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In its first boost to associate compensation in more than two years, Sullivan & Cromwell has announced an interim bonus ranging from $10,000 to $20,000. Firm Chairman H. Rodgin Cohen said Monday the interim bonus, which will be paid later this month, is intended as a gesture of appreciation for associates who had been working extremely hard recently. “I work pretty hard and I’m here late or in the morning and I see how associates are working,” he said. “I see the hours.” The bonus will start at $10,000 for first-year associates and scale up to $20,000 for more senior associates. It will be paid to all associates, without regard to hours billed. Cohen said the interim bonus is a supplement and not a replacement for the year-end bonus, which he said would also be paid to associates, barring a drastic reversal in the economy. The amount of the year-end bonus has not yet been determined, but a source at the firm said total compensation for Sullivan & Cromwell associates this year would almost certainly be higher than last year’s. If so, Sullivan & Cromwell’s move is likely to be matched by most major New York firms. Though introduced as a retention incentive during the boom years of the late 1990s, bonuses have become an entrenched expectation and perhaps the primary source of associate discontent when they are lower than those paid at rival firms. Over the last few years, top firms including Cravath, Swaine & Moore and Skadden, Arps, Slate, Meagher & Flom have traditionally matched each other on associate compensation through some combination of base salary and bonus. Some firms have tied bonuses to billable hours. In 2003, most of New York’s leading firms paid first-year associates $125,000 in salary and a $17,500 bonus, the same amount as in 2002. Most of the top New York firms have seen profits increase in recent years. Sullivan & Cromwell had profits per partner of $1.9 million in 2003, according to the most recent Am Law 100 survey by The American Lawyer magazine, an affiliate of law.com and the New York Law Journal. Associate compensation at top law firms has declined from the levels reached during the dot-com boom. In 2000, firms concerned about an exodus of associates to Internet startups and investment banks paid bonuses ranging from $40,000 for first-years to $100,000 for senior associates. Cohen said attrition has been on the rise at his firm, with larger numbers of associates leaving for investment banks, consulting firms and in-house legal departments. But he said he did not expect the interim bonus to have a great impact on the rate at which associates depart.

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