Clifford Chance matches bonus rates in New York
Clifford Chance agrees to 2003 bonus rate, while City rival Allen & Overy looks set to follow
January 07, 2004 at 07:03 PM
2 minute read
Clifford Chance (CC) has matched the 2003 bonus rate for the New York market, with arch banking rival Allen & Overy (A&O) likely to follow later this month, in moves that will cost both firms millions of dollars.
The decision means CC will pay its first-year associates the benchmark set last month by a handful of leading Manhattan firms of $17,500 (£10,100) rising to $25,000 (£14,740) for senior associates.
The move will cost the global giant, which has 421 New York associates, more than $7.3m (£4.1m) this year.
A&O, which has 230 US-qualified lawyers, is currently finalising its bonus awards but is widely expected to stick with the market rates, costing the firm at least $3m (£1.6m).
The figures underline the costs for UK firms attempting to compete in the world's most expensive labour market – a reflection of New York firms' higher profitability.
One US partner told Legal Week: "There is pressure on the UK firms to match the bonus rates, even if financially they are performing less well than US firms. [But] putting the bonuses below the market rate would damage recruitment and the general market perception."
CC's move follows on from Cravath Swaine & Moore's announcement in December that it was sticking to its 2002 rates, a decision exclusively revealed on 9 December by www.legalweek.com.
The rate was matched by most of the leading New York firm's peers, including Sullivan & Cromwell, Davis Polk & Wardwell and Willkie Farr & Gallagher.
However, the decision will have been met with relief by leading London firms as many US lawyers believed a post-summer surge in deal activity could have led to substantial increases in year-end bonuses, which have fallen sharply since 2000.
CC US managing partner John Carroll told Legal Week: "The market has certainly settled down with similar bonus levels to last year.
The market has taken a couple of years to get to the right rate."
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