Biglaw Bonus Watch (2013) Forum

[lonerider]

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[TatteredDignity]

I know I have a "stopping point" net worth where I would just have absolutely no use for money beyond it. If I had been making millions for a decade I really doubt I'd keep putting up with Biglaw stress. And even if I did keep working, it definitely wouldn't be about the money.

The money is how they keep score.

[Monochromatic Oeuvre]

In some ways, bonuses aren't really about attracting 1st year associates, right? It's about retaining your mid-level associates, who are getting headhunted & have offers from clients that won't demand 2000+ billable hours. The firms aren't competing with each other with the bonuses; they're trying to offer just enough so their profitable 4th year will stay on another year and not leave to work in-house at a client.

And the rest of the economy is probably doing just poorly enough that big law doesn't need to up the bonuses for retention. Yeah big law has a high turn-over rate, but the firms are still profitable with that turn-over, and to spend more right now to up retention would cost more than the estimated savings.

In some way, this is also a function of the high tuition & corresponding debt of associates. The higher the tuition --> higher the debt --> greater the need to have a big law salary --> higher big law retention.

Maybe this is all obvious and I'm just stating what's already been said. Just throwing it out there.

This of course raises the long-standing question about why firms don't just lower junior associate salaries and try to throw big money at midlevel laterals. Paying a fourth year, say, $300k in total comp is a much more profitable endeavor than paying a first year $170k total comp, right?

[Monochromatic Oeuvre]

I know I have a "stopping point" net worth where I would just have absolutely no use for money beyond it. If I had been making millions for a decade I really doubt I'd keep putting up with Biglaw stress. And even if I did keep working, it definitely wouldn't be about the money.

The money is how they keep score.

Another possible justification for why they keep working.

[09042014]

In some ways, bonuses aren't really about attracting 1st year associates, right? It's about retaining your mid-level associates, who are getting headhunted & have offers from clients that won't demand 2000+ billable hours. The firms aren't competing with each other with the bonuses; they're trying to offer just enough so their profitable 4th year will stay on another year and not leave to work in-house at a client.

And the rest of the economy is probably doing just poorly enough that big law doesn't need to up the bonuses for retention. Yeah big law has a high turn-over rate, but the firms are still profitable with that turn-over, and to spend more right now to up retention would cost more than the estimated savings.

In some way, this is also a function of the high tuition & corresponding debt of associates. The higher the tuition --> higher the debt --> greater the need to have a big law salary --> higher big law retention.

Maybe this is all obvious and I'm just stating what's already been said. Just throwing it out there.

This of course raises the long-standing question about why firms don't just lower junior associate salaries and try to throw big money at midlevel laterals. Paying a fourth year, say, $300k in total comp is a much more profitable endeavor than paying a first year $170k total comp, right?

The only reason they aren't really competing on price is because they all roughly pay the same base salary and 2L's like prestige more than MARKET SHATTERING bonus from KE or Quinn. Dropping to 145k or lower would make them less competitive based on pay and prestige--because paying below market is TTT.

Nobody wants to raise salaries because they figure everyone will just match.

[84651846190]

This whole thread just shows that someone needs to do a PhD thesis on biglaw associate compensation to get to the bottom of this.

[Monochromatic Oeuvre]

This of course raises the long-standing question about why firms don't just lower junior associate salaries and try to throw big money at midlevel laterals. Paying a fourth year, say, $300k in total comp is a much more profitable endeavor than paying a first year $170k total comp, right?

The only reason they aren't really competing on price is because they all roughly pay the same base salary and 2L's like prestige more than MARKET SHATTERING bonus from KE or Quinn. Dropping to 145k or lower would make them less competitive based on pay and prestige--because paying below market is TTT.

Nobody wants to raise salaries because they figure everyone will just match.

I get that KE SHATTERING THE MARKET is shitflame but honestly even if you were only going to beat Cravath by $10k isn't that a better tiebreaker than dat preftige? When it comes down to it, preftige is useless unless it turns into something material down the line, right?

