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This holiday season is looking good for law firm associates. It seems, the drought is ultimately over with Cravath awarding year-end bonuses to first-year associates that are at least 33% higher than bonuses awarded last year. For senior associates at Cravath, the hike in bonuses has exceeded 60%.
In 2011, first-year associates at Cravath had earned an average of $7500 in year-end bonuses, but this year, that amount is going to be $10,000. For senior associates, the jump has been drastic – to $60,000 from $37,500 – against 2011.
And this is coming after a long drought in the legal industry fraught with layoffs, the demise of Dewey & LeBoeuf, shift in client preferences, drops in demand for legal services offered by big law firms, and panic hitting the market in general. The better news is that law firms continue to follow the tradition of matching Cravath's bonuses with their own, even though, this last year, Cravath did not hand out spring bonuses, though most law firms did.
Many expected that this year the tradition of matching Cravath's bonuses may be broken, as law firms could point out that the hike in Cravath bonuses was partly due to Cravath compensating for the lack of spring bonuses. However, it does not seem law firms are in the same miserly mode as they were a year ago.
As of the last week of November, at least two more New York law firms, Simpson Thacher & Bartlett, and Skadden, Arps, Slate, Meagher & Flom, has affirmed they are going to raise year-end bonuses for associates in keeping with Cravath. Simpson Thacher would be paying year-end bonuses ranging from $10,000 to $60,000 from its junior-most to senior associates, and Skadden is also doing the same.
While the law firm bonuses given this year are much better than last, and show a year-on-year improvement from 2009, the rates are still much lower than what they were in pre-recession times. In 2007, first-year associates at Cravath and the other two law firms mentioned here had netted an average of $45,000 in regular and special bonuses, whereas senior associates had received $110,000. For senior associates, the bonus scene is still almost half of what it was before the recession, and for first-year associates less than one-fourth of what they used to receive.
Anyway, when things are getting better, thinking about the ‘golden days' is just wishful or wistful thinking, take it whichever way you want – but the main thing is that improving bonuses, and consistently improving bonuses over the last three years, indicate a slow recovery that is healthy for law firm associates.
On the other end of the market, the huge drops in LSAT examinees and first-year entrants at law schools signal the economy is correcting itself, and with supply going down steadily, associates who are already in the market, can look forward to their services being more appreciated in the near future.
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