Money

Quote of the Day: So We Need Lawyers to Torture People Now

By Christopher Danzig

If you don’t have a lawyer, it is hard to really put their feet to the fire and make sure the banks have every ‘t’ crossed and ‘i’ dotted… We are going to make sure funding for those legal services is restored.

– New York Attorney General Eric T. Schneiderman, discussing the implications of a $2.7 billion hard-cash settlement under a nationwide mortgage servicing agreement.

As part of the settlement, New York State will receive a guaranteed $136 million, and New Yorkers who suffered during the foreclosure crisis will be eligible for an estimated $648 million in additional payments. Schneiderman said the settlement will help restore legal service programs that were cut back in recent years.

Quote of the Day: In Five Years, Don’t Say We Didn’t Warn You

By Christopher Danzig

William Brewer Jr.

Take it from those of us on the frontline of economic distress in America. This could very well be the next debt bomb for the U.S. economy.

– William E. Brewer Jr., president of the National Association of Consumer Bankruptcy Attorneys, commenting on a new national survey of 860 bankruptcy lawyers. Surveyed lawyers expressed concern about the state of student debt in America, reporting that they are already seeing “what feels too much like what they saw before the foreclosure crisis crashed onto the national scene.”

Associate Bonus Watch: Morgan Lewis & Bucks-ius

By David Lat

Thanks to everyone who responded to our recent request for information about 2011 bonuses at Morgan Lewis & Bockius. Here’s our report on bonuses at MLB.

As you may recall, Morgan Lewis pays individualized bonuses, so there’s no tidy table as there is for lockstep firms. Feel free to use this post as an open thread for MLB bonuses — you can compare amounts anonymously, in the comments.

How are Morgan Lewis associates feeling about their bonuses? We’ll get the ball rolling with some tips that we’ve received….

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Associate Bonus Watch: Did MoFo Just Use Cravath as an Excuse to Screw Over New York Associates?

By Elie Mystal

Remember when Biglaw associates in New York got paid more than Biglaw associates everywhere else because it costs more money to live in New York than anywhere else? Yeah, those days are long gone. A few months ago, we pointed out that the NALP buying power index ranked the purchasing power of New York associates 42nd nationwide.

Maybe you didn’t believe NALP’s numbers?

Well, today we offer more evidence that if you are an associate working and living in New York, you are a chump. You are paying a higher cost of living than anywhere else in the country, and you’re not getting paid any more for the effort. In fact, if you work at Morrison & Foerster, you might be getting a smaller bonus just because you work in New York….

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Associate Bonus Watch: Bingham McCutchen’s ‘Extraordinary’ Bonuses

By David Lat

Congratulations to Bingham McCutchen, which recently earned a spot on Fortune’s best companies to work for — for the eighth year in a row. And congratulations to Bingham’s nine new partners. It’s a very international group: these seven men and two women work out of London (3), New York (3), Hong Kong (1), Boston (1), and Hartford (1).

And congratulations to high-billing associates at Bingham. They were rewarded with “extraordinary” bonuses, as set forth in the firm’s bonus memo….

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There’s No Easy Way Out Of Student Debt, But That Doesn’t Stop Some People From Feeling Superior

By Elie Mystal

Yesterday, my colleague Staci Zaretsky decided to make the case for why all the people who are dutifully paying off their law school debts should feel superior to those who default on their law school debts, or seek to discharge them through bankruptcy. As she wrote in her post, “Have I ever thought about filing for bankruptcy? Hell no. It might be hard, but I’m accepting responsibility for my actions. I’m paying back what I owe — slowly but surely, with not a single missed payment.”

Well, la, de, f***ing, da. It’s all well and good that Staci has never ever thought about availing herself of a financial protection that is readily used by rich people (and companies) should they make a ruinous financial investment. I’m also really happy that Staci apparently knew everything about what she was getting into before she decided to go into a whole lot of debt to the Western New England University School of Law.

But I’m sticking to the point that most people in their early 20s have no clue about what getting into six figures of educational debt will do to the rest of their lives. I still think that absent parental support of any kind, people in over their heads in debt should be able to file for normal bankruptcy without needing to show undue hardship.

The story shouldn’t be about students looking for an “easy” way out of their obligations. The story should be about helping 22-year-olds fully understand what they are getting into, and looking at all the options available for people to get out of horrible financial mistakes of the past….

