This legendary New York firm has a business model for the long term.
ON a purely statistical basis, with just two offices – one in New York and one in London – and a headcount of less than 500, it would be easy to place Cravath into the category of 'smaller firm'. But to do so, you'd probably have to be living on another planet, or at least under a rock. For when it comes to names in BigLaw, there's Cravath, and then there's everybody else. Much of the firm's prestige derives from its famous business model. The Cravath System – a set of principles and procedures that govern everything from hiring, to training, to bonuses and compensation – is often imitated, but never equaled. And in 2016, Cravath once more set the tone when it announced that it would now pay a whopping first-year salary of $180,000 – a move which most other elite firms soon matched.
But the reason Cravath sets the tone when it comes to business practice is not because of its pay scale, but the results its unique model achieves. For example, its crème de la crème corporate outfit has been involved in three of the ten largest M&A deals of all time. The most recent of these was AT&T's $85.4 billion merger with Time Warner. Chambers USA recognizes these achievements, awarding the firm cool and refreshing top-tier nationwide rankings for its M&A, banking, capital markets, securities, and tax work. In its Big Apple home it also gets the juiciest of accolades for its environmental, commercial litigation and media & entertainment practices.
Chances are that if you are seriously considering Cravath you have heard of the firm's renowned rotation system. Corporate lawyers switch practice group every 12 to 15 months, while their litigious comrades do the same every 15 to 18 months. While this might seem like a convoluted way of allowing lawyers the opportunity to find their niche, the system is in fact ingrained into Cravath's DNA and involves attorneys rotating around the houses until they settle down and make partner, “though some even go beyond that point.” Ergo, “if you are a partner at Cravath, you will have deep knowledge and experience of so many different types of law.”
From a class that “fluctuates in size between 100-150, depending on the economy,” the corporate department takes about 50 newbies, or just over half of all incoming associates. Around 40% of the intake enters the litigation practice, while the remaining attorneys are split between tax and trusts & estates. As mentioned previously, Cravath's corporate lawyers are best known for their M&A craft and the teams that deal with those transactions are the biggest in the department. Juniors are expected to get involved in every aspect of a deal, including plenty of the dreaded due diligence: “Though some people complain, they get on with it because it gives you invaluable insight into the companies that we work with.” That said, due to the small sizes of the teams, high-level tasks also enter attorneys' repertoires early on – “we have these foreign associate attorneys who come to us on exchanges from friendly firms. I worked with one on a recent deal and he was amazed at the level of responsibility that we get. From day one I was talking to clients on the phone.” Another source commented: “You see first-years driving transactions, which would be highly unusual at other firms.”
“Amazed at the level of responsibility.”
Over in litigation things aren't hugely different, except for the fact that juniors work with specific clients instead of in specific practice areas. This means that associates rotate between partners instead: “You'll be working with a specific partner and their clients doing different things for each one. For example, if their client is American Express, you'll be doing a lot of antitrust, but you'll also be doing securities or investigations work as well.” Again, responsibility levels are high – “as a first-year you are doing a lot of work that fifth-years would be doing. Of course, there are deposition outlines and doc review, but as soon as we finished that I was in full trial preparation mode, writing briefs, and doing research.”
Sky-high responsibility levels, a much-lauded rotation system, unapologetically long hours, and an almost unparalleled prestige – all of these things contribute to one of the most unique work cultures in all of BigLaw. Added to this is the fact that “you can't really lateral to Cravath, so if you don't make it first time, you aren't likely to get a second chance.” Promoting only from within and possessing an incredibly selective recruitment process engenders a system “built to have the best and brightest come here and try it out.” Many interviewees admitted that gaining a place in this hallowed institution was a “source of pride” and perhaps explained why Cravath lawyers are willing to work so hard for the firm – “absolutely no one here shies away from working extremely hard.” At the same time, and despite their mega status, “the firm only has two offices and our main competitors all tend to be much larger than us, so there's a definite focus on maintaining this small firm culture.”
