Akin Gump, it seems to me, has taken the reasonable approach for any firm that does not want to be a market leader in terms of compensation: it’s going to wait. Of course the firm is going to match. Most of the firms will end up matching the prevailing market for associate bonuses.
But as far as how much money that’ll be, we just don’t know yet. Instead of making a regular bonus announcement with a flashy bonus scale and the fiction that the numbers bear any kind of relation to the actual profitability of the firm, Akin Gump is just going to wait and see what happens, and then match the market.
[We were going to call this post something like "Associate Bonus Watch: Susman Godfrey Beats Cravath Too." But then we felt bad for singling out Cravath for paying unsatisfyingbonuses, when so many other Biglaw firms have followed suit. So we went with a tamer title instead.]
Just as it did last year, the powerhouse litigation boutique of Susman Godfrey announced associate bonuses that put the bonus scales of most other firms to shame. Happy Holidays, Susman Godfrey associates!
(By the way, Susman is a firm that celebrates the season in high style. The holiday party of its New York office, catered by acclaimed chef Daniel Boulud, is already legendary, even though it’s of fairly recent vintage.)
So, the Susman bonuses — what are we looking at here?
Last year, Cravath initially low-balled the bonus market, and Cahill Gordon made them look foolish by using the Cravath scale as a floor for its bonuses. This year, Cravath has come out with another crappy bonus scale, and Cahill is beating the bag out of it again.
This year, Cahill is making a “special bonus” payment right now, in time for everybody’s next paycheck. This is before they even delve into the regular year-end bonuses that Cravath has set at such a low mark.
It’s beginning to look a lot like last year’s Christmas at Cadwalader, Wickersham & Taft. CWT announced yesterday that it would be matching the Sullivan & Cromwell bonus scale. It starts at $7,500 for the class of 2010 and tops out at $42,500 for the class of 2003 and more senior. All bonuses will be paid in early February 2012.
But what about spring bonuses? And is Cadwalader planning to show any love for the class of 2011?
We called the story “Part 1″ because we knew, at the time, that we’d be bringing you a “Part 2.” Think of Christine Raglan’s UWS penthouse as the appetizer — or maybe even just the amuse-bouche. Now it’s time for the entrée, something far more substantial.
Let’s fly across Central Park and alight in the Carnegie Hill neighborhood of the Upper East Side, where a Cravath partner recently sold his ultra-luxurious residence — for a whopping $4.6 million. Interestingly enough, the buyer is a lawyer as well, in-house counsel at a major media company.
Who are the parties to this transaction? And what does a $4.6 million apartment look like?
The Cleary scale provides for (1) prorated bonuses for class of 2011 members and (2) a top payment of $42,500 for the most-senior lawyers (class of 2003 on up). We’re calling it the “Cleary scale” because some firms that pay a stub bonus to the class of 2011 top out at $37,500 (e.g., Milbank), and some firms that go all the way up to $42,500 don’t pay stub bonuses (e.g., Sullivan & Cromwell and Simpson Thacher).
(These are some pretty fine — and minor — distinctions. As Elie just grumpily remarked to me, “Remember when setting the market involved making it rain instead of figuring out if any pee got on the toilet seat?”)
In any event, it’s nice that Paul Weiss is taking care of its people at both the top and bottom of the seniority scale. Let’s look at the memo….
Usually, firms with main offices outside of Manhattan let the New York bonus market settle down a little bit before jumping into the fray. D.C., Chicago, Boston, and even L.A. — they all tend to allow New York to sort itself out before raising the hopes and dreams of people who aren’t paying NYC prices.
Not this year.
Ropes & Gray is jumping right into the middle of the bonus battle. For first and second year associates, they’ll be following the early payouts from Cravath and S&C. But further up the scale, where CSM and S&C diverge, Ropes & Gray is… not taking a position.
Yeah, Ropes wants to do its part to lock in the low bonuses for junior people, but for more senior people it’ll do it on a case-by-case basis….
