Formidable Cravath gives the whole legal profession jitters with its giant new pay scale – business as usual.
IN June, Cravath announced a new market-shattering salary rise. The $20,000 bump up for first and second years sees them take home $180,000 and $190,000 respectively. This is giant news for the legal profession, and many firms are following suit (keep an eye on our Salary Survey for regular updates). Although we haven't seen a jump like this since 2007, for market observers this is the natural order of things; for almost two centuries Cravath has been the pioneer. The famed Cravath System – a series of business management principles that shapes everything from hiring, training, and tenure to bonuses and compensation – has worked wonders for this elite firm and has forced its peers to look sharp and conform.
It takes more than just hiring and training policies to earn Cravath its almost mythical reputation. Just take a look at Chambers USA, which awards Cravath more best-of-the-best Band 1 rankings than Band 2 or below, the upshot being: if Cravath does something, it does it extremely well. The New Yorker's litigation and corporate teams are particularly well endowed with accolades, and attorneys here are known for handling some of the hugest M&A deals around. One such recent mega-merger saw Cravath represent Heinz in a tasty $60 billion combination with Kraft to create the third largest food and drinks company in the USA. Cravath is also assisting Shell in its fuel-injected $70 billion acquisition of BG Group – the biggest oil & gas merger of all time.
Juniors have long flocked to Cravath for its reputation for giving associates “the most challenging and developmental work possible at an early stage.” Sources “expecting to be thrown into demanding matters” weren't disappointed by Cravath's rotation system: corporate juniors switch practice group around every 12 to 15 months while litigators aim to rotate every 15 to 18 months. “Your responsibility level grows every time you move but you may know less on the subject than your juniors, who have been in the group for longer. It's exciting.” Check out our website for more associate thoughts on shifting groups.
Around 50 new first-years tend to join the corporate department each year. Half that number go into litigation and the remaining few head into tax or trusts & estates. Corporate juniors are attached to between three and five partners who dole out work, while litigators usually receive assignments from one partner.
“You're going to do it all.”
Banking, M&A and securities are the three main corporate rotations and cover “the main competencies you need.” Other rotations like real estate and corporate governance follow on from these. Banking juniors tackle “finance and credit work for both borrowers and lenders. We handle credit agreements and facilities, and acquisitions financings for companies and banks.” By their third year, interviewees were often “the lead associate on deals, working on primary transaction documents” – like credit agreements – “and overseeing juniors drafting ancillary documents, and helping out with due diligence.” Concerning the latter: “It's rare for anyone past their first twelve months at the firm to be doing this” in any practice group. The “main input of second and third-years within M&A is drafting a lot of ancillary documents, like guarantees, and taking a shot at the main purchase agreements” for public and private transactions. Debt, equity, IPO and corporate bond offerings are regular assignments in securities.
Litigators' tasks “can span the entire life cycle of the litigation as there are so many types of cases at so many stages. At the moment I'm working on a first draft of a motion to dismiss. We do some discovery but many of the juniors have the opportunity to take ownership of their cases so there is a fair bit of deposition preparation with expert and fact witnesses.”
Training & Development
When asked about training opportunities, nearly all of our interviewees were quick to point out “the best way to train is to get involved. Participating on a matter with a group is the most informative experience you can have.” Another elaborated: “A lot of the important stuff comes from being in the room with a partner on a big call and hearing how they handle questions and situations where you would not have known the answer.”
“The most informative experience.”
Cravath's online database features heaps of CLEs and training sessions presented by the firm's partners. Deal and case-led study luncheons talk attorneys through recent significant matters, such as the firm's representation of orange juice giant Cutrale and investment fund Safra Group in their unsolicited offer to acquire banana seller Chiquita. Workshops on negotiations, depositions, legal writing and oral arguments feature mock exercises, and litigators can go one further and prepare for trial in Cravath's own mock court room.
Cravath's décor matches that of its realistic mock courtroom. “Dark wood and earthy colors” make this a “very traditional office,” associates told us. One source reasoned: “We're not going to have 'look through' offices. That's not how we get down. The design is definitely conservative. More Mad Men than Apple.”
“More Mad Men than Apple.”
Junior associates usually share an office until their third year. “It's one of the best things the firm does.” Senior office mates “will have already handled tasks you come across and you can bounce issues around working relationships off of them.” The only apparent bugbear is speaker phone limitations: “Because of how much responsibility we're given at an early vintage, we're expected to be on the phone with clients from a very early stage. Often you both end up on the phone and it can be distracting."
