Skaddenfreude

An Inside Look at the Skadden Annual Review Process

By David Lat

We enjoy giving our readers the occasional peek behind the Biglaw curtain. Last month, for example, we shared with you the internal interview manual that Sullivan & Cromwell provides to its attorneys who conduct on-campus interviews at law schools.

Today, in a similar spirit, we take an inside look at the annual review process for attorneys at Skadden Arps. We’re into the fourth quarter of 2011, so these reviews are not far away.

In this special report, we’ll provide general observations on the Skadden review process, highlight noteworthy comments from leaked attorney evaluations, and show you a few reviews in their entirety (redacted to remove lawyer and client names). This information should interest Biglaw associates who want to know what partners look for junior lawyers, and it should also appeal to partners at other firms who want ideas on how to structure annual reviews.

If you’re interested in learning more about performance reviews at one of the world’s biggest and best law firms, please keep reading….

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Skadden Takes Its Heart from San Francisco — and Closes Its S.F. Office

By David Lat

Embarcadero Center (at right): Skadden's soon-to-be-former S.F. home.

Late last week, word started to leak out that Skadden Arps plans to close its San Francisco office, by the end of June 2011. A meeting was held on Friday where the closure was announced to the office. The S.F. office is essentially being folded into the firm’s Silicon Valley outpost.

Some of the initial reactions expressed concern. “Unclear with respect to job security,” said one source. “My cynical side wonders if this isn’t layoffs in disguise,” said another.

But further examination of the situation suggests that this is, as some might say, no big deal….

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Associate Bonus Watch: Skadden Matches Cravath

By David Lat & Elie Mystal

Bonuses have just been announced at Skadden. The following memo went out earlier today to all Skadden partners, from executive partner Eric Friedman:

To All Partners:

The attached memo announcing a year end discretionary bonus will be sent to associates in North America on a class by class basis today. Bonuses will range from $7,500 to $35,000 and will be issued in mid-December. While the same bonus schedule will be applied in all offices, communication to our international offices is being handled on an office by office basis. Counsel bonuses will be announced next week.

Bonuses are announced by class, but the range of $7,500 to $35,000 strongly suggests that Skadden is simply matching the Cravath bonus scale for 2010.

The form memo to associates that just went out, plus confirmations of bonus amounts for specific class years, after the jump.

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Skaddenfreude: A Look Inside the Life of a Kirkland & Ellis Contract Attorney

By David Lat

We call it Skaddenfreude: taking pleasure in the misfortune of others who work at large law firms. Today’s tale of Skaddenfreude involves a contract attorney working a project in the Chicago office of Kirkland & Ellis.

Let’s kick it off with a picture….

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Nixon Peabody Partner Gets Chastised by a Federal Judge for Work Hoarding

By Kashmir Hill

Nixon Peabody was a winner in Signature Flight Support Corp. v. Landow Aviation, a dispute between two aviation companies at the Washington Dulles airport. Nixon landed a victory for Signature Flight, and filed a motion for Landow to pay attorneys’ fees in the case.

Landow thought Nixon’s fees were sky-high and opposed the motion, resulting in a review of Nixon’s bills by Judge James Cacheris (E.D. Va.). Judge Cacheris buzzed Nixon’s bills. From the National Law Journal:

U.S. District Judge James Cacheris of the Eastern District of Virginia determined that Nixon Peabody’s $1.57 million in fees was too high and slashed about $440,000 off that amount, awarding $1.13 million….

In his July 30 decision, Cacheris found that the number of hours Nixon Peabody expended on the case demonstrated a “lack of billing judgment exercised by plaintiff’s counsel” and “overall excessiveness of plaintiff’s fee request.”

Less than half a million slashed? Pocket change — though that was on top of $205,102.50 that Nixon says it had already excluded from the bill.

Reading the opinion offers lots of fun Skaddenfreude, perhaps particularly for attorneys laid off by Nixon Peabody early last year. Partner Louis Dolan got knocked by the court for spending hundreds of billable hours at the end of 2008 doing work better suited for a junior associate…

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Reality TV Star Victoria, of Downtown Girls, Fails the Bar Exam

By Kashmir Hill

MTV has sunk low. Really low. Its newest program, Downtown Girls — a reality TV show about a group of hot girls living in TriBeCa — is using the New York bar exam as a dramatic narrative hook.

