Money

Back in 2007, Simpson Thacher led the charge to $160,000. Not Cravath, not Skadden, not Sullivan & Cromwell — it was STB that was first out of the gate with associate salary raises. Simpson Thacher is one of the most respected law firms in the country, and it used to be a compensation leader.

But those days appear to be long gone. Now, the firm is just a follower. Its theories about associate compensation seem to have nothing to do with the health of the firm, and everything to do with doing whatever Cravath tells it to do.

Associates are the firm seem quite disappointed by that….

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Last week, we joked about the glacial pace of the 2013 Biglaw bonus season. After all, Cravath made its announcement on December 9, and in that time, we’ve only heard from as many firms as days have passed since that time — seven.

Well, maybe things are finally heating up. Yesterday afternoon, two more firms sent out word of their associate bonuses by class.

We know Paul Weiss is looking hot, hot, hot these days, but were their bonuses just as sexy? And what about the bonuses at Bracewell & Giuliani, a firm that posted a double-digit increase in gross revenue?

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(Plus Bonus News From Bracewell & Giuliani)”

Well, the bonus scale has been set. Cravath led — by copying their bonus payments from last year — and now everybody is following. I’m on record saying that these bonuses are underwhelming and disappointing.

Gone are the days where the first-year bonus represented a significant chunk of your law school debt. Sure, you can pay down some interest with your bonuses, or you can prudently save it, or maybe even invest it. But you can also blow it. I mean, it’s a “bonus,” right? In this depressed market, your bonuses look less like deferred compensation and more like “found money.” Instead of making a fiscally sound decision, using your bonuses for profligate, discretionary spending might make you feel better. (Disclosure: Elie Mystal is not a registered financial adviser and is too… stupid to follow a budget.)

Bonuses range from $10,000 for first-year associates to $60,000 for senior people. Professor Paul Caron of Tax Prof Blog tells me that associates can expect to take home about 60% percent of that, depending on where they live and how many dependents they have.

What can a young lawyer buy with that? In addition to what’s in the ATL holiday gift guide, here are 10 things…

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Happy Monday, everyone! What better way to start a new week than to bring you more bonus news?

As it turns out, Willkie Farr and Shearman & Sterling weren’t the only firms to participate in the Friday afternoon bonus dump. Two more firms broke word of their bonus intentions before the weekend, and now the question on everyone’s minds is whether they bucked the system and beat Cravath.

We’ve got the announcements from Cadwalader and Proskauer Rose for your viewing pleasure. Did either firm have the guts to top Cravath’s market rate?

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Is it our imagination, or is the 2013 bonus season unfolding at a glacial pace? Maybe because these bonuses are just the reheated bonuses from last year, they feel like they’re coming out of the fridge.

Cravath announced on Monday. Skadden announced on Tuesday. Cleary announced on Wednesday. Nobody announced on Thursday (as far as we know; if we missed your firm’s announcement, please email us or text us (646-820-8477)).

Today we got the Friday afternoon bonus news dump. We have announcements from Willkie Farr and Shearman & Sterling. What are these two firms doing?

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The last time someone willingly entered New Jersey.

* New Jersey continues to mint lawyers despite terrible market conditions. Lat told me I should come up with a good Jersey joke. I said that was fairly well-worn territory and I would feel a bit like #498 at the Houston 500. Lat said, “            ” [Newark Star-Ledger]

* The Obama uncle we mentioned earlier this week? Obama’s roommate before Harvard Law. Why won’t Obama produce his rent deposit!? [CNN]

* The men who stole parts of the Porsche Paul Walker died in were arrested yesterday. They will be charged with felony grand theft, tampering with evidence, and living perhaps too fast… too curious? [TMZ]

* Regulators are having a tough time figuring out what to do with the burgeoning Bitcoin market. Numismatists are equally puzzled by this rarest of rare coin markets. [New York Times]

* Jos. A. Bank, the most prestigious clothier in the United States and/or Canada, has been subpoenaed by the Ohio Attorney General. If the Ohio AG deposes one executive, he gets to depose three additional executives for free. [Washington Post]

* A Q&A with Nelson Mandela’s lawyer. Very cool story, indeed, bro. [Al Jazeera America]

And as an added bonus, after the jump are pictures from last night’s ATL holiday party…

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We’ve seen a surprising amount of drama emanate from the normally hushed halls of One Liberty Plaza in 2013. Cleary Gottlieb, one of Biglaw’s best firms, has been the site of contention and controversy regarding irate ex-staffers, support staff stealth layoffs, and a summer associate with a dark past.

Some of our Cleary readers and sources have objected to this coverage as painting a misleading picture of goings-on at CGSH. Their general view: all this drama is limited to the ranks of support staff — who have been coddled over the years, and are finally now being forced to be more productive. When it comes to the lawyers at Cleary, it’s business as usual.[1]

Is it “business as usual” with respect to associate bonuses? Cleary just announced….

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Not many firms try to trump Cravath, the traditional market leader when it comes to year-end bonuses. Most major firms are followers.

There are a few exceptions, and one of the exceptions is Skadden Arps. Back in 2008, Skadden announced bonuses before Cravath, and those Skadden bonuses turned out to be much higher than Cravath’s. When most other firms subsequently followed Cravath instead of Skadden, my colleague Elie Mystal mocked these firms for their “Half-Skadden” bonuses.

Skadden just announced its 2013 year-end bonuses. Did it beat the Cravath bonuses, or did it join them?

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Two weeks ago, I wrote about one of Biglaw’s most pressing issues: the failure of senior partners to pass along clients to younger partners. But that is not the only problem some of Biglaw’s senior partners are causing for their firms and the industry as a whole. Unfortunately, a measurable portion of senior partners, those of the august titles and stratospheric billing rates, are among the worst offenders of one of Biglaw’s most notorious shortcuts to extreme profitability: creative time entry and billing.

While I hate to acknowledge, even though I have seen it firsthand, that partners make up time entries wholesale for work never performed, it is not hard to realize that in this age of the multimillion-dollar partner there exists a tremendous incentive for such behavior. Or at least for partners to “round up” time entries, a tacitly accepted practice within Biglaw.

Incentives matter, and the more richly compensated a senior partner is, the more pressure there is on them to put down a solid four to five hours for “reviewing and revising” a draft brief on Tuesday, only to make a similar entry when they review a more robust version of the same brief a few days later. And because senior partners are frequently responsible for a horde of timekeepers below them, the tone set by the lawyers at the top of the pyramid has an impact on the behavior of those lower on the chain….

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Lat here. Going into the 2013 Biglaw bonus season, indicators were looking mixed.

Cravath, the supremely prestigious and profitable law firm that’s the traditional market leader on bonuses — as in the firm most widely followed by other firms, not necessarily the firm that pays the biggest bonuses — announced another large partner class. Last year, that boded well for bonuses.

On the other hand, Biglaw’s overall performance has been somewhat anemic this year. The stock market might be hitting new highs, but many law firms are running in place.

People have been waiting forever for Cravath to make its big announcement. Now the wait is over: at 4:45 p.m. today, Cravath announced its 2013 year-end bonuses.

How are they looking? What’s getting stuffed inside associate stockings this holiday season?

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