Cravath SHATTERS THE MARKET!

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Veyron
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Re: Cravath SHATTERS THE MARKET!

Postby Veyron » Mon Nov 28, 2011 7:09 pm

keg411 wrote:
LawIdiot86 wrote:I would agree that a Cravath 4th year is still good for lateraling (I know a couple), but that assumes they want the pay cut to go in-house or the prestige drop of another firm.


1) With the crap bonuses, is it really that much of a paycut for a 4th/5th year?
2) At some point, presTTTige isn't worth it anymore. I think at some point CSM associates are going to find either a place that will pay them more $$$ or will have lower billable hours.


Lol, point of prestige is to get money either now or in the future, not the other way around.

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Re: Cravath SHATTERS THE MARKET!

Postby xcountryjunkie » Mon Nov 28, 2011 7:11 pm

NinerFan wrote:
JusticeHarlan wrote:
NinerFan wrote:You might think of them as whiny and entitled, but they have a few good points. They bill 2000-3000 hours a year (and thus likely work (much?) more than that), sacrifice vacations, personal lives, and etc to be at the beck and call of their partners 24/7, even on holidays.

For that, they get their market pay, sure, but compared to Finance people who get 6 figure bonuses (and also work hard/are stressed), the reward is much smaller. At the same time they get this "small" bonus amount, Cravath partners have PPP of over 3 million dollars.

But they knew all of this going in, didn't they? Even those who graduated in boom times and expected better bonuses when they signed up certainly knew they weren't gonna get paid like finance people, and they knew the hours they would be required to work.


Sure. Doesn't mean they're not going to complain. Check out this info from an ATL commentator (sources omitted, but were all from prior ATL posts).

"Here is actual data for once on this site....(1) PPP, (2) first-year bonuses, and (3) first-year bonuses as a percentage of PPP, each at Cravath over the last 6 years. Note that the 2011 PPP is a conservative estimate given that by all accounts business was up considerably at Cravath this year over last.

Cravath PPP 2006 = $3.0m; bonus >= $35,000; (0.0117%)
Cravath PPP 2007 = $3.3m; bonus >= $45,000; (0.0136%)
Cravath PPP 2008 = $2.5m; bonus >= $17,500; (0.0070%)
Cravath PPP 2009 = $2.7m; bonus >= $ 7,500; (0.0028%)
Cravath PPP 2010 = $3.2m; bonus >= $15,000; (0.0047%)
Cravath PPP 2011 = $3.2m (est); bonus >= $7,500; (0.0023%) "

In this context, the bonus is sad. You can see why associates there would be annoyed. Why wouldn't they be looking to lateral somewhere else where they might work less and still get the same bonus and have better partnership prospects and more responsibility?


His math is off. He needs to move the decimal point. The relevant percentages are 1.17%, 1.36%, etc. But the gist is entirely correct.

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Re: Cravath SHATTERS THE MARKET!

Postby JusticeHarlan » Mon Nov 28, 2011 7:15 pm

NinerFan wrote:
JusticeHarlan wrote:
NinerFan wrote:You might think of them as whiny and entitled, but they have a few good points. They bill 2000-3000 hours a year (and thus likely work (much?) more than that), sacrifice vacations, personal lives, and etc to be at the beck and call of their partners 24/7, even on holidays.

For that, they get their market pay, sure, but compared to Finance people who get 6 figure bonuses (and also work hard/are stressed), the reward is much smaller. At the same time they get this "small" bonus amount, Cravath partners have PPP of over 3 million dollars.

But they knew all of this going in, didn't they? Even those who graduated in boom times and expected better bonuses when they signed up certainly knew they weren't gonna get paid like finance people, and they knew the hours they would be required to work.


Sure. Doesn't mean they're not going to complain. Check out this info from an ATL commentator (sources omitted, but were all from prior ATL posts).

"Here is actual data for once on this site....(1) PPP, (2) first-year bonuses, and (3) first-year bonuses as a percentage of PPP, each at Cravath over the last 6 years. Note that the 2011 PPP is a conservative estimate given that by all accounts business was up considerably at Cravath this year over last.

