Cravath: Waiting Milbank Salary Match, Biglaw Stalls Over 12 Weeks

• Milbank announced associate salary raises of $10,000 to $20,000, effective July 1, 85 days ago, with most Biglaw firms yet to match.
• Milbank also introduced special bonuses of $6,000 to $25,000, payable by August 31.
• The prolonged silence from firms like Cravath suggests a deliberate strategy rather than mere administrative delay.
• Cravath may be waiting until year-end bonus season to announce salary matches and special bonuses simultaneously, a strategy it has employed previously.
• This approach could allow firms to make raises effective January 1, 2027, avoiding retroactive pay, but would mean associates miss out on six months of higher salaries.

This prolonged period of inaction now feels less like an administrative oversight and more like a deliberate, strategic pause, particularly concerning Cravath's potential role.

The legal industry is currently witnessing an unusual delay in widespread associate salary adjustments, despite a significant move by Milbank over twelve weeks ago. On July 1, Milbank's new compensation scale took effect, offering first-year associates $235,000 and senior associates up to $455,000, representing raises of $10,000 to $20,000 depending on class year. This announcement, made 85 days prior, was expected to trigger a swift response across Biglaw, yet most firms have remained silent.

Adding to the pressure, Milbank further announced special bonuses ranging from $6,000 to $25,000 for associates and special counsel on July 27. These additional payments are scheduled to be disbursed by August 31, meaning Milbank associates will soon benefit from both increased base salaries and extra cash. In stark contrast, many of their peers at other prominent firms are still awaiting any indication of similar compensation adjustments, highlighting a growing disparity in the market.

Initially, the prevailing assumption was that the delay in matching Milbank's raises was simply a consequence of the summer season, with partners on vacation and management committees not convening. However, as the silence stretches past 12 weeks, this explanation is losing credibility. The question has shifted from why firms are waiting to whether this inaction is, in fact, a calculated strategy.

It is becoming increasingly difficult to argue that elite law firms require three months to assess their capacity to meet market compensation rates. The necessary financial analyses are straightforward, and the market rates set by Milbank are widely known among associates, recruiters, and partners alike. This prolonged period of inaction now feels less like an administrative oversight and more like a deliberate, strategic pause, particularly concerning Cravath's potential role.

A compelling theory suggests that Cravath, often seen as the market leader in compensation, may be intentionally deferring its response until the year-end bonus season. This approach has historical precedent: last summer, Milbank announced special bonuses in August, but Cravath waited until November to incorporate its match into its broader year-end bonus announcement. This pattern has occurred on multiple occasions, where Milbank's summer bonuses went unmatched by much of the market until Cravath's year-end move provided the impetus for other firms to follow.

Applying this historical context, Cravath could be planning to announce its year-end bonuses, match Milbank's special bonuses, and unveil a new salary scale all at once. Such a consolidated announcement could also include making the new salary raises effective January 1, 2027. This strategy would allow Cravath, and other firms awaiting its lead, to avoid several months of increased salary expenses and the complexities of retroactive pay. Indeed, two firms have already adopted this January 1, 2027, effective date for their salary adjustments, though associates under this model would forgo six months of higher earnings.

Beyond merely matching Milbank, Cravath might be using this extended period to formulate a more comprehensive compensation package designed to reaffirm its traditional position as the industry's standard-setter. By waiting until year-end, the firm could potentially pair Milbank's salary scale with even more generous bonuses or other financial incentives, aiming to deliver a compensation package that surpasses expectations.

While Milbank made the initial move, Cravath's strategic delay could be an attempt to have the final, more impactful word in the compensation race. However, this strategy carries a risk: if other highly profitable firms anticipate Cravath's year-end plan, one of them might choose to act sooner. By matching Milbank's compensation now, such a firm could garner significant goodwill from associates and position itself as a proactive compensation leader, rather than simply another firm waiting for Cravath's signal.

Source: Original reporting via Above the Law