Is Your Firm Keeping Up With The Joneses? The First Major Big law Firm Matches The 2021 Cravat Bonus Scale

The First Major Big law Firm Matches The 2021 Cravat Bonus Scale

As we’ve previously reported, last year saw the elimination of the lockstep salary structure at Cravat, Swaine & Moore, replacing it with a sliding scale bonus system, which rewards associate performance and productivity with higher bonuses than those awarded to their more senior colleagues. If your firm isn’t the biggest in the land, though, you might think that you’re stuck in lockstep forever… but that’s not the case! The first major big law firm to match Cravat’s 2021 bonus scale is none other than my firm, Mackoff Stark & Lee!

What do you think about the latest movement to match the 2021 Cravat bonus scale by the first major Big law firm?

The first major Big law firm has matched the 2021 Cravat bonus scale, which raises the average associate salary to $420,000. This decision came on the heels of a major exodus of partners and top-level associates. Additionally, firms are starting to move away from the 2:1 student-to-partner ratio they once heavily favored. For example,

A lot of firms have increased student stipends or started hiring more J.D. candidates earlier in their 3Ls careers. Along with these changes, there has been an increase in tuition reimbursement among other benefits that can help even out associate salaries (notably at Simpson Thacher). What does this mean for you if you are still an undergrad student deciding on where to apply next year?

Would match this scale make or break your decision on whether to accept a firm offer in 2020?

In an ideal world, every law firm would be able to offer the same benefits and salary as those at top-tier firms. This would mean providing partners with the equivalent bonuses in proportion to their share of equity, hiring experienced lawyers at competitive salaries and with generous benefits packages, and increasing hourly rates for junior associates in such a way that they could turn down more high-paying corporate jobs.

There are some very compelling arguments in favor of this goal: inequality is rampant within the legal profession, including between firms of different sizes; entering partners feel like they have little control throughout their careers, and the promise of a luxurious retirement is becoming increasingly unrealistic because many lawyers simply don’t earn enough over a lifetime.

Do you feel like the Cravat scale is too low, too high, or just right, and that firms don’t need to match it yet?

As firms grow more competitive and aggressive in pursuit of the best talent, it was inevitable that they would start to be more flexible with compensation packages. This is not to say that matching the 2021 Cravath bonus scale is necessary or appropriate for every firm, but it may no longer be the final word in salary negotiation.

The National Association of Law Placement just announced that Boston-based law firm, Morgan Lewis matched the 2021 Cravat bonus scale on November 1st. In doing so, they became the first major law firm with such a track record of success as a full-service institution to do so.

Why did this change happen so quickly after Skadden matched it last year (and why did Skadden make such a move)?

It’s not just about money- it’s about prestige. Skadden was able to steal a few partners from Sullivan and Cromwell last year by matching the 2021 scale, and this act of poaching got everyone in the industry talking about how Skadden was flexing its power.

Everyone wants to be on the winning team, so when other firms see this happen, they want to be first with matching or well it. What is most troubling here is that there are so many other firms who can easily match what we’re talking about- which means that these major law firms are operating at an ever more intense level of competition in what they offer their employees.

Are there any other law firms you feel will follow in this bold new direction?

Law firms have always competed with each other to offer the best possible compensation and benefits packages for associates. This move makes it seem as though more law firms will follow in this bold new direction.

Recently, a prestigious major firm announced that they are now matching the 2020 Cravath bonus scale for all associates, including lateral hires (except for those firms with equity partnerships). This move makes it the first major law firm to publicly offer matching bonus scales.

While some may worry about having a competitive disadvantage in recruiting if they do not match, others are confident that by making this strategic decision to lower associate attrition rates, they will become a coveted employer. Whether or not other major law firms decide to adopt this new strategy is unclear.

How would a move like this affect lateral hiring trends in the next few years, especially for people who are closer to hitting their bonuses at their current firms (i.e., 3Ls and 2Ls)?

Since this is such a huge shift for the industry, I don’t think that it would affect lateral hiring trends much at all. Lawyers have to make very big decisions when they’re applying to Cravat for jobs, and lateral lawyers will decide whether or not the firm matches their current bonus scale based on what they value most in their professional lives.

They may be willing to take a slight cut in pay just so they can enjoy being in one place for years instead of moving around every two or three years and feeling completely uprooted. Lawyers who do apply with firms that don’t match the Cravat model are taking on a major risk and are likely going to burn out because they will be spending more time working and less time outside of work developing their skill sets.

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