Bonuses Forum

[ToTransferOrNot]

So, obviously everyone reads ATL, so everyone knows that Cravath has announced bonuses. For ease of reference:

Class of 2009 – $7,500
Class of 2008 — $10,000
Class of 2007 — $15,000
Class of 2006 — $20,000
Class of 2005 — $25,000
Class of 2004 — $30,000
Class of 2003 — $35,000

So, how does everyone feel?

My personal take:

So you're going to bill 2400 this year. Add 25% on to that for non-billable hours, you're up to 3000 hours worked for the year.

So, a first year's take-home is $100,500 (after 40% taxes).

$25,200 for loan payments, assuming about $180k in loans and that you pay the minimum (admittedly not the smartest move).

That's still $25.10 in TAKE HOME, AFTER-TAX, AFTER-LOAN money, on 3,000 hours. It's still far, far more than the vast majority of people in this country make. It doesn't account for the fact that the benefits in Biglaw are top-notch.

Could you make more per-hour in other jobs? Well, that depends on what your job options were pre-law-school, but most people would not have made $25.10 after accounting for educational debt and taxes. And almost no one would have a job where they made anything near $25.10/hour for 3,000 hours.

[Blindmelon]

2400 hours billed? YIKES. My firm told me its typically 2000 - 2100 including pro bono hours. Yey for secondary market.

[ToTransferOrNot]

2400 hours billed? YIKES. My firm told me its typically 2000 - 2100 including pro bono hours. Yey for secondary market.

Lower pay to go along with it, I presume.

FWIW, I imagine 2400 is on the high end anywhere aside from some of the notorious NYC sweatshops, and (probably) Kirkland-Chicago. Of course, this is the Cravath bonus scale, so we're talking about one of the notorious NYC sweatshops here.

[concurrent fork]

Can someone provide a rational explanation for why Cravath always sets the market?

[Blindmelon]

2400 hours billed? YIKES. My firm told me its typically 2000 - 2100 including pro bono hours. Yey for secondary market.

Lower pay to go along with it, I presume.

FWIW, I imagine 2400 is on the high end anywhere aside from some of the notorious NYC sweatshops, and (probably) Kirkland-Chicago. Of course, this is the Cravath bonus scale, so we're talking about one of the notorious NYC sweatshops here.

Nah, its lockstep with the rest of the firm - large national. Yea, I think Cravath while its OMG prestige seems like a bad decision given that many other firms pay the same and require much less grinding. It would make sense if they paid more or gave better bonuses, but this whole lock-step thing is just silly.

Still 160k no matter what way you look at it is a ton. Even without a bonus, I'm still pissing myself at the prospect of getting a full-time offer after summer.

[ToTransferOrNot]

2400 hours billed? YIKES. My firm told me its typically 2000 - 2100 including pro bono hours. Yey for secondary market.

Lower pay to go along with it, I presume.

FWIW, I imagine 2400 is on the high end anywhere aside from some of the notorious NYC sweatshops, and (probably) Kirkland-Chicago. Of course, this is the Cravath bonus scale, so we're talking about one of the notorious NYC sweatshops here.

Nah, its lockstep with the rest of the firm - large national. Yea, I think Cravath while its OMG prestige seems like a bad decision given that many other firms pay the same and require much less grinding. It would make sense if they paid more or gave better bonuses, but this whole lock-step thing is just silly.

Still 160k no matter what way you look at it is a ton. Even without a bonus, I'm still pissing myself at the prospect of getting a full-time offer after summer.

Yeah. Even though I've voluntarily deferred for a year and cost myself $100k by doing so, knowing that I have a $160k job waiting for me in 2012 is just an absurd feeling.

But: Your secondary market pays the $160k? That's crazy... most firms don't pay $160k in the non-primary offices. You won the game - lower COL, same pay, lower billables. Which firm?

[rayiner]

I'd put money on Kirkland topping them.

[ToTransferOrNot]

I'd put money on Kirkland topping them.

