When we last checked in with Cadwalader, the firm paid out bonuses on the New York market scale — and without a specific billable-hours requirement. Associates were generally pleased about their bonuses — and, it seems, CWT in general. Last year the firm enjoyed a big jump in the American Lawyer’s associate satisfaction survey, leaping from #47 all the way up to #14.
If some of that happiness flowed from not having a billable-hours requirement for bonuses, though, it could be short-lived. In December 2014, the firm announced elimination of the billable requirement for bonus eligibility, with managing partner Pat Quinn telling Law360 that the change reflected “our firm’s emphasis on excellence of work, rather than quantity of work.” But now, just a little more than a year later, the firm is reinstituting a billable-hours cutoff, as one tipster told us:
CWT’s bonus policy recently changed. It was previously for everyone in good standing, but there are now hour requirements – 1600 billable + 200 quality non-billable (CLEs, recruiting, pro bono etc) for 50% bonus, 1800 billable + 200 non-billable for 100%, and 2200 for an extra 20%.
How Lexis’ CounselLink+ Reimagines The Redline
Contracts are now integrated into an end-to-end system, and efficiencies abound.
On the bright side, our sources seem fine with it. From a second source:
I think it’s pretty fair. Slower groups will dislike it, but it makes economical sense for the firm. Getting 200 non-billable is not terribly difficult as there are almost daily trainings that count, as well as pro bono and recruiting. That leaves 1800 billable to get 100%, which seems standard in major markets.
I think people’s biggest issue is that firm backtracked from the policy instituted recently to eliminate the hours requirement so associates could focus on quality over quantity.
Our original tipster also wasn’t too troubled, but noted that others might feel differently:
The bonus policy actually seems pretty reasonable. No one in my department is particularly upset because we’ll probably still make our hours, but litigation associates are a bit bummed as their department is really slow.
How MyCase Accounting Transforms Legal Bookkeeping
This complete system built for lawyers simplifies the complex world of law firm finance.
Ah yes, litigation slowness — a common complaint in Biglaw today, but still frustrating. Pat Quinn cited it when discussing the dip in Cadwalader’s profits in 2015, reported last month by the American Lawyer:
Gross revenue at Cadwalader, Wickersham & Taft fell 3.7 percent, to $463.5 million, in 2015, while partner profits declined 6.8 percent, to $2.06 million, the firm reported.
Revenue per lawyer also took a hit, dropping 2.8 percent, to $1.04 million. The firm added 11 new lateral partners last year, but overall lawyer head count decreased from 452 to 448….
Quinn said the revenue generated by the firm’s corporate department was up 32 percent in 2015. The firm’s litigation department, he said, experienced a slowdown that was on par with industry trends.
The slowness in litigation has resulted in litigation associates “dropping like flies,” one source told us. It’s not clear whether this headcount loss, reflected in a steady flow of departure memos, is voluntary or involuntary. (If the latter, Cadwalader wouldn’t be alone; we’re hearing reports of multiple firms trimming their ranks, but with so-called “stealth layoffs” — telling a small number of lawyers on an individual basis that it’s time to seek new opportunities, spread out over time to avoid publicity.)
We’ve heard reports of reductions on the staff side as well, but again, it’s not clear whether the departures are voluntary or involuntary. They could be voluntary; we’ve heard complaints over the past few months from CWT staff about how they haven’t received year-end bonuses since 2008. For example:
Each year since 2008, the firm stopped giving out bonuses to administrative staff. That includes the IT Department, Compliance, and Secretarial Services. (I haven’t asked anyone in Marketing or Accounting yet.) It’s been almost 10 years and the top brass still does not give out bonuses to administrative staff. We get a $250 gift card, which is a slap to the face and, as my colleague put it, “downright insulting,” considering that the fellow law firms we checked out on Glassdoor reported giving their administrative personnel $1,000+ in bonuses. Don’t get me wrong, it’s better than nothing, but when a bonus is an indicator of their appreciation, consider us underappreciated….
I know your publication focuses primarily on lawyers, but I wanted to share the overlooked story of the working class plebeians that hammer away in the bowels of this law firm. As such, if you deem this appropriate to share, please keep me anonymous as I don’t wish to be screwed any more than I already am. There is not enough Vaseline to go around.
We reached out to Cadwalader about (1) its bonus policies for associates and staff and (2) possible layoffs of litigators and staff. Here’s what the firm had to say:
Cadwalader entered 2016 with an eye to the future, aligning pay, staffing and overall compensation to match the strategic opportunities we see ahead for the firm. Our associate bonus policy, described in the attached email, is among the most generous in the industry. When it comes to our administrative staff, our approach to compensation is focused on the total compensation package, and it is very competitive with other top law firms.
Regarding your second inquiry, the firm has reduced staff over the course of more than a year in certain areas; however, it has also hired and continues to do so in others.
Fair enough; that’s a commendably candid statement by Biglaw standards. And you can flip to the next page for the full memo laying out the revised bonus policy (which strikes me as perfectly reasonable, even if the about-face from a year ago is odd).
What’s going on at your law firm, whether good or bad? Please feel free to email us or text us (646-820-8477). Thanks.
(Flip to the next page for Pat Quinn’s complete memo.)