Ed. note: Above the Law has teamed up with Law Shucks, which has done excellent work translating all of the layoff news into user-friendly charts and graphs: the Layoff Tracker.

This week, economists missed on the good side — initial jobless claims fell by more than expected. The 502,000 applicants are the fewest since January 3, and the four-month rolling average is at the lowest level since November 2008.

It’s tough to grasp half a million people filing for first-time benefits as good news, but these are troubled times, so we have to cheer where we can. Don’t get too excited, though. Even news that looks good at first glance probably isn’t. The 139,000 people who came off the continuing-claims roster more likely did so as a result of benefits running out or giving up the search than actually finding work.

But don’t be surprised if that number starts creeping back up. A bill was passed last week that will extend benefits by 14 weeks in all states, and six additional weeks in states where the unemployment rate is greater than 8.5%.

All in all, it was a relatively good week in BigLaw, with no layoffs reported. Nonetheless, firms continue to flail about trying to fix their economic models, and we document the efforts after the jump.

Ed. note: This post was originally published at 4:27 p.m. today. We have changed the timestamp to place it at the top of the page, but we will eventually return it to its original place.

We have confirmed the news of a Cravath bonus match with multiple sources at Cleary Gottlieb. One exchange went something like this:

ATL: Any good news today?

CGSH: No. Cravath news. Bonus FAIL.

So the 2009 bonus market is probably going to coalesce around the Cravath-level bonuses — unless S&C shows up and trumps CSM. Stay tuned.

The timing of the announcement is telling. Usually bad news is saved for Friday afternoons, so it gets lost in the pre-weekend shuffle. Did CGSH view its bonus numbers as potentially disappointing to the recipients?

Perhaps. In our reader poll on the Cravath bonuses, a majority of respondents said the CSM bonuses made them either “unhappy” or “very unhappy” (the most popular choice). Approximately 30 percent said the bonuses made them “neither happy nor unhappy.” Under 20 percent said the bonuses made them “happy” or “very happy.”

The Cleary memo and another READER POLL, after the jump.

In July, Morgan Lewis & Bockius announced that it would be ending lockstep compensation for its associates in 2010. At the time, the firm furnished this statement to Above the Law:

“We’re running our own business and focusing relentlessly on client relationships,” said Francis M. Milone, Chair of the Firm. “Doing so responsibly means continuing to reduce expenses, committing to the people in whom we are already invested, and looking at compensation across the board to ensure our structure matches the reality the entire legal industry must face.”

The July announcement was the culmination of the effort made by MLB and its chairman, Francis Malone, to reform the Biglaw business model. Back in April, Milone gave an interesting interview to the Philadelphia Inquirer:

Question: Law firms are still very profitable. Why do they need to downsize?

Answer: You have to make a judgment about whether you can keep people busy going forward. It is not healthy for a lawyer to not be busy, to have free time on his or her hands. You don’t grow, you don’t develop, you’re not happy.

And from a cultural perspective, you don’t want to build a firm that culturally is populated by a lot of people, or too many people, who don’t have enough to do.

Q: Is that the only reason?

A: The other piece of it is the feedback we got from clients. Because they’re looking at the way they want law firms to act. They’re not going to be as willing to pay, frankly, to train new lawyers. So it’s going to be harder to find things for new lawyers to do. And when we’re paying new lawyers $160,000 and clients don’t want to pay for them, you’re putting them in a position where there may not be a lot of things for them to do.

Well, 2010 is almost upon us. But MLB is suddenly not so excited about ending lockstep compensation. Milone conducted a firm-wide video conference yesterday, and tipsters report his enthusiasm for ending lockstep compensation was noticeably lacking.

Details and a statement from the firm, after the jump.

Year-end bonuses have been announced at the market-leading firm of Cravath, Swaine & Moore. And they are even lower than last year’s Cravath bonuses.

But look, this is 2009. Welcome to the Great Recession. Your true bonus is: you get to keep your job. That shouldn’t be taken for granted, even at Cravath.

Anyway, here’s the Cravath bonus scale for 2009 (via the WSJ Law Blog):

Class of 2008 — $7,500
Class of 2007 — $10,000
Class of 2006 — $15,000
Class of 2005 — $20,000
Class of 2004 — $25,000
Class of 2003 — $30,000
Class of 2002 — $30,000

Cravath’s bonus announcement is always important because the market tends to follow Cravath — as it did last year. Skadden’s 2008 bonuses, at roughly twice Cravath’s levels, were ignored.

Could this year be different? Are the Cravath bonus levels low enough such that a firm of similar or even lower prestige will try to better CSM? Or will other Biglaw shops simply avail themselves of the political cover provided by Cravath — which is arguably what happened last year, when Skadden’s generous bonuses went unmatched (excluding Wachtell)?

