Associate Bonus Watch 2006

stack of bills cash money.jpgAh yes, the legendary bonuses of Wachtell, Lipton, Rosen & Katz. Tout le monde wants to know: So, just how big were they?

Very big (and bigger than yours). We can’t give up specific numbers for specific classes, because that might get our sources in trouble (and WLRK is a pretty small firm).

But we’ll just make these general observations:

1. Wachtell Lipton pays base salaries that are at (or even slightly above) market.

2. Earlier this year, they paid out midyear bonuses ranging from $15,000, for the newest associates, to $50,000, for the most senior classes.

3. When you add the midyear bonuses to the year-end bonuses that were paid out earlier this week — on Tuesday, December 12 — every class at Wachtell received 2006 bonus compensation equal or slightly greater than 100 percent of base salary.

4. This year, the percentage of bonus as base varied a bit from class to class. Historically this hasn’t always been the case; when we were there, it was pretty much constant.

Executive summary: Take your base salary, double it, and that’s what your law school classmate who went to Wachtell earned in 2006, “all in” (base salary + mid-year bonus + year-end bonus).

A shameless plug for our former firm, based on the time that we spent there (2000 – 2003), after the jump.

double red triangle arrows Continue reading “Associate Bonus Watch: Wachtell Lipton Windfalls”

100 dollar bill Above the Law Above the Law law firm salary legal blog legal tabloid Above the Law.JPGThis just in: Earlier this month, M&A powerhouse Wachtell, Lipton, Rosen, & Katz bestowed generous “mid-year bonuses” upon its associates. The dough was distributed “without prejudice” to Wachtell Lipton’s legendary year-end bonuses, which in recent years have come in anywhere between 40 to 80 percent of an associate’s base salary. (WLRK’s base salaries are already at the top of the New York market.)

Your next question: How much? We hear that associates who graduated law school in the class of 2000 received a midyear bonus of $40,000, and associates who graduated in the class of 2002 received $30,000. So we’re guessing that the bonuses were distributed in $5K increments, with class of 2001 associates getting $35,000. (But perhaps the more senior people received bonuses reflecting bigger jumps; Wachtell, like many other top firms, likes to reward those who stick around.)

If you’re thinking that $40K doesn’t sound like that great a bonus for billing 3000 hours, please remember: This is just mid-year beneficence from Marty Lipton and Herb Wachtell. Year-end bonuses at Wachtell Lipton are expected to be better than ever, owing to the firm’s banner year on the corporate side. Back in the summer of 1998, believed to be the last time the firm doled out midyear bonuses (equal then to two months’ base salary), the end-of-year bonuses roughly equalled base salaries for associates. (For those of you who aren’t familiar with them, WLRK bonuses are lockstep based on seniority — they’re not tied to hours or to an assessment of the associate’s merit.)

What does Wachtell’s move mean for associates at other top New York firms? Well, probably not much — WLRK has always been in a class of its own in terms of compensation, paying bonuses that are more like investment banking bonuses than law firm bonuses.*

But Wachtell Lipton’s move could at least do this: It could prevent firms that raised base salaries earlier this year from “undoing” or “taking back” those raises, by reducing year-end bonuses by a commensurate amount. Now that Wachtell is taking in money so fast it’s GIVING it away — to its own associates — it would ill behoove Cravath and Sullivan to pull such a cheap trick on their associates. In the wake of Wachtell’s midyear bonuses, a top firm that raised associate salaries earlier this year, but then tried to keep total associate compensation unchanged by cutting year-end bonuses, would suffer a definite “shame sanction.”

Disclosure: Yes, we once worked at Wachtell Lipton, from 2000 to 2003 (i.e., we missed some of the fattest years). And yes, we are depressed this morning.

* Yes, obnoxious-lawyers-turned-obnoxious-bankers, we know: I-banking bonuses are often a multiple (x2, x3, etc.) of the banker’s base salary. Banker bonuses frequently run into the seven figures — unlike Wachtell bonuses, which at least have the decency to stay within six figures. And don’t get us started on the hedge fund people…

Earlier: Prior Skaddenfreude coverage (scroll down)