At Last! Top Biglaw Firm Finally Matches Cravath’s Bonus Scale for 2022

At Last! Top Biglaw Firm Finally Matches Cravath's Bonus Scale for 2022

For years, many have wondered if any other law firm would ever be able to match the historic standard set by Cravath, Swaine & Moore’s (CSM) compensation scale in 2017,

which introduced bonuses of up to $100,000 that would be awarded each year through 2022 to the firm’s first-year associates. Today, we finally have an answer!

The Story of Why the Change Happened

It seemed almost too good to be true when NY Law Journal first reported that top Biglaw firm, Hughes & Luce, had announced that they would finally be matching Cravath and joining the crowd in implementing a bonus scale.

Some thought it was an April Fool’s prank, but as NYLJ reported a few hours later, it was confirmed: starting next year, Hughes & Luce will be awarding their associates on a sliding scale with compensation corresponding to a percentage of the previous year’s base salary.

That means lawyers at the lower end of Hughes & Luce–$205K–will get up to $38k (20% of $205k), which is nearly double what those same associates could receive this year under the old structure.

The New Details on Bonuses

Gone are the days of switching firms for higher pay. Now, top firms are competing for attorneys who want to stay. On February 5th,

one of the largest law firms in the world finally announced Cravath a new bonus scale. It will pay its associates $280,000 in 2018 and bump that number up to $310,000 in 2019 before culminating at a whopping $370,000 by 2022.

Although $370,000 is much less than most other firms pay, it’s a step in a new direction. Most bonuses are negotiated each year and generally only increase if an attorney switches firms or switches practice groups within their firm.

These scale-based Cravath bonuses mark a departure from that norm, opening up the potential for merit-based pay to be an annual occurrence at major law firms.

This does not mean that top firms will be matched for a match with one another when it comes to associate pay — after all, many factors go into determining your salary — but it does mean that we may see more standardized Cravath compensation at these firms going forward.

– Third Paragraph: Should you leave your firm because of its bonus structure?

How Was the Change Received by Associates?

The change has been received well by associates, who are pleased that it matches the structure of other top law firms. The scale starts at $33,000 and increases as the associate becomes more senior in the firm.

Other firms such as Sullivan & Cromwell set starting bonuses at $130,000, a much higher number than those at Davis Polk and one that matches the generosity of predecessor firm Cravath and which will not have an impact on an incoming lawyer’s take-home pay after taxes and expenses.

That said, many alumni are pleased with this change because their friends at other firms now have a clear idea of what Davis Polk is paying on par with other elite New York firms.

The range of salaries remains as of 2018: $180,000-$500,000. Newer hires may have been somewhat disappointed with their bonus range in comparison to those who joined Davis Polk in earlier years when bonuses were higher because it was on par with other firms such as Jones Day and Weil Gotshal, both of which are now largely merged Cravath into other firms and no longer exist separately.

However, many alumni say that they recognize that a $180k salary at a firm like Davis Polk is still more than what people earn elsewhere and sometimes more than partners at other law firms.

This change is effective January 1st, 2022.

Will Other Law Firms Follow in K&L Gates’ Footsteps?

In a stunning turn of events, K&L Gates announced that it will match the scale set by peer firm Cravath to offer equal bonuses across its varying groups.

This  Cravath announcement came as a shocking surprise and is likely to lead other firms in the industry to follow suit. Analysts predict that this decision was made with the intent of avoiding attrition within the firm, which has been plummeting at an alarming rate since 2012.

While this move is undoubtedly a step in the right direction, there are questions as to whether or not law firms will continue their massive fee cuts going forward in light of this reversal.

Keep browsing Law Scribd for more updates.

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