2014 Biglaw Bonus Thread Forum

[Hopefully2012]

Cahill does, at least some years. Spring bonuses happened more broadly in 2011, but only because S&C raised market for first-years to $10k after Cravath had already announced $7.5k. When some firms followed S&C, Cravath later paid a $2.5k spring bonus to make up the difference. It's not typical.

This is very helpful. Thanks!

[dwyf]

What time of year have salary moves historically happened?

[Hopefully2012]

The $160,000 salary bump was announced at the end of January 2007.

[txdude45]

Why does the bonus bump matter? It's easy to justify downward adjustments to bonuses and they are by their very nature subject to potential large swings year to year. An increase in base pay would be something to get jazzed about, but this? Nah.

[WeeBey]

^ I think because its represents in the economy improving. It was pretty stagnant before and now firms basically doubled their bonuses. This is good news for future students who will be doing OCIs in the upcoming years and theyll be the ones who might see the market salary increase for when they start in 2017.

[Earl is here]

Anyone want to speculate as to what if anything this means for clerkship bonuses? Possible market increase there too or no?

[Desert Fox]

Anyone want to speculate as to what if anything this means for clerkship bonuses? Possible market increase there too or no?

Lol
No.

Lit is shit.

You should be lucky they give you anything.

[Desert Fox]

While it's easier to drop bonus than salary, bonuses are still sticky. They won't fall unless there is a market downturn.

[dixiecupdrinking]

Why does the bonus bump matter? It's easy to justify downward adjustments to bonuses and they are by their very nature subject to potential large swings year to year. An increase in base pay would be something to get jazzed about, but this? Nah.

Because for those of us who are actually lawyers we will get more money this year? What's hard to understand about that?

[Anonymous User]

While it's easier to drop bonus than salary, bonuses are still sticky. They won't fall unless there is a market downturn.

This. As someone else pointed out earlier, at least since 2000, bonuses have only ever fallen in recession years (2001, 2002, 2008, 2009). Barring another recession next year (unlikely but I suppose theoretically possible), next year's bonuses will be at least as high as this year's bonuses, and so forth.

[KM2016]

Anyone else think it's going to be an exciting week seeing which firms decide to match STB/PW/Cleary?

Hoping for a bidding war!

[WhirledWorld]

Anyone else think it's going to be an exciting week seeing which firms decide to match STB/PW/Cleary?

Hoping for a bidding war!

There is a 0% chance of a bidding war. Market has been set and matched by three firms.

However I do think there's a better shot than not that bonuses go up even more next year, as firms break rank to get the accolade of being a compensation leader (Like STB or S&C or Skadden have gotten in the past).

[Anonymous User]

Anyone else think it's going to be an exciting week seeing which firms decide to match STB/PW/Cleary?

Hoping for a bidding war!

There is a 0% chance of a bidding war. Market has been set and matched by three firms.

However I do think there's a better shot than not that bonuses go up even more next year, as firms break rank to get the accolade of being a compensation leader (Like STB or S&C or Skadden have gotten in the past).

Why is STB often leading the charge? I understand how Cravath and S&C can lead the market (since they are the two full-service firms with the highest PPP and RPL, significantly higher than those at STB, Skadden, DPW, Cleary, etc.). Why is STB always at the front?

[Anonymous User]

Anyone else think it's going to be an exciting week seeing which firms decide to match STB/PW/Cleary?

Hoping for a bidding war!

There is a 0% chance of a bidding war. Market has been set and matched by three firms.

However I do think there's a better shot than not that bonuses go up even more next year, as firms break rank to get the accolade of being a compensation leader (Like STB or S&C or Skadden have gotten in the past).

The cluelessness in this thread re: bonuses is sort of amusing.

So - bonuses. For the top tier firms, the extra bonus comp is basically a rounding error. Take the Simpson bonuses - they come out, mas or menos, an extra $20-25k in comp per associate on a blended average basis, and they're weighted toward the most profitable (i.e. senior) associates. Say a typical big firm structure with ~4-1 leverage, that comes out to a $100k hit per partner. To be frank, that's like one big M&A deal. If the only consideration were attracting and retaining associate talent, bonuses would be way higher.

Alas, that's not the only consideration. The other issue is that everyone want(ed) to keep their heads down. There was a lot of worry about the big firms getting roped into the same populist approbrium that's been blasted at the big banks, PE firms, hedge funds. There was a lot of worry about clients barking at billing rates when they saw gaudy bonus numbers. I have a family member who's a partner at a top firm, and he told me there was a big debate among the partnership multiple times since 2007 re: raising bonuses, and the effect on partner comp didn't even enter the picture - it was a pure question of recruting edge v. reputational and billing risk. And since everyone sees bonuses as a prisoners dilemma anyways, query the value of the recruiting edge.