Maybe 2Ls who are laser-focused on first-year comp wouldn't go to a firm with a more aggressive pay structure even if it provided a greater total comp over, say, five years. I just wonder how a firm who spent on a bunch of money poaching laterals would do. Let someone else sit through their less profitable years and then buy a fourth-year for $50k above what he's making at his current firm.

The whole lower junior comp/higher midlevel comp thing would sort of suck for associates who would have less to service interest-accruing debt in years 1-2. But if compensation were anything approximating market based, the more aggressive approach would be better representative, no?

I get that raising salaries is pretty much a lose-lose scenario for all firms, but I guess this just leads back to the same question I keep having: Why did they do this in boom times? What incentive did STB have to raise salaries to $160k knowing a hundred firms would match in a week and they'd be no better off hiring-wise?

[Monochromatic Oeuvre]

This whole thread just shows that someone needs to do a PhD thesis on biglaw associate compensation to get to the bottom of this.

Oh man, I know some guys that would be PERFECT for that...

[09042014]

This of course raises the long-standing question about why firms don't just lower junior associate salaries and try to throw big money at midlevel laterals. Paying a fourth year, say, $300k in total comp is a much more profitable endeavor than paying a first year $170k total comp, right?

The only reason they aren't really competing on price is because they all roughly pay the same base salary and 2L's like prestige more than MARKET SHATTERING bonus from KE or Quinn. Dropping to 145k or lower would make them less competitive based on pay and prestige--because paying below market is TTT.

Nobody wants to raise salaries because they figure everyone will just match.

I get that KE SHATTERING THE MARKET is shitflame but honestly even if you were only going to beat Cravath by $10k isn't that a better tiebreaker than dat preftige? When it comes down to it, preftige is useless unless it turns into something material down the line, right?

Maybe 2Ls who are laser-focused on first-year comp wouldn't go to a firm with a more aggressive pay structure even if it provided a greater total comp over, say, five years. I just wonder how a firm who spent on a bunch of money poaching laterals would do. Let someone else sit through their less profitable years and then buy a fourth-year for $50k above what he's making at his current firm.

The whole lower junior comp/higher midlevel comp thing would sort of suck for associates who would have less to service interest-accruing debt in years 1-2. But if compensation were anything approximating market based, the more aggressive approach would be better representative, no?

I get that raising salaries is pretty much a lose-lose scenario for all firms, but I guess this just leads back to the same question I keep having: Why did they do this in boom times? What incentive did STB have to raise salaries to $160k knowing a hundred firms would match in a week and they'd be no better off hiring-wise?

I assume STB thought that lesser firms wouldn't/couldn't make the jump to 160k.

I'd take the money, but apparently most law students with V10 grades don't take the money.

[lonerider]

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[thesealocust]

Also, never underestimate how furiously competitive firms are over the "best" candidates, if only as a matter of pride.

[Anonymous User]

The only reason they aren't really competing on price is because they all roughly pay the same base salary and 2L's like prestige more than MARKET SHATTERING bonus from KE or Quinn. Dropping to 145k or lower would make them less competitive based on pay and prestige--because paying below market is TTT.

Nobody wants to raise salaries because they figure everyone will just match.

I assume STB thought that lesser firms wouldn't/couldn't make the jump to 160k.

I'd take the money, but apparently most law students with V10 grades don't take the money.

I found it interesting that this year at my T1, pretty much everyone I spoke to on law review accepted offers at firms with lower 'prestige' than other places they had offers. To be fair, my school is probably widely regarded as unpreftigious so maybe that's just selection bias and my classmates and I are resigned to our shiTTTy lives. But plenty of 2Ls turned down V5/10/20 for fit/lifestyle options. I also know someone who turned down both preftige and MARKET SHATTERING options, accepting at a boutique (that *actually* shatters in both salary and bonus). For him, total comp was a far more significant consideration and prestige was inconsequential.

[thesealocust]

The only reason they aren't really competing on price is because they all roughly pay the same base salary and 2L's like prestige more than MARKET SHATTERING bonus from KE or Quinn. Dropping to 145k or lower would make them less competitive based on pay and prestige--because paying below market is TTT.

Nobody wants to raise salaries because they figure everyone will just match.

