Associate Bonus Watch: Davis Polk Beats Simpson!
Davis Polk: follower no more!
Yes, this merits the Drudge siren.
Wow! This is the most exciting Biglaw bonus season since Above the Law launched in 2006.
Things got off to a surprising start last Friday, when Simpson Thacher announced bonuses early, beating traditional leader Cravath to the punch — and setting a high bar, with generous bonuses ranging from $15,000 to $100,000. Things got a little more interesting this morning, when Skadden announced that some of its senior associates would get even more than the Simpson scale — $110,000, to be precise.
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But this is the most shocking development of all. Davis Polk, a perennial follower when it comes to associate compensation, just announced a bonus scale that beats Simpson Thacher as to four class years, involving midlevel and senior associates. Here are the DPW numbers and a comparison with STB’s scale, courtesy of a thrilled Davis Polk associate:
DPW – STB – Difference
2014: 15 – 15 – 0
2013: 15 – 15 – 0
2012: 25 – 25 – 0
2011: 50 – 40 – 10
2010: 65 – 55 – 10
2009: 80 – 70 – 10
2008: 90 – 85 – 5
2007: 100 – 100 – 0
Davis Polk’s cyclone of cash!
Davis Polk is known for many things — beautiful offices, beautiful lawyers, prestige oozing from every orifice, WASPy passive-aggressiveness gentility — but it has never been a leader on comp. My shorthand for DPW: “Associates hot, bonuses not.” This bonus news just shatters that conventional wisdom.
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But if Davis Polk was ever going to become a compensation leader, now would be the time. First, the corporate-centric firm has been having a great year, thanks to the M&A boom. Second, its current leader, managing partner Tom Reid, has shaken things up at the once-staid DPW. As I wrote back in 2013:
This isn’t your father’s Davis Polk. The venerable firm, known for uber-white shoes and super-blue-chip clients, is changing…. Under managing partner Tom Reid, DPW has become energized, entrepreneurial, and expansionary. Since Reid took the reins two years ago, the firm has pushed into new areas and gone on a lateral partner hiring spree — a sign that DPW is no longer waiting for work to come its way, but seeking out business more actively.
Lateral partner hires and now above-market bonuses — Davis Polk is finally opening up its wallet. Here is what one DPW associate had to say:
The higher than market bonus scale is VERY weird for a firm like ours which is typically a conservative follower. Maybe it’s a realization that most of us bill upwards of 2500 hours a year. About time they compensate properly.
The reference to Tom Reid’s [July 4] letter in the memo [posted on the next page] is to an email that pissed everyone off because he acknowledged we work harder than most associates at other firms, so naturally people were expecting a small mid-year bonus. All we got was that lame “thank you.” This could be to make up for that f**k up.
An extra $5K to $10K, while maybe not enough to wipe out a student loan balance, should certainly be enough to assuage hurt feelings. The symbolism of making more than the folks next door at Simpson or across town at Cravath means more than the actual cash.
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So what happens next? Will Simpson and Cravath and others revise their bonus scales after the fact to match Davis? Firms used to make such retroactive adjustments to their year-end bonus scales in the pre-ATL glory days of Biglaw, but that hasn’t happened in years. Will Sullivan & Cromwell match — or perhaps even exceed — the Simpson Thacher scale? And if that happens, will the rest of the market then match S&C, just as they followed SullCrom’s lead on spring bonuses back in 2011?
I view the Davis Polk bonus scale as Tom Reid sending a message to Joe Shenker: “Your move, S&C. You guys supposedly had a great M&A year too, and yet you made one measly partner — some dude in London. What gives? If you’re minting money like we are, we dare you to beat our scale.”
Congratulations, Davis Polk associates. You now work at a firm with cojones and cachet, home to the bold and the beautiful of Biglaw.
(Flip to the next page to read the Davis Polk memo in all of its glory.)
