Bonuses for associates in New York and Washington DC have been cut from $75,000 (£52,600) to $50,000 (£35,000) at the top end and from $40,000 (£28,000) to $20,000 (£14,000) for first-year associates. This will also extend to the 29 associates seconded to London from New York.
The decision, which was taken by the New York management and ratified by the firm’s executive last week, has no bearing on whether the firm will be paying bonuses in London; that decision will be taken in the new year. A spokesperson said: “Bonuses are done market by market. The partnership is a lockstep partnership, but salaries are totally market-driven and performance-driven.”
|“Bonuses are done market by market. The partnership is lockstep, but salaries are market and performance-driven”|
UK associates are currently on packages with a potential bonus element. Last year associates over four years qualified could earn up to 40 per cent extra by performance-linked bonuses.
According to one source, the New York management made the conscious decision to emulate Cravath Swaine & Moore, which cut its bonuses to the same bracket of $20,000 to $50,000.
However, the news came as a surprise to many in London. One partner said: “We sort of assumed there weren’t going to be any [bonuses] in New York, because Davis Polk [& Wardwell] weren’t paying any. People thought that at least we won’t get screwed again.”
However, the decision to pay bonuses underlines Clifford Chance‘s strategy of bolstering its US operation. Last summer it set up a taskforce to target lateral hires for the New York office (The Lawyer, 13 August). The New York office did not perform as well as other Wall Street firms during the M&A boom; however, according to one source, its heavy litigation bias – particularly in securities defence work – means that the practice’s revenues are now some 30 per cent higher than those for the previous year.