Will Bonuses Be Cut? Cravath and S&C Key to the Answer
Update: Cravath Cuts 2008 Associate Bonuses, Says 2009 Bonuses Could Be Zero
Will law firm bonuses be cut for associates this year? The answer could depend on decisions by Cravath, Swaine and Moore and Sullivan & Cromwell.
The two law firms are usually the first to announce associate bonuses, setting the standard that many large law firms choose to follow, the National Law Journal reports. Cravath was the first to make the announcement last year, saying it would pay a year-end bonus of $35,000 to $60,000 in addition to a special bonus of $10,000 to $50,000.
Firms may not be so eager to make quick bonus decisions this year as they face an economic downturn and clients seeking discounted legal fees, the story says. But at least one law firm leader believes year-end bonuses will remain unchanged, although special bonuses will be eliminated. He adopted that view based on the discussion during a meeting of law firm managing partners hosted by Citigroup Private Bank in August.
Cravath and Sullivan & Cromwell aren’t tipping their hands. S&C chairman H. Rodgin Cohen told the NLJ the firm has not yet discussed the issue. Cravath did not respond to the publication’s request for comment.
One firm leader has indicated that law firms based outside New York may be reluctant this year to follow the lead of their East Coast counterparts. Orrick, Herrington & Sutcliffe laid off 40 associates and counsel last week, and its chairman Ralph Baxter said many law firms may be rethinking their bonuses.
He told the National Law Journal that the current system is “not sustainable” because it depends on charging clients more and working associates harder. As for Orrick, he said the law firm set a bonus structure earlier this year that pays the same maximum amount as the firm did last year. Because the system is based in part of billable hours, fewer associates will receive bonuses this year, he said.
