Cravath

Cravath & Simpson & Mixed Messages

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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.

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Associate Bonus Watch: Cravath Offers Less Than Skadden

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animated siren gif animated siren gif animated siren gif drudge report.GIFIf 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:

law firm associate bonus watch 2008 biglaw bonuses.jpgClass 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.

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Associate Bonus Watch Warning: Outlook Bleak

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law firm associate bonus watch 2008 biglaw bonuses.jpgWe’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 widespread 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

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Open Thread: Associate Bonus Speculation

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Associate Bonuses law firms Above the Law.JPGA 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.

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GM/Chrysler Talks Could Be Schulte’s Day In The Sun

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chrysler cerberus building.JPGA lot of people have been asking how Schulte Roth & Zabel are doing during the economic downturn. It’s a relevant question given Schulte’s large book of hedge fund business.

But even as hedge funds are slowing down, Schulte could get a lot of work thrown their way if there is any fire to these G.M./Chrysler talks. According to AmLaw Daily Cravath is advising G.M. during the preliminary merger talks, while Schulte is advising Chrysler.

The high profile M&A work is being thrown Schulte’s way because of their longstanding relationship with the private equity giant Cerberus:

[Cerberus] bought Chrysler from Stuttgart, Germany-based Daimler for $7.4 billion in 2007–roughly $30 billion less than Daimler paid for the company in 1998.

In fact Cerberus could be the key to the whole deal:

[P]eople close to the merger talks said that Cerberus had proposed to contribute cash to GM-Chrysler in addition to the estimated $11 billion in reserves that Chrysler has on its books. In return, Cerberus would receive equity in the combined company and become a large shareholder.

It’s important to remember how young Schulte Roth is, having just been established in 1969 (compared to Cravath’s nearly 200 year history). A huge deal like this probably won’t offset the general slow down in hedge fund work, but it does show that Schulte has a couple of clubs in the bag to get through the current downturn.

Cravath, Schulte Roth Involved in GM-Chrysler Talks [AmLaw Daily]

Cerberus’s role crucial as GM-Chrysler merger talks continue [International Herald-Tribune]

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Legal Eagle Wedding Watch 9.7: No Ordinary Love

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champagne glasses small.jpg
For the commenters who yearn to see more “ordinary” couples in the Legal Eagle Wedding Watch, we commend this pair to your attention. The groom is a radio personality, and the bride has a JD from Loyola. They seem likable and . . . ordinary. Is this the type of couple our readership craves? Should we devote one slot a week to a Tier-II couple? Designate one column a month as Ordinary Week? Please advise. (This is actually a serious question. LEWW recognizes that we can’t satisfy everyone, but we do aim to please.)
For now, we’ll to continue to celebrate the extraordinary. Our finalist couples have degrees from Harvard, Yale, NYU, Chicago, and other elite schools, some with athletic programs. All three brides toil in Manhattan law firms, and all three grooms serve humanity in important-sounding public-sector jobs. Here they are:

1. Jessica Buturla and Caswell Holloway IV
2. Sarah McDonald and Patrick Egan
3. Johanna Greenbaum and David Newman

More on the couples below, including photos.

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The Worst Law Firm Websites

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Van%20Winkle%20Law%20Firm%20Lawyer%20Ken.jpgWachtell may be the most prestigious firm out there (according to Vault), but it has the industry’s worst Web site, as rated by Jonathan Thrope of the American Lawyer. We’re not completely sure we trust his judgment though, since he was “sucked in” by Womble Carlyle Sandridge & Rice’s animated dog. We waited for it to do something cool, but it just stretched and yawned.
According to Thrope, law firms are getting more serious about online marketing and using Web sites to create a distinctive brand. In general, law firm sites strike us as fairly dry. And boring. There are a few exceptions, like the Van Winkle Law Firm’s split personality bio page. North Carolina-based Van Winkle adds a personal touch to its site with dual bios (and photos) for many of its attorneys: one with professional highlights, and another focused on hobbies and life outside of work.
Other firms experiment with offbeat advertising, but seem to be using it to recruit attorneys, not clients. Like Curtis, Mallet-Prevost, Colt & Mosle’s creation of a Facebook page, and Stoel Rives’ free-style running promo on YouTube.
Of the assortment of staid sites in the AmLaw 100, five made Thrope’s cut for the worst. Check them out after the jump.

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Law Firm Olympics

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olympics beijing flag law firms.jpgJingoistic competition is fun, but why should handing out medals be the sole province of the IOC? Athletes and David Rivkin should not be the only ones getting a taste of Olympic glory.
Here at ATL, we’ve put law firms on the (imaginary) field of competition and are now ready to reveal the gold medal winners in a number of sports.
After the jump, see the winners, and weigh in on which firms would be champions in sports we did not pick for prime time.

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Fall Recruiting Open Thread: Vault 1-5 (2009)

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comparing.jpgAs reported last week, the Vault 2009 law firm rankings are out. You can find Vault’s ranking of the top 100 most prestigious firms here.
As observed by one astute commenter, “the prestige rankings will tell you nothing about the quality of your work experience.” In order to address this, we are relaunching a popular feature from last year: a series of open threads on the Vault 100 firms, organized in batches of five, to allow for comparative discussion (and gossip) about perks, hours, recruiting standards, firm life, etc.
We’re starting with the top five firms — and experiencing a bit of déjà vu, since the list is identical to last year’s (although the prestige scores, indicated parenthetically, have changed a little):

1. Wachtell, Lipton, Rosen & Katz (8.777)
2. Cravath, Swaine & Moore LLP (8.732)
3. Sullivan & Cromwell LLP (8.257)
4. Skadden, Arps, Slate, Meagher & Flom LLP (8.135)
5. Davis Polk & Wardwell (8.070)

Cravath is closer than last year to passing Wachtell in the rankings. Perhaps the bedbugs prevented CSM from retaking the top position, which it held back in the 2003 rankings. We’re amused that Vault lists this as a Cravath “notable perk”: “Grinds associates into a fine, self-important powder.”
Please discuss and compare the top five. More threads to come.
The Top 100 Most Prestigious Law Firms [Vault]
Earlier: Rejoice: The 2009 Vault Rankings Are Out!, Fall Recruiting Open Thread: Vault 1-5 (2008 edition) and Fall Recruiting Open Thread: Vault 96-100 (2008 edition — with links to all of last year’s posts).

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A Woman’s Place Is… At Cravath

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Deborah Epstein Henry.JPGThis week, Working Mother magazine, in association with Flex-Time Lawyers, released its second annual Best Law Firms for Women rankings.
Some of the firms on this year’s list are notorious sweatshops, more likely to help women freeze their eggs than they are to aid either sex in raising a family.
I contacted Deborah Epstein Henry (pictured), founder and president of Flex-Time Lawyers and co-author of the list. Henry said that her results reflect more than firm PR. The rankings score firm programs based on how many attorneys actually use those programs.
In Henry’s view, ranking the best law firms for women is more than just a women’s issue.
“What we are looking for is firms that have work/life policies that are both gender- and racial [sic] reason-neutral,” Henry said. “I firmly believe that the more we can move work/life issues away from being a ‘mommy’s issue’ the better off we’ll be.”
More on Henry’s efforts to make law firms responsive to lifestyle concerns after the jump.

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