It is still way too early to get hard numbers on what Biglaw bonuses will look like for 2008. But because of the economic downturn, we expect it will be a rocky bonus season.

As readers of The Shock Doctrine will note, it is important to be aware of fundamental changes to the way bonuses are paid out. You don't want something to slip in under the guise of a (massive) market correction.

Yesterday, Wilson Sonsini Goodrich & Rosati announced that 50% of their bonuses would be paid out based on performance evaluations. According to the firm, the change was made in response to associates' concerns:

To: All Wilson Sonsini Goodrich & Rosati Associates, Of Counsel, Special Counsel, and Staff Attorneys
From: John Roos
Date: September 25, 2008
Re: FY09 Associate Bonus Program

As always, the firm is committed to providing a competitive compensation package to our associates. We also are committed to listening to feedback from our associates and making adjustments to our approach to compensation as appropriate. Recently, the firm's associates have voiced concerns about the bonus program's heavy emphasis on billable hours. In response to those concerns and after a long and careful review of the associate bonus program, we're pleased to announce a new component to the bonus program focused on qualitative performance factors.

[Redacted] will be sending out a memo shortly with more details on the changes, but I'd like to give you a brief rundown on the changes, as well as the process that led to them. In essence, the total bonus opportunity will consist of three independent components:

-- a basic level of bonus paid at 1,900 hours;
-- an adder paid at 2,100 hours; and
-- a variable bonus based on work quality and overall contribution to the firm.

You'll note that the new bonus program allows us to continue to reward high-billing associates for their hard work--a factor that many associates pressed us to maintain--but it also allows us to reward those who are exceptional performers in other ways.

More from the memo, including explanation of the qualitative bonus component, after the jump.

Welcome to BACK TO THE FUTURE. In this occasional ATL feature, we'll step into a time machine and take a look at what the legal profession looked like at some point in the past.

In a post about staff layoffs at Fried Frank, a commenter drew our attention to this fascinating 1990 article from the New York Times. It seems that the commenter was trying to challenge the recent claim by firm chair Valerie Ford Jacob that the firm has never laid off attorneys. The NYT piece -- by David Margolick, former national legal correspondent for the Times, now at Portfolio (and also one of Kash's journalism professors at NYU) -- mentions Fried Frank as a firm that may have engaged in "stealth layoffs."

Margolick's article doesn't use the term "stealth layoffs," but the phenomenon it describes is essentially identical to what we've been reporting in the pages of ATL lately. The article begins:

They were the legal profession's gilded generation, an army of lawyers without limits. As law students, they were wined and dined and wooed by the most prestigious law firms in New York. Once hired, they began settling into a frantic but fantastically lucrative life. It was a life of glamour, prestige and, they assumed, stability.

Now, only a few years later, dozens of these lawyers have had a crash course in the realities of modern Wall Street practice. For the first time in their lives - lives of success atop success - they find themselves in an unusual position. They have been fired.

As the sour corporate climate reaches large law firms in New York and to a lesser degree cities like Los Angeles and Chicago, a bubble has burst. With business down, particularly in corporate work, real estate, and mergers and acquisitions, several of the most famous law firms have dismissed substantial numbers of lawyers, particularly those in the early years of their careers.

This article could have been written yesterday. But it was actually written over 18 years ago; the dateline is August 12, 1990. The more things change, the more they stay the same.

More excerpts and discussion -- including a brief comment from Margolick, plus information about what junior associates earned back in 1990 -- after the jump.

One of the "perks" of working in Biglaw is the ridiculous amount of money that gets direct deposited into your account every two weeks. Even if you work for a firm that pays below market rate, your earnings still beat the bag out of what they pay at the local 7-11.

Can you imagine having to take a second job to make ends meet?

Welcome to the world of an assistant prosecutor or public defender. The National Law Journal has some disturbing stories of attorneys putting in double duty to pay off their loans:

"I have lawyers delivering pizzas, I have another lawyer umpiring and another bartending," said Frank de la Torre, chief assistant at the Broward County Public Defender's Office. "Many of us could be making more money in private practice, but obviously those of us who make a career in the field of indigent defense do it because we love it and we believe in the Constitution."

The sad thing isn't just that they have to take these jobs, it's that they make more money -- bartending or whatever-- than they do in the legal profession.

