Four Firms Match Cravath's Associate Bonus Scale
2012-11-29 03:38:00 PM
When it comes to year-end associate bonuses, it appears the legal industry's top tier still follows Cravath, Swaine & Moore.
In the wake of Monday's announcement that Cravath would dole out more extra cash to its 372 junior lawyers in 2012 than it did in 2011, Recorder sibling publication The Am Law Daily wondered whether other large law firms would soon follow suit as usual or hold back amid what industry watchers predict will, in general, prove to be an anemic year on the revenue front.
A dozen Am Law 100 firms were mostly mum in response to initial inquiries on the subject. As of Thursday, however, four of those firms Paul, Weiss, Rifkind, Wharton & Garrison; Proskauer Rose; Simpson Thacher & Bartlett; and Skadden, Arps, Slate, Meagher & Flom had informed their associates that history would indeed be repeating itself this year and that they would be matching the bonus scale established by Cravath.
By way of reminder, that scale is as follows:
Class of 2012 $10,000 (prorated)
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
All of the early adopters to the associate bonus game appear to be having a solid year, despite a slowdown across the legal industry. At Paul Weiss, for instance, associates are on track to bill an average of 2,000 hours, according to a source at the firm speaking on condition of anonymity. That compares to a nationwide associate average of less than 1,800 hours found in a recent survey by Wells Fargo, says Jeff Grossman, the national managing director of the bank's legal specialty group.
Skadden and Simpson, meanwhile, have been among the busiest firms in the realm of M&A work, according to a Mergermarket ranking of legal advisers based on the value of deals handled (Skadden ranks third with $190.99 billion in deals for the first three quarters of the year. Simpson is ninth with $103.59 billion).
Simpson Thacher was the first of Cravath's peers to fall in line, informing associates about its bonus plans in an early Wednesday memo from chair Peter Ruegger (first posted on Above the Law) that said the extra compensation would be paid on Dec. 28.
In a note that hit inboxes a bit later in the day, Skadden executive partner Eric Friedman told the firm's more than 1,000 associates that payments will go out Dec. 21 to "associates in good standing who have been reasonably busy over the course of the year." Skadden's scale also makes two slight distinctions for the most junior and most senior associates, specifying that the class of 2012 that started this fall will receive $2,500 and that associates more senior than the class of 2004 will also receive $60,000.
Paul Weiss chair Brad Karp noted in his email announcing the firm's bonus scale that associates who predate the class of 2004 will get the same $60,000 the members of that class will receive.
Proskauer's executive committee sent its 445 associates an email Thursday afternoon laying out Cravath-scale bonuses to be paid Dec. 28. The memo says that those with more seniority than members of class of 2004 will receive individualized bonuses.
The Proskauer memo a copy of which was obtained by The Am Law Daily boasts somewhat broadly about the firm's "very successful year," saying: "We served our clients with distinction; worked on significant and high-profile matters; welcomed new colleagues of enormous talent; and maintained our momentum across all practice areas and offices." The memo continues: "While we are immensely proud of our 137-year history we remain relentlessly focused on our future, which has never been brighter."
Though Cravath's year-end bonuses are bigger this year than they were in 2011, the total extra compensation its associates are getting in 2012 is actually down slightly from last year, when the firm like many of its top-tier rivals gave out spring bonuses. The bonuses also pale when compared to the pre-recession peak, when Cravath gave seventh-year associates special bonuses of between $10,000 and $50,000 on top of regular bonuses of $60,000.
Other top-tier firms are likely to match Cravath's scale to keep a competitive edge in the marketplace, particularly for the recruiting of first-year associates. Matt Schwartz, a legal recruiter in the Washington, D.C., area focused exclusively on associates, says once associates are looking to jump from one firm to another, the minutiae of bonuses becomes less important.
"It's very rare people move for money," Schwartz says. "Though there certainly can be grumblings if people feel bonuses are not high enough."
Sara Randazzo is a reporter with The Am Law Daily, a Recorder affiliate.