So, readers, what do you think? Read the FULL MEMO, take a READER POLL, and COMMENT — after the jump.

Ed. note: Above the Law has teamed up with Law Shucks, which has done excellent work translating all of the layoff news into user-friendly charts and graphs: the Layoff Tracker.

Last week we wrote that jobless claims were higher than expected and that predicting anything with any degree of confidence seemed pointless. This week, the number of people receiving unemployment benefits was lower than expected, the lowest levels in seven months, and that was before announcement that benefits will be extended again. Still, the best that can be said is that the cuts are slowing:

Companies are cutting fewer jobs as they see more evidence of a recovery, helped by government stimulus efforts and less weakness in housing and manufacturing. While a separate report today showed the economy expanded for the first time in more than a year, a rebound in hiring may take longer to materialize

So while things bounced around unpredictably in the broader market, we had two notable announcements in law-firm innovations this week. We’ll cut right to them after the jump.

Corporations are so busy reducing the amount of money they spend on outside counsel that it’s easy to overlook the fact that they are also reducing the money they spend on in-house counsel. Well, it’s easy to overlook the fact if you are not in-house.

But a new survey reports that in-house lawyers are feeling the salary pinch along with their firm-based colleagues. The ABA Journal reports:

Lauren Chung, director of the Hildebrandt survey, told the ABA Journal that the frugal approach extends to compensation for in-house lawyers.

“Do I think that lawyers overall are making less?” Chung said. “They’re not getting the increases that they had been enjoying for the past several years. Every year they were almost guaranteed an increase. This year we see very clearly that is not the norm anymore.”

Of course, in-house lawyers aren’t exactly crying poverty. Their salary, even without the yearly raise, is still pretty good.

Check out just how good it is after the jump.

In this economy, if a newly-minted attorney can find a job, especially one paying over $100,000, she should be grateful. Based on our many conversations with law students and young lawyers, we think that most of them understand these new economic realities.

But not all of them. At least one Above the Law reader is still living in the heady days of “NY to 190.” Here’s what she wrote to us:

Can we put some pressure on firms that pay $160K to match at least those few firms that pay more than $160K (doesn’t a DC firm pay $180K and no, or little, bonuses?). It’s getting close to internal bonus discussion time, and any firm paying first years less than a $20K bonus will be paying less than those few firms, right?

Do we reward those firms paying a base of more than $160K with some positive press? If we do, does that put pressure on every other “peer firm” to remain a peer firm?

Honey, what recession-free universe are you living in? A sense of entitlement is so 2006.

A reality check, after the jump.

The National Law Journal suggests that the down economy could be hitting the pockets of the Elect. Some firms are suggesting that the $250,000 bonus to hire a former Supreme Court clerk is just too expensive in today’s economy:

At firms that have been shaken by the downturn, however, a $250,000 bonus will be hard to sell, some practitioners say. “Intuitively, it doesn’t feel right to pay that kind of bonus when you are trying to make economies wherever you can at the firm,” said veteran advocate Carter Phillips, managing partner at Sidley Austin’s Washington office. Thomas Goldstein of Akin, Gump, Strauss, Hauer & Feld, where there have been cuts, agrees that it’s tough to justify a $250,000 bonus when a firm is considering letting go a staff person paid $50,000. Because of that juxtaposition, he predicted bonuses will shrink — though he said it’s too early in the hiring season to say how much. “The number of firms willing to pay that amount of money will be down.”

But surely these firms aren’t talking about collusion, are they? SCOTUS clerks command top dollar, and firms that are struggling can’t artificially deflate the price for this top talent — even if they want to:

Firms won’t be sorry to wave goodbye to what Goldstein calls the “incredible escalation” that the $250,000 bonus represents. Even before the recession, firms were grumbling about it because of a recurring pattern: Some clerks grab the bonus, work at the firm for a year or three, then skip off to academia with loans paid off and kids’ tuition in the bank. “Firms are going to be more interested in clerks staying around and practicing law,” [former solicitor general Paul] Clement said.

While some firms might be priced out of the Elect market, we are still talking about a “recession-proof” set of credentials.

More after the jump.

When we reported on the salary cuts at Nixon Peabody, we mentioned that the firm would allow associates to make up some of the money come bonus time. Here’s how the firm explained the opportunity:

With our new levels of base pay in place, we will be introducing a bonus program that offers the potential of up to 30% of base pay based on firm and individual performance. We believe this innovative pay structure will reward our highest performing associates while lowering total compensation for those who perform at lower levels.

We’ve gotten a look at Nixon’s proposed “up to 30%” bonus structure. This hasn’t been finalized, but here is what is going around the office:

Let’s break this down, after the jump.