We wrote before about the law grad on the show in our post: Why Unemployed Lawyers Shouldn’t Go On Reality TV Shows — Exhibit A: Victoria, of MTV’s Downtown Girls. Her bio on the MTV site described her as an aspiring attorney who is “a source of rattlebrained comic relief” and “currently awaiting the results of her second attempt at the bar exam.”

We’ve since learned from tipsters that Victoria is a Brooklyn Law School grad. Her results came in on episode 4 of the show. The show’s lead Carrie Bradshaw-inspired character real person is Shallon, who narrates at the beginning of the episode: “Victoria is about to find out the results of her bar exam and that could totally shift the course of her whole life.”

Consider life shifted. The second time was not the charm for Victoria. So what do you do if you find out that you failed the bar exam on national television?

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Open Thread: What’s Your Net Worth? (And how does it compare to Elena Kagan’s?)

By David Lat

Earlier this week, we published a Lawyerly Lairs post about a graduating 3L named Jimmy. According to the blog Urban Turf, “Jimmy” is a 27-year-old law student with a job in D.C. Biglaw lined up, starting at $160,000. If that’s not enough to make you hate Jimmy, he also has a credit score of 781, $140,000 in the bank for a down payment on his first home, and no student loan debt.

Jimmy triggered envy, player-hating, and other strong reactions in the comments:

“F**k Jimmy. I graduated with 3.3 and couldn’t fund a job with a Biglaw firm in DC. Hence I make $75K, have $90K in student loans, $5K on credit cards and $0 for a down payment. Again, F**k Jimmy.”

“I’m sure there are several women here who are also thinking ‘Fuck Jimmy.’”

Meanwhile, blogger Jane Genova expressed doubt that Jimmy exists. A newly minted law school graduate, with zero debt and (at least) $140K in the bank — is this like believing in Santa Claus?

Jimmy is certainly very fortunate. But is he so fortunate that he’s incredible? No. His financial state could be explained by any number of factors, alone or in combination, such as (1) generous parents or other relatives, (2) a past inheritance, (3) a successful first career before law school (e.g., in finance), or (4) a full-ride scholarship to law school.

In the comments to the Jimmy post, ATL readers started to anonymously share details about their personal finances and net worths. If you found this interesting, be sure to check out this article in this Sunday’s New York Times Magazine, entitled “Net-Worth Obsession.” It’s about people who obsessively track their net worths over time and compare themselves to others on this front, sometimes with the help of websites (such as NetWorthIQ, featured prominently in the article).

Are you a net-worth obsessive? Tell us your net worth (anonymously), learn the net worths of some of your fellow readers, and see how your net worth stacks up against that of Supreme Court nominee Elena Kagan — after the jump….

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More Rumors: NYC to 190!

By David Lat

100 dollar bill Abovethelaw Above the Law law firm salary legal blog legal tabloid Above the Law.JPGWe’re beginning to wonder whether this “NY to 190″ business is just a big practical joke. But even though no real information has emerged, and the co-chair of Simpson’s personnel committee told us his firm is “not currently considering an increase in associate salaries,” the rumors continue to swirl.

Here are two email messages we’ve received that are representative of many others:

“NYC big firm starting salary may be increasing to $190k in the coming weeks. My source was a recruiter whose friend at Sidley told him the news. Have you all heard anything or is this bs?”

“[A] friend of mine, who is a partner at a big Chicago firm, with a large presence in NYC, mentioned that pay raises are likely in NYC and that the firm has budgeted $190k as the starting first-year salary.”

Such gossip is not far removed from this commenter’s parody:

My dad’s step-mom’s estranged aunt is a janitor at Cravath, and she said she found a scribbled note on the floor of a partner’s office saying “damn, looks like we have to go to at least $175k soon; call wife re: can’t add second pool to home in Nantucket this summer.”

We wish we had more to tell you right now. We’ll continue to dig.

But at this point, your guess is as good as ours. So feel speculate to discuss in the comments. Vote in our reader polls, if you haven’t done so already.

Will any of this chatter make associate pay raises happen — or happen faster? Unlikely. But hey, there are worse ways to pass the time.

Earlier: Nationwide Pay Raise Watch: The Simpson Rumor
Nationwide Pay Raise Watch: Official Comment from Simpson
ATL Reader Poll: WWNYD?