For people on the higher end of the non-lockstep system they have, yeah.

[concurrent fork]

2400 hours billed? YIKES. My firm told me its typically 2000 - 2100 including pro bono hours. Yey for secondary market.

Lower pay to go along with it, I presume.

FWIW, I imagine 2400 is on the high end anywhere aside from some of the notorious NYC sweatshops, and (probably) Kirkland-Chicago. Of course, this is the Cravath bonus scale, so we're talking about one of the notorious NYC sweatshops here.

Nah, its lockstep with the rest of the firm - large national. Yea, I think Cravath while its OMG prestige seems like a bad decision given that many other firms pay the same and require much less grinding. It would make sense if they paid more or gave better bonuses, but this whole lock-step thing is just silly.

Still 160k no matter what way you look at it is a ton. Even without a bonus, I'm still pissing myself at the prospect of getting a full-time offer after summer.

Yeah. Even though I've voluntarily deferred for a year and cost myself $100k by doing so, knowing that I have a $160k job waiting for me in 2012 is just an absurd feeling.

But: Your secondary market pays the $160k? That's crazy... most firms don't pay $160k in the non-primary offices. You won the game - lower COL, same pay, lower billables. Which firm?

There are 7 or 8 Boston offices at 160K, and from what I've gathered, 2000-2100 was standard this year.

[Anonymous User]

If I get an offer from my SA, I will be required to bill 2,400 hours for base pay of $175K. Large secondary market. Bonuses and promotions are completely merit based. Not sure what to think, but this is all I have.

[Anonymous User]

If I get an offer from my SA, I will be required to bill 2,400 hours for base pay of $175K. Large secondary market. Bonuses and promotions are completely merit based. Not sure what to think, but this is all I have.

Bickel and Brewer, eh?

[Kohinoor]

I'd put money on Kirkland topping them.

Are you suggesting that Kirkland shatters the bonus schedule?

[Kohinoor]

Can someone provide a rational explanation for why Cravath always sets the market?

Because Cravath always sets the market.

[bdubs]

Can someone provide a rational explanation for why Cravath always sets the market?

Biglaw operates as a demand side (labor) cartel. Every cartel needs a ringleader, the biglaw cartel's ringleader is Cravath. Law students really don't have alternative source of well-paid employment (look at the bimodal salary distribution). By announcing the bonuses up front Cravath can set the tone for all of the other shops so that they don't create a bidding war for top talent. It works the same way for starting salaries.

In the end, all of the partners make out like bandits.

Who wants to file a class action against every lockstep firm for collusion and other antitrust violations?

[Anonymous User]

K&E always tops the market, but it's always open as to how much and at what level. Pre-ITE, if I'm not mistaken, people who billed "normal hours" made almost double the market. ITE, the market bonus has begun at around 1900 hours for the last two years, with roughly one thousand dollar increments for every 100 hours on top, though this diminishes rapidly as you approached 3000.

Will K&E beat the market? I'm quite certain they will. Will they do so to the extent being raved about on xo? I doubt it.

Yea, I think Cravath while its OMG prestige seems like a bad decision given that many other firms pay the same and require much less grinding. It would make sense if they paid more or gave better bonuses, but this whole lock-step thing is just silly.

This feel-goodery stuff is great, and you should pat yourself on the back for getting a job, but don't for a second act like Cravath still isn't a better deal. There are only a handful of firms (all of which you're probably not going to) that offer better job security and/or better exit options. I'll take a crappy bonus over the heightened possibility of losing my job or getting no offered any day of the week.

Can someone provide a rational explanation for why Cravath always sets the market?

Because they're prestigious, firms know they can get away with aligning their bonuses with Cravath without taking a recruiting hit and knowing that their associates really have no choice but to accept it. It's really quite self-serving too. Firms will match peer firms. That's how DPW, S&C, STB, Cleary, Paul Weiss, Debevoise, and Skadden will justify it if they match.