* The vultures are circling around Dreier LLP’s Park Avenue office—an auctioneer’s website reads “everything must be sold,” but Dreier’s indictment last week says he must forfeit the firm’s assets—the prosecutors and bankruptcy trustee will have to fight it out. [The National Law Journal]

* “U.K. regulatory lawyers advising clients on the financial crisis and scandals bill as much $1,440 an hour.” “It’s our time in the sun,” says regulatory lawyer Darren Fox—alright Fox, wipe that smug look off your face—just because former M&A lawyers in the states can’t even get volunteer jobs—doesn’t make it OK to gloat. [Bloomberg.com]

* The Connecticut Attorney General got aggressive about AIG bonuses over the weekend. The outrage continues with new information that AIG payed out $218 million in bonuses, more than the $165 originally reported.[The Los Angeles Times]

* Enron executive Scott Yeager will be the first to bring his case before the U.S. Supreme Court. [The Houston Chronicle]

* SCOTUS will review “Hillary: The Movie,” and decide whether the scathing documentary should have been regulated as a campaign ad. [The Associated Press]

* A specialist on law firm finances says New York firms need to follow each others lead and re-shape associate pay—replacing “lockstep” with merit pay. [The Lawyer.com]

* An interesting case for the judge’s probable ruling to uphold Proposition 8 from a progressive gay marriage supporter. [The Washington Post]

Yesterday When I was a kid, I used to steal the Reese’s Peanut Butter cups from my younger sister’s Halloween bag, eat them, place the empty wrappers back in the bag and steal away into the night. My thinking was that at no time would my sister discover that the wrappers were empty, and if she did, well, the worst that my parents could do was take away my Nintendo.

Last night, attorneys at Morrison & Foerster opened up what they surely hoped would be their adult goody bag — an email from firm chair Keith Wetmore, titled “2008 Bonuses and 2009 Compensation ” — only discover that they, too, were faced with empty wrappers.

Naturally the email announced the usual bad news, including “simply unknowable” 2009 bonuses and salary freezes for 2009. The exception is for New York, where increases will be paid as bonuses if associates, among other things, are able to decipher the announcement itself:

In New York, however, where all major New York firms implemented step increases this year, the step increase will be paid as a Contribution Bonus in January 2010 in an amount equal to the step increase that would otherwise have applied for that class. The Contribution Bonus will be paid to those New York-based associates who progress with their class and record 1950 Efficient Legal Service Hours (see Compensation Brochure), subject to the usual prorations, and who are employed with the firm on the date the Contribution Bonus is paid.

But the email also contained a chart revising and lowering the already announced 2008 Evaluation Bonuses, which comprise the lion’s share of the total bonuses.

A tale of betrayal and woe, plus the MoFo compensation email, 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.

Mayer Brown has wished its NYC associates a merry Christmas Eve with bonuses matching the New York market (a.k.a. the Cravath/half-Skadden model).

Our tipster tells us there is no official word as to pay raises for 2009.

This announcement comes a month after Mayer announced layoffs of 33 attorneys, as well as administrative staff. Our tipster says rumors are making the rounds at Mayer of further layoffs in 2009.

Merry Christmas?

Full bonus memo after the jump.

Dear Jones Day threadjackers:

Here is your post about the Jones Day bonus. Now please put the lotion in the basket and give me back my dog.

Okay. Yesterday, Jones Day sent around its individual compensation letters. Traditionally, Jones Day makes bonus decisions on a case-by-case basis. This year is no different, but a tipster reports that the firm has generally decided to follow the Cravath scale.

Jones Day doesn’t have a billable hours requirement. But because of the individual nature of the firm’s decisions, some associates could be receiving more than people at Cravath, while some could get far less.

We also understand that Jones Day does everything it can to keep associates from knowing what the guy down the hall is taking home. A tipster reports:

All comp is confidential here. So no one knows what anyone else gets, unless you spill the beans, which is strongly discouraged. You just get your personal comp letter with your numbers.

Firm spokespeople could not be reached for comment about their bonus structure.

Our tipsters weigh in after the jump.

In good times, people are generally happy with lockstep bonus structures. In bad times, people start grumbling about “carrying” less lucrative practice groups. In these times… I think there was a novel about “Flies” that explained the situation.

For those who prefer a more “performance based” bonus scheme, McKee Nelson might be the place for you. Yesterday, the firm announced their bonus structure. A firm spokesperson explains the process to ATL:

McKee Nelson has always paid bonuses to associates based on a combination of performance and hours. As a general rule, we have not published a bonus scale or sent a bonus memo to associates as bonuses are determined and communicated on an individual basis. An exception was made last year as part of our voluntary program.