We've covered the craptistic pay for government lawyers in the past. Many public attorneys used to be able to pick up some real estate or T&E work on the side. Today? Not so much.

Keep on grifting 'till you drop, or it's back to the crumbs from the table after the jump.

The top 25 California law firms are staying in lockstep with regard to associate pay: $160K for first years, $210K for fourth years, $265K for seventh years.

According to The Recorder (via Law.com), only Sedgwick, Detert, Moran & Arnold paid below the market rate. They pay $130K to first years and only go to $197K for seventh years.

For the most part, firms have to play "follow the salary leader" in order to draw top talent. But in these times, some firms are desperate to cut back on associate compensation any way they can.

The idea floating around is to abandon lockstep salary progression based on year, and move to performance-based pay raises. Manatt, Phelps & Phillips has already abandoned automatic pay raises:

"I actually think the system in practice is very fair because it allows for those people who are overachievers to really be valued at what their skills are worth," said Diana Iketani, the firm's chief recruiting officer. On the other hand, she said, it reduces pressure on associates who would rather pace themselves or have different priorities.

Some firms that are not following suit, after the jump.

Earlier today, the American Lawyer published a report detailing declining profit margins in the legal industry.

It is nice to see that somebody commissioned an entire report to figure out obvious facts like "the first half of 2008 looks very different from the previous six years" and "[t]he slowdown is hitting the most profitable firms the hardest." In other breaking news, Britney Spears's career has hit a bump in the road.

Instead of a simple doom-and-gloom economic report, Am Law columnist (and Biglaw banker) Dan DiPietro offers this proposed solution to all the law firm ills: fire the associates!

"There is a silver lining. A bad year (and the numbers suggest 2008 will be even more trying than 2001, when partner profits were down slightly) will enable firms to take steps that partners would resist in a good year -- winnowing out unproductive lawyers and applying greater discipline to expense control."

Silver lining?

Partners, pundits, and others who like to play McKinsey & Co. on the weekends always suggest this form of fat cutting in tough economic times. But it is a disingenuous solution.

Read why, after the jump.

[Ed. note: This post is by SOPHIST, one of the finalists in ATL Idol, the "reality blogging" competition that will determine ATL's next editor. It is marked with Sophist's avatar (at right).]

On Tuesday, American Lawyer published a follow-up report to their overall associate satisfaction survey, released last Friday. This report ranks midlevel associates' satisfaction with their pay packages. Not surprisingly, Wachtell, Lipton, Rosen & Katz midlevels were most satisfied with their overall compensation, thanks in part to bonuses which ranged from $175,000 to $215,000.

Meanwhile, back on Earth, associates still lucky enough to have jobs were less than thrilled with their pay. Overall, midlevel salary satisfaction has only risen 1% annually since 2006.

The new numbers are surprising to some because top firms in other major markets are now matching the base compensation awarded in New York, while New York associates still receive higher bonuses to keep their landlords at bay.

According to American Lawyer, midlevel associates understand that extra compensation results in longer hours, less partner contact, and decreased job security. As one Jenner & Block associate put it, "They're not raising because they value us. We're just the collective beneficiary because the firm needs to keep up in the market. It's a back-handed compliment."

Perhaps it is time to use the lysine contingency to control the law student population in order to make firms care about associate retention.

A staff attorney reader of ATL once described his position as "either the bluest white-collar job, or the whitest blue-collar job." We found the description quite apt, based on what we know about being a staff attorney.

For those of you who are not familiar with them, staff attorneys perform work similar to contract attorneys -- e.g., document review, document production, other discovery-related tasks -- but, unlike contract attorneys, they are "on staff" at their specific firms (hence the title of staff attorney). They don't have to worry, like contract attorneys, about what their next gig will be, since they are employed directly by their Biglaw shops (i.e., not placed through an agency). Staff attorneys have stable jobs, good benefits, and reasonable hours (at least most of the time; they may have to work overtime if a case is busy).

But there are also disadvantages to being a staff attorney. All that document work can be monotonous, even mind-numbing. Unlike associates, staff attorneys are not on the track towards partnership. They are often the first to be let go during downturns (e.g., at Milbank Tweed; see here and here).

