Last week, Kramer Levin announced its bonuses. The firm is paying bonuses on the Cravath scale, to associates “in good standing.” So it looks on the surface like a market match.

But the memo contains the following language worth noting:

As has been our practice, eligibility to receive the Year-End Bonus will be based on merit and achievement of hours thresholds (which are expected to be the same as the last couple of years); associates who do not satisfy these components may be eligible to receive Year-End Bonuses in lesser amounts.

Do these merit and hours requirements keep a significant number of associates from receiving the full bonus? We don’t have enough data points to say; feel free to discuss in the comments. Also note that bonuses won’t be paid for a while — not until February 15, 2010.

The full memo appears after the jump.

Over the course of 2009, we covered attempts from a number of firms to replace lockstep associate compensation with a “merit based” compensation system. We have seen firm after firm (and consultant after consultant) claim that clients really care about how law firms pay their associates. And who can disagree with a term like “merit?” DLA Piper put it this way in its defense of its new, merit-based system:

At its core, this new system forces differentiation and rewards outstanding performance.

Right now, merit-based compensation is certainly winning the branding war against lockstep. There are certainly very good arguments in favor of merit compensation.

But there are also good arguments in favor of lockstep. There are reasons why lockstep is still the choice of firms considered to be the best in the country. If merit-based compensation is just a thinly veiled attempt to cut total associate compensation, that’s one thing. But let’s not forget that lockstep has some serious upside for associates, partners, and yes, clients.

Yesterday was a big news day over at Quinn Emanuel. In the morning, the firm announced its new partners; in the afternoon, the firm announced its associate bonuses.

Let’s start with the bonuses. Here are the criteria, from the firm-wide email sent by Richard Schirtzer (described in his bio as “one of the most successful big-case lawyers in California”):

Associates who have been with us since mid-August 2009, or before, and who either billed or were on target to bill at least 2000 hours for the year will receive a bonus. In calculating hours, full credit was given to time spent on collection and E & O matters, and up to 100 hours of credit was given for time spent on pro bono and/or AAIT matters.

For associates who started between January and mid-August, your hours were annualized and you will receive a pro-rated bonus based on the hours milestone you would have reached had you worked at that pace for a full year. The schedule we used to calculate bonuses is set forth below.

The bonus schedule — plus the Quinn Emanuel new partner announcement, and analysis thereof — after the jump.

Last year, associate bonuses at Wachtell Lipton dipped below 100 percent of base salary, for the first time since 2005. This year, they continued their downward slide.

But given the problems plaguing both the broader economy and the legal profession, bonuses didn’t go down by as much as many WLRK associates expected. The general reaction at 51 West 52nd Street was one of pleasant surprise: “Less than last year, but better than expected,” according to one source. The bonuses were announced last week, around the time of the Wachtell holiday party.

So how much are your friends and classmates at Wachtell taking home this year? Find out, after the jump.

Time for a belated bonus announcement. A few weeks ago, associate bonuses were announced at Cadwalader, Wickersham & Taft.

The bonuses were basically on the Cravath scale, provided you meet “the bonus criteria set forth in the bonus policy.” We’re advised that the bonus criteria focus for the most part on hours, with bonuses triggered at around 2000 hours (1900 billable).

In other CWT news, we hear that two real estate partners — Alan Lawrence and John Busillo — are leaving the firm for Arnold & Porter. Sources describe them as “heavy hitters” who “still have some business.”

The CWT bonus memo, after the jump.

We previously expressed skepticism towards the notion of a salary thaw. As Elie wrote, “Ha. Haha. Unfreezing? Yeah. Let me just ride my unicorn down the streets of El Dorado and see what there is to see.”

But perhaps the joke is on us. It seems that some firms are unfreezing salaries. On this subject, of course, we are happy to be wrong. Green shoots, an end to the recession — yay!

On Friday, we reported on Allen & Overy’s decision to unfreeze associate salaries. Today we bring you news of a similar decision by Akin Gump.

Memo after the jump.

Last week, we shared with you a very interesting internal document from Simpson Thacher & Bartlett: a collection of notes or informal minutes from a June 2009 partners’ meeting. The notes discussed attorney headcount, possible layoffs, and compensation, among other subjects.

Today we have even more deliciousness for you: an internal memorandum from executive committee chairman Pete Ruegger to the executive committee, transmitting the complete minutes of the June 8 partners’ meeting. As it turns out, the version of the meeting notes that we previously published was accurate, but not complete.

