Skadden Is Latest To Match Cravath Bonus Model

By Liz McKenzie

Law360, New York (November 20, 2009) -- Skadden Arps Slate Meagher & Flom LLP has released this year’s associate bonus structure, which reportedly mirrors the model adopted by Cravath Swaine & Moore LLP and pays junior associates less than half what they earned in 2008.

The Wall Street Journal reported Thursday that Skadden would match the year-end bonuses being paid out by Cravath and Cleary Gottlieb Steen & Hamilton LLP, which followed Cravath’s lead last week.

A memo written by Skadden chair Eric Friedman and obtained by WSJ explained, “While the economic environment has had an impact on our clients and the demand for legal services, the firm remains strong and we are optimistic about the future.”

Associates from the class of 2008 will receive a year-end bonus of $7,500 on Dec. 18, the memo said.

Associates in the 2007 and 2006 classes will earn $10,000 and $15,000, respectively, with those hailing from the years 2005 and 2004 netting approximately $20,000 and $25,000, respectively, the WSJ reported. Classes of 2002 and 2003 will take home larger bonuses of $30,000, the WSJ said.

The firm did not immediately respond to requests for comment.

The amounts are the same as those adopted by Cravath and, later, Cleary, suggesting that they may set the standard for bonuses this year, with other firms likely to match but not exceed the powerhouses’ end-of-year awards.

Cleary announced in a Nov. 9 memo to associates entering their second year in January that they will earn $7,500 in year-end bonuses, a drop-off from the $17,500 doled out last year, according to legal blog Above the Law.

At Cravath, figures are down slightly from 2008, when bonuses ranged from $17,500 for first-year associates to $30,000 for more seasoned associates, according to Above the Law.

When Cravath announced its bonuses last year, it attempted to tamp down expectations for 2009, citing the uncertainty of the economic future.

Like many others, the firm has continued to proceed cautiously throughout the year, choosing to offer incoming associates in June $80,000 if they agreed to postpone their start dates from fall 2009 to fall 2010.

--Additional reporting by Julie Zeveloff, Erin Coe, Anne Urda and Tina Peng