“You can't really lateral to Cravath, so if you don't make it first time, you aren't likely to get a second chance.”
Work hard-play hard has become a huge cliché in the world of business, but at Cravath it is a BigLaw trope that is alive and well. “The pastoral care at the firm is second to none, and though we're not partying all night, the events teams are ever-present in our lives from an early stage. And personally they are some of my favorite people in the building.” Those events teams are very active, putting together a busy social calendar. There's a monthly happy hour at a local bar with an unlimited tab, while more family-friendly fun is afforded by the annual Central Park Zoo party, during which the firm “rents out the entire zoo for the night and everyone brings along their families.” And it'd be remiss of us not to mention the Cravath Prom, a biennial black-tie bash that takes place at a swanky location somewhere in the city – last year it was Ellis Island's turn for a glitzy takeover.
Hours & Compensation
As mentioned above, long hours are part and parcel of a Cravath lawyer's life – “I do think it's important to go into the firm with your eyes wide open and it's something they are very candid about in the interviews. They know it's in everyone's interest that you are fully aware of the hours here.” That said, assignments stem from the few partners that juniors work with, meaning “if you're not busy, they strongly encourage you to go and live your life. Because when the work is there, it will find you.” Sources also felt the lack of an official billing target was “very helpful, it means I'm not thinking just about a figure but about the work I am doing. It allows people to relax without worrying about hitting some arbitrary requirement.”
“If you're not busy they strongly encourage you to go and live your life.”
Despite having no target, interviewees were certain that “if there was a quota, we would easily fill it. It's not unusual to have 120-hour weeks quite regularly.” Nonetheless, “you could be working late into the night one week and then billing five hours the next: it just really fluctuates.” What probably won't come as a surprise is the fact that Cravath associates had no qualms about their market-leading salaries. But they particularly liked that “your bonus isn't dependent on hours and there's never any resentment between those who are busy and those who are not.”
All Cravath attorneys share an office until their third year, and tradition dictates that whoever is the more senior occupant has the window desk. And this isn't the only historic convention the firm indulges in: “When I brought my girlfriend here for the first time she said the décor was exactly what she imagined an old school New York law firm to look like. There are a lot of oak bookcases and marble busts of old men.” The firm also has exclusive use of the Cravath cafeteria, which is subsidized by the firm and serves three hot meals a day. One discerning foodie has this to say about the fare on offer: “It's above average for a cafeteria but not great if you want to eat healthy!”
“There are a lot of oak bookcases and marble busts of old men.”
For those latterly inclined, the office is in an excellent location. At 50th and 8th it sits on the doorstep of trendy Hell's Kitchen, which boasts great transport connections and “a ton of wonderful restaurants and bars.” Cravath furnishes its lawyers with “excellent secretarial support – it's about five associates to each assistant. We also have an admin assistant team on every floor who give us 24-hour support, proofing and reviewing lists to make sure they sync up.”
Training & Development
The rotation system means that Cravath attorneys are well-rounded renaissance individuals after a couple of years at the firm. Moreover, the smaller working groups make on-the-job training more viable. Most sources agreed that “it's largely an ad hoc system of professional development. You learn the most by getting immersed in different types of work. Although there are formalized programs for those who prefer to learn that way.” The firm's mentorship scheme also came in for universal praise: “When you start you get an associate mentor and they are given a budget to take you out for lunch a couple of times a month. Then, starting your second year you get a partner mentor who is in the same department as you but on a different team. Mine has been great, we talk at least once a week.”
Further educational opportunities are afforded by Cravath's pro bono network which for many juniors represents “the chance to go to court and argue on your feet for the first time.” However, owing to their hectic work schedules, participation is “largely driven by professional interest, and whether or not you can be spared at the time.” The firm works with organizations like the Innocence Project, the Montefiore Children's Hospital, and Her Justice – “a charity for low income women who have suffered from domestic violence.”
