As we mentioned last week, McDermott Will & Emery was planning to hold a meeting with associates today about compensation matters. The meeting is over; here’s a brief report:
The MWE associate compensation committee had a videoconference with all associates this morning, where they ate crow about their bonus structure for 2007. They basically said, “we missed the market, we’re sorry, and we’re fixing it.”
They are meeting on January 23rd to set the rate for supplemental bonuses, which will be announced at the end of this month. Apparently the risk of losing all their top billers and having it smeared all over ATL was more than our delicate leadership could handle.
So no numbers yet; expect them near the end of this month. We’ll keep you posted.
Bonus season is still with us, although it’s winding down. Announcements continue to trickle in, but at a reduced pace. Going forward, we will combine bonus info into omnibus posts that will go up periodically, depending on whether we have a critical mass of tips.
Here is today’s compilation of associate bonus news — plus a tantalizing email, from Allen & Overy, that raises the possibility of an associate pay raise.
1. Thacher Proffitt & Wood: TPW has been hit hard by the credit crisis. As we reported back in November, they may be laying off associates this month. But at least they’re still paying out bonuses to the folks who are still around:
TPW paid bonuses year end. No standard memo to all, so information is hard to come by. They paid market bonus ($35,000 for class of 2006) with an hours requirement.
There seem to be four tiers: 2100 hours = full bonus, 2000 hours = half bonus, 1900 hours = somewhere between a third and a fourth ($10,000 for class of 2006 associates), and below 1900 hours = no bonus.
They are having a videoconference on the 15th with all associates to discuss compensation. In the meantime, they allegedly are continuing to monitor market data. It appears as if they will try and fix their initial misread of the market, but no one knows when, how or by how much. In some cities, peer firms’ bonuses [were] 3, 4 or 5 times MWE’s bonuses.
Sneaky to state that everyone gets the special bonus at 2000 hours, but it’s not market. For example, a fourth-year will either get 80k for 2150 or 38k for 2000-2149.
The Kramer Levin memo appears after the jump.
4. Allen & Overy: This is not bonus news, but over at Allen & Overy — or should that be Allen & Oy-vey-ry? — an email went out before the new year telling associates that the firm probably “will not be able to announce associate/senior counsel salaries for 2008 before the year begins.” One source wonders:
Have any other firms mentioned something like this? Do you think management knows something about a pending raise? Why wait, unless they have information about a possible raise?
We’ve heard complaints from numerous associates claiming that their law firms are using vague bonus policies to lowball them on bonuses. While we understand why these associates are upset, we can’t say we’re surprised. The whole point of a bonus policy that contains an element of discretion is the ability to pay some associates less than others — for whatever reason, justified or not.
This is why we regard only a lockstep, non-hours-based match of the Cravath year-end and special bonuses as a “true match.” If a firm reserves the right to tailor associate bonuses — based on billable hours, quality of performance, or any other factor — expect the firm to exercise it.
So we don’t expect to write much about how firms are using slippery bonus memos to pay low bonuses (although we will bring you the results of yesterday’s bonus survey). The intricacies of an individual law firm’s bonus policy tend to be of interest only to people at that particular firm.
We are, however, interested in bright-line distinctions. For example, what firms have rejected special bonuses entirely? It turns out there are a few of them. Last week we received this info:
DLA Piper litigation associates in New York just left a “Coffee Meeting” with Joe Finnerty III, head of New York litigation. He “unofficially” announced that the bonus structure and amount will be exactly the same as last year and that there will be no market “special bonuses.”
Hmm. Did the firm not get paid enough for the Mitchell Report?
And today we received this info:
I’m an associate at McDermott, Will & Emery in the Boston office. We have all just heard through department heads that not only will the firm not issue special bonuses this year, but bonuses this year will be less than half of years past and well well below market.
For example, a 6th year associate (class of 2001) billing between 2000 and 2100 hours will get approximately $5,000. eedless to say, this is less than a first-year associate gets for simply showing up at any other firm. There is not a large or probably even a midsize firm in Boston whose bonuses are anywhere near this low.
We’re guessing that DLA Piper and McDermott, Will & Emery are not alone in nixing special bonuses. Many of the firms that have remained mum until now probably have no plans of paying special bonuses, a la Cravath.
