2006 NYC Law Firm Bonuses

Graduate School Law School
1

<p>The following are a few exerpts from an article in the Wall Street Journal yesterday regarding this year's bonuses. Since there is so much talk of attorney compensation around this board, I thought that this might be informative for everyone.</p>

<p>The big issue is that most of the big law firms in NYC (and some other major cities) raised significantly associate base salaries earlier this year, so there is an expectation that bonuses may be lower this year resulting in total compensation remaining flat.</p>

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Many New York corporate law firms have had banner years, thanks in part to mergers, acquisitions and private-equity transactions. But that won't necessarily translate into outsize bonuses for the staff lawyers who have put in extra-long hours.</p>

<p>These associates often work at the beck and call of partners, sometimes on mundane tasks, in the hope of one day becoming partners. That process typically takes at least eight years, but can put them in a position to command annual compensation in excess of $2 million.

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In New York -- the nation's largest and most lucrative market, thanks to Wall Street business -- bonuses for associates often have little to do with either a firm's overall financial performance or the individuals' productivity. Rather, many firms match the competition's bonuses, regardless of whether firms have had similarly good years . . . .

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Big New York law offices tend to take a one-size-fits-all approach to bonuses for associates, because they worry that if they fail to match market leaders, they will be branded as miserly and scare away prized law-school recruits.

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Beyond the Hudson River, firms tend to apply greater bonus rigor

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The rules of the Big Apple law-firm-bonus game are simple: A white-shoe corporate law firm typically takes the lead by announcing the annual bonuses, which are pegged to associates' seniority. Then, most of its peer firms follow suit, sometimes within days, by announcing nearly identical bonuses.

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Last year, Sullivan & Cromwell LLP was first out of the gate, announcing bonuses ranging from $35,000 for first-year associates to as much as $65,000. Then, the chase began, with top firms such as Davis Polk & Wardwell and Cahill Gordon & Reindel LLP matching Sullivan's bonuses. In February, Sullivan & Cromwell boosted base compensation for starting associates to $145,000, an increase of $20,000. Most big New York firms matched the move.

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The bonus game is a delicate "Kabuki dance," says Mr. Horowitz, of Simpson Thacher. Once, he explains, Simpson led and was then topped by another firm's bonus offer, forcing Simpson to then "match the topper," he says. Eventually, though, lawyers say, one firm will go forth, setting off an almost certain chain reaction, if history is a guide.

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"After a firm breaks, you try to move quickly, because you get credit for not lagging," says a partner at a leading New York firm. "It's a game of chicken; it's a little surreal."

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2

<p>Man, I am really looking forward to biglaw. The money throwing is ridiculous.</p>

3

<p>So are the hours.</p>

4

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So are the hours.

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<p>and the pressure. and the emotional and physical stress.</p>

<p>always remember that they don't throw around that type of money just for the heck of it -- there are very high expectations that come with those dollars.</p>

5

<p>Im willing to make the sacrifices.</p>

6

<p>I've said it before, I'll say it again. If all you care about is money, then don't become a lawyer. Just go to investmnet banking, or its 'cousins' like private equity or hedge funds. I hear that some private equity firms are paying over 400k (salary + bonus) for associates fresh out of MBA school. And that's just in the first year.</p>

7

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I've said it before, I'll say it again. If all you care about is money, then don't become a lawyer. Just go to investmnet banking, or its 'cousins' like private equity or hedge funds. I hear that some private equity firms are paying over 400k (salary + bonus) for associates fresh out of MBA school. And that's just in the first year.

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<p>It's easy to say that but the fact of the matter is Sakky that not everyone goes to a school that will be a target for BBs, law school provides an alternate path that can pay pretty well for those who do not go to a target undergrad school.</p>

<p>Additionally, there are lawyers who are able to make the change later on. Distressed Debt hedge funds are some of the best performing funds right now and many of them will hire former lawyers (bankruptcy law). Goldman Sachs recently hired a lawyer to head up their Restructuring practice. So later on some lawyers may have the option of moving over.</p>

8

<p>
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It's easy to say that but the fact of the matter is Sakky that not everyone goes to a school that will be a target for BBs, law school provides an alternate path that can pay pretty well for those who do not go to a target undergrad school.