Some staff attorneys claim they are treated like second-class citizens. Back in March, over at the Huffington Post, Yolanda Young -- a former staff attorney at Covington & Burling -- decried what she described as the firm's "staff attorney ghetto," noting the high proportion of minorities among the staff attorney ranks (and the low percentage of minorities among the ranks of partnership-track associates).

If it is a "ghetto," however, it's a rather well-paid one. From one tipster:

I'm a Paul Weiss staff attorney. [ATL] has a loyal following among us.

I'd be interested in seeing a post on SA salaries. I wonder how much they differ from firm to firm here in NYC, or in other cities.

I'm sure such a post would get hammered with comments from BigLaw associates. But it would be widely read, and interesting to the growing ranks of the staff attorney underclass.

We're happy to oblige. Here is the requested post.

Find out how much Paul Weiss pays its staff attorneys in New York -- and, if you're a staff attorney at another firm or in another city, dish about how much you make -- after the jump.

Recovering lawyer Marci Alboher is a writer -- or, as Alboher likes to say, "a slash" (an "author / journalist / speaker") -- who pens a New York Times blog called Shifting Careers. The blog "looks at new ways of custom-blending careers, and shares tips for doing it better."

Her latest post, Demystifying Salary Secrecy, may be of interest to ATL readers. She writes:

A few months ago, I went to hear Gloria Steinem speak. She said many memorable things, including this: If women were more willing to reveal their salaries to one another, they would make strides in eliminating the gender gap in wages. I think that's true for all of us interested in boosting our earning potential. Of course, we all know what we're worth to our employers or our investors by the amounts written on the checks they issue. But how many of us know what we are worth relative to others in the same or similar positions to us?

Well, a lot of us, at least in Biglaw (and at least in terms of associates; compensation for counsel and partners is somewhat less transparent; but even they have the American Lawyer PPP data).

In a reader poll earlier this year, about a quarter of you declared that openly discussing salary is "tres tacky," while a majority described it as "a necessary evil." That seems to be where the column comes down:

I used to be tight-lipped about what I was making with other freelancers. But I am increasingly willing to share more information with selected colleagues because I realize it is the only way of figuring out whether I'm fairly compensated.

Transparency isn't so revolutionary in certain contexts. Those who work for the government are used to it, as are many unionized employees.

I'd like to hear from people who work in environments where all salaries are made public. How do you feel about that transparency?

So, readers, any thoughts? We're guessing that most of you belong to the "transparency is good" school of thought. But if you have contrary (or additional) views to share, please do.

Demystifying Salary Secrecy [Shifting Careers / New York Times]

Earlier: Associate Bonus Watch: Sullivan & Cromwell's Super-Special Bonuses (And a digression on open discussion of salaries.)

Earlier this month, there was some discussion in the comments about law firms possibly cutting associate salaries to cope with the economic downturn. The scenario sounded far-fetched -- but maybe it's not as far-fetched as some might have hoped.

Look, we aren't saying that the sky is falling. There's a world of difference between a law firm based in Fort Lauderdale, with 128 lawyers and extensive exposure to Florida real estate, and the giants of Biglaw, with hundreds of millions (or even billions) in revenue, profits per partner well into the seven figures, and diversified practices.

But still, nobody would call this good news. From the Daily Business Review:

Attorneys at Becker & Poliakoff are being hit with a 12 percent pay cut for the foreseeable future to help the real estate-dominated firm deal with a drop in profitability and delays in collections.

Becker & Poliakoff is the first major South Florida firm to turn to its lawyers to make cuts to help it deal with the economic slowdown and real estate downturn. Other firms have trimmed staff jobs, including paralegals and secretaries, and cut back on other expenses to help cope with the economic landscape.

Alan Becker, the firm's managing shareholder, informed attorneys and support staff about the pay deferment plan via podcast Wednesday. The cut took effect Thursday and affects only lawyers. No layoffs are expected.

So that's the silver lining to the proverbial cloud. You've suffered a 12 percent haircut on your salary, but at least your job is secure.

We don't know what the Becker & Poliakoff pay scale is, but we're guessing it's well below the $160K scale. Back in 2003, it looks like their starting salaries were in the $63K-$70K range.

But just out of curiosity, what would Biglaw salaries look like if they were trimmed in this manner? If a 12 percent reduction were applied to the first three steps of the standard New York pay scale, salaries would go from 160-170-185 to 141-150-163.