I assume STB thought that lesser firms wouldn't/couldn't make the jump to 160k.

I'd take the money, but apparently most law students with V10 grades don't take the money.

I found it interesting that this year at my T1, pretty much everyone I spoke to on law review accepted offers at firms with lower 'prestige' than other places they had offers. To be fair, my school is probably widely regarded as unpreftigious so maybe that's just selection bias and my classmates and I are resigned to our shiTTTy lives. But plenty of 2Ls turned down V5/10/20 for fit/lifestyle options. I also know someone who turned down both preftige and MARKET SHATTERING options, accepting at a boutique (that *actually* shatters in both salary and bonus). For him, total comp was a far more significant consideration and prestige was inconsequential.

This comment is dumb and it hurts my organs to read.

[Monochromatic Oeuvre]

I assume STB thought that lesser firms wouldn't/couldn't make the jump to 160k.

I suppose if this were the case that QE could cop WLRK-level talent just by bidding up salaries to a place where most firms can't hang. But even so most firms know that paying below market is the kiss of death and they'd pretty much do anything to stay with it. I guess maybe the only incentive to do it is when it seems like a market raise is inevitable, so you might as well get the positive press associated with it? If that were true then firms would only increase salaries when it seems inevitable that salaries will be increased. I guess it would be kind of like a stock price that goes up because everyone bought it when they heard the stock price was going to go up.

I'd take the money, but apparently most law students with V10 grades don't take the money.

Yeah, it seems really weird to me. Like if someone had S&C and BSF offers in hand, what leads them to go "On the one hand, BSF will likely be better for my financial situation to the tune of literally tens of thousands of dollars a year. On the other hand, S&C is JUST SO GODDAMN V3"?

Not that Vault accurately correlates with quality outcomes. If they did, both W&C and MTO would be easily top six or seven.

Cahill consistently pays substantial above market bonuses. But lots of people pick v10 over them. I think "preftige" = exit options. You turn down $ today for better career options tomorrow.

I feel like I would take Cahill/Susman or their ilk in about half a second over V10 if given the chance, at least until I see reliable data showing V10 substantially improves exit options post-Biglaw.

Seems like the biggest dearth of legal employment data. The old lore seemed to say things like "Cravath was so respected that even associates who had missed partner there could slip into partner roles at lower V100s" and shit like that. Basically suggestions that V5 absolutely guaranteed a superior outcome compared to lesser firms. ITE I wonder if there's a material difference in average lifetime earnings among different firms.

I found it interesting that this year at my T1, pretty much everyone I spoke to on law review accepted offers at firms with lower 'prestige' than other places they had offers. To be fair, my school is probably widely regarded as unpreftigious so maybe that's just selection bias and my classmates and I are resigned to our shiTTTy lives. But plenty of 2Ls turned down V5/10/20 for fit/lifestyle options. I also know someone who turned down both preftige and MARKET SHATTERING options, accepting at a boutique (that *actually* shatters in both salary and bonus). For him, total comp was a far more significant consideration and prestige was inconsequential.

Either this T1 was Fordham or there wasn't a big enough sample size to be making any generalizations about people turning down baller offers.

[Tiago Splitter]

I feel like I would take Cahill/Susman or their ilk in about half a second over V10 if given the chance, at least until I see reliable data showing V10 substantially improves exit options post-Biglaw.

You might want to read up a bit on Cahill. Seemed like a nice enough place but their specialties are pretty niche. Also, they've only paid above market bonuses for a few years.

[thelawyler]

In terms of exit options at V5 over bigger bonuses... it did seem like an awful lot of the partners I interviewed at other V100 firms came from the V10 as laterals rather than home grown talent...

[dixiecupdrinking]

Beyond a certain point, people do value other things more highly than money. This is what some of the K&E SHATTERS type trolls don't seem to get. I personally would not like working in an aggressively eat-what-you-kill place and wouldn't do it for an extra $10k a year when I'm already making 160. In fact there seems to be a common cultural thread among a lot of the above-market firms -- Quinn, Boies, Cahill, Kirkland. They all seem to have an aggressive edge that can be off-putting. If it fits your personality and your work preferences, then great, but for some people biglaw is stressful enough without being in a place with a culture like that. This is putting aside the other obvious point that, with the partial exception of Kirkland, these firms are not strong across the board in lots of practice areas like the V10-ish firms are.

