Stagnant Year-End Bonuses for BigLaw Associates Add Up to Smaller Percentage of Firm Profits
Perhaps it’s due to a perception by corporate clients that leading New York law firms, like Wall Street businesses, are raking in too much money in tough economic times.
Perhaps it’s simply that greedy partners want to hog as much of their law firms’ profits as possible.
But, whatever the reason, it’s clear that many BigLaw associates are not only getting year-end bonuses that fall short of what they received in the past, they are getting bonuses that add up to a smaller percentage of their law firms’ overall profits, reports Reuters.
A few firms known for their litigation work, such as Boies Schiller & Flexner and Susman Godfrey, are showing associates the money, with expected bonuses of between $50,000 and $100,000, or even $200,000, for top-performing young attorneys at Boies Schiller. Quinn Emanuel also paid associates a hefty bonus last year and could well do so again in 2011.
But most BigLaw firms are following the lead of Cravath Swaine & Moore, which earlier this month announced bonuses of between $7,500 and $37,500, to be paid tomorrow, according to the article.
While these are substantial amounts, compared to what the average American worker earns, they are also substantially less than the $35,000 to $110,000 that Cravath paid–and other law firms matched–in 2007, before the Great Recession, according to the article. It also reports that the total year-end associate bonuses paid by Cravath this year might add up to even less less than last year’s figure of 0.23 of partner profits. In 2007, the bonuses amounted to 1 percent of what partners got.
On average, Cravath partners made $3.3 million in 2007 and $3.17 million last year, according to an American Lawyer survey.
Some point to the stagnant economy and the increasing power that corporations have over the law firms that do their work, suggesting that this is not the time for law firms to flaunt big bonuses in clients’ faces.
“We’ve got clients who are struggling. They don’t want to see big bonuses,” Leroy Inskeep, who heads DLA Piper’s associate compensation committee, tells the legal publication.
However, others note that BigLaw bonuses have remained at the same level for several years, after falling from a 2007 high, even as profits at some law firms rise appreciably, and suggest a different reason.
“First and foremost, there is an underlying greed. That is the overriding aspect,” says Steven Harper. A retired partner of Kirkland & Ellis, he now teaches at Northwestern University’s law school and edits the Belly of the Beast blog.
ABAJournal.com: “Cravath Bonuses Signal Lackluster Year for M&A Work, WSJ Says”
ABAJournal.com: “Proskauer Will Pay Same Year-End Bonuses to Associates as Cravath”
ABAJournal.com (podcast): “Santa or Scrooge: How Do BigLaw Firms Determine Associate Bonuses?”
Above the Law: “Associate Bonus Watch: Sullivan & Cromwell ‘Beats’ Cravath — and Promises Spring Bonuses”