Cravath PPP 2006 = $3.0m; bonus >= $35,000; (0.0117%)
Cravath PPP 2007 = $3.3m; bonus >= $45,000; (0.0136%)
Cravath PPP 2008 = $2.5m; bonus >= $17,500; (0.0070%)
Cravath PPP 2009 = $2.7m; bonus >= $ 7,500; (0.0028%)
Cravath PPP 2010 = $3.2m; bonus >= $15,000; (0.0047%)
Cravath PPP 2011 = $3.2m (est); bonus >= $7,500; (0.0023%) "

In this context, the bonus is sad. You can see why associates there would be annoyed. Why wouldn't they be looking to lateral somewhere else where they might work less and still get the same bonus and have better partnership prospects and more responsibility?
Oh, don't get me wrong - Cravath associates have every right to complain (even if the tone does come off as entitled and grating), or to lateral to better situations.

But even in 2007 they were still getting crushed by the friends working in finance, weren't they? I just didn't think it seemed like an apposite comparison.

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Re: Cravath SHATTERS THE MARKET!

Postby LawIdiot86 » Mon Nov 28, 2011 7:16 pm

keg411 wrote:
LawIdiot86 wrote:I would agree that a Cravath 4th year is still good for lateraling (I know a couple), but that assumes they want the pay cut to go in-house or the prestige drop of another firm.


1) With the crap bonuses, is it really that much of a paycut for a 4th/5th year?
2) At some point, presTTTige isn't worth it anymore. I think at some point CSM associates are going to find either a place that will pay them more $$$ or will have lower billable hours.

A 4th/5th year at CSM is looking at something in the 180k range? Maybe they'll find a corporation to pay them that much. Anything else (lower firm, finance, etc) is more risky relative to the job security of CSM. At some salary/bonus point people will leave CSM, but apparently the powers that be have decided the risk is worth it given the economy and throngs of people willing to work for them.

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Re: Cravath SHATTERS THE MARKET!

Postby Anonymous User » Mon Nov 28, 2011 7:17 pm

No, a 4th or 5th year is looking at something in the low to mid 200's

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Re: Cravath SHATTERS THE MARKET!

Postby Anonymous User » Mon Nov 28, 2011 7:20 pm

A 4th or a 5th year at CSM will be making a base salary well over 200K and be getting a fat bonus on top of it.

The finance comparisons are quite imperfect. Finance bonuses are not lock stop, and finance base salaries are lower than legal salaries, and finance jobs are usually harder to hold on to. Apples and oranges. You hear more about the guys with fat bonuses at big banks than the guys getting no bonuses or getting laid off. Try following dealbreaker and not just abovethelaw for more insight there. (UBS sucks).

Also, when calculating bonus amounts, keep in mind it has a lot to do with retention and not profitability. Firms in '07 were losing attorneys very rapidly and had to open their wallets in an effort to keep people around. See, e.g., articles about S&C pushing a 30% yearly attrition rate.

At the firm I worked at (Cravath-like) this summer there was a lot of attorney departures over the summer, presumably because openings were finally becoming available. This could be a signal that firms think they may have already lost anybody who was willing to jump ship at this point.

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Re: Cravath SHATTERS THE MARKET!

Postby Eco » Mon Nov 28, 2011 7:32 pm

Whatever man. The associates are being paid over 150k and those bonuses are just a cherry on top of an awesome job in terms of pay (not sure about working conditions). On the other hand, for lawyers making barely 50 or 60k (if they're lucky), $7,500 makes up close to 15% of your entire salary, i.e. that lawyer would freaking die for that bonus.

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Re: Cravath SHATTERS THE MARKET!

Postby c3pO4 » Mon Nov 28, 2011 7:52 pm

Eco wrote:Whatever man. The associates are being paid over 150k and those bonuses are just a cherry on top of an awesome job in terms of pay (not sure about working conditions). On the other hand, for lawyers making barely 50 or 60k (if they're lucky), $7,500 makes up close to 15% of your entire salary, i.e. that lawyer would freaking die for that bonus.


Yes and some people who work at McDonalds make $10 an hour so the lawyers making 50k should be happy. The comparison between lawyers making 70k and lawyers in biglaw firms is apples and oranges. In the market these associates are in, these are low bonuses. It's not a matter of opinion it's a question of economics.

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Re: Cravath SHATTERS THE MARKET!

