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services rendered.jpgLet’s say you meet a woman. You like her, she likes you, and eventually you move in together. She helps around the house and, you know, “helps” with other things too. Let’s say that over the course of a year, you “spend” $10,500 on that woman.

How would you explain where that money went, to say an account or on your tax forms?

Well, if you are Mr. Howard Shih of California, you call the $10,500 “wages” and try to get a tax deduction.

That is the situation that the U.S. Tax Court recently wrestled with. Except the proceeding was not directed at Mr. Shih for claiming a deduction, instead the case was about whether the woman (Ms. Jue-Ya Yang) should have reported the $10,500 as “income.”

(Dear God: That whole “The Law” idea you had is brilliant. What a great premise for your “Earth” sitcom. Don’t change a thing! It’s comedy gold.)

After the jump, TaxProf Blog walks us through the difference between wages, gifts, and illicit prostitution.

double red triangle arrows Continue reading “Lawsuit of the Day: Is there a Date Deductible?”

law firm associate bonus watch 2008 biglaw bonuses.jpgFollowing up on its inspirational holiday card, yesterday Cadwalader announced the NYC-standard crappy Cravathy bonuses. The transmittal memo, which included the familiar numerical table, was short and sweet:

We are pleased to announce that the Firm will award year-end bonuses to associates and counsel as follows. Bonuses will be based on previously communicated criteria and are expected to be paid in January 2009. Associates who joined the Firm subsequent to January 1, 2008 and prior to October 1, 2008 will receive a pro-rated portion of the bonus.

The reference to “previously communicated criteria,” we’re told, is a reference to CWT’s hours requirement.

Full memo after the jump.

double red triangle arrows Continue reading “Associate Bonus Watch: Cadwalader Matches The NYC Market”

wine glass.jpg

* A couple is suing United Airlines for “overserving” the husband by serving him red wine every 20 minutes on the flight. They say this is what caused him to beat his wife on the way to customs. [Chicago Tribune]

* “Federal judges in some parts of the United States are delaying the swearing-in of new citizens, apparently so that courts can keep millions of dollars in naturalization fees paid by immigrants, according to a new government report.” [The Washington Post]

* A Rhode Island family sued their cable provider for hooking up the Playboy channel, which plays hardcore porn. [Courthouse News Service]

* Investors in Madoff’s ponzi scheme might be able to get back some of their money by filing for a U.S. tax refund. As if the U.S. government isn’t paying out enough money these days…[Bloomberg.com]

* The high court in Europe says a UK couple should be bound by the ruling of judge in southern Cyprus that they demolish their vacation home. The house is built on land that belongs to a Greek Cypriot who claims it was taken from him during the Turkish invasion in 1974. [BBC News]


gunderson dettmer logo.jpgTo balance out word of the robust O’Melveny bonuses, here’s some bad news out of California. Earlier this week, Gunderson Dettmer (boy I miss “ad”venture capital) laid off a number of junior associates. As veterans of the heady dot-com days may recall, Gunderson put itself on the map back in 1999 by leading the charge to $125,000 starting salaries.

Gunderson did not respond to multiple requests for comment, made yesterday and today, so we don’t have an official number of new people looking for work. But two sources claim that the firm laid off half of its first-year class (five out of ten associates) on Monday, plus an additional but unknown number of more senior attorneys. These layoffs are, according to a tipster, “on top of performance-related attrition / dismissals throughout the fall.”

Some of those laid off this week were stub first-years, i.e., class of 2008 from law school. As Chris Rock might say, “here today, gone today.”

More after the jump.

double red triangle arrows Continue reading “Nationwide Layoff Watch: Gunderson Dettmer Says ‘Hello and Goodbye’”

  • 17 Dec 2008 at 6:15 PM
  • Dreier

Dreier LLP, RIP

This should not come as a great surprise, but let’s go ahead and close the loop. From the WSJ Law Blog:

Dreier LLP Marc Dreier Marc S Dreier Mark Dreier Drier Dryer.jpgNearly two weeks ago, mere hours after Marc Dreier was arrested up in Canada for allegedly impersonating an in-house lawyer at a pension fund, lawyers at the eponymous law firm were heralding its doom. “It’s over,” said one litigation partner at the time.