What I'd heard is that, at least at this top firm, the thinking was that at some point the top 10-15 firms or so would break away in bonuses from everyone else. No one has had the guts to do it yet but it's just a matter of time - maybe this STB move will do it. A $100K hit to partner comp is not a big deal when most partners are pulling in $2M plus, but it is a big deal at firms down the chain, especially firms with big deltas between the top earners and the partner plebs - those firms have a lot of partners earning six figures, who can't take that hit.

So what drove the bonus move now? I think (a) die-down of political risk from higher bonuses (the banks have started raising bonuses first); (b) increases in in house comp for senior M&A associates in top groups - folks can leave now without taking that much of a comp hit, even seeing raises if they go to PE firms in legal M&A roles; (c) tight lateral market for finance associates, particularly firms with lower PPP drawing away finance associates from the top firms.

[DoveBodyWash]

Milbank has matched

http://abovethelaw.com/2014/11/associat ... bandwagon/

Any speculation on when Cravath will come out?

[Old Gregg]

Milbank has matched

http://abovethelaw.com/2014/11/associat ... bandwagon/

Any speculation on when Cravath will come out?

Either right before Thanksgiving or on the Monday after.

[Old Gregg]

So - bonuses. For the top tier firms, the extra bonus comp is basically a rounding error. Take the Simpson bonuses - they come out, mas or menos, an extra $20-25k in comp per associate on a blended average basis, and they're weighted toward the most profitable (i.e. senior) associates. Say a typical big firm structure with ~4-1 leverage, that comes out to a $100k hit per partner. To be frank, that's like one big M&A deal. If the only consideration were attracting and retaining associate talent, bonuses would be way higher.

I think this is exactly right. Bonuses *could* be higher, but it doesn't influence partner comp that much.

On whether firms lower in the totem pole can afford this, I think I disagree. A lot of lower V100 firms will "match," as they've done in the past, but will implement hours thresholds. It's a win win for them because they can also retain midlevels and seniors.

I think there's a huge squeeze for corporate associates in general. They were underhired in 2008, 2009 and 2010 (to some extent) and they're now midlevels. To top it off, many people went into litigation thinking it was "safer." As a result, I'm seeing crazy incentives in the lateral market: huge signing bonuses, "accelerated partner track" (whatever that means), and some other crazy shit.

[Anonymous User]

Milbank has matched

http://abovethelaw.com/2014/11/associat ... bandwagon/

Any speculation on when Cravath will come out?

Not sure if it's a typo but on their memo it doesn't say prorated bonus for class of 2014. Then they exceeded Simpson

[lhanvt13]

Milbank has matched

http://abovethelaw.com/2014/11/associat ... bandwagon/

Any speculation on when Cravath will come out?

Not sure if it's a typo but on their memo it doesn't say prorated bonus for class of 2014. Then they exceeded Simpson

and will be subject to the usual prorations for 2014 start dates

[Anonymous User]

Milbank has matched

http://abovethelaw.com/2014/11/associat ... bandwagon/

Any speculation on when Cravath will come out?

Not sure if it's a typo but on their memo it doesn't say prorated bonus for class of 2014. Then they exceeded Simpson

and will be subject to the usual prorations for 2014 start dates

awww man. no bidding war after all

[Old Gregg]

No one would engage in a bidding war with Milbank.

[desertlaw]

Any chance that SullCrom, Skadden, and DPW are waiting because they suspect that Cravath might go higher than Simpson, and don't want to look bad if that happens? Or is that wishful thinking?

[Old Gregg]

Any chance that SullCrom, Skadden, and DPW are waiting because they suspect that Cravath might go higher than Simpson, and don't want to look bad if that happens? Or is that wishful thinking?

Your mindset should be that everyone will fall in line and to be pleasantly surprised if one of the above beat the market. That's how you should set your expectations.

[B.B. Homemaker]

Any chance that SullCrom, Skadden, and DPW are waiting because they suspect that Cravath might go higher than Simpson, and don't want to look bad if that happens? Or is that wishful thinking?

Your mindset should be that everyone will fall in line and to be pleasantly surprised if one of the above beat the market. That's how you should set your expectations.

For bonuses and for life in general.

[desertlaw]

Never think optimistically? Got it. Thx.