If you liked your 2008 salary, you’re going to love your 2009 salary. Latham & Watkins just sent around this email about 2009 associate compensation:
The world economy is experiencing unforeseen and unprecedented dislocations. Our clients are feeling those impacts and the legal community is not immune. The Executive Committee has spent the last few weeks discussing these critical issues in the context of planning for 2009. While we anticipate that the diversity of our practices and global reach will serve us well in the year to come, it seems clear that the global economy will continue to be challenged at least through 2009. As a result, we are modifying associate compensation as part of a prudent business strategy.
Effective January 1, 2009, associates moving to the next class year will continue to receive the same base compensation as they received in 2008. Please do not hesitate to contact your local Associates Committee members if you have any questions about the resulting salary scales.
We expect as a general matter to continue to reward outstanding performances through our merit-based bonus pool. As in previous years, we will announce bonuses in late January.
We are confident that by continuing to work together we will be well positioned to succeed in the face of the economic challenges that lie ahead. We thank each of you for your many contributions to the firm.
Freezing salaries is now part of the “market.” The latest associate pay raise is effectively being undone.
I’ve been operating under the assumption that the legal layoff party of 2008 would stop in 2008. My rose colored logic has been simple. I’ve assumed that Biglaw managers can: A) count, B) add, and C) figure out a sustainable 2009 business model. If those three assumptions are true, I figured that most well managed law firms would be able to get through all of their attorney reductions in 2008 and get themselves into an appropriate position for 2009.
Flawed logic? Perhaps. It’s what the shrinks like to call a “coping mechanism.”
Of course, in making these assumptions I ignored the possibility that some firms were still using “operation ostrich”: a heads down, asses high approach that gleefully exposes tail feathers to the still spinning wheel of economic destruction.
The Legal Intelligencer today warns us that the first quarter of 2009 could see more chopping at firms that are still trying to ride out the storm:
Move over, New York — it’s Philadelphia’s time in the hot seat. Legal blog Above the Law was abuzz with reports and rumors Monday that two Philadelphia firms saw associate cuts with one of them laying off staff as well. And according to one consultant, the Pennsylvania market could most likely expect to see more attorney cuts in the new year as firms wait out the holiday season.
After the jump, the new cuts in the new year aren’t likely to be localized just to the Philadelphia area.
* Budweiser (Bud) beer cannot corner the market on it’s name anymore. The EU high court took away Anheuser-Busch’s famous trademark–a big win for Czech beer company “Budvar”. [Associated Press]
* The Supreme Court breathed life in to the lawsuit of former Gitmo detainees, British Muslims who want top officials (including Donald Rumsfeld) held responsible for their torture at the prison. [The Los Angeles Times]
* Bankruptcy filings are up 30% this year, and New York filings are happening at a faster rate than the rest of the Nation. Maybe this time Wall Street is suffering more than mainstreet? (doubtful). [The New York Times]
* Madoff’s lawyer John R. Wing, known as “Rusty” says Madoff’s family had nothing to do with the ponzi scheme (am I the only one who thinks of the Fonz every time I hear ponzi scheme). [The New York Times]
* A Senator says the U.S. Treasury may adopt a plan that would force automakers into bankruptcy if they can’t make it without the government’s help. [Bloomberg]
The memo below was sent to us by a tipster, with this prefatory comment: “No one really knows what the f*** the second half of the first sentence of the memo means.”
So, dear readers: What does this language mean? The most literal interpretation is that Squire Sanders will resist associate pay raises in 2009 — e.g., it won’t go along with any “NY to 190″ movement started by another firm. The overall associate pay schedule will remain unchanged, at least at SSD.
But that’s a bit obvious. Given the dire economic conditions, reflected in Squire’s decision to lay off 30 employees last month, it makes more sense to view this language as a poorly worded attempt to announce a year-long salary freeze (i.e., not giving associates the customary January increases in base salary to reflect their greater seniority).
If it’s a pay freeze announcement, SSD isn’t the first firm to travel down this path (although they are going the farthest). McDermott Will & Emery is freezing salaries until March (at least); Bryan Cave is freezing them until April. Womble Carlyle is freezing salaries for the first half of 2009 (at least).
We have an inquiry in to Squire Sanders partner Timothy Sheeran, who sent the memo. In the meantime, your attempts to parse this language are welcome in the comments.