More discussion, after the jump.

For the second installment of the Asia Chronicles, we're going interactive. Please click on this Youtube link, minimize, and read on.

Come with us, won't you, to a world of your imagination. Imagine that you're an associate at a major U.S. law firm in Asia, paid the same salary and bonus as your colleagues back home. Imagine further that $87,500 of your salary is excluded from federal income tax. Imagine that your firm pays your rent, and, even though this would normally be considered taxable income, it is excluded from taxation as well.

One of the ACLs who lived in this "world that defies explanation" paid off his entire $120K+ law school debt in one year and is on track to put away over a quarter million during the next two years. How? With extra salary and a much lower tax burden, he takes home approximately 15% more cash than he would in the U.S. He has no car or other transportation expenses (walks 10 minutes from home to office), usually works late enough to expense his dinners, and pays no rent. He takes so many business trips that frequent flier miles and hotel points take care of most of his vacation expenses. At least 80% of his paycheck goes straight into his 401K and other investments. The rest goes to magnums of Cristal (he admits he could do better).

Before we jump into the details, let's set out some assumptions:

Assumption #1: There are tons of U.S. firms in Asia; some pay less, some pay more. A sizable group of firms pays competitive packages (yes, we said "packages") at or near the top of the market. This entire discussion focuses on that group because, let's be honest, for most of us "the law" isn't our calling. We don't sit up at night thinking about Section 4(2) of the U.S. Securities Act or wonder about the components of a conversion formula in a share purchase agreement (wait, maybe someti... ok, no ... never). So, for the purposes of this discussion, let's just assume that it's mostly (almost entirely) about the Benjamins. (Or Maos? Lees?)

Assumption #2: There are U.S. lawyers in Vietnam, Indonesia, Thailand, etc. But, to borrow from XOXO/Greedy Associates lingo, this discussion focuses on "BIGLAW" in the major Asian markets (i.e., Tokyo, Singapore and the greater China region) at "Vault"-listed firms. HTH.

On to the main event. Salaries. Three words: New York levels. Bonuses. Three words: New York levels. That's right. When you guys over in New York rejoice over the raises, so do we. But, there's more. A few years ago, there was this evil little SOB of a concept called "tax equalization" whereby firms, for whatever reason (well, we know the reason; you do the math), decided to pay their overseas U.S. associates an amount in salary that was equal, after tax, to what an associate in New York would be paid. Yes, that means poor little Billy in Asia was "theoretically" paying New York city and state tax. Firms have since moved away from this model. In a low-tax region like Singapore or Hong Kong, this means associates can take advantage of the low tax rates. What's that, you say? The U.S. taxes on worldwide income? Fear not. Certain provisions in the tax code are geared towards providing tax breaks for U.S. citizens working worldwide. Bottom line, associates in Asia at U.S. law firms also pay less in taxes each year.

Ohhh, and it doesn't stop there. Remember the reference we made to "packages" above? Firms in Asia (except in, only God knows why, Singapore ) foot the bill for their associates' housing expenses. Many firms pay this housing allowance in cash each month, some pay the rent directly to the landlord. Many firms then let associates keep the difference between the rent and the allowance. The word on the street is that a certain Wall Street law firm whose name begins with an S and ends with a T pays top of the market at about $80,000 a year. So, if you're an associate at this unnamed Wall Street firm that rhymes with Pimpson Cratcher and your rent is $40,000 each year, you're pocketing an extra $40,000. It's the "special bonus" that never stops giving.

According to Evan Jowers of Kinney Recruiting (who has eyeballed perhaps more offer letters from the major US and British firms in Hong Kong / China than any other person in the industry), "The housing / expat packages at the top U.S. and British firms in Asia are likely to go higher in the next year or two. Many of these firms have substantially raised their packages in only the past 6 months, with there now being many more firms in the what I consider to be competitive housing allowance range in Hong Kong, $65,000 to $80,000, than a year ago. In fact, the number of firms with housing packages over $70,000 in Hong Kong has more than doubled in the past six months."

More delicious details, after the jump.

Time for a shout-out to this writer's home state. Over in New York, Biglaw lawyers tend to look down upon their cousins across the river. Dismissive jokes about "Jersey firms" are commonplace.