Office sharing isn't the only element at Cravath that promotes collaboration. “I've been pleasantly surprised by the ancillary benefits to the rotation system. I ring people I don't know who have worked on a deal before to ask if they can help. They go out of their way to chat about it and dig through archived emails and documents.” Others were surprised by the general attitude of their colleagues. “I thought people would be stuffy and it would feel like a white shoe firm where people were very driven and focused on work, but unable to joke around and didn't have any sense of humor. People here are good at getting the job done efficiently and taking work seriously, but they’re humorous and down to earth.”
“The work ethic here is incredible.”
That said, juniors still felt Cravath had a formal feel. “We all have to wear suits,” one interviewee pointed out, while another stressed “our standards are high. We are not going to cut corners or be sloppy. We check every box.” That's partly because “the work ethic here is incredible.” Cravath has “a tradition of doing good work and people want to feel they live up to it.” One acknowledged that the firm does “have a reputation as a difficult place to work, with demanding people. The work is demanding but people here are supportive.” So while attorneys have high expectations of both themselves and each other, it leads to a sense of being “all in the trenches together.”
One word we heard time and again was “perfection.” Cravath attorneys put “client service above all. Everyone cares so much about doing an excellent job that they focus much more on completing a job flawlessly than keeping employees happy day to day. It's never a question of whether or not someone should stay up all night doing something perfectly for a client.”
Hours & Compensation
With client needs taking center stage, heading home tends to slip down the to-do list. “You have to adjust what you expect in terms of work/life balance and be open to pushing back or altering plans,” sources conceded. But we were told the firm is pretty good at leaving associates alone during vacation. One junior mentioned that “there is not a face time requirement, so we can go home to work. I'm not saying I haven't had to cancel plans; recently it has been all-consuming. I've not seen anyone for a month!” How consuming is all-consuming? “On a relatively busy day I'll be at the office until around 9pm,” another source professed. “On really busy days I'll leave at two or three in the morning.” Busy periods can either fall in chunks –“I've had months where I could leave at 6pm and others where I billed well over 200 hours” – or unexpectedly blow in like freak blizzards: “Last week I left at 7pm and worked from home but last night I stayed till 4am and then was back in at 8am.”
“You don't have to feel guilty.”
Luckily there is no billable hours target and as all matters stem from the few partners juniors work with, “if things are slow there is no burden on you to go out and find stuff to do. You don't have to feel guilty and can enjoy the slow days.” The other benefit to a lack of a target comes in the form of reduced competitiveness: “With plenty of work to go around, no one is jockeying for that extra hour to receive their end of year bonus.” One non-compensation benefit Cravath offers is student loan refinancing.
The firm has long been known for setting the market rate for bonuses (nicknamed the Cravath scale) and nearly always declares them before everyone else. In 2014 Simpson Thacher announced first, and Davis Polk then set higher bonus rates, causing Cravath (and others) to revise up. Order was restored in 2015 when Cravath reasserted its place as the first announcer and everyone else fell in line. We conducted interviews prior to the firm's giant pay rise announcement, but this sends a strong message to the market: Cravath wants the very best all for itself.
As they're kept so busy on client matters, juniors “don't have that much time” to take on pro bono. Many admitted: “It's not at the forefront. The focus tends to be more on the client work we're doing.” Matters are “not hard at all to pick up” for those that want to. “The pro bono department does a good job at keeping people aware of what is going on.” And what can juniors jump on? “Anything. Immigration assistance, dealing with custody matters or helping someone with medical benefits or malpractice claims.” Cravath also collaborates with Montefiore Children's Hospital and Morgan Stanley Children's Hospital in New York in providing legal help related to medical care, such as assisting an immuno-suppressed child with appropriate housing upon discharge from hospital.
Pro bono hours
Like pro bono, several sources felt that diversity at Cravath wasn't front of mind: “I think they're continuing to work on it but I do feel other firms are more focused on it than us.” Others disagreed: “I think they're very keyed in to issues of recruiting and fostering a diverse set of associates. The affinity groups are very active. We're making strides but it's always a process.”
“It's always a process.”
The firm's diversity statistics are pretty much in line with the rest of the industry and Cravath runs affinity groups for ethnic minority, female, LGBT and parent attorneys. “It's good to know there are other people at the firm who look like you and may face the same challenges that you face as a minority lawyer.”
Litigation hiring partner Karin DeMasi tells us: “When people start at Cravath they are lawyers from day one. We look for people who are excited to be a contributing member of a team.” What does that person look like? One junior reckoned: “Highly motivated, driven and intelligent. Most people here have gone to elite institutions. Cravath attorneys have been high achievers at every academic step of their life and are looking for a firm which embodies that ethic.”