Nationwide Pay Raise Watch: Atlanta

By David Lat

Atlanta Georgia GA Hotlanta Big Peach Abovethelaw Above the Law legal tabloid.jpgThe day that many of you have been waiting for has arrived. Today ATL goes to ATL: the fair city of Atlanta!
Based on NALP forms and prior news articles, it seems that starting salaries in the Big Peach generally range from $130,000 and $145,000 (similar to Philadelphia).

At $130K: Alston & Bird; Arnall Golden Gregory; King & Spalding; Kilpatrick Stockton; McKenna Long & Aldridge; Morris, Manning & Martin; Paul Hastings; Powell Goldstein; Smith Gambrell & Russell; Sutherland Asbill & Brennan; Troutman Sanders; Womble Carlyle.

At $135K: Jones Day

At $145K.: Dow Lohnes; Hunton & Williams; McGuireWoods; Schiff Hardin.

At $160K: Fish & Richardson (IP work).

Feel free to discuss associate compensation, or any other hot issues in Hotlanta, in the comments. Thanks.
New lawyers’ pay puts public sector to shame [Atlanta Journal-Constitution]
Alston & Bird Raises First-Year Pay Yet Again [Fulton County Daily Report]
Hunton raises first-year salaries to $145,000 [Fulton County Daily Report]
Related: Open threads focused on Denver, Hartford, Philadelphia, Seattle, New Jersey, Phoenix, Charlotte.

Skaddenfreude: More Criticism of Associate Pay Raises

By David Lat

100 dollar bill Above the Law Above the Law law firm salary legal blog legal tabloid Above the Law.JPGWow. Late Friday afternoon, we briefly discussed an article by D.C. bar president James J. Sandman, a partner at Arnold & Porter in Washington, bemoaning the recent associate pay raises. The article generated a strong reaction, judging from the avalanche of reader comments (75 and counting; mostly insightful, and mostly disagreeing with Sandman).

We emailed James Sandman, offering him space in ATL to offer a further defense of his article. We haven’t heard back from him yet; but if we do, we’ll let you know.

In the meantime, here’s an American Lawyer article that raises similar concerns. It’s a news rather than opinion piece, but the partners quoted in it voice sentiments similar to Sandman’s. Some excerpts:

A partner at Greenberg Traurig was meeting with attorneys from five law firms when he learned that Simpson Thacher & Bartlett had raised associate salaries across the board.

“Every BlackBerry in the room started flashing,” he recalls.

It was 4:30 p.m. on Jan. 22. At least five firms matched the next day, and by the end of the week, the sticker price for a new associate in the New York market was up for the second time in a little more than a year — to $160,000.

The raise surprised competitors and legal consultants alike and caused many to question whether another pay increase makes sense. They point out that pay isn’t associates’ main gripe (uncertain partnership prospects and grueling hours top this list). Robert Link Jr., managing partner of Cadwalader, Wickersham & Taft, goes even further. If improving associate morale was Simpson’s goal, says Link, the raise may do more harm than good.

A higher salary “puts more pressure on productivity and hours,” says Link, exacerbating precisely the quality-of-life issues that make junior lawyers unhappy.

“I don’t know what Simpson was thinking,” he adds.

It’s similar to Sandman’s comment:

“I don’t understand what causes a firm be the first to increase the salary of a brand-new lawyer from an already eye-popping $145,000 to $160,000. There is no competitive advantage in doing so. Other firms will surely follow suit, and the firm that led the market will quickly be indistinguishable from the rest of the pack.”

So, what WAS Simpson thinking? Discussion continues after the jump.

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Breaking: Simpson Thacher Raises Associate Base Salaries!!!

By David Lat

100 dollar bill Above the Law Above the Law law firm salary legal blog legal tabloid Above the Law.JPGSimpson Thacher & Bartlett has raised associate base salaries across the board. For the most junior classes, the increase is $15,000. New associates arriving at the firm in the fall will now receive a starting salary of $160,000, instead of $145,000.

(You saw the memorandum here first, people — less than ten minutes after it was sent. MSM sources: PLEASE CREDIT ABOVE THE LAW. Thank you.)

The Simpson Thacher memo reprinted below was emailed to us by multiple sources. So we do not doubt its authenticity. It was sent out today by email, at 4:28 PM, by STB executive committee chairman Philip T. (Pete) Ruegger III, to all associates and non-senior counsel.

We are seeking additional comment from STB representatives — namely, Pete Ruegger, who sent the memo, and Susan Bussy, who handles media inquiries. We will let you know if and when we hear back from them.

