem counterintuitive to raise rates when clients are hurting, but in interviews, managing partners insist that, for most clients, value trumps rates.

That makes perfect sense. Charge more + Pay less (bonuses) = Stable PPP notwithstanding an economic crisis of global proportions. “I love this plan! I’m excited to be a part of it!”

After the jump, let’s bring out the Stay Puft “Straw” Man.

double red triangle arrows Continue reading “Managing Partners Expect Associate Head Count To Remain Stable:
ATL Expects Associate Head Count to be a Useless and Misleading Statistic”

Wilmer Hale logo.JPGWe’ve reported on various firms cutting back some of the “perks” that used to be associated with Biglaw. But Wilmer Hale has decided to hit associates where they eat, literally.

A memo went out to New York associates “updating” the firm’s overtime meal policy. For you law students out there who are not aware of the system, law firms usually allow lawyers to charge late night meals to clients. A long, long time ago astute managers realized that underlings perform better when they are fed. Apparently, there is a complex biological process that allows workers to convert the nutrients found in bread and water into menial legal tasks.

But Wilmer Hale has concluded that adenosine triphosphate is an “optional” luxury for associates lucky enough to work past 8 p.m. Paul A. Engelmayer, managing partner of Wilmer Hale’s New York office, clarified the overtime meals policy this afternoon:

The firm’s policy is to reimburse lawyers and bill clients for up to $30 per overtime meal not simply because a lawyer is present and working at the office at 8PM, but, rather, because the lawyer had to be here at that time to meet a specific client need or deadline. Just because a lawyer chose to work late does not mean that a client should have to pay for his or her food. Partners are constantly writing off evening meals billed to clients where it was impossible to justify to the client why they should be paying for a lawyer’s food. Please don’t bill clients for overtime meals where there isn’t a justification that you’d feel comfortable articulating to the client as to why the client should be paying for it.

I once knew a New York associate who always “chose” to work past 8 p.m. for no good reason. He was a great guy and a good attorney, until “the incident.” Now he lives at Bellevue and eats pudding out of a Redweld.

Look, we all know some associate at the firm who “abuses” the overtime meal system. But the vast majority of people who are working after hours are there because they have to be, not because they want to be and certainly not because Seamless Web is a bigger draw than a beer and a bed.

But Wilmer Hale presses the point, after the jump.

double red triangle arrows Continue reading “More Shock Doctrine: Wilmer Hale ‘Clarifies’ Late Night Meals Policy”

damages dewey leboeuf.jpgIf things are a little slow in New York law firms, perhaps they should consider starring roles in the pictures. We’ve covered movie shootings at firms before, because it seems somewhat glamorous to host the Hollywood types and to see your firm later on the big screen.

But now we’re getting news that Dewey & LeBoeuf has deigned to be a set for the little screen. From a Dewey tipster last week:

[T]hought you might be interested to hear that yesterday and today we have production crews from the tv series “Damages” in our building at 1301 Ave of the Americas filming scenes for their upcoming season. It’s quite amusing actually. Crews are on our 23rd and 43rd floors, so people are tip-toeing around and there are signs all over the place that read “Filming in Progress … please avoid the Area.”

This is the second time D&L has been used as a set. Scenes from Michael Clayton were also filmed here. Needless to say there were many star-struck associates who got a chance to see George Clooney walking the halls.

In case you don’t know about it, Damages is a legal series on FX that starts Glenn Close (aka, bunny boiler from Fatal Attraction), William Hurt and Ted Danson.

Oscar-winning film Michael Clayton and mega-wattage star George Clooney meet the standards of Biglaw prestige. Film away. But a legal series on FX?

Oh, Dewey, like Glenn Close, your acting career is on the decline.

Before Thanksgiving, we were hearing rumors of layoffs in Dewey’s New York office. Like an aging Hollywood star, going to the small screen may be an act of desperation. Filming revenues must pay the salaries of a couple of first year associates.

Earlier: Davis Polk: It Ought To Be in Pictures?

Nationwide Layoff Watch: Performance Review Attrition at Dewey & LeBoeuf

Gleaming tower of cars.JPGAre we going to have a domestic auto manufacturing industry in 2009? Nobody knows. But just in case the government doesn’t bail out Detroit, law firms are jockeying to work on the bankruptcy.

AmLaw Daily reports that three firms are the early favorites to capture the bankruptcy work: Weil, Gotshal & Manges, Kirkland & Ellis, and Skadden.

Timothy Pohl, part of Skadden’s ruling class, sounds confident that his firm is in the running:

Pohl says Skadden has historically done work for former Chrylser owner Daimler, which sold 80 percent of Chrysler to private equity firm Cerberus Capital Management in 2007 for $7.4 billion. Skadden also does work for Ford, says Pohl, adding that the firm has yet to be contacted by either automaker.

“I’m not convinced that any [of the Big Three] are hiring advisers yet,” Pohl says. “But between us, Kirkland, and Weil, I’d say that the three of us have the largest [bankruptcy and restructuring] groups with a big falloff after that.”

Obviously both Skadden and Kirkland have the chops to handle the work, but isn’t the real question “Why not Weil?”

It’s uncertain whether a potential Big Three bankruptcy might present a similar problem for Weil–and how the firm would manage to juggle its Lehman, Lenox, and other client obligations in the event of such a resource-draining retention. That’s especially true given that it’s unclear whether a potential Big Three filing would proceed on a liquidation track (a la Lehman) or as an infinitely more complicated corporate restructuring.

At some point, Weil has to run out of bankruptcy lawyers. Right?

On Kirkland, after the jump.

double red triangle arrows Continue reading “If the Big Three Fall, Which Law Firms Rise?”

law firm associate bonus watch 2008 biglaw bonuses.jpgAs 7th year associates at Half-Skadden and Skadden-Mart come to grips with the fact that they will be getting a smaller bonus than 1st years at Skadden, let’s take a look at a curious article that came out on November 20th. The same day Cravath announced their reduced bonuses (and threatened their people about 2009) Chairman Chesler spoke to American Lawyer:

Evan Chesler, the presiding partner of Cravath Swaine & Moore, stresses that firms do not need lots of offices to be diversified. “It is too easy to confuse geography with geographic reach,” he says. “It is not the same thing.” …

Although Cravath has just one small outpost in London, the firm is highly diversified, Chesler maintains. “We certainly do Wall Street work, but we always have done work for companies not on Wall Street, companies that make things and are located all around the world, and will continue to do so.”

Apparently, for Chesler “it is too easy to confuse” words with deeds. Either the firm is diversified and is in a good position to weather this economic storm, or it is not. I’m sure that Chesler’s employees do not really appreciate Chesler running around publicly talking about the health of the firm, on the same day he sends around internal memos warning:

[A]ssociates 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.

If you want to criticize Cravath associates, don’t call them “greedy and entitled,” instead call them “foolish” for believing their own management. Believing their own firm is a mistake I’m sure most Cravath associates will not make again.

After the jump, guess who else was talking.

double red triangle arrows Continue reading “Cravath & Simpson & Mixed Messages”

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