“People who are comfortable being challenged.”
A word of warning though: “People get caught up in their credentials but the practice of law is different from the study. It's important to listen more than you speak.” So juniors involved in hiring want to see candidates “exude confidence in their work without being arrogant. I want to be sure someone will work hard and master things fast but don't think they know everything because otherwise they won't learn.”
Strategy & Future
Associates noted that Cravath is “probably one of the more conservative firms at expanding into new offices and practices. We'll continue to follow a similar approach, which is one of the reasons the firm is so strong.” Corporate hiring partner Eric Schiele confirms: “We tend to evolve rather than make wholesale changes to strategy on a short term basis. We're not looking to open any more practices or offices and we will continue to focus on what we're good at.” Not everything is static though, Schiele adds: “We're continuing to grow in the investigations and white-collar areas.”
Litigation hiring partner Karin DeMasi and corporate hiring partner Eric Schiele give us the low-down on Cravath's strategy and hiring
Chambers Associate: Associates noted that M&A has been very busy recently. Is that the case?
Eric Schiele: We've had an excellent year across practice areas. If we look at M&A, we're acting for brewer Anheuser-Busch InBev in its pending acquisition of SABMiller, we were involved in the Kraft Heinz merger and the sale of aerospace manufacturer Precision Castparts to Berkshire Hathaway, to name a few. If you look at our ten biggest announced deals in 2015 they amount to almost half a trillion dollars in deal value. Given our relatively small size that's extraordinary.
CA: Have any other areas been particularly active?
ES: Our practice areas are interrelated and we've been busy across a number of different areas. With M&A as busy as it has been, we're steadily moving toward what will be a historic year. I'm not sure we've had a year where we had more deals in excess of $10 billion in a year. With that comes a great deal of financing. We've done several hundred billion dollars worth of financing in all its forms, from high yield and investment grade debt to IPOs, like representing the underwriters in Ferrari's $982 million public offering. 2015 has been a very good year in financing.
Karin DeMasi: On the litigation side we've had success in a number of different areas. We have a generalist litigation practice that enables the firm to handle trial work, investigations and domestic and international arbitrations in a wide variety of subject matters, including intellectual property, antitrust, securities litigation, M&A litigation, government investigations, and contract and other general commercial disputes.
CA: Cravath's known for being quite conservative when it comes to expanding into new practice areas or offices; is anything going to change in the coming years?
ES: We tend to evolve rather than make wholesale changes to strategy on a short term basis. We're not looking to open any more practices or offices in the near future and we will continue to focus on what we're good at. We know we're really good trial lawyers, we're good at purchasing and selling companies and we are good at raising money. Sticking to what we're good at has served us well for quite a while, but there will be adjustments over time as areas become more attractive. For example, it's not a new trend but we're continuing to grow in the investigations and white collar area, which we started expanding in several years ago.
CA: Cravath's hiring process is a little bit different. Talk us through what interviews students have to attend and who they will meet with.
KDM: : We recruit from a wide variety of law schools from around the country, and we also receive applications from abroad. Partners conduct our on-campus interviews, and we also send associates to campuses to meet with applicants, tell them about the firm, answer any questions they may have and give them a sense of the firm and our people.
Applicants who receive an in-office call-back interview will find we have a unique process. Rather than the typical half-day pre-scheduled interviews, we ask applicants to spend a full day with us at the firm. We do this because we do not hire associates laterally, so the vast majority of our attorney hiring is done at the law school stage. As a result, we want to ensure that applicants get a good sense of the firm and we get a good sense of each individual applicant, more than just what is on paper. Applicants spend the day in a number of untimed interviews meeting with a mix of partners and associates to get an understanding of practice areas and have their questions answered.
CA: What kind of questions do you ask during callbacks?
KDM: We leave it up to the lawyer conducting the interview, but there are a number of things we look at. It's a holistic process so we're interested in their experiences and record of success. The interviews are not scheduled for a specific length; they're free-form and organic so some might be an hour long and others only fifteen minutes. Partner and associate interviewers will ask what seems important to them based on an applicant's resume and the conversation as it develops. Sometimes topics are personal or about legal issues. The idea is to gain a true sense of every applicant so we can hire the best of the best.
CA: What makes someone stand out at interview?
KDM: A number of things. We look for self-starters and people who want the opportunity of being in a firm where they will work on complex problems, deals and litigation. When people start at Cravath they are lawyers from day one. We look for people who are excited to be a contributing member of a team. They need to have a strong work ethic, a collaborative demeanor and a desire to work at a place where the work is challenging.