Without further ado, the memo:

SIMPSON THACHER & BARTLETT LLP
MEMORANDUM TO ALL ASSOCIATES AND COUNSEL

The Firm has been very busy and we expect the high level of activity to continue. We are proud of the results we are helping our clients achieve.

We believe we have the finest legal team of any global law firm. In appreciation of your efforts, we are pleased to increase associate base salaries as follows, effective January 1, 2007:

Class of 2006 – $160,000
Class of 2005 – $170,000
Class of 2004 – $185,000
Class of 2003 – $210,000
Class of 2002 – $230,000
Class of 2001 – $250,000
Class of 2000 – $265,000
Class of 1999 – $280,000
Class of 1998 – $290,000

We are also raising the base salary for the members of the Class of 2007, who will arrive in the fall, to $160,000.

Counsel and classes senior to 1998 will be addressed on an individual basis.

Again, on behalf of the Firm, thank you for your commitment and hard work.

January 22, 2007
Pete Ruegger

*************************

Other firms will surely follow suit and match this base salary increase. As the various firms match, please note their moves in the comments. THANKS!!!Simpson Thacher Bartlett stb 160000 160k starting salary pay raise.jpg

Skaddenfreude: In-House Salaries, Please

By David Lat

100 dollar bill Above the Law Above the Law law firm salary legal blog legal tabloid Above the Law.JPGThis item, from yesterday’s WSJ Law Blog, caught our eye:

As the 11th Vioxx trial got underway yesterday in federal court in New Orleans, Merck disclosed in an SEC filing that it’s giving its general counsel Kenneth Frazier a raise and a promotion, effective Nov. 1. The GC who will forever be associated with the Vioxx litigation and the company’s decision to try and battle one case at a time will now have a base salary of $780,000, a plummy 13% jump up from his former base pay of $689,000.

Last year, with cash, bonus and stock, Frazier reportedly took home $1.64 million. In other big pharma GC salaries, Pfizer general counsel Jeff Kindler, promoted to CEO earlier this year, was ranked 18th and earned $1.9 million last year. Robert Armitage, in-house counsel at Eli Lilly ranked 51st and earned $1.17 million.

Serving as a general counsel to Big Pharma: Nice work if you can get it.

This brings us to our next theme for Skaddenfreude, ATL’s ongoing survey of salaries within the legal profession. We’d like to turn our attention to the incomes of in-house lawyers.

If you’re employed as in-house counsel for some corporation, we’d like to learn how much you earn. We will then share it with our readers, as a public service to them — but keeping you and your employer anonymous, as always. We’re especially interested in lawyers below the general counsel level — e.g., associate, assistant, or deputy general counsels — whose salaries are not already matters of public record.

So please, in-house lawyers, help us out. Send us your salary information, by email (subject line: “Skaddenfreude”). Examples of “anonymized” entries, and guidelines for submitting your salary info to ATL, appear here. Thanks!

Drinks on Mr. Frazier? [WSJ Law Blog]

Earlier: Skaddenfreude: Totally Gauche Ogling of Other Lawyers’ Incomes
Prior editions of Skaddenfreude (scroll down)

Skaddenfreude: Wachtell Lipton’s ‘Midyear Bonuses’

By David Lat

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)

Skaddenfreude: An Amendment

By David Lat

100 dollar bill Above the Law Above the Law law firm salary legal blog legal tabloid Above the Law.JPGIn light of the recent debut of Skaddenfreude, ATL’s column chronicling attorney compensation, it’s a neat coincidence that the New York Times has an entire article discussing compensation for first-year associates at major law firms.

We’ll get to that article in just a second. First, though, a brief amendment to our prior Skaddenfreude request. We received this thoughtful email from a reader:

is it too late to add a line for hours billed? that would add more of an element of schadenfreude too, don’t you think? this is more like freudenskadden — feeling sick about how much more money they make.

Good point. We stand corrected! So yes, in your Skaddenfreude submissions — we’ve received a bunch already, thanks, keep ‘em coming — please include your annual billable hours (either an estimate of this year’s or last year’s actual).

If you’re not a law firm attorney, feel free to include an estimate of how many hours you work in a year. If you’re a legal academic, throw in some bragging about how you make six-figures, or close to it, for only nine months of work.

Okay, that’s the Skaddenfreude amendment. Now, on to discussion of the Times piece — after the jump.

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