Legal Business

Starting a war: Cravath lifts associate pay for the first time in almost ten years

Starting a war: Cravath lifts associate pay for the first time in almost ten years

In a move likely to trigger similar increases amongst its rivals, Cravath, Swaine & Moore has lifted associate pay for the first time in almost ten years, bumping up base pay to $180,000.

Having last boosted pay in 2007, first year associates at Cravath will see a raise of $20,000 to their pay packets taking home $180,000. Associates in their seventh and eighth year will receive an extra $35,000 moving their salaries up to $300,000 and $315,000 respectively.

According to an internal memorandum sent to Above The Law, the increase will come into effect on July 1 and will be reflected in paychecks commencing on July 8, 2016.

In the City Magic Circle firms have finalised reviews of associate pay with increases across Freshfields Bruckhaus Deringer, Clifford Chance, Linklaters and Slaughter and May.

Both Freshfields and Clifford Chance (CC) have bumped up their NQ salaries to £85,000, a rise of £17,500 for Freshfields, which this year folded discretionary bonuses into salaries and £15,000 for CC which also included bonuses in its figures.

NQs at Linklaters can expect to take home at least £81,000 next year including bonus. High performers will on average earn £91,000 including bonus, up on the basic £68,500 salary NQ lawyers at the firm earned last year. 1PQE associates will on average receive £90,000, with 2PQE and 3PQE associates receiving £100,000 and £111,000. High performing lawyers will receive substantially more, with 1PQEs set to earn £101,000. High performing two year PQEs will earn £119,000 and high performing three year PQEs will earn £130,000. That is up on the £98,500 basic salary 3PQEs would receive last year.

In an underwhelming announcement, Slaughter and May increased its salaries for NQ lawyers by 2.1% from £70,000 to £71,500, while associates with one year’s experience (PQE) will see their salaries go up to £79,000 from £75,500. At the other end of the scale, those with three years’ PQE, will receive an increase of 3.4% on the £96,500 paid out last year.

Cravath associate salaries:

1st year – $180,000 ($160,000 + $20,000)

2nd year – $190,000 ($170,000 + $20,000)

3rd year – $210,000 ($185,000 +$25,000)

4th year – $235,000 ($210,000 +$25,000)

5th year – $260,000 ($230,000 + $30,000)

6th year – $280,000 ($250,000 + $30,000)

7th year – $300,000 ($265,000 + $35,000)

8th year – $315,000 ($280,000 + $35,000)

madeleine.farman@legalease.co.uk

 

 

Legal Business

After 25 years, Cravath loses top deal lawyer Barshay to Paul Weiss

After 25 years, Cravath loses top deal lawyer Barshay to Paul Weiss

A firm rarely to lose its senior talent, Wall Street firm Cravath, Swaine & Moore‘s corporate partner Scott Barshay is leaving the prestigious firm to join disputes leader Paul, Weiss, Rifkind, Wharton & Garrison as its global head of M&A.

Barshay, who comes cited amongst some of the most prominent M&A lawyers in the US, leaves Cravath after 25 years having joined in 1991 and being elected to its partnership in 1998.

Having spent his entire career at Cravath, in his new role Barshay will focus on advising clients on M&A, activist defence and corporate governance.

Some of Barshay’s recent high-profile M&A transactions in the past year include advising 3G Capital and H.J. Heinz in the $60bn Kraft-Heinz merger; representing Anheuser-Busch InBev in its $107bn acquisition of SABMiller; advising Cameron International in its $15bn sale to Schlumberger and acting for Honeywell in its $90bn proposal to acquire United Technologies; and representing Starwood Hotels in its contested pending $13.6bn sale to Marriott International.

Some of Barshay’s recent activist defence representations include advising Avon in its settlement agreement with Barington Capital; acting for Qualcomm in the accumulation of more than $2.5 billion of Qualcomm’s stock by JANA Partners; and advising Xerox in the accumulation of more than 7% of Xerox’s stock by US business magnate Carl Icahn and subsequent separation into two public companies.

‘The breadth and depth of Scott’s practice perfectly complement our firm,’ said Robert Schumer, chair of Paul Weiss’s corporate department. ‘Our clients worldwide will benefit from Scott’s unparalleled expertise in public M&A representation and board-level strategic counsel.’

The move of M&A star lawyers is rare within the elite band of American corporate law, but the exit is Cravath’s third in recent years after Sarkis Jebejian left the firm in 2012 for Kirkland & Ellis, a year after James Woolery left to co-head JPMorgan Chase & Co’s M&A practice for North America.