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Associate Bonus Watch: Orrick’s Merit-Based Matrix Continues to Be the Most Transparent

By Elie Mystal

Orrick Herrington & Sutcliffe has been a leader in instituting a merit-based compensation system. Two aspects of their system make Orrick’s commitment to merit-based seem genuine:

1) Partners put in significant time so that merit evaluations are more than just hours cut-offs.
2) Orrick is transparent about how many people get paid.

You can’t run a merit-based system with a Jones Day-like approach to transparency without everybody feeling like they are secretly getting screwed. If you do it out in the open, at least the low-hanging fruit will know that other, better work paid off for others in their class.

So let’s look at the memo. While Orrick generally does a good job of looking at associate productivity instead of mere man-hours, make no mistake, the firm still wants you to bill, and in a timely fashion….

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Quotes of the Day: Mo’ Superior Legal Minds, Mo’ Problems!

By Staci Zaretsky

Antonin Scalia

Society cannot afford to have such a huge proportion of its best minds going into the law.

– Supreme Court Justice Antonin Scalia, commenting on the state of the legal profession at the 2012 Midyear Meeting of the American Bar Association in New Orleans.

(Justice Scalia comments on Biglaw’s flawed compensation system, after the jump.)

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Not Even Bankruptcy Will Make Your Student Loans Go Away

By Staci Zaretsky

As we mentioned in Morning Docket, more and more law school graduates are trying to seek bankruptcy protection from their mountains of student loan debt. Bankruptcy? Really?

Now, we know that reading comprehension is tested on the LSAT, but apparently, once students complete the law school entrance exam, that skill goes right out the window. How do we know? Because law school graduates, who freely signed up for student loans as law students, are now trying to shirk their repayment responsibilities. They are the 99% (of people who sign on the dotted line and think nothing of it until it’s time to face the consequences).

All the documents these law school graduates signed and claimed to have read and understood prior to accepting their student loans — well, they had some words to say about bankruptcy. Important words. Here are some of them, pulled from my very own master promissory note:

We will discharge (forgive) your loan if: [y]our loan is discharged in bankruptcy. However, federal student loans are not automatically discharged if you file for bankruptcy. In order to have your loan discharged in bankruptcy, you must prove to the bankruptcy court that repaying the loan would cause undue hardship.

Aww, you think you’ve got an undue hardship, precious little snowflake? Well, think again….

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Which Law School Is Allegedly Paying Students Not to Take the Bar Exam This Summer?

By Staci Zaretsky

Most law school graduates pass the bar exam with flying colors on the first try. Law schools, of course, are ecstatic when their graduates pass, because it’s something that they can brag about in their brochures. Other law school graduates aren’t so lucky — they fail, and they fail hard. But law schools don’t want you to know about the people who fail the bar exam. They’d like to shove those dirty statistics far, far away from public view.

So what happens when a law school’s graduates fail the bar exam in such great numbers that it becomes national news? Does that law school hang its head in shame and admit defeat? Or does it figure out a way to game the numbers so that next time, it won’t be so embarrassed?

As with most things having to do with numbers, this law school has allegedly made an ill-advised decision to appear more appealing to the public (and the American Bar Association). This law school is allegedly offering its students money in the hopes that they won’t take this summer’s bar exam. But which law school?

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Associate Bonus Watch: Wilson Sonsini Announces Bonuses and Base Salary Scale

By David Lat

Today everyone’s talking tech, thanks to Facebook’s upcoming IPO. In light of how Silicon Valley is dominating the news cycle, it seems fitting to discuss the recent bonus and salary news from Wilson Sonsini — one of SV’s top firms, and counsel over the years to many startup companies turned tech giants.

(But not Facebook, at least with respect to the IPO. That’s being handled by Fenwick & West and Simpson Thacher.)

So what kind of bonuses did WSGR just announce? Let’s find out….

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All Rise: Promotion and Pay Freeze on Federal Law Clerks Has Been Lifted

By Elie Mystal

The freeze is melting away.

A friend who is a federal clerk just texted me: “I’m gonna buy new bras!”

Oh yes, it’s time federal clerks got back to the good life. A memo just went out from Senior Judge Thomas Hogan who heads the Administrative Office of the United States Courts. Hogan informed the system that the freeze on promotions, step increases, and cash awards for federal clerks has been lifted for this year.

It’s cool to be a federal clerk again! Well, it’s cool to be a federal clerk on a two-year or long term clerkship, again.

But maybe only for this moment. Austerity could rear her ugly head right around the corner….