And to be perfectly (and brutally) honest, does it make sense for firms with profits per partner that are a fraction of Cravath’s to pay bonuses at Cravath levels? Of course associates want bigger bonuses. But they also want jobs.
Nevertheless, we have no doubt that many of you are unhappy about your firm’s bonus policy. Feel free to engage in bonus bitchery in the comments. Thanks.
McDermott, Will & Emery has come up with a more creative way to deal with soaring associate salaries. The firm has announced that it will be creating a “second tier” of associates to deal solely with low-level tasks like, e.g., document review.
As Cal Law points out, hiring cheaper lawyers to do this type of work is nothing new; this type of stuff is the staple of contract attorneys in most biglaw firms these days. The new part is making these contract attorneys a lower class of associates, essentially making them “permanent contract attorneys”, as Cal Law puts it:
While some firms quietly turn to contract attorneys, or even ship grunt work overseas, McDermott, Will & Emery plans to create a new tier of attorneys — think of them as permanent contract associates — to handle lower-end tasks at lower billing rates.
…
First-year associates at big firms now earn $160,000. Meanwhile, electronic discovery has dramatically increased the amount of basic work that usually goes to those high-priced associates.
“This is a topic of great importance, since the cost of document review has become intolerable for everyone,” said David Balabanian, the head of Bingham McCutchen’s litigation group.
While hiring contract attorneys is nothing new, creating a second class of full-timers is.
[The Recorder via Cal Law]
Is this a good or bad thing? On the one hand, it increases the competition even more for the “real associate” positions and institutionalizes to an even greater extent the law school tier system into biglaw law firms.
On the other hand, it may be beneficial to those attorneys now doing the contract work. It will establish them as associates in the firm, even if not on the same level as the top tier associates. They will likely receive things like benefits. The top tier associates will likely do more substantive work sooner. And the clients won’t find themselves paying top tier prices for stuff like document review, as still occasionally happens.
So what do you guys think? Will other firms adopt this model? Once again, it makes sense to us.
And hey, L2L, maybe you should apply.
Related: Firm to Fill Cheap Seats [The Recorder via Cal Law] McDermott To Create a New Class of BigLaw Attorneys [WSJ Law Blog]
Prior to the Cravath bonus announcement, McDermott Will & Emery said it would be announcing bonuses later than usual this year. But now that Biglaw bonus season has been kicked off early, will they stick to their previously announced timetable?
For those of you who are interested, the MWE announcement — which was made on October 11, well before the CSM news — appears after the jump.
We’re surprised that the firms in this latest group of Vault 100 law firms aren’t ranked more highly. Some of them are quite profitable (Dechert),* prestigious (Munger), or high-profile (Boies Schiller, home of legendary litigator David Boies).
But who are we to argue? For communal discussion, here is this morning’s batch of Biglaws:
We have a ruling in the HappyMealGate case (prior coverage here, here, and here of Wiliam P. Smith, the McDermott Will & Emery partner who told Judge Laurel Myerson Isicoff that she was “a few French Fries short of a Happy Meal”). And it’s surprisingly lenient.
Judge Isicoff basically gave Smith a stern talking to:
“There is no jurisdiction in the U.S. — including the district where Mr. Smith regularly practices — where the expression and tone Mr. Smith used on May 7 would fall in the bounds of acceptable behavior,” a solemn Isicoff said from the bench in front of a packed courtroom.
and ordered him to take an online professionalism course administered by the Florida Bar.
Smith brought McDermott chairman Harvey Freishtat with him to beg and plead for mercy from Isicoff. Apparently it worked.
Isicoff said she accepted the apologies of both Smith and McDermott Will & Emery chairman Harvey Freishtat, the head of the Chicago-based, 1,000-lawyer firm, who also appeared in front of her to beg her pardon.
Looks like the fry guy got off relatively easy, and we’ve all learned something: don’t stoop to middle-school insults while arguing in front of a federal judge, especially if you’re appearing pro hac vice.
Surely you all recall William P. Smith — a partner at McDermott Will & Emery (Chicago), and head of its bankruptcy department — who recently told a Miami bankruptcy judge, in open court, that she was “a few French Fries short of a Happy Meal.” We broke the story here (with follow-up here).
