Sullivan & Cromwell looks set to spark a US pay war after moving to pay a one-off ‘special bonus’ of up to $20,000 to all of its associates.
The bonuses will be awarded on 21 October and sees the New York leader offer first-year associates a $10,000 one-off bonus, rising to $20,000 for senior associates.
The special bonus is in addition to the traditional end-of-year bonus, usually starting at $17,500, and represents around 7.5% of an associates’ annual base salary, which starts at $125,000.
The highly symbolic move sets a new benchmark for the influential New York legal market and comes amid mounting expectations that US firms are gearing up this year for substantial pay increases in response to the reviving US economy.
The New York legal market has left pay rates on hold since 2001, while end-of-year bonuses have tumbled from the six-figure awards handed out in the boom year of 2000.
Any major increases will be closely watched by London firms since they are likely to used in the US firm’s City branches, further increasing pressure for the best UK lawyers.
One senior Sullivan partner told Legal Week: “There has not been an increase in compensation for a few years now, but seeing as the work has picked up a lot recently and our associates have been working very hard, we thought they deserved it.”
The Sullivan partner added: “We are still deciding on the salary and bonuses rate, which will be finished over the next three months. But it is more likely that the bonuses will go up rather than the base rate.”
The firm’s stance is expected to put pressure on Manhattan rivals such as Cravath Swaine & Moore and Davis Polk & Wardwell to follow Sullivan’s example when they set their bonuses later this year.