(Update: Paul, Weiss, Rifkind, Wharton & Garrison also detailed end-of-year bonuses in a memo to associates Monday, with amounts matching those announced by Cravath.)
Despite the uptick in associate salaries this year, Cravath, Swaine & Moore announced Monday that it would stick to the same year-end bonus scale as recent years, with first-year associates receiving $15,000 and senior associates receiving up to $100,000.
The announcement by the Wall Street firm, first reported by Above the Law, sets the stage for the rest of the elite legal market to either match or tailor their holiday payouts to their own needs.
Cravath is sending a particularly early notice for the industry. Its announcement, just three days before Thanksgiving, comes about a week earlier than the firm’s bonus announcements in the last two years.
The bonuses are on top of a major round of associate salary increases this year, in which Cravath matched salaries set by Milbank, Tweed, Hadley & McCloy for its junior associates but increased salaries further for midlevel and senior associates.
Cravath also doled out a midyear “special” bonuses in late June, akin to those announced by Simpson Thacher & Bartlett earlier this year.
According to the Cravath memo dated Nov. 19, year-end bonuses will be paid Friday, Dec. 14. Just as before, the firm does not apply any billable hour criteria for determining eligibility for associate bonuses. “Virtually all our associates will receive the full bonus,” the memo said.
Meanwhile, bonuses for senior attorneys, specialist attorneys, senior discovery attorneys and foreign associate attorneys will be determined on an individual basis, according to Cravath’s memo.
A firm spokeswoman for Cravath declined to comment.
“Only firms that compete with Cravath for associates need to be competitive with their comp scale,” said Kent Zimmermann, a law firm management consultant at the Zeughauser Group. “But if history is any guide, a very large number of firms across the country will eventually follow. This will increase the magnitude of the bubble that has been growing on associate comp. I predict it will burst when the economy softens.”
While firms are now spending more on overhead, large firms are also seeing more demand and revenue growth, according to recent surveys. According to the Thomson Reuters Peer Monitor Index, demand at large law firms grew more in the third quarter of 2018 than any three-month period since 2011.
And Citi Private Bank’s Law Firm Group reported revenue growth through the first three quarters of 2018, attributing that to a combination of higher billing rates and demand growth.
Here is the full bonus scale announced Monday by Cravath:
- Class of 2018 — $15,000 (prorated)
- Class of 2017 — $15,000
- Class of 2016 — $25,000
- Class of 2015 — $50,000
- Class of 2014 — $65,000
- Class of 2013 — $80,000
- Class of 2012 — $90,000
- Class of 2011 — $100,000
- Class of 2010 — $100,000
Meghan Tribe contributed to this report.