Pro bono hours
For all US attorneys: 25,874
Average per attorney: 52
Diversity was another area in which sources felt the firm could make more of an effort. There are several racial affinity groups, but “they're not very active.” Cravath's women's initiatives make more headway, though – “there are women's lunches once a month and departmental partners will host all their female lawyers at their apartments regularly as well.”
There's no getting away from the fact that the Cravath recruitment process is a rigorous affair. After an initial OCI, the callback is a day-long interview with numerous partners and associates. Instead of the usual two or three-hour affair, “you have an interview with the main partners but there's no time limit, it just goes on until the partners get what they want out of it. It reminded me more of how a family business is run.”
“You have an interview with the main partners.”
Interviewees were in no doubt as to where most new recruits come from – “it's really the top 14 schools, there's a lot from NYU, and Harvard has a big contingent.” However, they were also keen to stress that personality plays a big part as well: “If you're coming from Columbia and have certain grades, some firms will take you without even thinking. But Cravath's not like that – they are looking for people with great personalities as well as grades.”
Strategy & Future
“Everyone's really excited."
Unsurprisingly, working at Cravath opens many prestigious doors: “You can check out our Wikipedia page, there's a long list of famous people who used to be Cravath lawyers. It's rare that people lateral to other firms; if they leave it'll be to go into business or government.” Those who choose to stay are kept up to date about strategy at regular townhall meetings, which are mandatory to attend. In July 2016 it was announced – “to much fanfare” – that Faiza Saeed was taking over as presiding partner of the firm from C. Allen Parker in January 2017. “Everyone's really excited, she has amazing clients and will be the first Asian-American female head of a white shoe firm.”
Cravath's Rotation System
Cravath's summer associates are “assigned to, and stick with, one partner and only work for them.” So for students hankering after “trying out different areas, it's not great. But associates rotate until they make partner so there is no need to figure out what you like best because eventually you're going to do it all.”
First-years tend to return to their summer group. Deal-doers generally swap every 12 to 15 months and although litigators aim to transition around 15 to 18 months it's “not always as clear cut” as corporate: “If you're on a trial or case and they need your body of knowledge, you might not rotate for two years.”
What's the deal behind having a rotation system? “The purpose is to keep you on your toes and make sure you're never quite comfortable,” one junior quipped, before adding. “I can certainly see the benefit of it, both in terms of broadening my skill set and generally improving my problem solving skills.” For those wanting to “be a lawyer in the long term it's the best way to go,” another interviewee reckoned. “You're going to get exposure to, and have to do, everything. If you're going to leave after a year or two to go in-house or you don't want to be a lawyer I'm not sure it's as good; if you're going in house you probably don't need all those different areas of experience.”
Making the switch doesn't see attorneys going back to basics for each area: “When you start a new rotation you're coming into the group at a level that is commensurate with what people who have been in the practice area for a couple of years would be doing.” Another reiterated: “The biggest concern people have about the rotation system is making the jump to a new practice area and having to get up to speed quickly. It's a steep learning curve but everyone knows what it's like. People are happy to answer questions and give you background information. The partners know you're getting up to speed and help you fill in the gaps when they arise.”
The Cravath System
Throughout our feature you have seen us mention The Cravath System, the firm’s pioneering set of business management principles that have been replicated or adapted by the majority of large law firms across the country. Name partner Paul Cravath set down these then-innovative ideas in the early 20th Century but what does The Cravath System actually entail today? It can be broken down into several key characteristics:
- Recruiting legal staff: name partner Paul Cravath preferred to hire the 'best of the best' and looked to the better law schools for candidates. Editorial experience on the school law reviews was also something he valued greatly. His stance was that a graduate from a university outside the top five law schools was expected to be the equivalent of a B student at Harvard. Also, only new graduates were to be hired, except in extenuating circumstances. Paul Cravath’s initial belief was that someone who had worked anywhere else had learned bad habits already. While this stance has softened slightly, the firm still looks for top law school talent. Today, the firm hires from a wide array of law schools across the US and Canada and many new hires have had experience in other vocations before joining the firm.