Success in Biglaw often is measured by the size of an attorney’s “book of business.” Not surprisingly, having a book of business is also the best way to ensure the success of a private practice. The bigger the book, the greater your exit options. So whether your goal is to make partner or to open your own firm, everyone knows that the key is to develop a book of business.
That is easy to say, but virtually impossible to do in a big firm setting. Many big firms handle only matters in which the amount at stake is in the millions of dollars. This means that the prospect of an associate landing such a case is slim; a client would never entrust a multi-million dollar dispute to an un-tested associate. Associates are told to attend networking events, but what is the prospect of meeting someone who just so happens to have a ten million dollar dispute laying around, and who has not yet staffed the matter, and who is willing to entrust the matter to a junior associate he just met?
Once upon a time, mentoring relationships were strong, and firms were loyal to their associates. A loyal associate could hope that the partner for whom he or she worked would encourage clients to develop a relationship with the associate and allow the associate to claim ownership of future engagements from that client. If nothing else, a loyal associate could expect to inherit clients from a retiring partner.
Alas, the traditional method of building a book of business no longer works for most associates. Firms now sometimes go so far as to actively discourage associates from forming too-strong relationships with clients, lest the associate leave and take the client with them. And even if an associate is fortunate enough to get client contact, clients are likely to develop loyalties to the partner on the matter, even if the associate is doing most of the work. Unfortunately, just because you do good work doesn’t mean that over time you will magically develop that elusive book of business.
To make matters worse, it’s often impossible to predict future business, especially for litigators. If a client hires you for a patent dispute and pays you $1 million in fees in 2011 before the case settles, does that mean you have a $1 million book of business, even if you have no reason to expect any business from that client in 2012? How can you guarantee repeat business from any client, especially in litigation? Do you need a three or five year average? Those are long time frames for associates.
With all these challenges, how can an associate ever hope to make the rain they will need if they want to open their own firm?
Ed. note: The Asia Chronicles column is authored by Kinney Recruiting. Kinney has made more placements of U.S. associates, counsels and partners in Asia than any other recruiting firm in each of the past seven years. You can reach them by email: email@example.com.
Please note that Evan Jowers and Robert Kinney are still in Hong Kong and will stay FOR THE REMAINDER OF THIS WEEK. We still have a handful of available slots for meetings with our Asia Chronicles fans. If we have not been in touch lately, reach out and let us know when we could meet! There is no need for an agenda at all. Most of our in-person meetings on these trips are with folks who understand that improving a legal practice through lateral hiring is an information-driven process that takes time to handle correctly.
Regarding trends in lateral US associate hiring in Hong Kong, we of course keep much of what we know off of this blog. Based on placement revenue, though, Kinney is having one of our most successful years ever in Asia. We are helping a number of our law firm clients with M&A, fund formation, cap markets, project finance, FCPA and disputes openings. These are very specific needs in many cases, so a conversation with us before jumping in may be helpful. As always, we like to be sure to get the maximum number of interviews per submission, using a well-informed, highly targeted, and selective approach, taking into account short, medium and long-term career aims.
Making a well informed decision during a job search is easier said than done – the information we provide comes from 10 years of being the market leader in US attorney placements at the top tier firms in Asia. There is no substitute for having known a hiring partner since he/she was an associate or for having helped a partner grow his or her practice from zip to zooming, and this is happily where we stand today – with years of background information on just about every relevant person in all the markets we serve, and most especially in Hong Kong/China/Greater Asia. So get in touch and get a download from us this week if we can fit it in, or soon in any case!
The legal industry is being disrupted at every level by technological advances. While legal tech entrepreneurs and innovators are racing to create a more efficient and productive future, there is widespread indifference on the part of attorneys toward these emerging technologies.
When the LexisNexis Cloud Technology Survey results were reported earlier this year, it showed that attorneys were starting to peer less skeptically into the future, and slowly but surely leaning more toward all the benefits the law cloud has to offer.
Because let’s face it, plenty of attorneys are perhaps a bit too comfortable with their “system” of practice management, which may or may not include neon highlighters, sticky notes, dog-eared file folders, and a word processing program that was last updated when the term “raise the roof” was still de rigueur.