Breaking: Cravath Announces Year-End Bonuses; Let the 2012 Bonus Season Begin!
Cravath just announced its 2012 year-end bonuses. How much will CSM - and, of course, the many firms that follow CSM - be paying out this year?
Lat here. Earlier this month, I wondered: could the bumper crop of new partners at Cravath bode well for bonuses? Although firms like Cravath generally make partnership decisions with a focus on the longer term, as opposed to based on short-term financial performance, a class of five partners is one of the largest Cravath has had in years. It certainly seems to reflect a good degree of confidence about the firm’s future.
Now we have our answer as to the size of Cravath bonuses. The firm just announced its year-end bonuses for 2012, and they’re not simply a cut-and-paste of last year’s numbers. This year’s bonuses are more generous than last year’s, which is great news (at least for associates trying to pay off their law school loans; partners might be less enthused).
Sit up and take notes, since the Cravath bonus scale sets the bar for most other major law firms….
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Here is what Cravath’s 2012 year-end bonus scale — a scale that will be widely adopted all over Biglaw in the days and weeks ahead — looks like. It comes to us via Peter Lattman of DealBook (who got the leak this year instead of his former outlet, the WSJ Law Blog):
Class of 2012 — $10,000 (pro-rated)
Class of 2011 — $10,000
Class of 2010 — $14,000
Class of 2009 — $20,000
Class of 2008 — $27,000
Class of 2007 — $34,000
Class of 2006 — $40,000
Class of 2005 — $50,000
Class of 2004 — $60,000
Cravath will pay the 2012 year-end bonuses on Friday, December 21 (the end of the world in the Mayan calendar). Because Cravath is a lockstep firm and “does not apply any billable hour or similar criteria in determining eligibility for associate bonuses…. virtually all of our associates will receive the full bonus.”
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How do the 2012 bonuses compare to last year’s payouts? Here is Cravath’s 2011 year-end bonus scale:
Class of 2011: $0
Class of 2010: $7,500
Class of 2009: $10,000
Class of 2008: $15,000
Class of 2007: $20,000
Class of 2006: $25,000
Class of 2005: $30,000
Class of 2004: $37,500
As you can see, the 2012 year-end bonuses are a good deal higher than the 2011 year-end bonuses. In 2011, first-year associates received $7,500, and the most-senior associates received $37,500. In 2012, first-year associates are getting $10,000, and the most-senior associates are getting $60,000. That represents healthy improvement in year-end bonuses, as predicted by the partner-making tea leaves.
Note, however, that Cravath associates did not receive spring bonuses in 2012. In calendar year 2011, they received spring bonuses in the following amounts:
Class of 2011 (N/A; not yet at the firm): $0
Class of 2010: $2,500
Class of 2009: $7,500
Class of 2008: $10,000
Class of 2007: $15,000
Class of 2006: $20,000
Class of 2005: $20,000
Class of 2004: $20,000
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Thus, in calendar year 2011, Cravath associates received the following in total bonus compensation (adding spring and year-end bonuses):
Class of 2011: $0
Class of 2010: $10,000
Class of 2009: $17,500
Class of 2008: $25,000
Class of 2007: $35,000
Class of 2006: $45,000
Class of 2005: $50,000
Class of 2004: $57,500
So here’s a comparison of 2011 and 2012 total bonus compensation at Cravath (math done rather hastily; if you see errors, please let us know):
Class Year — 2011 — 2012
1st Years (stub) — $0 — $10,000 prorated
1st Years — $10,000 — $10,000
2nd Years — $17,500 — $14,000
3rd Years — $25,000 — $20,000
4th Years — $35,000 — $27,000
5th Years — $45,000 — $34,000
6th Years — $50,000 — $40,000
7th Years — $57,500 — $50,000
8th Years — $57,500 — $60,000
On the one hand, including spring bonuses when comparing 2011 to 2012 makes the 2012 bonuses look less generous. On the other hand, one can argue that the spring bonuses paid in 2011 should actually be viewed as a supplement to 2010 compensation, not as part of 2011 compensation. (Elie takes this position below.)
As for the timing of the announcement, apparently Cravath didn’t like our idea of announcing and paying bonuses early to help employees adversely affected by Hurricane Sandy. Just as it did in 2011, Cravath announced on the last Monday in November. In 2010, the firm announced on November 22 — the second-to-last Monday in November, and before Thanksgiving. Back in 2009, the firm announced on November 2, the first Monday in November.
Based on the past few years, it seems that Cravath is announcing its bonuses later and later (but still always on a Monday in November). Maybe next year Nate Silver can spare us the waiting and predict Cravath’s bonuses; he seems to be good with November prognosticating.
Now, please flip to the next page for (1) analysis by Elie Mystal, (2) color commentary from ATL readers, and (3) the full Cravath memo….
