The dreaded swine flu, aka the H1N1 virus, made it to Mayer Brown last week. Will it now work its way up the Am Law 100?

This afternoon, via Fashionista (last paragraph), we learned that swine flu has hit the hallowed halls of Vogue. And we all know who shares a fancy building with Vogue and Conde Nast: Skadden Arps.

In the past, Skadden employees have expressed disappointment over not sharing elevators with Vogue's glamorous hotties. Perhaps now the Skaddenites are thanking their lucky stars -- or wishing they had taken Sidebar.

When we reported on the salary cuts at Nixon Peabody, we mentioned that the firm would allow associates to make up some of the money come bonus time. Here's how the firm explained the opportunity:

With our new levels of base pay in place, we will be introducing a bonus program that offers the potential of up to 30% of base pay based on firm and individual performance. We believe this innovative pay structure will reward our highest performing associates while lowering total compensation for those who perform at lower levels.

We've gotten a look at Nixon's proposed "up to 30%" bonus structure. This hasn't been finalized, but here is what is going around the office:

Let's break this down, after the jump.

In good times, people are generally happy with lockstep bonus structures. In bad times, people start grumbling about "carrying" less lucrative practice groups. In these times... I think there was a novel about "Flies" that explained the situation.

For those who prefer a more "performance based" bonus scheme, McKee Nelson might be the place for you. Yesterday, the firm announced their bonus structure. A firm spokesperson explains the process to ATL:

McKee Nelson has always paid bonuses to associates based on a combination of performance and hours. As a general rule, we have not published a bonus scale or sent a bonus memo to associates as bonuses are determined and communicated on an individual basis. An exception was made last year as part of our voluntary program.

... I will tell you that 2008 McKee Nelson bonuses were based on the Cravath scale but with our customary variation in the bonus awards made to individual lawyers based on performance and hours.

Remember that McKee Nelson recently laid off 32 people, including 17 corporate finance attorneys. Paying bonuses at all really is a "bonus."

After the jump, McKee Nelson tipsters share their thoughts.

Individualized memos have been issued to Skadden Arps associates to inform them of their 2008 bonuses and 2009 base salaries. The Skadden base salaries reflect the customary annual pay raises -- sorry, Lathamites.

Because Skadden's announced bonuses this year are so much higher than the Cravath-established market level, folks at other firms have wondered: Are the Skadden bonuses for real?

The short answer: yes. To quote the famous Seinfeld episode, "they're real -- and they're spectacular."

We've surveyed Skadden associates from a variety of class years, from 2008 through 2001. The scale we've pieced together looks like this (i.e., like last year's year-end or regular bonus schedule, but without the "special" bonus amounts):

Class of 2008 -- $35,000 (prorated)
Class of 2007 -- $35,000
Class of 2006 -- $40,000
Class of 2005 -- $45,000
Class of 2004 -- $50,000
Class of 2003 -- $55,000
Class of 2002 -- $60,000
Class of 2001 -- $65,000

The bonus schedule is, of course, subject to the 1600-hour minimum. That's not an onerous burden, and pro bono hours count towards the minimum, in unlimited amounts. If you fall short of the 1600-hour minimum, you may still be eligible for a 50 percent bonus -- aka a "half-Skadden" bonus.

After the rest of the New York market settled around the Cravath bonus levels, some wondered: Do the Skadden partners feel like chumps?

Find out, after the jump.

Maybe Latham & Watkins was never into this whole "____ to $160K" thing to begin with. When Latham finally raised salaries across the board back in May 2007, we reported:

Well, it appears that Latham has been shamed into giving into the "hysteria" surrounding associate comp.

As we've discussed, Latham's associate salary freeze essentially cancels out the pay raise from 2007. Whether you call it a salary freeze or a pay cut, Latham chairman Robert Dell is calling it sound business. The Blog of the Legal Times reported this quote from the chairman earlier today:

We are modifying associate compensation as part of a prudent business strategy in the face of challenging economic times. All associates moving to the next class year on January 1, 2009 will continue to receive the same base compensation as they received in 2008. We are confident that our business strategy, our diverse practices and our strong global platform will serve our clients and our firm well as we all face the challenges of a difficult business environment in 2009.