Here’s an excerpt to whet your appetite. If you think that a return to the heady days of 2007 is just around the corner, as the economy improves and Wall Street strengthens, think again:

• As we dig out of the recession, hopefully with increased utilization and decreased headcount, we should do better in 2010 and beyond, but we do not think our gross revenues and premiums are going to return to 2007 levels and our net income is unlikely to return to 2007 levels in the next couple of years.

As the matrix shows, if we can get our average hours back up over 1800, we can still have a $1M+ [partnership] point at 88% realization. But, Simpson Thacher and our peer firms are going to be less profitable businesses than they were. Pricing and margins are going to continue to be challenging. At least in the short to mid-term.

Indeed. Additional analysis and the complete documents, after the jump.

Year-end associate bonuses were recently announced by Boies, Schiller & Flexner, the litigation powerhouse founded by the renowned David Boies. And the Boies bonuses were good — very good.

For starters, unlike other top firms, Boies is paying bonuses to first-year associates from the class of 2009. According to Phil Korologos, a partner in the firm’s New York office:

First-year associates who started after September 1, 2009 will receive a $5,000 year-end bonus. First-year associates who started prior to September 1, 2009, will receive the greater of $5,000 or their performance-based bonus.

Performance-based bonuses at the firm can be quite high, depending on how hard you work and the types of cases you work on (contingency or non-contingency). As a result, bonuses at Boies are individualized, not lockstep; there’s no magic number for each class year. The firm provided Above the Law with the high end of its bonus ranges:

For associates after their first year, the amount of their bonus is based on performance. The performance based bonuses for rising second-year associates range as high as $70,000.

The performance based bonuses for associates beyond their second year range as high as $150,000.

Six-figure bonuses? Now we’re getting into Wachtell territory — or beyond (since we suspect Wachtell bonuses will be down quite a bit this year).

In addition, Boies Schiller pays above-market base salaries — just like Wachtell ($165,000) and Williams & Connolly ($180,000). First-year associates at BSF now start at $174,000.

Check out the complete Boies salary scale, plus learn more about how their bonuses are calculated, after the jump.

The bonus machine keeps on rolling. Milbank Tweed announced its 2009 associate bonus schedule just before Thanksgiving. The firm will be matching Cravath.

It’s interesting that Milbank decided to match the bonus market, considering the firm has already greatly reduced the size of its summer program. In July, we reported that Milbank canceled its 2010 summer program in its Los Angeles office. So it doesn’t appear that Milbank matched the market because it is all that concerned about recruiting.

Then again, with the bonus market set where it is — unless Sullivan & Cromwell wants to turn everything upside down — there is not a lot of recruiting that will be done on the back of this bonus.

Current Milbank associates probably don’t care very much about future recruitment at Milbank. They just want their reward for a hard year of work. Enjoy your bonus, Milbank friends.

Read the full memo after the jump.

Is announcing associate bonuses on the Wednesday before Thanksgiving a trend in the making? Will we get a few more announcements this afternoon, to match those by Davis Polk and now Debevoise & Plimpton?

Debevoise has had a relatively busy year, from what we understand. But is there life after Siemens? Being conservative with bonuses may be a wise move, unless the firm has lined up another mega-matter to ride out the storm.

So Debevoise has decided to match the Cravath-level bonuses. The full Debevoise memo appears after jump.

Well, here’s an early Thanksgiving present from the partnership at Davis Polk & Wardwell to their associates. Bonus news.

DPW will be putting the same meal on the table as Cravath:

We are pleased to announce that associates in good standing will receive a bonus payment as outlined below. Bonuses will be paid on December 24th, 2009 in the same manner as the regular December monthly payroll, and will be subject to proration for those who arrived after January 1, 2009 and those on part-time schedules or other special arrangements. Bonuses for counsel and other attorneys will be determined on an individual basis and will be communicated and paid according to the normal time schedule.

Class of 2008: $ 7,500
Class of 2007: $10,000
Class of 2006: $15,000
Class of 2005: $20,000
Class of 2004: $25,000
Class of 2003 and senior: $30,000

We thank you for your efforts over the past year, and wish you and your family a wonderful holiday season.

The Management Committee

In this season of thankfulness, some DPW associates feel they deserve a few more blessings than what the firm is offering.

Bonus season is now in full swing. Sources report that Willkie Farr has announced bonuses that match the Cravath scale.

Here’s the breakdown:

From: The Executive Committee
To: ASSOCIATES - NY; ASSOCIATES - DC
Cc: PARTNERS - FIRMWIDE
Sent: Fri Nov 20 11:11:01 2009
Subject: 2009 Associate Bonuses

The Executive Committee is pleased to announce the following year-end bonuses for associates:

Class of 2008: $7,500
Class of 2007: $10,000
Class of 2006: $15,000
Class of 2005: $20,000
Class of 2004: $25,000
Class of 2003: $30,000
Class of 2002 and senior: $30,000

Bonuses will be paid on December 18, 2009, consistent with our customary practices. The Firm greatly appreciates the efforts of our associates over the course of the year.

