Anticlimactic Annual Bonus
December meant the release of annual year-end bonuses by major law firms around the country, but despite the Wells Fargo wealth management survey in September indicating law firms earned more in 2011, the year-end bonuses did not reflect the increase. Instead, the amounts were nearly identical to those reported in 2010 and 2009.
Cravath, Swaine & Moore released its 2011 year-end bonuses on Nov. 8, with $7500 for the firm’s first-year associates and $37,500 for seventh-year associates. Following Cravath’s lead, Skadden, Milbank, Proskauer Rose and other top firms also announced bonuses in the same range.
The figures were unexpected, as the Wells Fargo survey reported law firms’ profits per partner in 2011 rose 7.6 percent for the first half of the year at 125 top firms, and revenue increased 4.5 percent. However, the in-house bonuses were in fact smaller than last year’s, which rose by an average of 73.5 percent between 2009 and 2010, according to HBR Consulting’s 2010 law department salary survey.
Still, the discrepancy may be a result of the events of 2011, as Occupy protesters and economic woes continued to trouble clients and pressure firms against giving large bonuses. Looking ahead, the February 2012 issue of InsideCounsel will have more on in-house compensation and job trends.
Olive Branch for Boeing
Weary of the lengthy, unending battle that carried on during much of 2011, Boeing Co. and its union finally came to terms in December. The International Association of Machinists (IAM) approved a pay deal that would extend the current contract agreement with the plane manufacturer by four years and allow them to continue to build the 737 jet in Washington State.
In addition, workers will receive a 2 percent wage increase every year of the contract, as well as cost-of-living adjustments, a new performance-based incentive program, improvements in the pension program and a $5,000 ratification bonus for each union member. The deal passed with 74 percent of the 31,000 machinists voting in its favor.
To top it off, the union also asked the National Labor Relations Board (NLRB) to withdraw a complaint the machinists filed, alleging the company built a 787 Dreamliner factory in South Carolina to illegally transfer work to a nonunion plant outside of Washington.
It’s a happy ending for both parties, after a tumultuous summer and fall of negotiations. The union pressed Boeing several times, including a September instance when it released internal documents claiming Boeing illegally transferred work on the 787 Dreamliner to a nonunion facility in Charleston, S.C., to punish union members for past strikes. The NLRB will consider the union’s request to dismiss the case, reported Bloomberg.
Bank of America Settles
Bank of America has been swimming in troubled legal waters for months now, dealing with, among others, a lawsuit against its Merrill Lynch unit for investors deceived by mortgage-backed securities, and a fair-lending case against its Countrywide unit, which alleged discrimination against certain buyers during the housing boom. But those two cases, at least, were settled this month, narrowing down the amount of lawsuits the bank has to juggle.
In early December, Bank of America agreed to a $315 million settlement with investors who were defrauded by the mortgage-backed securities. The class-action deal was said to be one of the biggest ever of its kind, but was outshone by BofA’s $335 million Countrywide settlement, announced just a few days ago, which is the largest fair-lending settlement in America’s history.
Regarding the Countrywide settlement, Janis Bowdler, director of the Wealth-Building Policy Project at the National Council of La Raza, said: “This historic settlement sends a powerful message that financial institutions will be held accountable for targeting communities of color with unfair practices that have led to needless foreclosures.”
T-Mobile Deal Goes Down the Toilet
AT&Ts grand master plans to acquire T-Mobile (owned by Deutsche Telekom AG) were finally foiled by the Department of Justice in December. The DOJ filed its lawsuit to prevent the merger in August, saying that the combined powers of AT&T, the biggest mobile and fixed phone service provider in the U.S., and T-Mobile, another giant of the industry, would “substantially lessen competition for mobile wireless telecommunications services across the United States,” and consumers would suffer.
In the months that followed AT&T began preparing itself for the worst, first announcing it would take a $4 billion dollar charge should the deal fall through (the value of which was originally $39 billion), then saying it was “actively considering whether and how to revise our current transaction to achieve the necessary regulatory approvals,” then finally giving up the deal officially on Dec. 19.
Olympus Case Opens Up
The case that began with the October dismissal of former Olympus Corp. CEO Michael Woodford for asking too many questions about millions of dollars involved in the acquisition of a medical equipment manufacturer found a little bit of closure in December.
While the Japanese camera maker owned up to covering up investment losses in November, the official report wasn’t released until Dec. 6, when an independent panel found that Olympus’s board was no more than a roundtable of “yes men” who were “rotten to the core.” This revelation has spurred experts to encourage other Japanese companies to reassess their values of unquestioning deference to their superiors, to keep this from happening again.
After all that, Japanese prosecutors finally raided the company’s Tokyo offices on Dec. 20, as well as the home of former chairman of the board Tsuyoshi Kikukawa.