- Training legal staff: Cravath believed in exposing associates to a wide range of areas of the law. Associates were assigned to a partner for a period of time (usually 12 to 18 months) where they learned to break down large tasks into manageable pieces and pick up key skills 'on-the-job'. This is still true today and, after a few years, associates are generally capable of handling almost any matter that falls within their area of practice.
- Compensation: the first law firms paid their associates nothing, and they were compensated solely by what they could bring in for themselves. By 1910, Cravath was one of the first firms to hire incoming lawyers on a salary. Since they preferred to hire the best, this led to wide disparities in starting salaries among the ranks of firms. To this day, Cravath sets the market’s expectation for compensation among many of the large law firms.
- Tenure: Cravath believed that as a general rule only partners should have permanent employment at the firm, and an associate could stay with the firm for only so long as he or she was 'promotable'. Those not suitable for promotion were dismissed as part of the 'up or out' policy. Today, this is not true and a number of associates transition into new roles as Practice Area Attorneys or Senior Attorneys.
- Choosing partners: even in the early days, Cravath did not have a culture of lateral hires. Unless there was a need for expertise that was unavailable within the firm, Cravath thought that partners should be chosen only from within the office. The firm still hires lateral partners only in rare circumstances.
- Interests outside the firm: partners and associates may not have business interests outside the firm. Charitable, educational and artistic interests are permitted. There are no part-time associates and partners, and all business in the office is company business.
- Relationships of the partners: Cravath believed that partners were expected to work with each other closely, and silos and cliques were to be avoided. Partners and associates were not to have business interests outside of the firm, though charitable, educational and artistic interests were encouraged. This is still true today.
- Scope of the practice: Cravath handled predominantly civil matters in the early years, and the majority of firms adopting this system were likewise civil law firms. Today many of the principles set forth by Paul Cravath are in place at law firms around the world.
- Influence: the firm avoids lobbying or currying favors with politicians.
- Management: Cravath believed that a firm must have strong executive direction.
Interview with Karin DeMasi and Eric Schiele, hiring partners, Cravath
Interview with Cravath's hiring partners Karin DeMasi and Eric Schiele
Chambers Associate: What are your standout highlights from the past year at Cravath?
Eric Schiele: Overall the firm had a fantastic year. We were very strong in both corporate and litigation. In corporate, in aggregate for our three core practice areas, we did about $1.1 trillion worth of deals – including about $660 billion of M&A deals. And we were on some of the biggest deals of the year, including Time Warner/AT&T and British American Tobacco/Reynolds.
Karin DeMasi: Litigation also had an exceptional year with a number of very significant matters. We represented the Republic of Argentina in resolving decade-old litigations related to injunctions on their $80 billion default. We're also having a big impact on antitrust cases across the country. We won a favourable judgement for AmEx after a 5-week bench trial that resulted in a unanimous second circuit reversal, one of a few rare cases brought by the DoJ. We also won a two-month jury trial for Colgate Palmolive and handled airbag issues for Takata.
CA: What is the most significant thing about Cravath that has allowed the firm to become so prestigious?
KDM: I think it's a combination of things. Cravath's model, which has been incredibly consistent, is to represent clients in their most significant deals and cases. We choose premium work over volume, and that has enabled us to be true to our ethos. That ethos includes lock-step – which ensures an enormous amount of cross-selling. We also have a rotation system that ensures all of our associates have the broadest training. We really become good at a wide variety of areas here.
ES: I would add that much of what defines our continued success is derived from the fact that we very rarely take laterals. Because we have decided largely to foreswear access to every talent pool that exists apart from the associates in the building and those that we recruit straight from law school, we have an incentive to invest in our associates in a way that is unique. That has created a consistency of both quality and of culture.
