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The US bonus season began last week when elite New York firm Cravath Swaine & Moore revealed the level of additional pay it would be offering its junior lawyers on top of their annual salaries this year.
Those looking to embark on a pre-Christmas New York shopping expedition will have been left disappointed. Cravath has unveiled a dramatic cutback in its bonuses for associates with at least a year’s experience, and no bonus at all for those that started at the firm less than a year ago. Lawyers who joined Cravath in September 2008 will receive nothing by way of a bonus. They do, however, earn an annual salary of $160,000 (£98,000).
Second-year associates will receive a bonus of $7,500, a drop of 57 per cent from $17,500 last year, while senior associates will receive a bonus of $30,000, the same amount they were awarded a year ago. Last year Cravath’s presiding partner Evan Chesler put the firm’s associates on notice that their year-end bonuses would either be “significantly reduced” or nonexistent. In that context, the fact that Cravath is paying anything at all may have come as a relief to the firm’s associates.
The US bonus season is a closely watched barometer of law firm fortunes on both sides of the Atlantic. The closest UK comparison so far came at the end of October, when Slaughter and May revealed it would halve its annual bonuses for fee-earners, while keeping bonuses for non-fee-earners at the same level as last year.
Now the annual game is underway in the US. “Cravath always wants to be perceived as the market leader, in good times and bad, so their announcing first is consistent and, I would suspect, purposeful on their part,” commented Bruce MacEwen of legal website AdamSmithEsq. com. He added: “Their cutting bonuses isn’t extraordinary in the least. Anything else, including parity with last year, would be extraordinary given this environment.” Cravath did not comment.