More discussion, including a salary chart that Lat prepared to show just how bad L&W associates must be feeling today, after the jump.

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.

After the jump, what was that about bonuses?

I think I speak for many ATL readers and Biglaw followers when I ask: when the heck is S&C going to announce its 2008 associate bonuses?

Because the delay is getting ridiculous. It's December 15th. All of S&C's peer New York firms have announced already, except for Weil -- and historically speaking we can't expect Weil to move before S&C. S&C has always been a market leader on this matter. What gives?

One tipster puts the extent of S&C's delay in stark relief:

S&C normally pays our bonus along with our December paycheck. Today, however, my December paycheck posted to my account, but no bonus along with it. Still no announcement from them regarding the change, so this is rather surprising.

It now seems likely that S&C won't pay a dime of the 2008 associate bonus in 2008. That's annoying. Essentially, the conversation over at S&C seems to be going like this:

S&C: I got a threshold. I got a threshold for the abuse that I will take. Now, right now, I'm a f**** race car, right, and you got me the red. I'm just saying that it's f*#^@! dangerous to have a race car in the red. That's all. I could blow.
ATL COMMUNITY: Oh! You ready to blow?
S&C: Yeah, I'm ready to blow.
ATL COMMUNITY: Well, I'm a mushroom cloud laying mother$^&er, mother@%^&er. Every time [I open my inbox and don't see a fair compensation message], I'm Superfly T.N.T., I'm the Guns of the Navarone!

Get with the program S&C.

Happy Monday.

Earlier: Prior ATL coverage of associate bonuses.

Debevoise & Plimpton has been very busy and very profitable. They recently sent around a positive internal email about the firm's business during the downturn. And we know that the Siemens case has treated them well.

But in 2008, public protestations of solid business mean nothing when it comes to associate compensation. Debevoise announced that they were paying half of what Skadden is offering:

2008: $17,500 (pro-rated)
2007: $17,500

2006: $20,000

2005: $22,500

2004: $25,000

2003: $27,500

2002: $30,000

2001 (and senior): $32,500

The numbers -- while annoying -- are not really that surprising. Schulte Roth, housed in the same building, earlier today announced the same scale (although subject to an hours requirement). Even our Debevoise sources anticipated that, with Siemens winding down, the firm would be more forward-looking with this round of bonuses.

What is surprising is the timing of this bonus announcement. The email went out from managing partner Rick Evans at 6:54 p.m. WTF ("Sacré bleu" in Debevoise-speak)? Was management hoping to dodge the news cycle with an after-hours announcement? Somebody should let them know that the internets are on 24/7.

Our hearts go out to the Debevoise associates that were still working when this announcement crashed into their inboxes. Professionalism is its own reward. All Skadden associates are getting this Christmas is twice the money.

Read the full memo after the jump.

We received almost two thousand responses to last week's ATL / Lateral Link survey on attorney morale. That's way up from the survey we did in April.

Your morale, not so much.

Roughly 43% of practicing attorneys who responded to the survey are in poor spirits:

  * 24% said their morale was "bad", up a bit from 21% in April.

  * 11.5% said their morale was "awful", which is about the same as April.

  * 7.6% of respondents said their morale "couldn't be worse." This is actually down from 9.6% in April, suggesting that some of the most enthusiastically mopey April associates have now found unhappiness of a less extreme sort. (Either that, or they discovered that their morale really could be worse.)

Survey Results: How's Your Morale?

Structured Finance and Real Estate attorneys are still the mopiest, with 69% and 66%, respectively, feeling "bad" or worse. This is actually a big drop for real estate associates since April, when only 56% said they were unhappy.

Interestingly, only 31% of law students said they were happy, with 50% saying their morale was "bad" or worse.

But, the glass is still almost half full. Surprisingly, morale, while not exactly great, hasn't really fallen much since April.

  * 23.7% of practicing attorneys who responded to the survey, said their morale was "good", which is only slightly down from April's number (25.8%).