CA: How do you feel about rival firms seeking to emulate, even imitate, Cravath's model?
ES: The way we are organized is focused on the long term and developing great lawyers, and different firms have tried to adopt different elements of it, but there are costs to it. Each firm has to work out its own way, but it would be difficult from a standing start to do things like we do them – we're almost 200 years old and it's been our model for a long time. It would be very challenging to emulate for a number of reasons.
KDM: It is hard to emulate the history, the training, all the elements that go in to Cravath's culture. The firm is so unique that it doesn't really impact us at all. What we do works and we're going to continue doing it. We're about to celebrate our 200th anniversary and we hope to be doing this for centuries. Staying true to that has been integral to our success.
CA: How many rotations must an associate have ideally done before they specialize?
ES: On the corporate side, the short answer is you never really specialize until you're on the verge of becoming partner. Corporate associates continue to rotate and remain true generalists until they are partners.
KDM: A litigation associate probably has four or five rotations in their eight years. Over the course of those rotations you really work with all the partners across multiple practices. Our partners, for the most part, remain generalists, though we may have preferences for the different types of matters.
CA: Would all those associates make partner?
ES: I don't think we recruit anybody who we don't think has the potential to ultimately make partner. Certainly we recruit people who we think could be at the firm in eight years' time, though it's very difficult to know exactly how people will develop from the outset.
KDM: We look for the best talent and we want people to be the best individuals.
CA: Does the rotation system make a lawyer a jack-of-all-trades?
ES: I think the rotation system develops “complete” advisors. Almost all of our partners came through the same generalist system, and look at what we have achieved across practice areas. If someone asks whether our generalist system can produce a world-class M&A, capital markets or banking lawyer, I would say that the evidence is there.
KDM: We are prepared to try any cases. We do everything from investigations to antitrust. It's not a situation where our associates dabble in any respect. They become experts in how to develop, litigate and ultimately win a case..
ES: If you think about the practice of law and the range of skills required – just knowing the rules is the easy part. The soft skills, like communication, persuasion and tactical instincts, are more challenging to develop and I think are developed in our system better than any other.
CA: Are there any plans to open more offices? Or expand into other practices?
ES: We continuously ask ourselves whether we are covering our subject market in the optimal way. I don't think we will ever open an office that will not practice New York law. We have stuck to what we're good at and it has served us well. Sometimes we move into extensions of our core areas, but it tends to be more of an evolution. We look to the long term, rather than chasing trends.
KDM: I agree with Eric. We self-assess and think strategically. I don't think there's any current plan to go elsewhere. Technology has obviously made that easier. One of the core things is the quality of our lawyers – the associates in this building are the future of Cravath.
CA: What are the key attributes a person must have before they are considered for an offer?
KDM: A record of success and achievement can be shown in a variety of ways. Grades and background are factors, but one of the things that is very important is people who want to be fully engaged in the law. The people who are successful love what they do and want to be challenged.
ES: An impressive record can come in a lot of forms. In all cases we are looking for someone who has consistently demonstrated an ability and a desire to achieve impressive things.
CA: How do you encourage diversity in recruitment?
KDM: We think very actively about diversity in hiring. Well in advance of interviewing, we think about how best we can attract students from all backgrounds. We host and participate in many programs around the country throughout the year and partner with a number of student groups. We want our attorneys to reflect the full talent pool. Students from traditionally underrepresented backgrounds (in Big Law) need to know that there is a path here for them.
CA: What do you tell recruiters to look out for in interviews?
ES: There is no single model, but there are elements we look for. Most of our interviewing is done by partners who are very familiar with this and each has his or her own approach to it. Law students who interview here end up interviewing with a half dozen or so partners, so we get a lot of views and feedback to work with.
KDM: We're not like another firm where there's a hiring committee. When candidates come here, they meet a variety of partners and associates. We ask our lawyers to be candid with the law students, which enables everybody to get the best information. As long as that happens, the firm sells itself.