But large-firm lawyers in New Jersey are doing just fine, thank you very much. From a tipster:

As a Jersey guy, you may find this interesting: According to the NJ Law Journal, Lowenstein Sandler just became the first NJ firm with profits per partner in the seven figures: $1,102,700. Average compensation per partner is not far behind, at $977,500.

And it's not just Lowenstein Sandler that had a good year. Although New Jersey firms slowed their hiring and trimmed equity partner ranks in 2007, showing signs of being affected by the dire economic times, they still did pretty well. From the New Jersey Law Journal (subscription):

Growth in total revenues and net profits [among the New Jersey Top 20 firms] thus slowed in 2007. Revenue rose by 7.67 percent to $1.53 billion from $1.42 billion in 2006, compared with a 9.6 percent hike in last year's survey.

Profit growth was even slower, up only 5.62 percent to $519.3 million from $491.6 million, compared with a 9.9 percent bump the prior year.

When fewer lawyers produce more revenue, it means each is working harder. Indeed, revenue per lawyer showed a pronounced spike: up 5 percent to $517,650, more than three times the 1.4 percent rise to $493,000 reported last year.

Likewise, since there were fewer equity partners sharing the bottom line, profits per partner growth enjoyed an eight-fold increase, rising 6.62 percent to $594,100, compared with a sluggish 0.8 percent to $557,200 in last year's survey.

By New York standards, PPP of $600K is small potatoes. But it's still a handsome income -- and grows more appealing if the hours, cost of living, taxes, and partnership prospects are better over in Jersey. [FN1]

Time for New Yorkers to think about jumping to the other side of the Hudson? Or time for another round of pay raises for Garden State associates?

[FN1] These matters are open to debate, of course. Some New Jersey firms, such as the super-profitable Lowenstein, have reputations as sweatshops for demanding a lot of their associates.

Streamlining for Austere Times [New Jersey Law Journal (subscription)]

We inquired into this topic previously, and one of you even put up a Community post. What's up with those special bonuses for senior associates over at Sullivan & Cromwell?

This gossip has been circulating:

Rumor has it that S&C put out a memo about the senior bonuses [last week]. Apparently, the $2.5 million they "put aside" [mostly] went to cover the Cravath special bonus. The actual amount of the bonus was unknown as of last night as far I could tell.

The memo, which I don't have, seemed to suggest that the money was spent, but that they were going to give a small amount because they had promised. If S&C senior associates are lucky, maybe they'll get a gift certificate to Chili's.

And it's true. We couldn't get our hands on the memo, but we have confirmed with sources at the firm that S&C paid out its special "senior associate bonuses" last week. We don't know the numbers for all years, but word on the street is that current fifth-years received around $2,500.

Three grand is small compared to the whopping year-end bonuses that Sullivan already paid to its senior associates. But contrary to our tipster, it buys you more than a few meals at Chili's. Maybe the Cheesecake Factory?

In related news, the Sunday Styles section of the New York Times has an interesting article entitled "Not-So-Personal Finance." It's all about how among young people -- say, folks in their twenties and thirties -- open discussion of salaries and compensation isn't as taboo / tacky as it is among older folks. Lawyers get a shout-out:

Several workers under 35 said that greater salary transparency among friends only makes sense in an age when there is so much information freely available online. Young professionals, in fact, have all sorts of ways to find out how much their friends make, even without asking. Associates at law firms anonymously report their own salaries to Web sites like www.greedyassociates.com.

Greedy Associates? That's a bit "five years ago." If you check out their front page now, you'll see it's overrun with spam and postings about lawyer salaries in Kiev (no offense to our Ukrainian brethren).

We realize that the readership of Above the Law isn't exactly a random sample, but please take our poll:

Not-So-Personal Finance [New York Times]

Earlier: Associate Bonus Watch: Sullivan & Cromwell Matches (and More)

Starting salaries for new associates in the London offices of U.S.-based firms can be quite generous. They often exceed the New York going rate of $160,000, approaching $200,000 at top shops. See here (noting that Weil and Cleary pay newly-qualified lawyers the equivalent of $180K, and Latham pays NQs the equivalent of $190K, in London). [FN1]

But top U.K. firms, known collectively as the "Magic Circle," aren't quite as generous to their London associates. From the ABA Journal:

[W]hile some magic circle firms may up the ante at least a little this year, some partners are complaining that junior lawyers already are overpaid.... Says an unnamed Clifford Chance partner: “People should be grateful for having jobs in the current market. I could easily see the rises not happening now and being deferred until later in the year.”