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<p>By the same token, not everybody goes to a law school that will get them to a New York corporate law firm where you can get the bonuses that have been discusssed here on this thread. </p>

<p>I am convinced that if you were good enough to get into a top New York corporate law firm, then you are probably also good enough to also have gotten a bb banking job, or, even better, something in private equity or hedge funds.</p>

9

<p>I just found this thread at random and I registered so I could respond. I am an attorney who went to a top-5 law school and worked in BIGLAW for a few years. BIGLAW is a thoroughly miserable experience. I finally quit my $190k per year job in disgust and started my own practice a few years ago.</p>

<p>Go to law school only if you want to become a lawyer. A BIGLAW associate is not a lawyer. Just a high paid scribe.</p>

<p>If you want to make money, get an MBA or better yet -- start your own business.</p>

10

<p>Noone wants to be an associate. Everyone wants to be a partner. And you better have thick-skin and great drive to endure the 8-11 years it takes to become one.</p>

11

<p>Even being a partner isn't necessarily all that great. For example, if you are just working for other partners.</p>

<p>There are two ways to real satisfaction and security as a law firm attorney: First, if you have a decent-sized, portable book of business. Second, if you have a specialty that the firm really really needs and cannot replace easily.</p>

<p>Just my humble opinion.</p>

12

<p>You are certainly not alone, lskinner, however, I and many ohers worked absolutely insane hours in biglaw for years, and are now reaping the benefits of the outstanding experience that we gained during that time. </p>

<p>I actually do resent your statement that a biglaw associate is merely a high paid scribe. If my experience in biglaw consisted merely of work as a "scribe", perhaps I, too, would not have thought much of my experience. Instead, I worked on challenging projects with as much responsibility on those projects as I could possibly handle (and sometimes almost too much responsibility) -- it was hardly the work of a scribe.</p>

13

<p>The fact is that (1) BIGLAW associates tend to get very very very little responsibility; and (2) BIGLAW associates tend to wildly exaggerate their level of responsibility.</p>

<p>If anyone who aspires to BIGLAW happens to be reading this, please take sally's comments with a huge grain of salt. It's possible that she is one of the super-lucky few who actually get to do stuff.</p>

14

<p>lskinner, you clearly didn't work at Wachtell, S&C or Cravath, because all of the junior attorneys I have ever known there is so busy doing real, substantive work that they don't have time to respond to you here. I hate to make assumptions about you since I know nothing about you, but in my experience, the "competent get punished", meaning that the best associates tend to get more responsibility and substantive work that they can handle. If you feel that you did (or do) only grunt work, I'm sorry for you, but that is hardly the norm all of the time at the most prestigious firms.</p>

<p>Do junior associates spend time working on due diligence and discovery? Of course they do. That's how junior associates begin to learn about the guts of a transaction or a litigation matter. The reason why junior associates work so many hours is that in addition to these kinds of work, they are also drafting sections of documents (which takes forever the first few times you do it), drafting sections of briefs and motions, researching aspects of whatever laws are applicable and attending client meetings and strategy meetings to learn how things work. Again, if this hasn't been your experience, lskinner, I really do feel badly for you, because this kind of intense experience is exactly why working for a big law firm can be so valuable to a junior attorney's career for the long term.</p>

15

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Do junior associates spend time working on due diligence and discovery? Of course they do. That's how junior associates begin to learn about the guts of a transaction or a litigation matter. The reason why junior associates work so many hours is that in addition to these kinds of work, they are also drafting sections of documents (which takes forever the first few times you do it), drafting sections of briefs and motions, researching aspects of whatever laws are applicable and attending client meetings and strategy meetings to learn how things work.

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<p>When I was at BIGLAW (as a litigation associate) I did plenty of document review; researching the law; drafting entire memoranda of law; and attending meetings. However, I would not call that responsible work. If you are intelligent and motivated, that stuff gets old pretty fast.</p>

<p>For me, responsible work means: (1) taking and defending important depositions; (2) arguing motions and being lead counsel at court conferences; (3) examining witnesses at trial; (4) dealing directly with the client (not taking notes at a meeting -- actually having one-on-one discussions with the client where significant issues are discussed); and (5) making important decisions (not suggesting things -- actually having authority to make decisions.)</p>

<p>Responsible work also means setting your schedule. i.e. coming in on the weekend because you decide it is necessary in order to get your work done and not because a senior associate or parter told you to come in. </p>

<p>If any intelligent college or law or high school students happen to be reading this, please trust me when I tell you that as a BIGLAW associate, you will enjoy far less autonomy and responsibility than you currently have. And if you have any independence or invididualism in your spirit, you will go insane.</p>

<p>Just my humble opinion</p>

16

<p>
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Responsible work also means setting your schedule. i.e. coming in on the weekend because you decide it is necessary in order to get your work done and not because a senior associate or parter told you to come in.

