Compensation

When we recently ranked top law firms based on responses to the ATL Insider Survey, readers raved about Wilson Sonsini, which took the #5 spot on our list of the top 12 firms. According to one respondent, the firm boasts “entrepreneurial meritocracy, the best client base, endless opportunities, and smart helpful people. It is a unique place, perfect for the self-motivated overachiever.”

In terms of the five specific survey metrics, Wilson fared best in the compensation department. On a 10-point scale, WSGR scored an impressive 8.73 (out of 10) in terms of satisfaction with pay. (The firm’s other scores: 8.63 for culture, 8.33 for training, 7.80 for morale, and 7.33 for hours.)

But will Wilson Sonsini be able to maintain its high score on the comp front? Not everyone is happy with the firm’s latest bonuses….

(Please note the multiple UPDATES added to the end of this post.)

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The law firm of Goodwin Procter is in the news these days. Some of the firm’s top trial lawyers are defending Mathew Martoma — formerly of SAC Capital and Harvard Law School, where he famously falsified a transcript — in one of the biggest and most exciting insider-trading cases in history.

(Fun fact: one of the members of Martoma’s trial team, Roberto Braceras, is the son-in-law of Judge José A. Cabranes. So if the Martoma case ever winds up before the Second Circuit, Judge Cabranes may have to recuse.)

Martoma earned millions while at SAC Capital, and some of that money will be making its way into the coffers of Goodwin Procter. And some of that money will then get paid out as associate bonuses, which the firm recently announced….

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Congratulations to Northwestern University and Northwestern Law. The university just announced a $25 million gift, and $15 million of that will go to the law school.

The gift comes from Northwestern Law alum Neil Bluhm, who has an estimated net worth of $2.5 billion. Although Bluhm made his fortune as a real estate and casino magnate, he took his first steps towards wealth in Biglaw. Bluhm worked as an associate and then a partner in the Chicago office of Mayer Brown.

Speaking of Mayer Brown, the firm’s New York office just announced bonuses. Could they be the first big bucks banked by budding billionaires?

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These are interesting times for Sidley Austin. Lately the firm has had lots of good news, such as its big expansion in Texas, counterbalanced by a little bad news (for an individual partner).

That’s at the partner level. What’s going on among the associate ranks?

Bonuses — announced and paid last week. Among the firms that do individualized rather than lockstep bonuses, Sidley is one of the earliest movers.

So how are Sidley Austin associates feeling about their 2013 year-end bonuses?

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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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It’s Tuesday, November 26, past 5 p.m. Do you know where your bonus is?

When we surveyed our readership about 2013 law firm bonuses, 57 percent of respondents predicted that the first firm (traditionally Cravath) would announce during the week of Thanksgiving. That’s basically over. It’s theoretically possible we could get an announcement later tonight or sometime tomorrow, but it seems unlikely.

So what’s going on? Where. Are. The bonuses?

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Regular readers of Above the Law are well aware of the bimodal salary distribution curve of starting salaries for new lawyers. Lawyers understand why the curve looks the way it does: there are a few “elite” firms that essentially engage in salary collusion at the very top (don’t everybody start thanking Above the Law at once), while most lawyers will struggle to find a job in the $40K – $60K range.

When non-lawyers see this curve, they are surprised. The curve popped up on Mother Jones the other day, and author Kevin Drum called the $160K spike “pretty weird.” Then the commenters on his post — actually HELPFUL commenters who managed to weigh in without personal attacks on the author — explained to Drum why it was so.

But that’s kind of the problem: people only become aware of the bimodal salary distribution curve after they’ve been to law school (and done things like become a regular reader of Above the Law). They don’t get the information before they commit to law school, when the information could be useful. In a world without time machines, hindsight is blind.

Still, even people who have already committed to their dread fate can benefit from an understanding of history. Do you know what the salary distribution curve looked like in 1991, during the last “great” lawyer recession? Do you think the people who are charging you money to go to law school have seen it?