[911 crisis actor]

Yeah go to Cahill if you want to enjoy high yield cap markets and nothing else

Maybe you'll be lucky enough to do some doc review for Floyd Abrams on the side

[Big Shrimpin]

Beyond a certain point, people do value other things more highly than money. This is what some of the K&E SHATTERS type trolls don't seem to get. I personally would not like working in an aggressively eat-what-you-kill place and wouldn't do it for an extra $10k a year when I'm already making 160. In fact there seems to be a common cultural thread among a lot of the above-market firms -- Quinn, Boies, Cahill, Kirkland. They all seem to have an aggressive edge that can be off-putting. If it fits your personality and your work preferences, then great, but for some people biglaw is stressful enough without being in a place with a culture like that.

So fucking credited. In my busiest times, I would have traded a few hundred hours for the entirety of the like 5k after-tax bonus, let alone an additional 5k for billing a few hundred more hours.

It's nice to have a life outside of work. I'm always going to whine/flame about getting more money, but the truth is that having time away from work is worth more than whatever marginal increase in total compensation you're getting. Unless you're (a) a workaholic or (b) working at a firm that gives you a shitton of bonus money above like 2000 hours. Any by a shitton, I mean like at LEAST a third of your billables (i.e. like 10K per 100 hours worked over like 2100 hours or so).

[legends159]

I get that raising salaries is pretty much a lose-lose scenario for all firms, but I guess this just leads back to the same question I keep having: Why did they do this in boom times? What incentive did STB have to raise salaries to $160k knowing a hundred firms would match in a week and they'd be no better off hiring-wise?

One theory is that firms raise salaries when they're competing with other industries for candidates not other firms. During boom times the best college graduates were going into other industries and not flooding law schools - at least that was the fear of those in charge at specific law firms.

[Anonymous User]

Yeah go to Cahill if you want to enjoy high yield cap markets and nothing else

Maybe you'll be lucky enough to do some doc review for Floyd Abrams on the side

This point cannot be overstated. Wonder why KE/BSF/Cahill can and do pay more? They're extraordinarily profitable because of their laser focus on niche, revenue generating businesses (underwriter side high yield/mid-market PE M&A/etc.) and because their associates bill more hours in a free market system (see, BSF). The cost imposed, from the perspective of a first year, is that you can't develop the generalist skills you might at a different V10 (try doing M&A at Cahill and see how it works out). I'm not knocking the firms -- they're all great practices -- but total comp alone doesn't capture the cost/benefit of these firms vs. others.

As someone who was making the choice between V3 and all of KE/BSF/Cahill, the 10-20k comp difference was not anywhere near as important as the substantive training/exposure I'd get on a variety of work as a junior. Also remember that there are lots of niche practices areas that these firms don't have and that lots of law students are interested (ie, bankruptcy at Cahill or public company work at KE).

[Anonymous User]

Yeah go to Cahill if you want to enjoy high yield cap markets and nothing else

Maybe you'll be lucky enough to do some doc review for Floyd Abrams on the side

This point cannot be overstated. Wonder why KE/BSF/Cahill can and do pay more? They're extraordinarily profitable because of their laser focus on niche, revenue generating businesses (underwriter side high yield/mid-market PE M&A/etc.) and because their associates bill more hours in a free market system (see, BSF). The cost imposed, from the perspective of a first year, is that you can't develop the generalist skills you might at a different V10 (try doing M&A at Cahill and see how it works out). I'm not knocking the firms -- they're all great practices -- but total comp alone doesn't capture the cost/benefit of these firms vs. others.

As someone who was making the choice between V3 and all of KE/BSF/Cahill, the 10-20k comp difference was not anywhere near as important as the substantive training/exposure I'd get on a variety of work as a junior. Also remember that there are lots of niche practices areas that these firms don't have and that lots of law students are interested (ie, bankruptcy at Cahill or public company work at KE).