CA: What does Cravath offer young lawyers that is unique from your rivals?
KDM: I really think it's the rotation system and the mentorship. We have people who will push you. We don't staff according to year, we have first years going to trials. We look for people who embrace challenge. This is not a place where you sit in the background for five years supporting a partner. You are a lawyer from day one.
ES: Given our size and our history, we have a very distinct culture, and I think our system produces the strongest lawyers the fastest – though obviously I'm a bit biased. But I don't know of another institution that consistently develops lawyers like we do .
CA: What effect do you think a Trump presidency will have on the legal market?
ES: Every time there's a change of administration there is a period when people try to figure out what kind of regulator that administration will be. That is particularly true in this case, as they have not had a long history of governance. If history is any guide, we'll reach a new normal relatively quickly.
KDM: I think the only thing I'd add is, while it's relatively unknown, one thing that's very clear is that people are passionate on all sides. There's a big spectrum. From that will emerge, especially on the litigation side, new types of matters. People rally around causes and it will be interesting.
Cravath, Swaine & Moore LLP
825 Eighth Avenue,
- Head Office: New York, NY
- Number of domestic offices: 1
- Number of international offices: 1
- Partners (US): 78
- Associates (US): 386
- Main Recruitment Contact: Lisa A Kalen
- Hiring Partners: Karin A DeMasi and Eric L Schiele
- Recruitment Website: www.cravath.com
- Diversity officer: Kiisha J B Morrow
- Summer Salary 2017
- 1Ls: $3,500/week
- 2Ls: $3,500/week Post
- 3Ls: $3,500/week
- 1Ls hired: Yes
- Split summers offered: Yes
- Can summers spend time in overseas office: Yes
- Summers 2017: 2-1LS, 119-2Ls
Main areas of work
Corporate, litigation, tax, executive compensation and benefits, trusts and estates.
Cravath is known as one of the preeminent law firms in the country. Each of our practice areas is highly regarded and our lawyers are widely recognized for their commitment to the representation of our clients’ interests. We believe the development of our lawyers is our most important long term objective. Our partners come almost exclusively from the ranks of our own associates. We recruit the most talented law students and have our partners directly train the next generation of associates. Through our rotation system – a system in which corporate associates “rotate” from one practice group to another and litigation associates “rotate” from one partner to another – associates work directly with a small team of partners and associates. We have found that this system enables even our most recently hired associates to work directly with our clients and quickly to assume substantial responsibility for important matters, while at the same time preventing undue specialization.
• Number of 1st year associates: 84 • Number of 2nd year associates: 70
• Associate salaries: 1st year: $180,000 • 2nd year: $190,000
• Clerking policy: Yes
Law Schools attending for OCIs in 2017:
Berkeley, Boston College/Boston University Job Fair, Brigham Young University New York Interview Program, Cardozo, Chicago, Columbia, Cornell Job Fair, Duke, Emory Job Fair, Fordham, George Washington New York Job Fair, Georgetown, Harvard, Harvard BLSA Job Fair, Howard, Lavender Law Career Fair, LeGaL LGBT Career Fair, Michigan, Midwest-California-Georgia Consortium, Northeast BLSA Job Fair, New York University, Northwestern, Notre Dame New York Job Fair, Stanford, Texas, Texas New York Job Fair, Tulane/Washington University Job Fair, Vanderbilt Job Fair, University of Pennsylvania, Virginia, Yale
Summer associate profile:
Our summer program is designed to provide law students with an experience that mirrors the life of a first year associate. Summer associates experience the day-today working life of a Cravath lawyer and gain valuable hands-on experience working directly for, and with, our clients.
Summer program components:
Prior to the summer, we collect department and assignment preferences (type of matter or practice area, specific teams or partners). Upon arrival, summer associates are assigned to a partner from their selected department, along with an associate mentor. This partner is responsible for assigning work and providing feedback.