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<p>That is hardly the definition of responsible work in a client service industry -- and that is exactly why even the most respected partners in big law firms work nights and weekends when their clients demand that they do so. If you want to be a part of the most important matters and if you want your clients to begin to look to you as a go-to person at your firm, you absolutely need to be there when the client needs you. As a junior associate, sometimes you just need to be there and sometimes you just don't necessarily understand the big picture that the partner or a more senior associate clearly sees. Are there times when you feel like you are in the office merely to babysit the partner or senior associate as they get work done? Sure. Does that suck? Hell, yes. The reality, though, is that it simply takes a lot of time and energy to get the enormous volume of work that clients demand finished, and with all of the t's crossed and i's dotted. Someone has to run changes, and proofread, and make sure that the documents get properly distributed to all of the necessary parties. Yes, that usually falls upon the junior associate. But let's be honest here -- who else should that work fall upon? The partner who is charging $600+ an hour? The senior associate who is charging $400+ an hour? Absolutely not -- the clients wouldn't have it. You get to do that work because you need to learn from the bottom up. You learn from seeing how a partner marked up a document received from the parties on the other side of a transaction. You learn from hearing the discussion between the partner and the senior associate concerning strategy. If you're not there, you don't learn anything. The reward for doing all of this work is the fantastic substantive experience that you should also be receiving. If a junior associate is not getting substantive work, then it is that junior associate's job to seek it out. </p>

<p>I hardly had a unique experience by receiving fantastic substantive work as a junior associate. Hard working, bright junior associates always will get that substantive work. Firms depend upon it for their livelihoods. If you don't train the junior associates, who will run the deals when the junior associates become mid-level associates?</p>

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If any intelligent college or law or high school students happen to be reading this, please trust me when I tell you that as a BIGLAW associate, you will enjoy far less autonomy and responsibility than you currently have. And if you have any independence or invididualism in your spirit, you will go insane.

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<p>I don't know about the insane part, but your first sentence is true enough. Let's think, though, how many people in the world have more autonomy than college students? Working at a law firm is tough, and I think that that point has been made quite clear on this board many times. Junior associates certainly pay their dues (as do most junior professionals in any profession -- talk to your friends who are investment banking analysts and junior accountants to confirm), but the rewards can be great, particularly the financial rewards. Success working in a law firm will not come to everyone -- some will leave earlier, some will leave later and some will stick around until they are passed over for partner. Biglaw partners are realists, and they recognize that a significant number of young associates will leave by their fifth year -- in fact, they count on it. That's why they hire 50, 60, 70, 90 new associates each year. It's because they know that by the time the firm can really make some money off of the associates, when they are mid-level associates (5th, 6th years), that a significant number will have left. This is harsh, but when a friend of mine left his tippy top law firm during his fourth year, a partner said to him that while they were sorry to see him go, the firm largely sees the first three to four years of practice as "separating the wheat from the chaff" anyway. Ouch! That is the reality. </p>

<p>I am happy for you, lskinner, that you seem happy in your current career, but I really do think that you paint too bleak a picture. Yes, you will work long, unpredictable hours in a big law firm. Yes, you will have to cancel plans at times with friends, significant others, parents, etc. Yes, you will likely work more nights and weekends than you will care to count. Yes, you will do some grunt work. However, you will also get to be part of some of the most interesting and notable legal matters out there. You will get to learn the practice of law from some of the top practitioners out there. You will be well compensated. You will get invaluable experience that will translate into any kind of career in law that you may want, and many careers outside of the law. Four to six years of solid biglaw experience under a lawyer's belt is as good as gold in the job market. As difficult as it was, I wouldn't trade my biglaw experience for anything.</p>

17

<p>many people who go to work for a large firm will end up feeling how sally feels. many people who go to work for a large firm will end up feeling how lskinner feels. i have many former law school classmates that fall on both sides of this divide. </p>

<p>personally, i think this is a great exchange for prospective lawyers to be reading. </p>

<p>i worked for two smaller non-NYC firms -- some aspects of practice there were vary similar to bigfirm law (long hours, high demands from clients and partners, associate turnover and burnout, etc.) and some were very different (faster client contact, fewer levels of lawyers on any given matter, etc.) i had big firm friends who envied those differences and i had big firm friends who pittied me those differences.</p>

18

<p>
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That is hardly the definition of responsible work in a client service industry -- and that is exactly why even the most respected partners in big law firms work nights and weekends when their clients demand that they do so.