Currently, starting lawyers at leading London firms reportedly make between 63,500 pounds and 65,000 pounds. That translates to a range of about $125,000 to $128,000 in U.S. dollars.

Additional detail, from Legal Week:

Partners with City giants including Linklaters and Clifford Chance (CC) - normally early movers - told Legal Week they are not expecting to see significant increases this year, as they feel the impact of the credit crunch.

Linklaters, Freshfields Bruckhaus Deringer and Allen & Overy (A&O) are all in the process of reviewing their salary bands, with partners conceding substantial rises are unlikely. Increases at the junior end are thought to be particularly unlikely.

Insofar as the market for legal services is becoming increasingly global -- London has been gaining on New York as a global financial capital, and competing with it for talent -- pay stasis in London is bad news for those seeking pay raises in New York.

NY to 190? As the Brits like to say, "Not bloody likely."

[FN1] These figures are generated by converting pounds to dollars. But yes, we know that London is even more insanely expensive than New York.

Firms to hold off on major pay hikes after crunch [Legal Week]
London Partners to Associates: At $125K, We’re Paying You Too Much [ABA Journal]

The Brokeback Lawfirm scandal folded its pup tent months ago. But there's still stuff to cover at one of ATL's favorite firms, the venerable Sullivan & Cromwell.

Here are two items. First, from a tipster:

If I recall correctly, Sullivan & Cromwell sent out a memo in December or January saying that even though they paid the "special bonuses" in December, they still intended to pay additional profit-sharing bonuses in February. [February is over] and as far as I know, not a word from S&C. Can you guys please make a big deal over this?

The tipster's memory is slightly off. From chairman H. Rodgin Cohen's earlier bonus memo:

[T]he Firm will pay senior associates compensation in addition to salary and bonus through our new Senior Associate Supplemental Bonus Plan ("the Plan"). We have decided to accelerate payments under this new Plan to result in the following [market-matching bonuses] being paid on December 14 to our senior associates, with final supplemental payments to be made in the Spring of '08.

We are now officially into spring 2008. So ATL hereby "make[s] a big deal over this." Has S&C paid the supplemental bonuses to its senior associates? If so, can someone please give us the skinny?

Second, here's an interesting rumor of a partner departure from S&C, from a different tipster:

Carlos Spinelli-Noseda is a partner at S&C (do a Google search and check the cached website). At this point, however, you can't find him on the firm's external or internal website anymore. No idea what's up with him, but apparently he [was] involved in a firm event about 10 days ago...

We're intrigued. Partner departures are more common farther down the Am Law 100, but they're rare at a place like Sullivan & Cromwell.

We did some preliminary poking around, but didn't learn anything. A firm spokesperson didn't respond to multiple telephone and email messages. The usual news sources have no stories about his defection to another firm. On LinkedIn, he's still listed as an S&C partner (although it's true, as noted by the tipster, that his bio is gone from the S&C website).

We tried contacting Mr. Spinelli-Noseda directly. Our email didn't bounce back, but we didn't get a response either. When we dialed his direct extension, a receptionist answered the telephone with the firm name, not his name. When we asked to speak with him, the secretary asked us -- in a vaguely hostile tone -- who we were and why we were calling. She took down our contact info, but did not offer to put us into voice-mail, and we never received a return call.

If you know what's going on, please email us. Thanks.

Update: The mystery of Spinelli-Noseda's departure has been solved. See here for details.

The rumor making the rounds of lawyer and staff layoffs at Thelen Reid Brown Raysman & Steiner is true. We just spoke to Thelen's co-chair, Stephen V. O'Neal, who provided confirmation and details.

The firm is in the process of laying off 26 associates and 85 staff members, on a firm-wide basis, "in response to recessionary pressures." (Unlike President Bush, Mr. O'Neal was not afraid to use the "r" word.) Thelen has approximately 600 lawyers, per its website, so the cuts amount to roughly 4 percent of total headcount.