Postby romothesavior » Mon Nov 28, 2011 8:08 pm

c3pO4 wrote:
Eco wrote:Whatever man. The associates are being paid over 150k and those bonuses are just a cherry on top of an awesome job in terms of pay (not sure about working conditions). On the other hand, for lawyers making barely 50 or 60k (if they're lucky), $7,500 makes up close to 15% of your entire salary, i.e. that lawyer would freaking die for that bonus.


Yes and some people who work at McDonalds make $10 an hour so the lawyers making 50k should be happy. The comparison between lawyers making 70k and lawyers in biglaw firms is apples and oranges. In the market these associates are in, these are low bonuses. It's not a matter of opinion it's a question of economics.

+1. They're not looking at their bonuses next to lawyers in Boise, Idaho or some little ID firm down the street. They're looking at their bonuses relative to PPP, and bonuses compared to other biglawl firms in their market, and they're understandably upset. Its not entitled to feel the way they do. These partners are being tight asses and if associates have the skills/experience to jump elsewhere, they may do it.

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Re: Cravath SHATTERS THE MARKET!

Postby Veyron » Mon Nov 28, 2011 8:13 pm

c3pO4 wrote:
Eco wrote:Whatever man. The associates are being paid over 150k and those bonuses are just a cherry on top of an awesome job in terms of pay (not sure about working conditions). On the other hand, for lawyers making barely 50 or 60k (if they're lucky), $7,500 makes up close to 15% of your entire salary, i.e. that lawyer would freaking die for that bonus.


Yes and some people who work at McDonalds make $10 an hour so the lawyers making 50k should be happy. The comparison between lawyers making 70k and lawyers in biglaw firms is apples and oranges. In the market these associates are in, these are low bonuses. It's not a matter of opinion it's a question of economics.


Wow, did you take sanity pills today or what man?

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Re: Cravath SHATTERS THE MARKET!

Postby romothesavior » Mon Nov 28, 2011 8:15 pm

The firm I'm SAing with does bonuses based on hours (1850 and 2,000, IIRC) at I believe 7k and 15k, plus a little extra for merit. I know other firms in secondary markets are similar. Sure, it ain't Cravath base pay, and Cravathians will have exit opportunities I could never dream of, but the financial incentives of associateship at Cravath or other elite NYC biglawl vs. us secondary market lemmings is small once you factor in COL.

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Re: Cravath SHATTERS THE MARKET!

Postby agentzer0 » Mon Nov 28, 2011 8:34 pm

any chance we see other firms seizing on this as an opportunity to go bigger? Didn't Skadden beat Cravath a few years go?

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Re: Cravath SHATTERS THE MARKET!

Postby stratocophic » Mon Nov 28, 2011 8:37 pm

romothesavior wrote:The firm I'm SAing with does bonuses based on hours (1850 and 2,000, IIRC) at I believe 7k and 15k, plus a little extra for merit. I know other firms in secondary markets are similar. Sure, it ain't Cravath base pay, and Cravathians will have exit opportunities I could never dream of, but the financial incentives of associateship at Cravath or other elite NYC biglawl vs. us secondary market lemmings is small once you factor in COL.
CR. Enjoy yo preTTTige and extra 500-800 hrs/yr kiddies.
agentzer0 wrote:any chance we see other firms seizing on this as an opportunity to go bigger? Didn't Skadden beat Cravath a few years go?
Skadden took a gamble and got the rug jerked out from under them, IIRC. Cravath undercut them by 50% and the lemmings fell in line. Kirkland will doubtless SHATTER tho
Last edited by stratocophic on Mon Nov 28, 2011 8:38 pm, edited 1 time in total.

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Re: Cravath SHATTERS THE MARKET!

Postby 5ky » Mon Nov 28, 2011 8:37 pm

Veyron wrote:
c3pO4 wrote:
Eco wrote:Whatever man. The associates are being paid over 150k and those bonuses are just a cherry on top of an awesome job in terms of pay (not sure about working conditions). On the other hand, for lawyers making barely 50 or 60k (if they're lucky), $7,500 makes up close to 15% of your entire salary, i.e. that lawyer would freaking die for that bonus.


Yes and some people who work at McDonalds make $10 an hour so the lawyers making 50k should be happy. The comparison between lawyers making 70k and lawyers in biglaw firms is apples and oranges. In the market these associates are in, these are low bonuses. It's not a matter of opinion it's a question of economics.


Wow, did you take sanity pills today or what man?