Don’t feel bad, guys; there are a lot of great things you can do with $7,500.

More on Willkie’s bonuses after the jump.

Ed. note: Above the Law has teamed up with Law Shucks, which has done excellent work translating all of the layoff news into user-friendly charts and graphs: the Layoff Tracker.

This week, economists missed on the good side — initial jobless claims fell by more than expected. The 502,000 applicants are the fewest since January 3, and the four-month rolling average is at the lowest level since November 2008.

It’s tough to grasp half a million people filing for first-time benefits as good news, but these are troubled times, so we have to cheer where we can. Don’t get too excited, though. Even news that looks good at first glance probably isn’t. The 139,000 people who came off the continuing-claims roster more likely did so as a result of benefits running out or giving up the search than actually finding work.

But don’t be surprised if that number starts creeping back up. A bill was passed last week that will extend benefits by 14 weeks in all states, and six additional weeks in states where the unemployment rate is greater than 8.5%.

All in all, it was a relatively good week in BigLaw, with no layoffs reported. Nonetheless, firms continue to flail about trying to fix their economic models, and we document the efforts after the jump.

We have confirmed the news of a Cravath bonus match with multiple sources at Cleary Gottlieb. One exchange went something like this:

ATL: Any good news today?

CGSH: No. Cravath news. Bonus FAIL.

So the 2009 bonus market is probably going to coalesce around the Cravath-level bonuses — unless S&C shows up and trumps CSM. Stay tuned.

The timing of the announcement is telling. Usually bad news is saved for Friday afternoons, so it gets lost in the pre-weekend shuffle. Did CGSH view its bonus numbers as potentially disappointing to the recipients?

Perhaps. In our reader poll on the Cravath bonuses, a majority of respondents said the CSM bonuses made them either “unhappy” or “very unhappy” (the most popular choice). Approximately 30 percent said the bonuses made them “neither happy nor unhappy.” Under 20 percent said the bonuses made them “happy” or “very happy.”

The Cleary memo and another READER POLL, after the jump.

In July, Morgan Lewis & Bockius announced that it would be ending lockstep compensation for its associates in 2010. At the time, the firm furnished this statement to Above the Law:

“We’re running our own business and focusing relentlessly on client relationships,” said Francis M. Milone, Chair of the Firm. “Doing so responsibly means continuing to reduce expenses, committing to the people in whom we are already invested, and looking at compensation across the board to ensure our structure matches the reality the entire legal industry must face.”

The July announcement was the culmination of the effort made by MLB and its chairman, Francis Malone, to reform the Biglaw business model. Back in April, Milone gave an interesting interview to the Philadelphia Inquirer:

Question: Law firms are still very profitable. Why do they need to downsize?

Answer: You have to make a judgment about whether you can keep people busy going forward. It is not healthy for a lawyer to not be busy, to have free time on his or her hands. You don’t grow, you don’t develop, you’re not happy.

And from a cultural perspective, you don’t want to build a firm that culturally is populated by a lot of people, or too many people, who don’t have enough to do.

Q: Is that the only reason?

A: The other piece of it is the feedback we got from clients. Because they’re looking at the way they want law firms to act. They’re not going to be as willing to pay, frankly, to train new lawyers. So it’s going to be harder to find things for new lawyers to do. And when we’re paying new lawyers $160,000 and clients don’t want to pay for them, you’re putting them in a position where there may not be a lot of things for them to do.

Well, 2010 is almost upon us. But MLB is suddenly not so excited about ending lockstep compensation. Milone conducted a firm-wide video conference yesterday, and tipsters report his enthusiasm for ending lockstep compensation was noticeably lacking.

Details and a statement from the firm, after the jump.

Year-end bonuses have been announced at the market-leading firm of Cravath, Swaine & Moore. And they are even lower than last year’s Cravath bonuses.

But look, this is 2009. Welcome to the Great Recession. Your true bonus is: you get to keep your job. That shouldn’t be taken for granted, even at Cravath.

Anyway, here’s the Cravath bonus scale for 2009 (via the WSJ Law Blog):

Class of 2008 — $7,500
Class of 2007 — $10,000
Class of 2006 — $15,000
Class of 2005 — $20,000
Class of 2004 — $25,000
Class of 2003 — $30,000
Class of 2002 — $30,000

Cravath’s bonus announcement is always important because the market tends to follow Cravath — as it did last year. Skadden’s 2008 bonuses, at roughly twice Cravath’s levels, were ignored.

