Cravath, Swaine & Moore Shake-up Partner Pay System

For decades, upward mobility at America’s biggest law firms was based primarily on a system of seniority. But the times they are a-changing, and for the storied 200-year-old Cravath, Swaine & Moore—one of the few remaining holdouts of the old-school…

Jennifer
Image Credit: iStock
Sign up for insightful business news.

For decades, upward mobility at America’s biggest law firms was based primarily on a system of seniority.

But the times they are a-changing, and for the storied 200-year-old Cravath, Swaine & Moore—one of the few remaining holdouts of the old-school “lockstep” partner system—the pathway to promotion is about to see a major shakeup.

Witness To The Compensation

In Cravath’s old lockstep system, promotions came from within, and lawyers who make partner saw compensation packages based on years-worked rather than business generated. The intent was to prioritize teamwork and collegiality, with clients shuffled between colleagues to match each case with the best legal expertise—rather than co-workers competing for big-payout cases, regardless of experience or know-how.

The problem? The system left the firm exposed to competitors, who poached Cravath lawyers with the promise of higher pay for top performers:

  • The average Cravath partner earned a $4.6 million salary in 2020, according to American Lawyer Magazine. Meanwhile, major firms off the lockstep system saw partner salaries average $7.5 million, with some paying $10 million to top performers.
  • “Having zero flexibility to acknowledge super-performers is doing [Cravath] a disservice over time,” legal recruiter and consultant Matthew Bersani told The Wall Street Journal on Monday.

Now, Cravath is moving to a hybrid model for its 96 partners. “Under the new system, the seniority-based bands will still exist,” Cravath presiding partner Faiza Saeed told The Wall Street Journal, “but more money will be distributed to those making the strongest contributions.”

Erin Brocko-rich: Departing from the lockstep model isn’t the only way Cravath lawyers can see a pay-bump this year. The firm has informed senior associates Christmas bonuses may total as much as $115,000 this season, igniting a bonus arms race across the industry. Thanks in large part to litigating the boom of business mergers and acquisitions, corporate law earned record revenues in 2021. But it came at a cost: much higher than usual turnover rates. Now, big firms are shelling out massive bonuses to combat lawyer burnout.

Analysis more
(Photo Credit: Towfiqu Barbhuiya/Unsplash)

Private Practice: A Q&A with Pierre Valade, Founder of Privacy App Jumbo

(Photo Credit: Nate DeWaele/Unsplash)

The Brontosaurus Bubble: Could the bottom fall out of the dinosaur fossil market?

Recent News

Southwest Reducing Training Time Needed for New Pilots

Absolutely Nobody Can Agree on What’s Happening With the Economy Right Now

America’s Push for EVs Could Leave the Power Grid Feeling Drained

Private Practice: A Q&A with Pierre Valade, Founder of Privacy App Jumbo