Big Law Firm Bonuses from SalaryExpert

Big Law Firm Bonuses

Compensation for attorneys is affected by a variety of factors including location and hours billed, but the size of the law firm is a very important determinant as well. The larger firms are able to handle matters that can produce a level of profitability not usually matched by firms with less than 100 attorneys. Big law firms tend to cluster in their pay practices with the most prestigious firms setting a structure that other large firms will follow. Firms don’t need to purchase salary surveys as the information on associate salaries is widely available. This is not the case for the salaries of other firm staff which are more opaque.  Big firms in New York City generally pay their associates the highest attorney salaries in the United States, though Chicago, Los Angeles and a few other cities are close.  One of the most prestigious of the New York City firms is Cravath, Swaine & Moore LLP, so the announcement of its bonus structure at the end of this year was widely anticipated. The structure, like most associate compensation at large firms, is lockstep based on seniority and is given below.

  • 1st Year – $7,500
  • 2nd Year — $10,000
  • 3rd Year — $15,000
  • 4th Year — $20,000
  • 5th Year — $25,000
  • 6th Year — $30,000
  • 7th year — $35,000

These bonuses are in addition to base salaries that start at $160,000 and generally move up in increments of $10,000 to $20,000 per year. The base salary at most of these firms remains what it was in 2007, but the bonus for 1st Year’s in 2010 will be significantly less than what Cravath gave its 1st Year’s in 2007 ($45,000). Most associates won’t be pushed to leave by their disappointment with the bonus as the job market for young associates remains very weak as they also consider the long term possibility of partnership. For 2009 the average profits per partner at Cravath was $2.7M. This was up from $2.5M in 2008 but down from the 2007 number of $3.3M. We won’t know the 2010 profits per partner for a few months but, given the bonuses, it may be that Cravath’s profitability is not back to the pre-recession numbers yet.

Numbers such as these profits per partner figures have encouraged many young people to take on six figure debt loads. Unfortunately, even those who gain admission to the most prestigious law schools frequently find that the new normal for the legal market doesn’t offer them a salary that will allow them to pay off their debt in a reasonable amount of time while having the life they had hoped for. If they can’t find a place in these big firms or if they find they don’t want to work in a big firm due to the time demands and the nature of the work, many attorneys feel trapped by the debt burden they must carry, which is not dischargeable in bankruptcy. While the Great Recession will be remembered primarily for reminding people that taking on mortgage debt is risky, it may also due the same for student debt.

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