P.S. Presumably all the bailout-related work the firm is getting isn’t making up for lost work in other practice areas.
In today’s National Law Journal, Leigh Jones reports that non-equity partners at major law firms are also worried about the future. With all of the frightening career news floating around, it seems reasonable that either you are bringing in business, or you are terrified.
The upshot is that some law firms — especially those that have maintained armies of nonequity lawyers primarily to service accounts — are rethinking their business model, and some nonequity partners likely are reassessing their careers.
“Some firms are going to have to take a hard look,” said Brad Hildebrandt, chairman of Hildebrandt International, a law firm consultancy.
In good times, non-equity partners are a nice luxury for firms looking to use experienced people who generate great fees:
K&L Gates Chairman Peter Kalis said he is “very” comfortable with the equity-to-nonequity ratio at his law firm. He said the business model at K&L Gates is akin to a diamond, with the widest portion of the structure representing a group of nonequity partners who have created a more attractive service model for clients.
“Clients have little or no interest in paying for credit card-waving first- and second-year associates to fly around the country and run up bills,” he said. “What clients are interested in is paying for appropriately priced people who have both skills and substantive knowledge and who add value.”
The nonequity tier at K&L Gates, said Kalis, comprises attorneys with a wide variety of career goals — some with definite plans for full partnership and others who have less desire to develop business.
But these are not good times.
The bloated “inner tube” of non-equity partners, after the jump.
* The Austin Powers “Random Task” joke is too easy here. Instead, I’ll assume that this case will only provide further evidence for TSA officials demanding that we walk through nasty airports barefoot and broken. [What About Clients?]
* If you are going to comment on commenters, then ATL’s commentariat has to be part of that discussion. [Volokh Conspiracy]
* Black-on-black criticism is a sign of progress. It’s good to remember that “the black community” is not a monolithic group. [On Being a Black Lawyer]
* Is Pass/Fail like an undercover police officer for prestige whores? [Legal Blog Watch]
* Blawg Review celebrates Bill of Rights Day. But do they celebrate all rights? I offer a cheers to the rights-happy Ninth Amendment … there are so many more rights just waiting to be discovered! [The Legal Satyricon via Blawg Review]
[Thacher's] overall headcount is down more than 100 lawyers compared to last year — and so are its profits. Profits per partner fell more than 22 percent in 2007 to $1.02 million, according to the Am Law 200.
The firm has had a constant stream of high-profile departures, including its vice chairman Thomas Leslie, who decamped for Greenberg Traurig in October, and Washington managing partner Richard Schaberg, who left for Hogan & Hartson’s D.C. office last month. The New York consultant and another individual familiar with the discussions say that if the deal falls through, Thacher Proffitt will likely go under.
We don’t have much more information about the K&S/TPW talks, but based on sources at Thacher, something significant is about to go down at the firm — and dissolution is one possibility.
According to our tipsters, whether or not there is a rescue by King & Spalding, Thacher’s litigation department won’t be a part of it. Word on the street is that the head of litigation is leaving TPW tomorrow.
We received multiple reports this morning that Drinker Biddle & Reath let go of approximately 20 people, all on Friday. Tipsters reported the information this morning, but a morning commenter had the best line:
Yes it’s true about DBR – on Friday afternoon. No stealth – they came around to every office – told everyone it was economy based.
Other tipsters confirmed that the dismissals were based on the economy and not associate performance. The firm would not confirm or deny the reports, as a matter of policy.
If true, axing people 13 days before Christmas is a sad sign of the times. Let’s hope that firms finish all of their 2008 associate cuts by the end of this week. Surely feelings and families should take precedence over burying layoff news in the holiday news cycle.
And, as always, good luck to all the former Drinker Biddle employees.
Last week, we posted an open thread to discuss end-of-the-year gift giving to your secretary and/or paralegal. We’ve waded through the many comments to fish out some points of consensus.
A few secretaries appeared on the thread to urge associates to give cash or an AmEx/Visa gift card equivalent, and not a gift card to a specific restaurant, bookstore or department store. As one secretary says, “if you decide on giving gift certificates/store cards – I sincerely hope your next bonus will be paid in the same currency.”
New York appears to have its own scale. Even with the bonus slash, many associates are still giving their secretaries $100 per each year the associate has worked at the firm.