  * 13.3% said their morale was "great", which is actually up a little from April (11.5%)

  * And 3.2% of practicing respondents thought their morale "couldn't be better," basically the same as April.

So, overall, about 40% of respondents are still happy.

Patent associates were the happiest lot, with 58% declaring their morale to be at least "good."

Bankruptcy associates, energy attorneys and judicial clerks were close behind at 57%, and trademark lawyers branded themselves 51% happy.

More results after the jump.

As many people have pointed out, being angry over "only" a $20,000 bonus is something that most of the working world finds appalling. We get it: "spoiled whiners," "real people are losing their jobs," "nobody should complain about a six-figure salary," yada, yada, yada.

But other people have pointed out that most of the working world doesn't have $150,000 plus in educational debt to pay off before Biglaw lets you out of white-collar indentured servitude. Most associates don't blow their bonuses on hookers and coke. (Fools!) Sadly, paying off debt is the final destination for most of the bonus cash.

So, in a way, law schools always take your bonus -- at least a significant chunk of it. But maybe this year those schools got an additional tap into your bonus cash. Last week Harvard Law school released its 2007-2008 Report of Gifts. According to a tipster (I didn't receive the report personally because I try to stay off the HLS grid; it has a lot to do with my hooker/coke/debt decisions), Half-Skadden and Skadden-Mart donated quite a lot to HLS. The report lists those two firms in the $1 million to $3 million range.

Putting some figures together, after the jump.

Another law firm informed associates that their hard work was worth half of what it was a year ago. Davis Polk & Wardwell is the latest firm to announce Half-Skadden bonuses.

The official DPW bonus structure is as follows:

Class of 2008: $17,500 (prorated)

Class of 2007: $17,500

Class of 2006: $20,000

Class of 2005: $22,500

Class of 2004: $25,000

Class of 2003: $27,500

Class of 2002: $30,000

Class of 2001 and senior $32,500

So much for elite law firms paying their associates at the top of the market. Instead, Cravath has succeeded in opening the door to the "thank you sir, may I have another" theory of associate retention and company morale.

It could be worse. These guys are are still getting a bigger bonus than law students who interviewed with Skadden this year. Yay seniority!

What is particularly annoying about the DPW memo is that they act like they are meeting the market with these bonuses, as if Skadden doesn't even exist.

We are pleased to announce that associates in good standing will receive a bonus payment as outlined below. ...

We thank all our associates for their diligent and skillful efforts as we support our clients in this challenging economic environment.

"Pleased to announce." Not "horribly embarrassed that we are slavishly short-changing our associates because Daddy-Cravath said it was okay."

Read the full memo after the jump.

As 7th year associates at Half-Skadden and Skadden-Mart come to grips with the fact that they will be getting a smaller bonus than 1st years at Skadden, let's take a look at a curious article that came out on November 20th. The same day Cravath announced their reduced bonuses (and threatened their people about 2009) Chairman Chesler spoke to American Lawyer:

Evan Chesler, the presiding partner of Cravath Swaine & Moore, stresses that firms do not need lots of offices to be diversified. "It is too easy to confuse geography with geographic reach," he says. "It is not the same thing." ...

Although Cravath has just one small outpost in London, the firm is highly diversified, Chesler maintains. "We certainly do Wall Street work, but we always have done work for companies not on Wall Street, companies that make things and are located all around the world, and will continue to do so."

Apparently, for Chesler "it is too easy to confuse" words with deeds. Either the firm is diversified and is in a good position to weather this economic storm, or it is not. I'm sure that Chesler's employees do not really appreciate Chesler running around publicly talking about the health of the firm, on the same day he sends around internal memos warning:

[A]ssociates should be prepared for the likelihood that the economy and the Firm's financial performance next year will not show a significant improvement over this year and they may receive significantly reduced or no year-end bonuses next year.

If you want to criticize Cravath associates, don't call them "greedy and entitled," instead call them "foolish" for believing their own management. Believing their own firm is a mistake I'm sure most Cravath associates will not make again.

After the jump, guess who else was talking.