You are dead wrong about multiple points here.

1) K&E now does a ton of public company work (taking partners from Skadden, Cravath and Simpson tends to help in that regard), and has been on basically every big public company deal this year except for Vodafone-Verizon. I don't think it's quite up there with S&C, Skadden, Cravath, etc., but a law student looking to do that kind of work will not be denied it at K&E. That aside, the firm's public company practice is expanding rapidly. And aside from that, K&E has three other pillars of practices that are decidedly not niche (IP, litigation, bankruptcy).

2) You are talking about these firms today, where they beat the market by substantially less than they used to. Today, I agree that an extra $10-$20k doesn't really make it worth it (though K&E's bonuses tend to be super nice if you're a well-regarded midlevel/senior associate/non-equity partner). Back in the old days, where first year bonuses were $35,000, K&E would pay a base of 2x that, and usually in the range of 3x to 4x (it wasn't hard to hit that range based on hours). You easily had junior associates making six figure bonuses.

In that context, you would've been retarded not to take the firm, though it was decidedly more mid market PE niched back then then it is now.

But now? I guess you have a point. If the differential is only $20k or so and it takes 600 more hours to get there, I see your point. But while the "niche" idea might be true for BSF and Cahill, it sure as hell isn't true for K&E. It's a full service law firm, not a boutique.

the 10-20k comp difference was not anywhere near as important as the substantive training/exposure I'd get on a variety of work as a junior

This is probably the most inflammatory statement here. You have absolutely no idea that the experience at a market-paying firm is more substantive than the experience at a market-beating firm. Frankly, it just sounds like you're looking for excuses to justify going to a market-paying firm, and it's hard to provide reasons that don't rhyme with "prestige."

[dixiecupdrinking]

"Inflammatory?" Relax, no one is going to hurt your precious Kirkland.

[Anonymous User]

"Inflammatory?" Relax, no one is going to hurt your precious Kirkland.

Not precious to me. I'm pretty undecided about it. But that aside, I'm tired of the stupid TLS meme that somehow the panache and genteel white shoe, entirely lockstep firms are somehow *the* place to be for a vast variety of super substantive experience. You're not going to be chairing trials one day and negotiating merger agreements the next day at S&C. As a corporate associate, you'll be doing diligence and disclosure schedules. You will be doing this at Skadden's M&A practice too, as well as Simpson's, Wachtell too... and yes even that "niche practice" K&E, or even Paul Weiss (which, if we take the above poster's account to its logical conclusion, doesn't even have an M&A practice...).

Whether you get more experience, etc. above that depends entirely on you, not on the firm. If you demonstrate an ability and willingness to take on tougher shit, you will be given tougher shit. I know second years at Davis Polk who have run their own deals and I know third years at K&E still doing diligence; I also know second years at K&E who have run their own deals and third years at Davis Polk who are still doing diligence.

And while we're on the topic of the glitzy glamour of public company work, I'm not sure what the draw is. The deals are so large and there's so much at stake that you will never get truly earth-shattering experience until you're at least a midlevel (and even then you'd have to be a superstar). The only glitz and glamour of such deals is the possibility of a cool-as-fuck deal toy and maybe, maybe a mention on http://www.americanlawyer.com. If that's the shit you thrive for, then you're truly one of a kind.

[thesealocust]

Firms that have the chance of paying more should definitely win associates, all else being equal. I don't think you can from a bird's eye view give an opinion singing the praises of lock step firms over the Cahills/Kirklands/BSF/Q&E/etc. of the world, but if all else isn't equal (read: preferred practice area, fit, whatever push you one way or the other) the chance for a comp bump shouldn't drown out other factors.

Work is going to be a big part of life, step 1 should be making sure you do something you want somewhere that you're as comfortable/happy as you can be. If that place happens to also pay you more, groovy. I likewise wouldn't put any stock on some Magic Prestige Bump at the big name lockstep firms (and in the case of Kirkland, it's honestly toe-to-toe with the lock-step firms and has broad practices as well, so there's even less of a difference than a place like Cahill or BSF/Q&E where the choice can lock you in to something more narrow from the get-go)