On Tuesday, the predictions came true; Dreier LLP filed for Chapter 11 protection in bankruptcy court in Manhattan. In its petition, filed by Stephen Shimshak and Brian Hermann at Paul Weiss — where the receiver in the case, Mark Pomerantz, also hangs his hat — Dreier claims to have liabilities tallying between $10 million and $50 million.

The best reading in the petition is the list of creditors. Seems Mr. Dreier hadn’t been keeping up with the firm’s bills. Among those allegedly owed: the landlord of 499 Park Ave. ($908k); West Publishing ($441k); American Express ($323k); PR firm Van Prooyen Greenfield ($274k); ABM Janitorial Services ($89k); and AT&T ($81k).

And you thought your Westlaw bill was big….

A little more, after the jump.

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Michael Mukasey small Chief Judge Michael B Mukasey SDNY Above the Law blog.jpg* What’s the reason for U.S. AG Michael Mukasey recusing himself from the Bernard Madoff investigation? It may be his synagogue. [Cityfile]

* K&L Gates grand poobah Peter Kalis gripes about U.S. News & World Reports, gets all mushy about Pitt Law, and praises affirmative action. For minorities and kids from West Virginia. [TaxProf Blog]

* Ohio lawyer David Mills has started a daily legal cartoon blog. We ATL folk are painfully aware of how hard it can be to make the law funny. [Courtoons]

* ATL’s own Elie Mystal in a free-ranging interview on race, the law, blogging, and comments. [On Being a Black Lawyer]

* Two-thirds of law firms expect lower 2009 revenues. Sigh. But 8.2% expect higher revenues. Those must be the boutique bankruptcy firms. [National Law Journal]

Thacher.jpgBecause TPW knows a thing or two about crisis and rescue plans.

Seriously, though, it’s a good sign for the firm, even if it may not be a lucrative engagement — the Treasury press release reports that “total cost for the firm’s services is not expected to exceed approximately $500,000.” It raises the possibility that rumors of the firm’s demise are greatly — well, maybe not greatly, but somewhat — exaggerated.

Treasury Hires Legal Firm Under the Emergency Economic Stabilization Act

[U.S. Department of the Treasury (press release)]

law firm associate bonus watch 2008 biglaw bonuses.jpgIt’s getting ugly out there. For the first time since 2005, associate bonuses at Wachtell Lipton have dipped below 100 percent of base salary.

For those of you who aren’t familiar with the subject, here’s how bonuses at WLRK work. First, they’re lockstep, not tied to any billable-hours requirement or performance review. Everyone in the same class receives the same bonus.

Second, Wachtell bonuses are calculated as a percentage of base salary. Sometimes the percentage is the same from class to class; sometimes it’s not. In 2006, for example, there were divergences from year to year. When there are divergences, they generally favor seniority, with more-senior associates receiving bonus percentages that are higher than those given to juniors.

In 2006 and 2007, total bonus compensation at Wachtell (including midyear bonuses in 2006) clocked in at or above 100 percent of base salaries . This year, however, the bonus percentage sank below that threshold. We don’t have the exact number, but we’re hearing around 70 percent of base salary — “good” and “better than expected,” say two sources, but not as good as recent years.

(If this figure isn’t consistent with what you know, please email us. Please mention the class year that is the basis for your information, since sometimes the bonus percentage varies from class to class. Due to that variability, plus the lack of a firm-wide bonus memo, bonuses at Wachtell are less transparent than at other firms.)

Recall also that Wachtell base salaries are on a scale that is slightly above market. First-year associates at WLRK earn a base of $165,000 rather than the usual $160,000 (no Latham shenanigans here). A base salary of $165,000 and a 70 percent bonus would bring total compensation for a (non-stub-year) first-year to just over $280,000.

A Wachtell associate earning under $300,000 is a sad thing. But these are sad times.