With respect to the location of the affected lawyers, the cuts affected all major offices. With respect to seniority -- one source told us that some first- and second-year associates were fired -- Mr. O'Neal said that "some were fairly junior, and some more senior."

In terms of practice areas, Mr. O'Neal said the layoffs were spread out among groups, but with "some areas more impacted than others," including certain parts of capital markets and cap-markets-related real estate work. He noted that other practice areas are "thriving and increasing in scope," including renewable energy, cross-border M&A, China practice, litigation, and workouts / bankruptcy.

With respect to staff layoffs, Mr. O'Neal explained that they are due in part to the economic climate, but in part due to post-merger staff redundancies. The merger of Thelen Reid and Brown Raysman took place in late 2006, making the consolidated firm a little over a year old. But the firm did not do much cutting of staff in 2007.

Last year "was not a year when we tried to make deep cutbacks in anything, even though we had combined two good-sized firms," explained Mr. O'Neal. "It was a year of building, coordinating, and consolidating. We wanted to understand how best to organize this new entity." Now that the firm has a better understanding of its staffing needs, and is in the process of consolidating multiple offices in the same cities (e.g., New York), it is reducing staff redundancies.

As for associate severance packages, Mr. O'Neal stated that firm provided a "market-level" package. We floated three to four months as our understanding of market, and he said that the firm is "in that ballpark."

"We are anticipating a profitable 2008," said Mr. O'Neal. "We are being prudent businesspeople, and when you are dealing with recessionary pressures, you adjust your business so you will have -- and maintain -- a strong level of profitability, notwithstanding those pressures."

We thank the firm for the information and candor with respect to the layoffs (i.e., not casting these departures as "performance-based"). If you have more information, feel free to email us.

Updates: A few additional nuggets:

1. As noted in the comments, total headcount includes partners and counsel, so the percentage of associates laid off is higher than 4 percent. Some of you suggest it's around 10 percent.

2. We're a little annoyed at Legal Pad for the lack of an ATL shout-out -- in both the blogosphere and the MSM, it's proper form to credit and/or link to the source that breaks a story first (even if you were working on the same story too) -- but we'll link to them anyway.

They have more on the Thelen layoffs here. Much of the info in their post appeared previously in ours, but they do add that the firm "is also trimming its summer program from eleven to eight weeks and is pushing the start date for first-years from September to January."

3. A source at the firm tells us that the severance packages were in the two- to three-month range.

Earlier: Prior ATL coverage of layoffs (scroll down)

[Ed. note: Yesterday's guest post about how Barack Obama's tax plan might affect Biglaw associates, authored by Ted Frank, generated a record number of comments on ATL: 564 (and counting). It also generated lots of reaction throughout the blogosphere (links collected below). So we thought we'd invite Ted to do a follow-up.]

Here it is. Ted wrote it in response to the following reader email, which makes many of the arguments that surfaced in the 564+ comments. From an Obama defender:

I'm sorry, but you are losing your credibility by posting this false propaganda on Obama. Look at Obama's website. It clearly states, "Asked About Raising the Cap, Obama said, 'You Might Have the Equivalent of a Doughnut Hole'--NOT That He Would Completely Remove the Cap." Obama "has stated in various venues that 'his inclination... has been for a 'donut' where the uncapping would take place above some threshold income level -- probably around $200,000 or $250,000' his economic adviser Austan Goolsbee said in an email. A donut would protect a certain portion of income (e.g., between $100,000 and $200,000) from the payroll tax and could be phased in over decades."

In addition, that "$34,000 paycut" in the post title is misleading. Even if all your assumptions were correct (which they weren't), the after tax pay cut under Obama is < $20,000. I love your site, but please correct this ridiculous false article before you lose all credibility.

And now, without further ado, Ted Frank.

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First, as I show in the spreadsheet, a $20,000 tax increase is the equivalent of a $34,000 before-tax paycut for a New York City resident, which would have the same after-tax effect. The $34,000 figure is accurate: that's just math. The Obama tax plan would have the same effect on a NYC fifth-year associate being paid market as a $34,000 paycut.

Obama has never said he will have a doughnut-hole, only that his SS tax could include a doughnut-hole. When Hillary Clinton attacked Obama at the November 15 Nevada debate for wanting to eliminate the cap, Obama didn't say that the attack was incorrect; he defended the policy because eliminating the cap would only affect what he called the "upper class." The press has accurately reported that Obama has also proposed eliminating the cap; even Obama's own website links to a thinktank's analysis of the benefits of a cap elimination.