And firms will change their definition of "peer firms" to suit their needs too. A hilarious reminder is Covington regarding Howrey as a peer firm in justifying their salary freeze. Absolutely hilarious.

[Blindmelon]

There are 7 or 8 Boston offices at 160K, and from what I've gathered, 2000-2100 was standard this year.

This. COL isn't low, but its not NYC.

[Anonymous User]

The Cravath bonuses are so shockingly low that it's possible they will fail to set the market this year. What needs to happen is 1) S&C or Skadden rolls out bigger bonuses tomorrow and 2) several V20 firms match the higher bonuses in the next couple of days. If that happens, the momentum will be too great, and any "top" firm will feel obliged to follow the new bonuses.

S&C is probably BigLaw's best hope; they've supposedly had a very busy year, and good mid-level corporate associates are getting harder to replace. K&E can't do much to move the ball because their bonuses are not lockstep. Irell is guaranteed to shatter Cravath's scale, but they're too small to move the NY firms, and their bonus announcement will probably come a little too late.

[Kohinoor]

The Cravath bonuses are so shockingly low that it's possible they will fail to set the market this year. What needs to happen is 1) S&C or Skadden rolls out bigger bonuses tomorrow and 2) several V20 firms match the higher bonuses in the next couple of days. If that happens, the momentum will be too great, and any "top" firm will feel obliged to follow the new bonuses.

S&C is probably BigLaw's best hope; they've supposedly had a very busy year, and good mid-level corporate associates are getting harder to replace. K&E can't do much to move the ball because their bonuses are not lockstep. Irell is guaranteed to shatter Cravath's scale, but they're too small to move the NY firms, and their bonus announcement will probably come a little too late.

shockingly low? Isn't that the bonus scale from last year?

[run26.2]

The Cravath bonuses are so shockingly low that it's possible they will fail to set the market this year. What needs to happen is 1) S&C or Skadden rolls out bigger bonuses tomorrow and 2) several V20 firms match the higher bonuses in the next couple of days. If that happens, the momentum will be too great, and any "top" firm will feel obliged to follow the new bonuses.

S&C is probably BigLaw's best hope; they've supposedly had a very busy year, and good mid-level corporate associates are getting harder to replace. K&E can't do much to move the ball because their bonuses are not lockstep. Irell is guaranteed to shatter Cravath's scale, but they're too small to move the NY firms, and their bonus announcement will probably come a little too late.

My take on firms that pay market is that they do not pride themselves on being financial innovators. They are content following what all the other firms are doing. You really would need the next couple of firms to do the same thing, i.e. pay a bigger bonus, before other firms would really even think about doing this. Once 1-2 more come out at Cravath's numbers, the rest will fall in line.

I guess it could happen, but the other market firms may generally relieved that there was not a large bonus going out. I think the fact that everyone else has waited to announce their bonuses is a good indicator that they will be following Cravath's lead.

[bdubs]

The Cravath bonuses are so shockingly low that it's possible they will fail to set the market this year. What needs to happen is 1) S&C or Skadden rolls out bigger bonuses tomorrow and 2) several V20 firms match the higher bonuses in the next couple of days. If that happens, the momentum will be too great, and any "top" firm will feel obliged to follow the new bonuses.

S&C is probably BigLaw's best hope; they've supposedly had a very busy year, and good mid-level corporate associates are getting harder to replace. K&E can't do much to move the ball because their bonuses are not lockstep. Irell is guaranteed to shatter Cravath's scale, but they're too small to move the NY firms, and their bonus announcement will probably come a little too late.

My take on firms that pay market is that they do not pride themselves on being financial innovators. They are content following what all the other firms are doing. You really would need the next couple of firms to do the same thing, i.e. pay a bigger bonus, before other firms would really even think about doing this. Once 1-2 more come out at Cravath's numbers, the rest will fall in line.

I guess it could happen, but the other market firms may generally relieved that there was not a large bonus going out. I think the fact that everyone else has waited to announce their bonuses is a good indicator that they will be following Cravath's lead.