Paul Weiss’ revenues were up 7% in 2015 to $1.1bn from $1bn the previous year in what was the firm’s 16th year of record-breaking growth having broken the billion dollar barrier last year.

jaishree.kalia@legalease.co.uk

Subscribers can more about Wall Street’s elite firms in the feature: ‘The conservation game – up close with New York’s original inner circle’

Legal Business

Cravath and Skadden check-in as Starwood derails Marriott merger to seal Chinese hotel takeover

Cravath and Skadden check-in as Starwood derails Marriott merger to seal Chinese hotel takeover

Cravath, Swaine & Moore, Skadden, Arps, Slate, Meagher & Flom and Gibson, Dunn & Crutcher are advising as Westin owner Starwood Hotels & Resorts Worldwide has called off its $12.2bn buyout agreement with Marriott in favour of a $13.2bn offer from a group of investors led by China’s Anbang Insurance Group.

The consortium, which comprises Anbang, J.C. Flowers & Co. and China’s Primavera Capital, are offering to acquire all of the outstanding shares of common stock of Starwood for a $78 per share in cash, an increase from the $76 per share proposal made by the consortium’s previous bid earlier this month.

According to the Starwood board, Anbang’s proposal constitutes a ‘superior offer’ and ‘the binding and fully financed proposal from the consortium provides a high degree of closing certainty’.

Cravath is representing Starwood with a team led by corporate partner Scott Barshay. The firm is also representing Starwood in connection with its existing agreement with Marriott.

Anbang has instructed Skadden as its legal adviser in the takeover bid with New York-based M&A partner Eileen Nugent, who is also the firm’s global co-head of transactions.

Advising Marriott is Gibson Dunn & Crutcher co-chair of the M&A practice group Stephen Glover. Marriott’s earlier deal with Starwood worth $12.2bn, would have catapulted it to become the world’s largest hotelier by a wide margin, adding 50% more rooms to Marriott’s portfolio.

The Chinese firm has been an aggressive buyer of US hotel properties of late and already owns New York’s iconic Waldorf Astoria.

jaishree.kalia@legalease.co.uk

Legal Business

Cravath and Kirkland ride pharma wave to win places on $5.8bn Abbott-Alere deal

Cravath and Kirkland ride pharma wave to win places on $5.8bn Abbott-Alere deal

Already two of the big winners from the merger bonanza in the pharmaceuticals sector, Cravath, Swaine & Moore and Kirkland & Ellis have won mandates advising on the $5.8bn purchase of diagnostic testing company Alere by Abbott Laboratories.

Illinois-based Abbott, which made $20.4bn in sales in 2015, agreed a deal to pay $56 per common share for Alere as it bulks up its diagnostics business. This is a 51% premium on Alere’s share price on Friday.

Cravath fielded New York M&A partners Scott Barshay and Keith Hallam for Alere, whose disease and flu testing equipment is used in doctors’ offices, clinics and at home. Barshay is one of the Wall Street stalwart’s biggest deal doers, having also billed his time on drinks giant Anheuser Busch InBev’s $107bn proposed acquisition of Peroni-making rival SABMiller, and Heinz’s $60bn merger with chocolate conglomerate Kraft to form Kraft Heinz.

Kirkland’s New York-based corporate partners Daniel Wolf and David Feirstein were selected by Abbott to advise on the deal. The instruction is the latest in a string of pharma deals executed by Wolf, who was picked by Baxalta, a maker of haemophilia and leukemia drugs, to handle its $32bn sale to Ireland’s Shire. He also counts Bristol-Myers Squibb and Teva Pharmaceutical as clients.

The total value of global pharma M&A in the first three quarters of 2015 rose 46% to $251.5bn according to a recent report from analysts at MergerMarket. This was largely driven by US companies investing in European rivals or companies targeting rare diseases.

tom.moore@legalease.co.uk

Legal Business

Cravath kicks off bonus season with associates in line for up to $100,000

Cravath kicks off bonus season with associates in line for up to $100,000

Cravath Swaine & Moore has set the benchmark for US associate bonuses becoming the first major law firm to announce its end-of-year awards.

The Wall Street leader revealed this week that it will stick to 2014’s bonus levels ranging from $15,000 to $100,000.

In December last year, Cravath increased amounts for certain classes to match Davis Polk & Wardwell’s bonus scheme, after it first announced bonus levels in November that came in significantly lower than other peer group firms.