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…To Take A Survey

We here at ATL want to know what world’s largest legal audience — ours, of course — thinks. Hence, we ask our audience a lot of questions. Our Insider Survey, which is soon coming up on its 15,000th respondent, provided the raw materials for the creation of our Law Firm and Law School Directories, as well as features on various specific organizations, locations, and practice areas. To supplement our Insider Survey data, we also take a closer look at specific aspects of institutions, such as compensation and social media policies. Additionally, we check in with our readers for their take on topical events, including presidential politics and Obamacare. Today, we have a look at a handful of our ongoing survey projects: Social Media, Stipend/Advance, and Health Insurance. But first, we are looking for help with a new research initiative.

There is probably no other industry as obsessed with the concept of “culture” as the legal profession, particularly in the world of law firms. Many firms view their culture as a key element of their distinct place in the competitive marketplace. But what does that even mean? Is there consensus on what constitutes culture? Do clients notice or care? We would like to dig deeper into these questions. As a first step in this project, we are looking for a small group of currently practicing law firm attorneys who are willing — in complete confidence — to give us about twenty minutes of their time to answer some of our questions concerning the realities of what defines firm culture. Preference will be given to attorneys who have lateraled between firms. We will be conducting this project in partnership with our friends at Adam Smith Esq. and JD Match. If interested, please email us here.

Apart from the never-ending Insider Survey, ATL has three ongoing surveys which we hope will bring greater transparency to subjects of interest to our readers. Here’s a quick glimpse at where they stand today…

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The year-end Biglaw management machine is starting to grind into motion. The compensation committee is starting to look at the numbers for individual partners — to decide who will be rewarded and who will be de-equitized. And the firm’s A/R collections crew is starting to pressure the partnership to get bills out the door and talk to clients about what will be paid by year’s end. The associate bonus committee? If one still exists, is must be having a hard time reserving conference room space to meet.

The end of the year is a serious time for law firms. For many individual lawyers in Biglaw, it is the time of year when their die may be cast, in terms of compensation, lateral movement options, or even their continued employment. As anyone who follows Biglaw knows, we are living in interesting times, with many firms navigating choppy seas in terms of client demand, financial performance, and expense management. And at many firms, there has never been a wider gulf between the rank-and-file partner and firm management when it comes to the ability to make or influence decisions about the firm. Partners at many firms are often clueless about what the firm is doing and why, to the extent that partners are asked to vote on lateral candidates or even mergers based solely on the “reassurances” and “enthusiastic outlook” of management.

The net effect of this divide between management and the partnership? An increasing sense among partners that they are simply assets of legal “brands” rather than owners or even stewards of a professional enterprise. For many, it is a bit of a hopeless feeling, especially when they consider the Biglaw options down the street, which usually present the same level of management opacity to the putative “owners” as their current firm. But just because management likes to tell the partnership to “leave the managing to us, you just focus on building your practice” does not mean partners aren’t entitled to information — even if it’s just the personal views of the managing partner on certain issues.

Here are five questions for your managing partner. The topics are varied, but the answers given should give partners a good sense of both their relative standing within their firms and the values that drive the business decisions of their leadership….

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“Being a partner at an elite law firm isn’t what it once was,” as I recently wrote in a Wall Street Journal book review, but “while the brass ring might be tarnished, it still gleams brightly for many.” And with good reason: even if it’s harder than ever to become (and remain) a partner, for those who do manage to make it, the pay, perks, and prestige are plentiful.

The American Lawyer just released its latest New Partner Survey. The magazine heard from almost 500 lawyers who began working as partners between 2010 and 2013. About 60 percent of the survey respondents are non-equity or income partners — which makes sense, given the proliferation of two-tier partnerships, as well as how junior these partners are — and the rest are equity partners.

What are the most notable findings from the survey? Here are five:

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