That's a +1 for you, and a +1 for c3po

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Re: Cravath SHATTERS THE MARKET!

Postby Eco » Mon Nov 28, 2011 8:39 pm

Yes and some people who work at McDonalds make $10 an hour so the lawyers making 50k should be happy. The comparison between lawyers making 70k and lawyers in biglaw firms is apples and oranges. In the market these associates are in, these are low bonuses. It's not a matter of opinion it's a question of economics.


That's right. Because comparing two people in the same field (lawyer in big law vs. lawyer in midlaw/small) is the same as comparing how a lawyer feels about his salary with how a McDonalds worker feels about his. Unless you're saying that lawyers at McDonalds get paid $10 an hour?

What I'm saying is that at least these guys have jobs that pay bonuses. Many lawyers graduating from top schools with good grades are struggling to get paid just about anything nowadays.

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Re: Cravath SHATTERS THE MARKET!

Postby romothesavior » Mon Nov 28, 2011 8:43 pm

Eco wrote:
Yes and some people who work at McDonalds make $10 an hour so the lawyers making 50k should be happy. The comparison between lawyers making 70k and lawyers in biglaw firms is apples and oranges. In the market these associates are in, these are low bonuses. It's not a matter of opinion it's a question of economics.


That's right. Because comparing two people in the same field (lawyer in big law vs. lawyer in midlaw/small) is the same as comparing how a lawyer feels about his salary with how a McDonalds worker feels about his. Unless you're saying that lawyers at McDonalds get paid $10 an hour?

What I'm saying is that at least these guys have jobs that pay bonuses. Many lawyers graduating from top schools with good grades are struggling to get paid just about anything nowadays.

Still irrelevant.

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Re: Cravath SHATTERS THE MARKET!

Postby Veyron » Mon Nov 28, 2011 8:44 pm

Eco wrote:
Yes and some people who work at McDonalds make $10 an hour so the lawyers making 50k should be happy. The comparison between lawyers making 70k and lawyers in biglaw firms is apples and oranges. In the market these associates are in, these are low bonuses. It's not a matter of opinion it's a question of economics.


That's right. Because comparing two people in the same field (lawyer in big law vs. lawyer in midlaw/small) is the same as comparing how a lawyer feels about his salary with how a McDonalds worker feels about his. Unless you're saying that lawyers at McDonalds get paid $10 an hour?

What I'm saying is that at least these guys have jobs that pay bonuses. Many lawyers graduating from top schools with good grades are struggling to get paid just about anything nowadays.


Fine, we're all very fortunate to live in a country where with some hard work and a little luck we can make $30 an hour (after tax) working for Cravath. Whats your point?

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Re: Cravath SHATTERS THE MARKET!

Postby NinerFan » Mon Nov 28, 2011 8:49 pm

Eco wrote:
Yes and some people who work at McDonalds make $10 an hour so the lawyers making 50k should be happy. The comparison between lawyers making 70k and lawyers in biglaw firms is apples and oranges. In the market these associates are in, these are low bonuses. It's not a matter of opinion it's a question of economics.


That's right. Because comparing two people in the same field (lawyer in big law vs. lawyer in midlaw/small) is the same as comparing how a lawyer feels about his salary with how a McDonalds worker feels about his. Unless you're saying that lawyers at McDonalds get paid $10 an hour?

What I'm saying is that at least these guys have jobs that pay bonuses. Many lawyers graduating from top schools with good grades are struggling to get paid just about anything nowadays.


Big law firms have constrained the number of jobs available by laying off associates, reducing or eliminating SA classes, de-equitizing partners, cutting support staff, etc, so that they can boost their PPP numbers. In turn, they are making associates do more work. So, these associates now think they should be paid more because they're doing more work which contributes to those huge PPP numbers.

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Re: Cravath SHATTERS THE MARKET!

Postby Eco » Mon Nov 28, 2011 9:31 pm

You all have good points, I'm just saying, honestly, the world outside of big law isn't exactly roses and peaches for lawyers. It's actually horrifying.

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Re: Cravath SHATTERS THE MARKET!

Postby Veyron » Mon Nov 28, 2011 9:35 pm

Eco wrote:You all have good points, I'm just saying, honestly, the world outside of big law isn't exactly roses and peaches for lawyers. It's actually horrifying.