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Associate Bonus Watch: Finnegan Deals Nice Merit Bonuses to the Worthy

By Elie Mystal

I was getting a little worried yesterday about the state of Biglaw bonuses. But a new day brings a new hope. Yesterday, Law360 (subscription req.) reported that Finnegan broke off a huge bonus payment that once again highlights how cheap Cravath and other Biglaw firms following Cravath have been this season.

Don’t get me wrong, Finnegan is a smallish “boutique” firm. And their bonuses are merit based as opposed to lockstep. It’s exactly the kind of place where they can post an eye-popping top number for the highest performing associates, while the rank and file aren’t doing all that well.

But even if Finnegan’s bonuses aren’t quite as magnificent as the firm would like you to believe, they still look impressive when compared to the low numbers Cravath and other lockstep followers have been dishing out. Eventually, you have to think that some of Cravath’s top talent will leave and try their hand someplace where their talents and hard work will be rewarded with cash….

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True Story: Harvard Law Sells Naming Rights to Its New Bathrooms, and a Berkeley Law Professor Couldn’t Be Happier

By Elie Mystal

The new face of Harvard Law School has a funny side.

This week, Harvard Law School unveiled its brand new Wasserstein Hall — a behemoth of a law building that will serve the needs of Harvard law students for generations, maybe even centuries. I was not invited to any of the gala events; my invitation must have been lost in the mail. But I can’t wait to see the finished product. Rumor has it that there’s a state-of-the-art debtor’s prison carved into the building’s foundation.

Obviously, a project of this magnitude required a major fundraising effort. Harvard has never been shy about naming things after big donors. Remember, the university itself is named after a guy who made one of the wisest donations of books ever. Wasserstein Hall contains the Caspersen Student Center, and enough commemorative plaques to fill a plaque store.

The building also contains the Falik Men’s Room.

No, I didn’t make that up. I’m not that clever. I’ve got pictures. I’ve even talked to the benefactor who made the gift….

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Associate Bonus Watch: Finally, Someone Is Paying Less Than Cravath

By Elie Mystal

In case you were wondering, it’s pretty much time to panic about the lack of spring bonuses. Believe it or not, Biglaw could actually allow bonuses to go down despite soaring profits. But that’s a post for another day.

The bad news today is that after a trend of firms easily topping the low bonuses set by the former “market leaders” at Cravath, we’re now looking at a firm that claims it is top tier, but is paying demonstrably less than the already sad CSM bonus amount.

Well, check that, if you bill upwards of 2400 hours at the firm, you might make a little more than your counterparts at Cravath. And hell, if you bill upwards of 2800 hours, you might really do well for yourself (which should help with the alimony payments after your spouse divorces you). But if you are just a standard, 2000 hour biller, the firm didn’t even match Cravath.

I don’t know, maybe making a pathetic bonus payment isn’t so much of an issue in Washington, D.C.?

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Morning Docket: 01.30.12

By Staci Zaretsky

Keeping you unemployed since 2008.

* People like it when the members of the Supreme Court agree with each other, except when the justices forget to tell them exactly what to do. Poor sheeple. [Washington Post]

* If you’re wondering why you can’t get a Biglaw job, it’s because the firms don’t need you. Well, they probably do, but definitely they need their money more. [Wall Street Journal]

* Chadbourne & Parke to 190K square feet: partners seem to be pissy about the move, but this white-shoe firm may soon be a blue-chip tenant at One World Trade Center. [New York Times]

* British blokes like scamming folks. Kevin Steele, a former Mishcon de Reya partner, has been sentenced to more than five years for his role in a $28M fraud scheme. [The Guardian]

* Florida’s former foreclosure king might have been dethroned, but David J. Stern refuses to give up his crown. Say hello to the Five Guys burger king. [Real Time / Palm Beach Post]

* My Fair Wedding? More like My F**ked Wedding. A New York couple is suing celebrity wedding planner David Tutera, alleging that he left them waiting at the altar. [New York Daily News]

Moonlighting: Why Just Being a Great Lawyer Won’t Get You a Promotion

By Susan Moon

In-house promotions are tricky. There are so many different kinds of companies, and so many things that can go wrong when you’re looking for a promotion. Some companies are upfront about the process: they’ll inform you if you’re being considered, let you know which committees need to approve, etc. Others are kind of like, “Uh, promotion, what’s that?,” and then they’ll just drop one on you when you least expect it, and run away (not that you’d complain about it).