The level of bonuses is typically viewed as a barometer of strength for the world’s largest legal market.

This year, however, Cravath has stayed at 2014 levels. Lawyers who joined Cravath in September 2015 and 2014 will receive a $15,000 bonus on 18 December while those that joined in 2013 will receive $25,000.

Those that joined the 440-lawyer firm in 2012 will take home $50,000 and those from the 2010 class will receive $80,000, while senior associates will continue to receive $100,000 in bonuses.

In line with the most prestigious Manhattan firms, Cravath ‘locksteps’ its bonuses, paying them on strict seniority rather than individual assessment.

While Cravath often sets the market bonus rate for other top Wall Street firms, last year Simpson Thacher & Bartlett put down an early marker. At that time, Cravath followed suit and matched Simpson Thacher’s bonus scales for each associate level before subsequently raising their rates.

Cravath has historically been one of the most profitable law firms in the US, with profits per equity partner of $3.36m for the 2014 financial year, while revenues were up 6% annually to $648m.

Cravath bonus scale 2015:

Class of 2015 — $15,000 (pro-rated)

Class of 2014 — $15,000

Class of 2013 — $25,000

Class of 2012 — $50,000

Class of 2011 — $65,000

Class of 2010 — $80,000

Class of 2009 — $90,000

Class of 2008 — $100,000

Class of 2007 — $100,000

jaishree.kalia@legalease.co.uk

For more on Cravath and its key New York rivals, see ‘The Conservation Game‘ (£) 

Legal Business

The conservation game – up close with New York’s original inner circle

The conservation game – up close with New York’s original inner circle

Amid a changing global legal market, three storied Wall Street firms retain commanding reputations. Legal Business assesses New York law’s enduring inner circle.

Almost all absurdity of conduct arises from the imitation of those whom we cannot resemble.
Samuel Johnson

Legal Business

US associate bonuses: Simpson first to unveil, Cravath follows and Skadden tops with $110,000 bonus

US associate bonuses: Simpson first to unveil, Cravath follows and Skadden tops with $110,000 bonus

The US bonus season, usually led by Cravath Swaine & Moore, has this year seen Simpson Thacher & Bartlett kick-start the process ahead of the traditional schedule, and set a very high bar for the rest of the American elite firms.

Simpson awarded $15,000 in bonus to its junior associates increasing to $100,000 for the more senior ranks, with the firm’s midlevel and senior associates seeing the biggest increases from last year. Traditional market leader to unveil bonuses Cravath, Swaine & Moore followed suit and matched Simpson Thacher’ bonus scales for each associate level.

However, breaking the mould so far are Skadden Arps Slate Meagher & Flom and Davis Polk Wardwell who have awarded their associates more generously. While Skadden Arps pretty much matched Simpson Thacher’s bonuses, it has awarded certain associates in classes of 2007 bonus amounts of $110,000 in recognition of outstanding performance. All bonuses are expected be paid out on 19 December.

Davis Polk on the other hand, has matched Simpson Thacher’s bonus range of $15,000 to $100,000, but has awarded $5,000 more for its 2008 class, and $10,000 for its 2009, 2010 and 2011 class.

The bonus scales revealed so far are understood to be: 

Simpson Thacher:

2014: $15,000

2013: $15,000

2012: $25,000

2011: $40,000

2010: $55,000

2009: $70,000

2008: $85,000

2007: $100,000

Cravath:

2014: $15,000

2013: $15,000

2012: $25,000

2011: $40,000

2010: $55,000

2009: $70,000

2008: $85,000

2007: $100,000

Skadden Arps:

2014: $15,000

2013: $15,000

2012: $25,000

2011: $40,000

2010: $55,000

2009: $70,000

2008: $85,000

2007: $100,000 – $110,000

Davis Polk:

2014: $15,000

2013: $15,000

2012: $25,000

2011: $50,000

2010: $65,000

2009: $80,000

2008: $90,000

2007: $100,000

jaishree.kalia@legalease.co.uk

Legal Business

US bonus season: Cravath kicks off by holding bonuses at 2012 levels

US bonus season: Cravath kicks off by holding bonuses at 2012 levels

The US bonus season has kick-started with elite New York firm Cravath, Swaine & Moore setting the tone by revealing it will pay its associates the same end-of-year bonuses as 2012, ranging from $10,000 to $60,000.