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<p>I don't know much about transactional work, but in litigation, that is ridiculous. Clients don't "demand" that the attorney work on a particular day, the top attorney decides what days to work based on the schedule in the case. If a paper is due on a Monday, the attorney might choose to do it over the weekend; he or she might choose to do it in advance; or he or she might simply call his or her adversary and get an extension.</p>

<p>The only (rare) exception is in an emergent situation, such as when a temporary restraining order is necessary. In that case, the client might very well say "I need this tomorrow" But then, the top attorney will say "Sure, but it's gonna cost you." And he will get a big fat payday out of it (or similar credit).</p>

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[quote]
Are there times when you feel like you are in the office merely to babysit the partner or senior associate as they get work done? Sure. Does that suck? Hell, yes. The reality, though, is that it simply takes a lot of time and energy to get the enormous volume of work that clients demand finished, and with all of the t's crossed and i's dotted. Someone has to run changes, and proofread, and make sure that the documents get properly distributed to all of the necessary parties. Yes, that usually falls upon the junior associate.
But let's be honest here -- who else should that work fall upon? The partner who is charging $600+ an hour? The senior associate who is charging $400+ an hour? Absolutely not -- the clients wouldn't have it.

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<p>So what? Whether it's right or wrong, that associate is not doing responsible work. Some people don't mind being paid a lot of money to be micromanaged and shuffle papers. Personally, I can't stand it. </p>

<p>I am simply warning people about how miserable BIGLAW can be. Let me repeat my warning:</p>

<ol>
<li><p>For the most part, you will NOT be doing responsible work. </p></li>
<li><p>Be skeptical of what associates tell you. frequently they are trying to convince themselves -- by convincing other people -- that they have tons of responsibility.</p></li>
</ol>

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I hardly had a unique experience by receiving fantastic substantive work as a junior associate. Hard working, bright junior associates always will get that substantive work. Firms depend upon it for their livelihoods. If you don't train the junior associates, who will run the deals when the junior associates become mid-level associates?

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<p>I'm not sure what "fantastic substantive work" means. Earlier I described -- from a litigation perspective -- what I consider to be responsible work. Do you agree that most litigation associates get very little of such work?</p>

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However, you will also get to be part of some of the most interesting and notable legal matters out there.

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<p>Even the most interesting matter can become uninteresting if it is broken up into pieces and the less interesting parts are delegated down the chain of command.</p>

<p>Personally, I would rather be the lead (and only attorney) in a $10,000 dispute than a junior associate on a team of 10 attorneys working on a $1,000,000,000 matter. </p>

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You will be well compensated. You will get invaluable experience that will translate into any kind of career in law that you may want, and many careers outside of the law. Four to six years of solid biglaw experience under a lawyer's belt is as good as gold in the job market.

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<p>I don't think the experience is all that great, but there's no question that you make a lot of money and that it looks good on your resume. But again -- so what?</p>

19

<p>
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Junior associates certainly pay their dues (as do most junior professionals in any profession -- talk to your friends who are investment banking analysts and junior accountants to confirm)

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Don't forget medical residents, particularly in surgery.</p>

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Personally, I would rather be the lead (and only attorney) in a $10,000 dispute than a junior associate on a team of 10 attorneys working on a $1,000,000,000 matter.

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Surely you can understand, though, that this is a matter of your personal preferences. You aren't "right" any more than you are "wrong" on this.
EDIT: Your word "personally" makes my comment unnecessary; my fault. I simply meant to stress the point that it's perfectly legitimate for people to lean differently from you on the subject.</p>

20

<p>
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Surely you can understand, though, that this is a matter of your personal preferences. You aren't "right" any more than you are "wrong" on this.
EDIT: Your word "personally" makes my comment unnecessary; my fault. I simply meant to stress the point that it's perfectly legitimate for people to lean differently from you on the subject.

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<p>Absolutely. It's just that people have a tendency to underestimate just how miserable the lack of autonomy at BIGLAW can be. This is exacerbated by the fact that interviewers and other associates tend to downplay this problem.</p>

<p>"We'll give you as much responsibility as you can handle" goes the refrain at interviews. It just ain't so.</p>