"Not God Bless America, God-damn America."

We are now able to report that Simpson Thacher & Bartlett has matched bonuses with Half-Skadden:

On behalf of the partners of the Firm, I would like to announce that year-end bonuses for associates in good standing will be as follows:

Class of 2008: $17,500 (pro-rated)

Class of 2007: $17,500

Class of 2006: $20,000

Class of 2005: $22,500

Class of 2004: $25,000

Class of 2003: $27,500

Class of 2002: $30,000

Class of 2001: $32,500

Class of 2000: $32,500

Cravath has doomed us all.

After the jump, more analysis and the full STB memo.

In the two weeks since our ATL / Lateral Link survey on bonuses, we've talked about when bonuses were and will (or won't) be paid, how your billable hours look this year, and what you expect bonuses to be for 2008.

Or, at least, what you expected them to be before the Skadden and half-Skadden bonus announcements late last week.

But we haven't yet reported on your answer to the following question: "If getting a lower bonus this year meant that your firm could completely avoid layoffs, what's the minimum bonus that you would consider fair?"

Some initial comments were a bit dismissive of the question, and were more than happy to dismiss a few associates, too:

Don't care about layoffs, and so wouldn't sacrifice a nickel in bonus to avoid them. Layoffs, if any at my firm, won't reach my class (2004). If they do, they won't reach my practice area (litigation). If they do, they won't reach me.

lay off the lazy a-holes. I billed 3000 this year.

Would prefer higher bonus with layoffs

But as a severe rash of layoffs followed, hearts began to soften, much like the market for structured finance associates:

  * Almost one fourth of practicing respondents would accept a bonus of zero this year to avoid layoffs.

  * More than half would accept a bonus of $20K or less.

  * Only about 5% still insist on bonuses of at least $75K.

Results: What were your hours and bonus in 2007, and what do you expect for 2008?

See breakdowns of morale by seniority, market and practice, as well as a Cravath vs. Skadden comparison, after the jump.

If you work at Cravath, Swaine & Moore, prepare to be very, very angry. From the bonus memo just issued by presiding partner Evan Chesler:

Both 2006 and 2007 were extraordinary years for our Firm. In 2006 we paid large year-end bonuses to our associates, and in 2007 we further supplemented those bonuses. As a result of the deterioration of the business environment, the Firm's financial performance in 2008 will not be in line with those earlier years. While the Firm believes that we should pay year-end bonuses this year, in light of the current business climate we do not think it is appropriate to pay the full bonuses that were paid in 2006 and 2007 or the additional supplemental bonuses paid in 2007.

Just yesterday, Skadden announced that they would match the 2006/2007 bonuses less the "special" bonus paid in 2007. For Cravath to come in under that number is pretty surprising. The official Cravath bonus structure for 2008 is as follows:

Class of 2008 -- $17,500 (pro-rated) Class of 2007 -- $17,500

Class of 2006 -- $20,000

Class of 2005 -- $22,500

Class of 2004 -- $25,000

Class of 2003 -- $27,500

Class of 2002 -- $30,000

Class of 2001 -- $30,000

Suddenly, the question is no longer "Is Skadden the ceiling?" Instead, we must ponder "Is Cravath the floor?"

Done being angry? Okay. Now prepared to get very, very frightened:

Given the uncertainty of the economy and the business climate going forward, we will not be able to address the issue of whether there will be any year-end bonuses in 2009 until this time next year. However, associates should be prepared for the likelihood that the economy and the Firm's financial performance next year will not show a significant improvement over this year and they may receive significantly reduced or no year-end bonuses next year.

Update (6:22 PM): Of all the tips that have crashed ATL's inbox in the last 45 minutes, this one best captures the raging rage people are feeling:

WTF does Cravath think it's doing? They're basically threatening no bonus for NEXT YEAR? They're not being Nostradamus, they're trying to force people out. Cravath associates will get that memo, collect their garbage 2008 [bonus] and lateral the hell out before they get screwed again.

Why not just conduct stealth layoffs? Forced attrition is the same thing. Go home, Cravath. You're embarrassing yourself.

