Newspaper article International Herald Tribune

Bar Raised on Law Firm Bonuses ; Higher Year-End Reward Given by U.S. Trendsetter Surprises Some Analysts

Newspaper article International Herald Tribune

Bar Raised on Law Firm Bonuses ; Higher Year-End Reward Given by U.S. Trendsetter Surprises Some Analysts

Article excerpt

On Monday, the law firm Cravath, Swaine & Moore kicked off the U.S. bonus season by announcing year-end rewards that were substantially higher than they had been the previous two years.

Every year around this time, the heads of the largest U.S. law firms weigh the size of year-end bonuses for their junior lawyers. And almost all ask the same question: What will Cravath pay?

Cravath refers to Cravath, Swaine & Moore, one of the oldest and most profitable law firms in the United States.

In a quirky tradition lacking a sound explanation but one by which the industry abides, Cravath is the first to announce bonuses paid to its associates, and then other firms follow, either matching those figures -- or not.

On Monday, Cravath kicked off bonus season by announcing year- end bonuses that were substantially higher than they had been the previous two years, reflecting a strong performance for the law firm, which is based in New York.

Bonuses will range from $10,000 for the most junior lawyers to $60,000 for senior associates, according to an internal Cravath memo.

Deborah Farone, a spokeswoman for Cravath, declined to comment.

Cravath's announcement surprised some competitors and legal industry experts. Four years after the global economic crisis, business remains challenging for the U.S. legal sector, squeezing the financial results of corporate law firms. But Cravath's pay bump will put pressure on competitors to increase their year-end bonuses or risk alienating their junior lawyers.

"For years, Cravath has set the bar for what it pays its associates, and other law firms follow them like lemmings to avoid any negative inference about their financial strength," said Bruce MacEwen, a law firm consultant who runs the Web site Adam Smith, Esq. "And they need to reassure their associates that they're a top- tier firm."

Cravath has had a busy year. …

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