Lawyers who joined Cravath in September this year will receive a $10,000 bonus on Friday 20 December, identical to last year’s sum. First-year associates will also receive $10,000 while the most senior associates will receive $60,000.

The decision to keep bonuses static reflects the firm’s cautiousness following modest revenue growth among the US big law firms over the past year. Cravath is regarded as the market leader in terms of setting a benchmark for how other major US law firms will reward their junior lawyers, with US commentator David Lat commenting in his Above the Law blog late on Monday (2 December): ‘My take on the Cravath bonus numbers: this is good news. Biglaw’s performance has been rather weak in 2013 to date, but the Cravath partners are basically absorbing any downside risk themselves and keeping their associates whole.’

Last year, the 450-lawyer firm boosted its associate bonus levels, showing some signs of confidence after the economic slowdown. Meanwhile in 2011, bonuses were largely held, with first-year associates awarded $7,500, while seventh-year associates received $37,500.

The top 60 Legal Business Global 100 firm reported a 6% increase in revenues to $603m this year, while its profit per equity partner was also up 14% to $3,435,000.

The firm declined to comment.

jaishree.kalia@legalease.co.uk

The bonuses in full:

Class of 2013 — $10,000 (pro-rated)

Class of 2012 — $10,000

Class of 2011 — $14,000

Class of 2010 — $20,000

Class of 2009 — $27,000

Class of 2008 — $34,000

Class of 2007 — $40,000

Class of 2006 — $50,000

Class of 2005 — $60,000

Legal Business

Finance: Slaughters, Cravath and De Brauw secure Shell DCM work as Irwin Mitchell wins Wells Fargo as new client

Finance: Slaughters, Cravath and De Brauw secure Shell DCM work as Irwin Mitchell wins Wells Fargo as new client

European corporates are showing greater reluctance than last year to tap into the debt capital markets but Royal Dutch Shell this week issued a triple-tranche $3.75bn bond with Slaughter and May; Cravath, Swaine & Moore and De Brauw Blackstone Westbroek at the helm.

Slaughter and May’s finance partner Matthew Tobin and tax partner William Watson led a team advising on the issue of five-year, ten-year and 30-year fixed rate notes, which were issued by Shell International Finance and guaranteed by Royal Dutch Shell, which plans to use the funds for general corporate purposes.

Cravath’s team was led by New York-based corporate partner William Rogers assisted by tax partner Michael Schler. Slaughter’s best friend De Brauw was led by London-based corporate partner Ernest Meyer Swantee and included Paul Sluerink, a Netherlands-based tax partner.

The trio regularly work together on bond issues and in August last year advised Royal Dutch Shell on a similar $2.5bn triple tranche bond under its US shelf programme, in the same month advising Unilever on a $1bn bond issue.

Elsewhere, Slaughter’s finance team has also advised Taylor Wimpey, one of the largest residential developers in the UK, on the recently announced successful refinancing of its revolving credit facility. The original facility was due to expire in November 2014 but has been refinanced with a £550m facility that expires in August 2018.

The team was led by finance partner Mark Dwyer and included tax partner Gareth Miles. Taylor Wimpey is a long term client of the firm and Dwyer has helped bring the company’s borrowing under control via a series of debt restructurings and the sale of its US business. ‘At one point the company had over a £1bn in debt. It’s most recent announcement stated a figure of £68.4m,’ Dwyer told Legal Business.

Meanwhile, it has emerged that Irwin Mitchell has won new client Wells Fargo in a multi-billion pound deal on the back of the 16-lawyer SJ Berwin real estate team that joined in 2010. The firm advised the leading US real estate lender on the England and Wales due diligence aspects of its £4bn real estate loan acquisition from Commerzbank-owned Hypothekenbank Frankfurt, in a deal that signed last month.

The Irwin Mitchell team was led by real estate partner Rob Thompson, who said: ‘This is the first time we have acted for Wells Fargo, a leading US bank and we are delighted to have advised on such a major acquisition and prestigious deal. The real estate due diligence on a portfolio of this size required immense organisation and careful management to ensure the matter proceeded smoothly.’

Allen & Overy (A&O) and Dechert advised on the overall structuring of the transaction. The A&O team was led by banking partner Arthur Dyson and corporate partner George Knighton while Dechert fielded US-based relationship partner Rick Jones and London finance partner Jeremy Trinder. Tax advice was provided by London partner Mark Stapleton.

Commerzbank was advised by Ashurst corporate partners Nick Cheshire and Rob Aird.

david.stevenson@legalease.co.uk