Read the full memo after the jump.

When we last saw Bryan Cave, the firm was busy acquiring Powell Goldstein, and saying great things about their long-term future and financial health.

Having just added so many new attorneys, the message ATL received this morning was surprising.

Two pieces of news for Bryan Cave associates today: they're deferring salary increases by three months and eliminating the associate shared fee program (where associates got bonuses for bringing in new clients)....

The spin on the deferrals is that they're a better option than layoffs and less drastic than an all-out salary freeze.

Shortly after this first report, we received the full firm-wide email announcing the changes:

In light of the continuing volatility in the economy and the uncertainties in the marketplace as we move into 2009, we believe it is now prudent to implement the following actions with respect to our compensation programs:

* Deferral of Consideration of Increases for Counsel and Associates. Consideration of increases for counsel and associates will be deferred in all offices. For example, for those cities where increases were previously effective January 1, the date for 2009 will be April 1. Offices with different compensation consideration dates will

Occasionally, commenters in our layoffs posts suggest that they would be willing to give up some of their salary in exchange for keeping their jobs. So ... here's a chance to do just that, at least for a period of time.

But most Bryan Cave associates will be pissed. Because you know what would have been even more "less drastic" than an all-out salary freeze? Not acquiring the debts and liabilities of Powell Goldstein.

More tipster reaction and the full Bryan Cave memo after the jump.

We expected this. Skadden has announced that they will discontinue the "special" bonuses from last year. Instead, they'll be giving out the 2006/2007 standard package. From the memo, sent out by executive partner Bob Sheehan:

[W]e will pay the year-end discretionary bonus at the same levels by class seniority which associates received in 2007 and 2006. However, we do not think it is appropriate to repeat the "special" supplemental bonus that was instituted last year. That bonus reflected a strong and growing economy that contributed to a record level of profitability.

The Firm has historically paid its associates at the "top of the market" in their respective local markets. While we do not know what other firms will do this year with regard to paying a supplemental bonus, we believe that our bonuses this year should be limited to the year-end discretionary bonus. What we will do in the future years, will, of course, depend on business conditions at the time and competitive compensation.

You will receive a memo early in December discussing your individual bonus. We appreciate the efforts you have all put in this year. You have contributed enormously to the success that we have achieved.

That should pretty much set the market.

The 2007 bonuses weren't bad. And Skadden isn't laying people off. It'll be pretty hard to complain if this is where the market ends up.

And, not for nothing, it shows good form by Skadden for telling people what to expect before the holiday season starts. That winter vacation to the Dominican Republic can now proceed full speed ahead.

Read the full memo after the jump.

We've tentatively started the Associate Bonus Watch for 2008, with news of Orrick's and McDermott's bonus plans, and the not-really-news that Morgan Lewis will not make bonus decisions until after the holidays.

With the dismal economy and the widespread law firm layoffs, we speculated last month that regular bonuses may be less than last year, and "special" bonuses would likely disappear. The New York Law Journal agrees with us, and suggests two other reasons for it:

The scale of the expense and the almost compulsory nature of the market are widely resented by partners. But they also realize bonuses play a huge role in associate morale, recruitment and retention. Most managing partners who spoke to the Law Journal about bonuses cited potential problems with associates in requesting anonymity. But this year they all also mentioned another interest group keeping a watchful eye on bonuses: clients.

So, reason one: If they give you a bonus, you might tell someone, um, like Above The Law. And reason two: pressure from clients to control costs. Anonymous firm leaders say they fear the effect a big bonus announcement would have on their fee negotiations with belt-tightening clients, especially those in the financial sector.

Orrick chairman Ralph Baxter notes that while Orrick will still pay bonuses, "performance factors, including billable hours, will reduce the number of associates at the firm" who actually get a bonus.

The article suggests that the dismal economy could provide the opportunity that some firms have been looking to escape the bonus bidding war, and eliminate associate bonuses all together. We know you're worried. In a recent Lateral Link survey by Justin Bernold, one out of every thirteen respondents was unsure when, or if, bonuses would be paid. But as The New York Law Journal notes:

Of course, much will depend on what Cravath and Sullivan & Cromwell do.