… I will tell you that 2008 McKee Nelson bonuses were based on the Cravath scale but with our customary variation in the bonus awards made to individual lawyers based on performance and hours.

Remember that McKee Nelson recently laid off 32 people, including 17 corporate finance attorneys. Paying bonuses at all really is a “bonus.”

After the jump, McKee Nelson tipsters share their thoughts.

Individualized memos have been issued to Skadden Arps associates to inform them of their 2008 bonuses and 2009 base salaries. The Skadden base salaries reflect the customary annual pay raises — sorry, Lathamites.

Because Skadden’s announced bonuses this year are so much higher than the Cravath-established market level, folks at other firms have wondered: Are the Skadden bonuses for real?

The short answer: yes. To quote the famous Seinfeld episode, “they’re real — and they’re spectacular.”

We’ve surveyed Skadden associates from a variety of class years, from 2008 through 2001. The scale we’ve pieced together looks like this (i.e., like last year’s year-end or regular bonus schedule, but without the “special” bonus amounts):

Class of 2008 — $35,000 (prorated)
Class of 2007 — $35,000
Class of 2006 — $40,000
Class of 2005 — $45,000
Class of 2004 — $50,000
Class of 2003 — $55,000
Class of 2002 — $60,000
Class of 2001 — $65,000

The bonus schedule is, of course, subject to the 1600-hour minimum. That’s not an onerous burden, and pro bono hours count towards the minimum, in unlimited amounts. If you fall short of the 1600-hour minimum, you may still be eligible for a 50 percent bonus — aka a “half-Skadden” bonus.

After the rest of the New York market settled around the Cravath bonus levels, some wondered: Do the Skadden partners feel like chumps?

Find out, after the jump.

Update (3:30 PM): Please note that this post has been revised in various respects since its original publication. The situation is fluid and we are investigating further. Thanks.

It’s moving day. Time for the elite firms to separate themselves from everybody else.

Multiple tipsters inform us that O’Melveny & Myers associates, in California and in Washington, DC, received voicemails today confirming that first year associate bonuses would be… $27,500. The bonus scale for OMM, in CA and DC, is believed to look like this:

2007 - 27,500
2006 - 30,000
2005 - 32,500
2004 - 35,000
2003 - 37,500
2002 - 40,000
2001 and 2000 - 45,000

A tipster adds, “Everyone is also eligible for additional bonus amounts on top of that based on hours and performance.”

We understand that OMM traditionally makes these announcements over voicemail. Bonuses will be paid on December 31st, with an official memo following in January. Oh, and just for good measure, class appropriate pay raises will proceed as planned. Eat your heart out, Latham.

Update (3:30 PM): It appears that these California and D.C. bonus levels are subject to a minimum hours requirement of 1950. In addition, it seems that O’Melveny’s New York office is on the Cravath scale.

Update (3:45 PM): Associate editor Kashmir Hill just spoke by phone with an O’Melveny spokesperson. The spokesperson confirmed that OMM’s California and DC offices are paying bonuses to associates that are higher than OMM in New York.

“For some time, we have set bonus levels at a competitive rate for local markets,” she said. And as ATL readers know, this year the local market in New York is weak in terms of bonuses. The OMM rep pointed out that last year New York bonuses were higher than non-NYC bonuses.

In addition, the spokesperson added, the California and DC bonus scales are subject to a minimum hours requirement of 1950. Bonuses in New York are not subject to such a minimum (although “hours and merit are taken into account,” according to OMM).

More after the jump.

Debevoise & Plimpton has been very busy and very profitable. They recently sent around a positive internal email about the firm’s business during the downturn. And we know that the Siemens case has treated them well.

But in 2008, public protestations of solid business mean nothing when it comes to associate compensation. Debevoise announced that they were paying half of what Skadden is offering:

2008: $17,500 (pro-rated)
2007: $17,500

2006: $20,000

2005: $22,500

2004: $25,000

2003: $27,500

2002: $30,000

2001 (and senior): $32,500

The numbers — while annoying — are not really that surprising. Schulte Roth, housed in the same building, earlier today announced the same scale (although subject to an hours requirement). Even our Debevoise sources anticipated that, with Siemens winding down, the firm would be more forward-looking with this round of bonuses.

What is surprising is the timing of this bonus announcement. The email went out from managing partner Rick Evans at 6:54 p.m. WTF (“Sacré bleu” in Debevoise-speak)? Was management hoping to dodge the news cycle with an after-hours announcement? Somebody should let them know that the internets are on 24/7.

Our hearts go out to the Debevoise associates that were still working when this announcement crashed into their inboxes. Professionalism is its own reward. All Skadden associates are getting this Christmas is twice the money.

Read the full memo after the jump.

With 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?