Here are a couple of the obvious considerations that the powers-that-be will take into account when deciding whether you are worthy of attainment of the next level:

1. Do you do good work (i.e., do you have good legal/technical skills)?

2. Do you have good soft skills? Remember, from my last couple of posts — this covers everything from effective communication, to leadership, to being tasked with convincing your peers that going as breakdancing elves to the holiday party can show the rest of the company that Legal can be fun, too! Soft skills make or break a lot of promotion opportunities, and your superiors are looking for them. For example, one very senior in-house attorney mentioned that having courage of your convictions — to speak up (in an appropriate manner and in the appropriate venue) when you think a strategy is flawed, or when you think you have a better idea — is what distinguishes a leader from the rest of the pack.

Alright, so let’s say that you have #1 and #2 covered. And you’ve made it absolutely clear that you want a promotion (and “I was wondering if, uh, you noticed what a good job I did on that contract the other day” doesn’t count). You should start evaluating color schemes for that larger office you’ve been eyeing, right? Well, don’t switch your name plate over just yet. As far as your company’s concerned, “yes” answers to the above questions are great, but they just mean you’re performing as expected for your level. Here are some of the less obvious questions that they’ll also be thinking about….

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Lawyerly Lairs: A Cadwalader Castle in the Sky

By David Lat

1112 Park Avenue

Partners at high-powered Cadwalader, Wickersham & Taft, where profits per partner in 2010 clocked in at almost $2.4 million, appreciate the finer things in life. These include $6 million houses in the Hamptons and the company of former Playboy models (who used to date movie stars like Matt Dillon).

Now, fabulous though they may be, beach houses in the Hamptons and Playboy model girlfriends sound… a bit flashy, a trifle arriviste. Some might view them as not very white-shoe, and not what you’d expect from partners of the oldest continuing Wall Street law practice in the United States. (Sure, some old-money people have places in the Hamptons, but these days the locale appeals more to celebrities.)

Thankfully there are some CWT partners who are kicking it old school. They live in exclusive prewar coops on Manhattan’s Upper East Side. No lofts in Tribeca or Soho — or, God forbid, Brooklyn — for these genteel types.

Let’s look at the Lawyerly Lair that a senior Cadwalader lawyer recently acquired — on Park Avenue, one of the world’s legendary thoroughfares — for just a shade under $6 million….

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Morning Docket: 01.27.12

By Staci Zaretsky

* The people at the Department of Justice really don’t want you to see Osama bin Laden’s death photos, but don’t they realize that the internet needs pics or it didn’t happen? [Blog of Legal Times]

* Déjà vu: Hustler Magazine’s nude photo spread of Nancy Benoit was back on the Eleventh Circuit’s docket this week. The porn purveyors face damages of $0, $250K, or $19.6M — what’ll it be? [ABC News]

* Poor Justice Clarence Thomas. He used to be such a “lonely kid.” Maybe that’s why he doesn’t talk much at SCOTUS these days, but he gives beautiful speeches outside the courtroom. [Worcester Telegram & Gazette]

* Cooley Law’s Temple building in Lansing was evacuated due to smoke, but no fire. It was probably just all of the hot air the administrators blow up students’ asses about their employment prospects. [MLive.com]

* This has got to be some kind of a first. Crawford Shaw, a lawyer, is withdrawing a client’s claim to a multi-million dollar lottery ticket because he can’t be bothered to argue about it. [Reuters]

* I’m going to Disney World prison! Bonnie Sweeten, the paralegal who faked her own abduction, has been sentenced to eight years for stealing more than $1M (half of which came from her law firm). [Daily Mail]

Non-Sequiturs: 01.26.12

By Elie Mystal

Greg Kelly

* Greg Kelly stands accused of an alleged rape that supposedly took place at a “lower Manhattan law firm.” While we wait for the tips machine to fire up, who’s up for kegs and eggs and Good Day New York tomorrow morning? [Gothamist]

* Classes in space colony law coming in 3… 2… 1… [Buzzfeed]

* The Ninth Circuit isn’t paying too much attention to the drivel coming out of the Republican primaries. [WSJ Law Blog]

* Resources are available for lawyers with substance abuse problems who need help. For lawyers with substance abuse problems who don’t need any help, I’ll be at Professor Thom’s tonight. [ABA Journal]

* Megan McArdle wonders: How much does Warren Buffett pay his secretary? [Instapundit]

* Congratulations to Barney Frank. Welcome to a civil liberty you should have always had. [Huffington Post]

* Apparently New York Times writer David Segal started his jihad against law schools because of a lawyer friend he talked to at a cocktail party. Click on the jump so you can get a look at him being interviewed, just in case you see him on the subway and want to talk to someone about your troubles…

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