Funny, I know plenty of lawyers outside of biglaw who like their jobs. Who'da thunk it. Indeed, if this news shows us anything its that even the upper echelons of biglaw don't blow other fields away on the basis of per-hour compensation.

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Re: Cravath SHATTERS THE MARKET!

Postby Anonymous User » Mon Nov 28, 2011 9:48 pm

First, why is the OP anonymous?

Second,

Also, when calculating bonus amounts, keep in mind it has a lot to do with retention and not profitability. Firms in '07 were losing attorneys very rapidly and had to open their wallets in an effort to keep people around. See, e.g., articles about S&C pushing a 30% yearly attrition rate.


The S&C rate was on the extreme end of the attrition spectrum. Peer firms had far lower rates.

I think other firms will one-up them and they will either pay a supplemental bonus or lose a ton of associates to the lateral market. The economy is down but biglaw profits have been doing well and partners are making more money, while associates work more hours than ever. The market won't support lowball bonuses like these.


Proof positive that you are still in law school. Other firms that will surely beat: Boies, Susman, Kirkland, and Irell.

Aside from those, all firms will happily fall in line.

Also, associates aren't necessarily working "more hours than ever." End of Q3 and Q4 has been very slow for many top firms (though not mine, thank god).

I'm not saying that these numbers are OK. I have no opinion. But the notion that the market will exceed Cravath is silly, at least for fall bonuses. Heck, I know plenty of V100s that didn't pay spring bonuses.
Last edited by Anonymous User on Mon Nov 28, 2011 9:59 pm, edited 1 time in total.

ToTransferOrNot
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Re: Cravath SHATTERS THE MARKET!

Postby ToTransferOrNot » Mon Nov 28, 2011 9:51 pm

All of this rabblerabblerabble is just that. Cravath lawyers (and biglaw lawyers in general) are sophisticated folks. If they think they're being undercompensated, they should go elsewhere. If they can't go elsewhere and get better compensation (including starting their own firm), guess what: they're not being undercompensated. If they aren't willing to take on a lot of risk for the possibility of a higher payday: they're still not being undercompensated (lack of risk is an aspect of compensation).

I don't understand why biglaw firms continue to pay even the base salaries they do, aside from the nagging fear that the market won't follow a drop in salary (see: Howrey, lol). To be sure, higher pay attracts the "top of the top" (see Wachtel, Bartlit, Susman, etc.) (or at least the real stars that are interested in certain practice areas - most of the above-market firms are lit boutiques, Wachtel is the only corporate one I'm aware of), but biglaw in general could drop to 120k/year with no bonus tomorrow and still get extremely qualified people.

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Re: Cravath SHATTERS THE MARKET!

Postby MrKappus » Mon Nov 28, 2011 9:53 pm

^ +1 to this (and to Anonymous above it). Firms will pay Cravath's scale this year (or less), it will not result in a biglaw exodus, and we'll all get to have this conversation again next year.

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Re: Cravath SHATTERS THE MARKET!

Postby c3pO4 » Mon Nov 28, 2011 9:56 pm

ToTransferOrNot wrote:All of this rabblerabblerabble is just that. Cravath lawyers (and biglaw lawyers in general) are sophisticated folks. If they think they're being undercompensated, they should go elsewhere. If they can't go elsewhere and get better compensation (including starting their own firm), guess what: they're not being undercompensated. If they aren't willing to take on a lot of risk for the possibility of a higher payday: they're still not being undercompensated (lack of risk is an aspect of compensation).

I don't understand why biglaw firms continue to pay even the base salaries they do, aside from the nagging fear that the market won't follow a drop in salary (see: Howrey, lol). To be sure, higher pay attracts the "top of the top" (see Wachtel, Bartlit, Susman, etc.) (or at least the real stars that are interested in certain practice areas - most of the above-market firms are lit boutiques, Wachtel is the only corporate one I'm aware of), but biglaw in general could drop to 120k/year with no bonus tomorrow and still get extremely qualified people.


no way. even if you are right about bonuses you are wrong about dropping base compensation. nobody can pay off their loans at 120k. does cravath want its associates slangin' on the side to make that 2500/month loan payment?

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Re: Cravath SHATTERS THE MARKET!

Postby Old Gregg » Mon Nov 28, 2011 9:59 pm

LOL at law school students having an opinion on bonus numbers.




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