It would be really easy for Obama to promise to include a "doughnut-hole" or to not eliminate the SS-tax cap. He certainly hasn't been afraid to promise drastically expensive programs of new spending or even tax giveaways to large swaths of the population who aren't paying much tax now.

But when it comes to Social Security, Obama is suddenly vague; when he does discuss details, it is to cite examples (e.g., Warren Buffett) that could not be accomplished without eliminating the cap entirely. And the only reason a politician acts that way is because he supports the more drastic, politically unpopular plan, but doesn't want to get tagged with it before the election, and will say after the election "I only said I would 'consider' a doughnut-hole."

How Barack Obama's Tax Plan Will Affect You [Microsoft Excel file]

Additional discussion and links, after the jump.

[Ed. note: Today we bring you some "news you can use": a practical look at how political choices might affect your personal finances. This post is by Ted Frank, who blogs at Overlawyered.com and PointofLaw.com, and who has guest edited ATL in the past. Take it away, Ted.]

BigLaw lawyers love Obama. If one searches by law firm various databases on-line for campaign contributions, one sees an overwhelming sea of blue, and most of it to Obama.

But how will Obama affect BigLaw wallets? On Above the Law, we regularly see commenters threaten to abandon law firms for falling $5,000/year short of market. I therefore thought it worthwhile to examine the effects of Obama’s tax and spending plans on take-home pay.

We all know that Obama wants to end the Bush tax cuts. That is a 3% bump across the board to the bad old days when associates faced a marginal federal tax rate of 36%.

But the real hidden tax is that Obama plans to end the social-security tax cap. Right now, you may notice, sometime during the summer or early fall, your take-home pay suddenly goes up because they stop deducting FICA. Current law caps social security taxes: in 2008, the cap is at $102,000. Obama proposes to abolish this. That mid-summer bump will be no more: add about several thousand dollars to your annual tax bill.

But social-security taxes are not only on employees. The government also charges 6.2% to employers that you never see on your W-2s. But rest assured the partners see this, and will notice that the expense of keeping an associate has risen several thousand dollars a year when FICA taxes double and triple. Will they swallow that additional expense, or take it out of your bonus?

Find out, after the jump (or click here).

The powers-that-be at Mayer Brown have made their decisions on bonus and salary adjustments, as announced in an email last night. And it appears that they've taken a page from the Dechert playbook, according to one associate:

"The second paragraph [of the memo] is a shock. We were never informed of financial ramifications for failing to enter our time."

It might be slightly annoying, but it's the growing trend. Expect more firms to adopt policies that tie compensation to timely time entry. Email exhortations without financial consequences don't seem to be very effective.

(And it's arguably not that big an imposition. You already slave away at the firm for ten or twelve hours a day -- so what's another five minutes at the end, to enter your time before heading home? It's just a matter of getting into the habit of doing it, instead of letting a backlog build up.)

The Mayer Brown memo, after the jump.

A quick update on yesterday's post about Seyfarth Shaw. A source there tells us:

Here are the "official" numbers for Seyfarth NYC and "Others," excluding Atlanta (no idea where they are -- presumably lower). Great for the mid/upper classes, but no so great for 1st-2nd years. Some grumbling also from income partners since they don't get paid a whole lot more than a senior associate and have to deal with all the administrative headaches associated with income partner status.

For those of you who are interested, the salary ranges appear after the jump.

We've confirmed the news, which surfaced previously in the comments, about the pay raise announcement by Seyfarth Shaw. Here's what one source told us:

The Chicago office had an all-associate meeting [yesterday]. First- and second-year associates will stay lockstep -- $145K for first years, $155K for second years -- while third- through eighth-years will get "market" base salary ranges. Not clear where anyone will fall in the ranges yet, since we don't find out until the week of March 3.

The bonus pool remains the same as last year, which means no "extraordinary" bonuses. (But there seems to be room to reward top performers one way or another.)

The managing partner of the office made a crack about sending him anonymous questions by posting them "on Wikipedia," so perhaps it's time for a higher profile for you.

Additional information, including ranges for selected classes, after the jump.