Cravath Cuts 2008 Associate Bonuses, Says 2009 Bonuses Could Be Zero
Updated: In a much-awaited memo issued today by Cravath Swaine & Moore, the white-shoe New York City-based law firm told disappointed associates that they would be getting much smaller year-end bonuses in 2008 than in 2007.
The really bad news, though, came lower down in the Cravath memo, according to Above the Law, which posted the full text of the Cravath memo on its blog:
“Given the uncertainty of the economy and the business climate going forward, we will not be able to address the issue of whether there will be any year-end bonuses in 2009 until this time next year,” the firm writes in the memo. “However, associates should be prepared for the likelihood that the economy and the Firm’s financial performance next year will not show a significant improvement over this year and they may receive significantly reduced or no year-end bonuses next year.”
Bonuses at Cravath this year range from $17,500 (prorated) for the Class of 2008 to $30,000 for the Class of 2001, the memo states.
That compares to a bonus range of $35,000 to $60,000 for associates at Cravath last year, according to Dealbook.
A special bonus also was paid to associates at Cravath last year, but will not be paid this year.
“I’ve been practicing for 33 years and this is the most significant economic downturn I’ve seen,” presiding Cravath partner Evan Chesler told Bloomberg yesterday. “Our clients, corporate America, are really experiencing unprecedented conditions. We have to be cognizant of the world we live in.”
Asked by the news agency whether Cravath might lay off any attorneys, he said the firm has no plans to do so. But, he added, “I can’t foretell the future.”
The firm has avoided layoffs so far, he says, by redeploying lawyers in slow practice areas to busier ones including both litigation and mergers and acquisitions.
Cravath does not plan to raise the billable hourly rates it charges clients in 2009, the memo notes.
Related ABAJournal.com coverage:
“Will Bonuses Be Cut? Cravath and S&C Key to the Answer”
Updated at 12:23 p.m. Nov. 21 to include information from Bloomberg article.
