Simpson Thacher & Bartlett announced smaller year-end associate bonuses Monday, continuing the slashing seen at other elite law firms.
The bonuses, which range from a pro-rated $17,500 for first-year associates to $32,500 for eighth- and ninth-years, matched the reduced rates announced Thursday by Cravath, Swaine & Moore.
"The numbers were essentially half of last year's," says Philip Ruegger III, Simpson Thacher's chairman. He confirmed the contents of a memorandum that outlined the lower bonuses and first appeared on the blog Above the Law. The memo cited "the current challenging business environment" as the reason for cutting the bonuses.
Special bonuses -- which last year ranged from $10,000 for second-years to $50,000 for seventh- to ninth-years -- went unmentioned in the memo. Their disappearance followed a trend established in earlier memos from Skadden, Arps, Slate, Meagher & Flom and Cravath.
Beyond confirming the leaked memo's contents, Ruegger declined to comment on the announcement. "It's an internal memo; we're not a public company," he says.
Simpson Thacher's bonus announcement suggests other firms may be inclined to follow Cravath's lead. Skadden, which announced its bonuses a day before Cravath did, took a different approach and announced flat bonuses.
New York firms have experienced weaker revenue growth in 2008 than the industry as a whole during the first nine months of the year, according to a report by Citi Private Bank published Friday."These firms are among those experiencing the greatest margin compression, and their demand was down 3 percent at the nine-month point, only a slight improvement over the 3.8 percent decline they posted through June," the report said.
In 2007, Simpson Thacher's profits per partner were $2.875 million, with gross revenue of $966 million, according to the Am Law 100.
This article first appeared on The Am Law Daily blog on AmericanLawyer.com.