Seriously? People fail to comprehend how law firms work. They are partnerships where the vast majority of profits are paid out to partners. The lower the firms can keep associate bonuses, the more money the partners take home. If firms didn't worry about losing associates and having everyone be demotivated they wouldn't pay bonuses at all.

[run26.2]

The Cravath bonuses are so shockingly low that it's possible they will fail to set the market this year. What needs to happen is 1) S&C or Skadden rolls out bigger bonuses tomorrow and 2) several V20 firms match the higher bonuses in the next couple of days. If that happens, the momentum will be too great, and any "top" firm will feel obliged to follow the new bonuses.

S&C is probably BigLaw's best hope; they've supposedly had a very busy year, and good mid-level corporate associates are getting harder to replace. K&E can't do much to move the ball because their bonuses are not lockstep. Irell is guaranteed to shatter Cravath's scale, but they're too small to move the NY firms, and their bonus announcement will probably come a little too late.

My take on firms that pay market is that they do not pride themselves on being financial innovators. They are content following what all the other firms are doing. You really would need the next couple of firms to do the same thing, i.e. pay a bigger bonus, before other firms would really even think about doing this. Once 1-2 more come out at Cravath's numbers, the rest will fall in line.

I guess it could happen, but the other market firms may generally relieved that there was not a large bonus going out. I think the fact that everyone else has waited to announce their bonuses is a good indicator that they will be following Cravath's lead.

Seriously? People fail to comprehend how law firms work. They are partnerships where the vast majority of profits are paid out to partners. The lower the firms can keep associate bonuses, the more money the partners take home. If firms didn't worry about losing associates and having everyone be demotivated they wouldn't pay bonuses at all.

I understand that perfectly well. That was my point. The partners are going to stick to continue to do what they have traditionally done, which is follow Cravath instead of pay higher salaries. Since Cravath paid relatively low bonuses, it works out well for them (i.e. the partners). What incentive do they have to do something different, such as pay higher bonuses?

[Kohinoor]

I understand that perfectly well. That was my point. The partners are going to stick to continue to do what they have traditionally done, which is follow Cravath instead of pay higher salaries. Since Cravath paid relatively low bonuses, it works out well for them (i.e. the partners). What incentive do they have to do something different, such as pay higher bonuses?

I could think of a few firms that might buck the market in order to rally from a recent reputational hit.

[Anonymous User]

I could think of a few firms that might buck the market in order to rally from a recent reputational hit.

Yeah, but problem here is that many of the Wall Street law firms don't view these firms as "peers" in terms of compensation. In fact, a source of mine fairly high up at a V5 tells me they don't consider most of the V10 peers for compensation.

There is a very real incentive to beat Cravath, but it's not because of "reputation boosts" or the fact that the bonuses are so low. Many top firms are experiencing normal attrition (i.e., attrition rates matching pre-ITE) and are getting severely understaffed. I know many associates who are waiting for bonus information to be released because, based on what it is, they will leave. While it might seem like a good thing that people are busy and hours can be done, smaller associate headcount limits the work a firm can take on, reduces revenue, and causes seniority imbalances that can lead to serious problems. Already, many V5s/V10s are taking in laterals, but this practice can only go on for so long. These firms prefer to have a core of homegrown associates.

[nealric]

My thought is that the 1st-2nd year bonuses are probably fine. People from the classes of 08-09-10 are just happy to be employed at this point. Where the bonuses are going to be problematic are for the 3rd-8th year associates. These people actually have skills and exit options. They are the ones that really push those PPP numbers to the stratosphere.

If they feel like they are getting screwed, they are going to leave. Even ITE, Cravath associates have exit options. I think there could be a real problem of midlevel understaffing over the next couple years.

[Big Shrimpin]

a rising tide only lifts those who already have a yacht...

edit: this was a joke posted in the comments of the ATL article on bonuses. Since everybody here reads ATL, especially all the comments, I apologize for being really lame and reposting it. Hopefully, someone who doesn't read ATL/comments will think it's funny!