Could this year be different? Are the Cravath bonus levels low enough such that a firm of similar or even lower prestige will try to better CSM? Or will other Biglaw shops simply avail themselves of the political cover provided by Cravath — which is arguably what happened last year, when Skadden’s generous bonuses went unmatched (excluding Wachtell)?

So, readers, what do you think? Read the FULL MEMO, take a READER POLL, and COMMENT — after the jump.

Ed. note: Above the Law has teamed up with Law Shucks, which has done excellent work translating all of the layoff news into user-friendly charts and graphs: the Layoff Tracker.

Last week we wrote that jobless claims were higher than expected and that predicting anything with any degree of confidence seemed pointless. This week, the number of people receiving unemployment benefits was lower than expected, the lowest levels in seven months, and that was before announcement that benefits will be extended again. Still, the best that can be said is that the cuts are slowing:

Companies are cutting fewer jobs as they see more evidence of a recovery, helped by government stimulus efforts and less weakness in housing and manufacturing. While a separate report today showed the economy expanded for the first time in more than a year, a rebound in hiring may take longer to materialize

So while things bounced around unpredictably in the broader market, we had two notable announcements in law-firm innovations this week. We’ll cut right to them after the jump.

Corporations are so busy reducing the amount of money they spend on outside counsel that it’s easy to overlook the fact that they are also reducing the money they spend on in-house counsel. Well, it’s easy to overlook the fact if you are not in-house.

But a new survey reports that in-house lawyers are feeling the salary pinch along with their firm-based colleagues. The ABA Journal reports:

Lauren Chung, director of the Hildebrandt survey, told the ABA Journal that the frugal approach extends to compensation for in-house lawyers.

“Do I think that lawyers overall are making less?” Chung said. “They’re not getting the increases that they had been enjoying for the past several years. Every year they were almost guaranteed an increase. This year we see very clearly that is not the norm anymore.”

Of course, in-house lawyers aren’t exactly crying poverty. Their salary, even without the yearly raise, is still pretty good.

Check out just how good it is after the jump.

In this economy, if a newly-minted attorney can find a job, especially one paying over $100,000, she should be grateful. Based on our many conversations with law students and young lawyers, we think that most of them understand these new economic realities.

But not all of them. At least one Above the Law reader is still living in the heady days of “NY to 190.” Here’s what she wrote to us:

Can we put some pressure on firms that pay $160K to match at least those few firms that pay more than $160K (doesn’t a DC firm pay $180K and no, or little, bonuses?). It’s getting close to internal bonus discussion time, and any firm paying first years less than a $20K bonus will be paying less than those few firms, right?

Do we reward those firms paying a base of more than $160K with some positive press? If we do, does that put pressure on every other “peer firm” to remain a peer firm?

Honey, what recession-free universe are you living in? A sense of entitlement is so 2006.

A reality check, after the jump.

The National Law Journal suggests that the down economy could be hitting the pockets of the Elect. Some firms are suggesting that the $250,000 bonus to hire a former Supreme Court clerk is just too expensive in today’s economy:

At firms that have been shaken by the downturn, however, a $250,000 bonus will be hard to sell, some practitioners say. “Intuitively, it doesn’t feel right to pay that kind of bonus when you are trying to make economies wherever you can at the firm,” said veteran advocate Carter Phillips, managing partner at Sidley Austin’s Washington office. Thomas Goldstein of Akin, Gump, Strauss, Hauer & Feld, where there have been cuts, agrees that it’s tough to justify a $250,000 bonus when a firm is considering letting go a staff person paid $50,000. Because of that juxtaposition, he predicted bonuses will shrink — though he said it’s too early in the hiring season to say how much. “The number of firms willing to pay that amount of money will be down.”

But surely these firms aren’t talking about collusion, are they? SCOTUS clerks command top dollar, and firms that are struggling can’t artificially deflate the price for this top talent — even if they want to:

Firms won’t be sorry to wave goodbye to what Goldstein calls the “incredible escalation” that the $250,000 bonus represents. Even before the recession, firms were grumbling about it because of a recurring pattern: Some clerks grab the bonus, work at the firm for a year or three, then skip off to academia with loans paid off and kids’ tuition in the bank. “Firms are going to be more interested in clerks staying around and practicing law,” [former solicitor general Paul] Clement said.

While some firms might be priced out of the Elect market, we are still talking about a “recession-proof” set of credentials.

More after the jump.