Cravath Swaine & Moore has cancelled the special bonus element of its 2008 year-end payments to associates.
Cravath is the second US firm to abandon special bonuses – payments that are made on top of the annual bonus – after Skadden Arps Slate Meagher & Flom announced its bonus structure internally last week (19 November).
At Cravath year-end bonuses this year will range from $17,500 (£11,721) pro-rated for the class of 2008 to $30,000 (£20.094) for the classes of 2001 and 2002.
A statement released internally said: “The economic downturn has severely affected our clients. They are under strong pressure to cut costs dramatically, and every week brings new announcements of unprecedented numbers of layoffs.
“Under these circumstances, we believe it would be irresponsible and an unacceptable hardship on our clients to raise our billing rates for 2009, and we will not do so.”
Last year Cravath set the standard for other US firms announcing associate bonus packages, making payments ranging from $35,000 (£23,443) for first years to a total of $110,000 (£73,678) for the classes of 2000 and 2001.