Even the Wachtell holiday party was scaled back. More details, plus predictions about the firm’s future, after the jump.

double red triangle arrows Continue reading “Associate Bonus Watch: Wachtell Bonuses Go Below 100 Percent”

Notorious B.O.A.L.T. is a UC-Berkeley law school student who enjoys setting law school lessons to music. He appeared on our pages before, rapping his way through CivPro.

Now he’s back. Notorious has gone acoustic, but this song embraces the rebellious roots of rock & roll. Notorious writes, “As a protest against the lunacy of the Socratic Method and the staggering lack of imagination on the part of the Boalt Hall administration in clinging to a cobwebbed curriculum, I will not be taking any final examinations this semester.”

“Do the Torts Shuffle” is his submission to Professor Patrick Hanlon in lieu of a written final exam. He asks that Hanlon consider giving him a “sub-standard pass in the course.” Here it is:

We think rapping lends itself more easily to talkin’ ’bout the law, but this is a worthy effort. The question is: is it a sub-standard pass level effort?

A lyrical excerpt, and speculation about the future of Notorious B.O.A.L.T., after the jump.

double red triangle arrows Continue reading “Notorious B.O.A.L.T. is ‘Born Again,’ but will he pass?”

law firm associate bonus watch 2008 biglaw bonuses.jpgUpdate (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.

double red triangle arrows Continue reading “Associate Bonus Watch: O’Melveny Makes It Rain, Baby
(At least outside New York. For 1950+ hours.)”

law firm associate bonus watch 2008 biglaw bonuses.jpgAfter yesterday’s Latham bombshell, Biglaw eyes turned to other California firms. Will Latham be a pack leader or a poop bag?

Last night, Gibson Dunn gave the first answer.

In individual meetings that started yesterday — and will continue today and tomorrow — Gibson associates are being informed of their 2008 bonus. As we understand it, Gibson Dunn associates will be receiving a Half-Skadden bonus.

We don’t like Half-Skadden bonuses around these parts (see here, here, here, and of course here). But given that Latham won’t even announce their bonus structure until after the new year, you have to be happy that Gibson said something.

Of course, thanks to Latham, the bigger question is what Gibson is going to do with associate salaries. More on that after the jump.

double red triangle arrows Continue reading “Associate Bonus Watch: Gibson Dunn Quickly Distinguishes Itself From Latham”

pls hndle copy 2.jpg[Ed Note: Do you have a question for next week? Send it in to advice@abovethelaw.com]

This week we received several requests for advice pertaining to that associate albatross, the firm holiday party. What should I wear? How much can I drink? Should I upgrade to Platinum membership at Equinox? In order to accommodate your overwhelming neediness, this week we’re abandoning our typical Pls Hndle Thx format in favor of a short etiquette guide to holiday parties. Hop on board – the Straight Talk Express is about to roll.

Casino Themes. Casino-themed parties are landmines. People lose all reason when they hear that a “Dinner for Two at Rosa Mexicano” or an iPod Nano is at stake, and I’ve personally seen the power of fake money in unmasking serious gambling problems. I urge those who are likely to get, er “intense” at the fake craps table to calm down, step away and immediately get a life.

Dress Code. The safest bet is to show up wearing exactly what you wore to work. Don’t pull a secretary and get changed in the handicapped bathroom into some Dorothy Zbornak sequined tunic. Don’t premiere your new Diesel jeans and ridiculous Express bolero-inspired button down.

Drinking Level. The worst feeling in the world is waking up and trying to figure out what the hell happened the night before. While it is perfectly acceptable to get drunk and “do things” outside the office or on weekends at random bars, I strenuously, STRENUOUSLY advise no more than two drinks at holiday parties, unless one of those drinks involves Patron, in which case a drink limit of one drink should be imposed in conjunction with a mandatory party exit time of 10pm. Trust me on this.

After-Parties. DO NOT ATTEND AFTER-PARTIES. The only thing that comes of them is that you will see things involving your coworkers that you never wanted to see and be forever bound to your fellow partygoers with this secret and terrifying knowledge. There is a bloodline.

Happy Holidays!

Your friend,

Marin

double red triangle arrows Continue reading “Pls Hndle Thx:
Party On, Wayne”

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