For those outside of New York, your little gift bundle of holiday joy can stay in the $100-250 range, with junior associates giving about $100, mid-levels giving about $150, and senior associates giving $200+.
In case comments are not indicative of general trends, here are some polls to see what your peers are doing. New York is its own world, and gets its own poll:
One commenter says that even if you have a bad secretary, “one of those ‘can’t make a copy’ people,” associates should still give a small gift, but should not feel obligated to give a hefty cash bonus.
More polls — about who you are giving to, and how to handle gift-giving if you’ve changed secretaries — after the jump.
Based on the anemic associate bonuses recently announced by Cravath, one might think that the firm is hurting. We hear that work at CSM is a little slow — and that there may be some anxiety over the staggering cost of the firm’s $900 million lease at Worldwide Plaza.
But don’t shed tears for Cravath just yet. The firm is still getting some high-profile engagements. From the New York Observer:
When agent Richard Leibner’s phone was ringing off the hook one night last week, everyone was asking him the same thing: Was his longtime client David Gregory the next host of Meet the Press, or wasn’t he? He called back, telling reporters he could neither confirm nor deny the report that first appeared on the Huffington Post.
Perhaps this was because his agency, N. S. Bienstock, wasn’t representing Mr. Gregory on the deal. So who exactly was aiding the ambitions of NBC’s robo-newsman? ….
On Monday morning, with the deal finally made public, white-shoe New York law firm Cravath, Swaine, & Moore posted a brief item on its Web site, crediting two of its partners — Eric Hilfers and Robert Joffe — for handling the negotiations.
This engagement probably didn’t generate the seven- or eight-figure fees that billion-dollar M&A deals generate. But it’s still a cool and interesting gig, the kind that stands out to 2Ls going through fall recruiting.
Ropes & Gray has announced the bonus structure they will be paying to junior associates across all of their offices. While the structure is nominally a Half-Skadden payout (which might work just fine for Boston based attorneys), there are a bunch of interesting caveats.
The basic structure is as follows:
Class: Base Salary: Bonus: Total Compensation
2008: $160,000: $17,500 (prorated): $177,500
2007: $160,000: $17,500: $177,500
2006: $170,000: $20,000: $190,000
But there are some opportunities for top Ropes associates to make a lot more, while associates who are low on hours get nothing:
As you know, we have an activity target of at least 1,900 billable and pro bono hours to be eligible for a bonus. This year, we have increased bonuses from the above scale for associates who worked substantially more than the targeted amount, and decreased rather than eliminated bonuses for many associates who worked substantially less. We did not apply the hours target to associates in the class of 2008 because their integration into client matters is still in progress. We have also adjusted bonuses in unusual circumstances where an associate’s performance review is substantially below our expectations.
More after the jump, including the full Ropes & Gray bonus memo.
Jiminy jillickers! ATL editors are going all over the place over the next month or so. Or at least all over the Eastern Seaboard. If we aren’t heading to your neck of the woods on these trips, never fear, we may hit you up on the next time around. We’ve already hit up Houston, Chicago, Seattle, San Francisco, and Los Angeles in the past year.
Kinney Recruiting’sEvan Jowers is currently in Hong Kong for client meetings and still has a few slots available through October 22. Evan will also be in Hong Kong November 14 to December 15. Further, Robert Kinney has been in Frankfurt and Munich this week and is available for meetings with our Germany based readers.
One of our key law firm clients has referred us to one of their important clients in the US, Europe and China – a leading global technology supplier for the auto industry – in order to handle their search for a new Asia General Counsel and Asia Chief Compliance Officer.
Kinney is exclusively handling this in-house search.
This position will have a lot of responsibility and include supervision of eight attorneys underneath them in the Asia in-house team. The new hire will report directly to the global general counsel and global chief compliance officer, who is based in the US. The new hire’s ability to make judgement calls is going to be as important as their technical skill set background.
The position is based in Shanghai and will deal with the company’s operations all over Asia and also in India, including frequent acquisitions in the region.
It is expected that the new hire will come from a top US firm’s Shanghai, Beijing or Hong Kong offices, currently in a top flight corporate practice at the senior associate, counsel or partner level. Of course, the candidate can be currently in a relevant in-house role.
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