As always, we welcome bonus news and memos via email (subject line: "Associate Bonus Watch").

Firms Rethink the Value Of Associate Bonuses [New York Law Journal]

Earlier: Associate Bonus Watch: McDermott Will & Emery is Sticking to the Plan ... For Now
Associate Bonus Watch: Orrick Stands Behind Bonus Structure
Associate Bonus Watch: Morgan Lewis Pushes Back Bonus Decisions
Open Thread: Associate Bonus Speculation

It is still way too early to get hard numbers on what Biglaw bonuses will look like for 2008. But because of the economic downturn, we expect it will be a rocky bonus season.

As readers of The Shock Doctrine will note, it is important to be aware of fundamental changes to the way bonuses are paid out. You don't want something to slip in under the guise of a (massive) market correction.

Yesterday, Wilson Sonsini Goodrich & Rosati announced that 50% of their bonuses would be paid out based on performance evaluations. According to the firm, the change was made in response to associates' concerns:

To: All Wilson Sonsini Goodrich & Rosati Associates, Of Counsel, Special Counsel, and Staff Attorneys
From: John Roos
Date: September 25, 2008
Re: FY09 Associate Bonus Program

As always, the firm is committed to providing a competitive compensation package to our associates. We also are committed to listening to feedback from our associates and making adjustments to our approach to compensation as appropriate. Recently, the firm's associates have voiced concerns about the bonus program's heavy emphasis on billable hours. In response to those concerns and after a long and careful review of the associate bonus program, we're pleased to announce a new component to the bonus program focused on qualitative performance factors.

[Redacted] will be sending out a memo shortly with more details on the changes, but I'd like to give you a brief rundown on the changes, as well as the process that led to them. In essence, the total bonus opportunity will consist of three independent components:

-- a basic level of bonus paid at 1,900 hours;
-- an adder paid at 2,100 hours; and
-- a variable bonus based on work quality and overall contribution to the firm.

You'll note that the new bonus program allows us to continue to reward high-billing associates for their hard work--a factor that many associates pressed us to maintain--but it also allows us to reward those who are exceptional performers in other ways.

More from the memo, including explanation of the qualitative bonus component, after the jump.

Welcome to BACK TO THE FUTURE. In this occasional ATL feature, we'll step into a time machine and take a look at what the legal profession looked like at some point in the past.

In a post about staff layoffs at Fried Frank, a commenter drew our attention to this fascinating 1990 article from the New York Times. It seems that the commenter was trying to challenge the recent claim by firm chair Valerie Ford Jacob that the firm has never laid off attorneys. The NYT piece -- by David Margolick, former national legal correspondent for the Times, now at Portfolio (and also one of Kash's journalism professors at NYU) -- mentions Fried Frank as a firm that may have engaged in "stealth layoffs."

Margolick's article doesn't use the term "stealth layoffs," but the phenomenon it describes is essentially identical to what we've been reporting in the pages of ATL lately. The article begins:

They were the legal profession's gilded generation, an army of lawyers without limits. As law students, they were wined and dined and wooed by the most prestigious law firms in New York. Once hired, they began settling into a frantic but fantastically lucrative life. It was a life of glamour, prestige and, they assumed, stability.

Now, only a few years later, dozens of these lawyers have had a crash course in the realities of modern Wall Street practice. For the first time in their lives - lives of success atop success - they find themselves in an unusual position. They have been fired.

As the sour corporate climate reaches large law firms in New York and to a lesser degree cities like Los Angeles and Chicago, a bubble has burst. With business down, particularly in corporate work, real estate, and mergers and acquisitions, several of the most famous law firms have dismissed substantial numbers of lawyers, particularly those in the early years of their careers.

This article could have been written yesterday. But it was actually written over 18 years ago; the dateline is August 12, 1990. The more things change, the more they stay the same.

More excerpts and discussion -- including a brief comment from Margolick, plus information about what junior associates earned back in 1990 -- after the jump.