CA: What can law students be doing to increase their chances of impressing you in their applications and at interview?
KDM: Everything a candidate does – from her academic record to law school to work experience to outside passions – contributes to what she brings with her. There is no particular thing we look for applicants to be doing; we're really hoping to see a long-standing, strong academic record and people who want to do work at the highest level possible. The consistent theme among the lawyers at Cravath is that we love what we do and we work together to produce the best work we can for our clients.
CA: How can a summer associate impress?
KDM: : It's not as much about impressing us, as it is about coming in and doing their very best. We don't expect a level of knowledge as we are all generalists here. We look for someone who puts their best self into the work they're doing and who wants to learn and work closely with people.
ES:It's about being engaged with, and enthusiastic about, what you do in the summer. I would tell summers not to worry about impressing us, but instead focus on what you can take away from the experience and get the best out of the situation.
KDM: A common thread among people at Cravath – and it's what keeps us here – is that from summer associates to senior partners, people love what they do. That level of engagement keeps us all going and really makes a difference. You can tell when a summer is working on something they're really enjoying as they take ownership of it. We encourage that from day one.
CA: What does the firm do to encourage diversity in recruiting?
KDM: We start from the belief that having attorneys with varying backgrounds, views and opinions enables us to produce the best advice and results for our clients. As such, it is critical that we provide opportunities that allow our attorneys to meet students from a diverse range of backgrounds. These opportunities range from having lunch with student affinity groups to having our attorneys participate in and attend student-run conferences to hosting receptions for women students, LGBT students and students of color. At the end of the day we want all students—including students from backgrounds that have traditionally been underrepresented in BigLaw—to be able to see a path here at Cravath for themselves.
CA: Is there anything else you think it is important for students to know about the recruitment process?
KDM: There are two other aspects which are important to recruiting. The first is that we don't hire laterally. That means we're really focused on the class we bring in every year. They are the future of the firm. We're not thinking about people who we could bring in later on, we're focused on the people who start here. Secondly, as a lockstep firm among partners and associates, there is a mutual incentive to see each other succeed. I think that pervades the culture of the firm in terms of collaboration and collegiality.
ES: One thing I hear from law students is their surprise at our remarkable lack of stuffiness. We are a two hundred year old firm and we fall into the category of what people think of as “white shoe”, but they are amazed we're real people they can get to know.
KDM: Eric and I meet with our applicants toward the end of their callback day and I hear all the time, 'I'm so surprised how friendly everyone is' and 'what a great day I've had.' It's wonderful to hear that and the full day callback enables people to really see the firm for themselves.
CA: Does either of you have any advice or words of wisdom for law students as they try to enter the legal profession?
KDM: Find something you love. There are definitely as many professions which are demanding in terms of hours but if you really love it and are excited about it, you will do a great job and have a very rewarding and successful career.
ES: When you are just starting out in a high-end service organisation that demands excellence, you need to learn to forgive yourself. You will make mistakes. It's a process and you will evolve and grow stronger at what you do. Do your best to shake off the days that don't go as well as you might want them to and keep progressing.
KDM: That's very good advice. The rotation system constantly puts attorneys into new areas to do things they have not done before. It complements their experiences, develops skills and provides them with the highest level of thinking. It's often the case that when associates start a new rotation, they do something brand new. They're given the training and support to do a great job but they must quickly adapt to learning and mastering new things.
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:
Cravath, Swaine & Moore LLP
825 Eighth Avenue,
- Head Office: New York, NY
- Number of domestic offices: 1
- Number of International Offices: 1
- Partners (US): 83
- Associates (US): 373
- Summer Salary 2016
- 1Ls: $3,500/week
- 2Ls: $3,500/week
- Post 3Ls: $3,077/week
- 1Ls hired: Yes
- Split summers offered? Yes
- Can summers spend time in overseas office? Yes
- Summers 2016: 114
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: 79
• Number of 2nd year associates: 74
• Associate salaries: 1st year: $180,000
• 2nd year: $190,000
• Clerking policy: Yes
Law Schools attending for OCIs in 2016:
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, McGill, Michigan, Midwestern/California New York Job Fair, Midwest- California-Georgia Consortium, Northeast BLSA Job Fair, New York University, Northwestern, Notre Dame New York Job Fair, Osgoode Hall, Stanford, Texas, Texas New York Job Fair, Toronto, Tulane/Washington University/Vanderbilt Job Fair, University of North Carolina, University of Pennsylvania, Virginia, William & Mary/ Washington & Lee Job Fair, 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-to-day 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.