The “Happy Meal” comment royally pissed off Judge Laurel Myerson Isicoff (and not ’cause she’s a Burger King partisan). She benchslapped Bill Smith via an Order to Show Cause, directing the Fry Guy to explain why he shouldn’t be suspended from practice in her court.
The firm has now filed a motion in response to the OSC. From the Daily Business Review:
Chicago attorney William P. Smith says he’s very, very, very sorry for telling U.S. Bankruptcy Judge Laurel Myerson Isicoff she was “a few French fries short of a Happy Meal” during a May 7 court hearing in Miami.
The chairman of McDermott Will & Emery, the Chicago-based firm whose bankruptcy practice Smith heads, is ready to prostrate himself before the judge as well.
According to a recent motion filed by the law firm, Harvey Freishtat, who heads the 1,000-lawyer firm, plans to fly to Miami for a hearing on Smith’s comment. The motion states Freishtat will personally express “on behalf of the entire firm, to this court, to the other lawyers in this case, and to the other honorable judges of this District Court, [his firm’s] sincere and deepest apology for the words used by Mr. Smith.”
And would Her Honor like a side of fries with that?
More discussion after the jump.
Earlier this month, we wrote about how William P. Smith — a partner at McDermott Will & Emery (Chicago), and head of its bankruptcy department — landed himself in the deep-fat fryer. Smith unwisely told a bankruptcy judge, in open court, that she was “a few French Fries short of a Happy Meal.”
Well, Judge Laurel Myerson Isicoff didn’t respond so well to that colorful statement. She issued a sua sponte Order to Show Cause, directing William Smith (hereinafter “the Fry Guy”) to explain why he shouldn’t be suspended from practicing in her court.
Several tipsters have directed our attention to this delightful article, from the Daily Business Review, about the Fry Guy’s “super-sized gaffe.” It describes the fallout, for both Smith and McDermott Will & Emery, from L’Affaire Happy Meal — and includes a shout-out to Above the Law.
Excerpts and discussion, after the jump.
It’s the Friday before a major holiday — and firms are scrambling to get their pay raise announcements out the door. It’s a nice way to send your bedraggled and overworked hardworking associates into a three-day weekend (assuming they don’t need to come in on Monday).
We’re about to sign off for the weekend, and we won’t be back until Wednesday. (Billy Merck, who has filled our shoes in the past, will be your guest editor on Tuesday.)
Before we go, here are the latest salary announcements that we’ve confirmed:
But the Manatt “raise” has a catch. Its effective date? January 1, 2008.
HA. That’s kind of funny, in a sick sort of way — provided you’re not at Manatt.
Memos appear after the jump. And we’re out the door. Have a great holiday weekend! Update (2:50 PM): We’ve verified the Pillsbury Winthrop raise news. Memo below. Update (3:25 PM): Jeez, you’re going to make us miss our flight to Las Vegas. Memo from the D.C. office of Winston & Strawn, added after the jump.
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In a land that is right here and in a time that is right now, a technology has arisen so powerful that it can replace basic human document review. Is it time to bow down before our new robot overlords?
First, here’s a little story about me: my life in the legal world began as a paralegal. My first case was a GIANT patent infringement case that was already six years old and had involved as many as five companies, multiple US courts, the ITC and an international standards committee. I knew nothing about any of this.
On my first day, my supervisor (a paralegal with at least eight other cases driving her crazy) sat me down in front of a Concordance database with a 100,000+ patents and patent file histories. “Code these,” she said. I learned that “coding”, for the purposes of this exercise, meant manually typing the inventor’s name, the title of the patent, the assignee, the file date, and other objective data for each document. I worked on that project – and only that project – for at least the first six months of my job. After a week or so, time began to blur.
What I know, in retrospect and with absolutely certainty, is that as time began to blur, so did my judgment. So did my attention to detail. If you could tell me that I did not make at least one mistake a day – one inconsistent spelling, one reversed day and month, one incorrectly spaced title – I frankly would need to see your evidence. I would not believe it. The human mind is trainable but it is not a machine.
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As we mentioned last week, McDermott Will & Emery was planning to hold a meeting with associates today about compensation matters. The meeting is over; here’s a brief report:
