Sullivan & Cromwell Pays Generous Spring Bonuses!

Sullivan & Cromwell Pays Generous Spring Bonuses!

Friday afternoons are for bad news. When you have some news that you want to disappear into the ether, you announce it on Friday afternoon. It’s a favorite time for disgraced D.C. figures to resign from office in order to “spend more time with their families.”

So why did Sullivan & Cromwell, one of the world’s most prestigious and profitable law firms, decide to announce good news — namely, generous spring bonuses for its associates — late on a Friday afternoon? (Was it perhaps in response to the Latham bonus news from earlier today?)

Yes, Cravath and Skadden and Davis Polk associates, you read that right. S&C is paying out healthy springtime bonuses. They’re supplemental to the 2010 year-end bonuses that S&C announced back in December.

So how much are we talking about? And when will these amounts hit associate bank accounts?

Let’s find out….

By the way, the S&C springtime bonuses shouldn’t come as a total surprise. When the firm announced year-end bonuses in December 2010, S&C mentioned that it might pay spring bonuses in 2011, subject to firm performance.

We’re gathering that the firm is performing well, since the amounts in question are significant. For junior associates, the springtime bonuses are equal to the end-of-year bonuses, meaning that S&C junior associates are getting twice as much bonus money as their friends at Cravath, Skadden, Davis Polk, Simpson Thacher, Weil Gotshal, Cleary Gottlieb, and Debevoise.

Here’s the full scale of Sullivan & Cromwell springtime bonuses, as set forth in today’s memo from firm chairman Joseph Shenker. The bonuses are payable in April — an incentive for S&C associates who were thinking of leaving to stick around until then.

Class of 2010: $2,500
Class of 2009: $7,500
Class of 2008: $10,000
Class of 2007: $10,000
Class of 2006: $12,500
Class of 2005: $15,000
Class of 2004: $17,500
Class of 2003: $20,000
2002+: $20,000

And here’s a table that we’ve prepared — if you see any errors, please note them in the comments — totaling the December 2010 and April 2011 bonuses for S&C associates:

Class Year: December 2010 Bonus + April 2011 Bonus = Total Bonus

Class of 2010: $0 + $2,500 = $2,500
Class of 2009: $7,500 + $7,500 = $15,000
Class of 2008: $10,000 + $10,000 = $20,000
Class of 2007: $15,000 + $10,000 = $25,000
Class of 2006: $20,000 + $12,500 = $32,500
Class of 2005: $25,000 + $15,000 = $40,000
Class of 2004: $30,000 + $17,500 = $47,500
Class of 2003: $37,500 + $20,000 = $57,500
Class of 2002+: $42,500 + $20,000 = $62,500

What might be motivating the springtime bonuses — and the January announcement? Said one of our S&C sources: “The early timing is likely due to the fact that the firm has been bleeding associates since January 1.” But another S&C tipster disagreed: “We get emails whenever someone leaves, and I haven’t noticed any uptick in attrition.”

UPDATE (1/22/11, 3 PM): There’s more discussion of this attrition issue in the comments. The majority view seems to be that attrition is running high at S&C these days. As for why it might not seem that way from emails, here’s a representative comment:

The reason that we haven’t seen an uptick in associate attrition on the weekly farewell emails is that the firm stopped sending them because so many people are leaving. Check the “S+C This Week” publications they’ve sent us and you’ll see a long list of people [leaving], and plenty more are — well, before the bonus news — scheduled to leave in the next few weeks.

In any event, regardless of the motives behind them, these spring bonuses are happy, happy news. Congratulations, S&C associates!

Now the question becomes: Which (if any) of Sullivan & Cromwell’s “peer firms” will match?

Verizon Files Early Challenge to Latest ‘Net Neutrality’ Rules

What, you ask, is that clickety-clackety noise you hear off in the distance, emanating from office buildings everywhere?

Here’s the answer: It’s the sound of lawyers (and their assistants), typing up legal challenges to the Federal Communications Commission’s recent rules on “net neutrality.”

One of the first (and most high-profile) challenges was filed Thursday with the U.S. Court of Appeals for the D.C. Circuit by telecom giant Verizon. The company asked the D.C. Circuit to overturn the FCC’s latest effort to regulate the Internet lines, predominantly on grounds that the government overstepped its authority. Click here for the WSJ story; here for the NYT story.

Last month, the FCC passed new rules to police Internet lines. The rules would bar phone and cable companies from blocking or slowing legal Internet traffic or providing preferential treatment to certain Web sites.

Verizon has long maintained that the FCC doesn’t have jurisdiction to enforce net neutrality rules and has urged Congress to get involved. In its appeal, Verizon said it is “deeply concerned by the FCC’s assertion of broad authority for sweeping new regulation of broadband networks and the Internet itself,” according to a statement from Michael Glover, a Verizon deputy general counsel.

This won’t be the D.C. Circuit’s first bite at the “net neutrality” apple. The court ruled early last year that the FCC overstepped its authority when it sanctioned Comcast for deliberately slowing some subscribers’ Internet downloads. Verizon has hired Wiley Rein’s Helgi Walker, the lawyer who helped Comcast win its case, to ask the D.C. Circuit to shoot down the FCC’s latest rules.

The Verizon suit is the first of several challenges expected to be launched against the rules.

Public interest groups that believe the rules don’t go far enough also are expected to contest the rules.

Challenges to the Health-Care Law Are Wrong — And Right

Challenges to the Health-Care Law Are Wrong — And Right

In a provocative piece over at the National Law Journal, Wisconsin Law professor Andrew Coan stakes out a position that’s new to us: that both sides in the debate over the constitutionality of the Affordable Care Act are correct. And, at the same time, they’re both wrong.

(For background, click here for all of the LB coverage on the debate over the constitutionality of the law, arguably the signature domestic-policy achievement reached by the Obama administration.)

So what is Coan talking about? He explains, on the one hand, his assertion that both sides are right:

For courts to uphold the act would thus cast aside a cherished principle of American constitutional law — that the national government is one of limited powers, with everything else left to the states.

On the other hand, he writes:

For courts to invalidate the act would thus cast aside another bedrock principle of American constitutional law — that Congress has plenary power to regulate interstate commerce, including health insurance, and also wide flexibility in choosing how to carry that power into effect.

But both sides, he writes, are also wrong; wrong to deny the validity of their opponents’ arguments.

Coan compares the current conflict to one that emerged during the presidency of George Washington, when Congress passed legislation incorporating a national bank. The bank’s proponents claim the Constitution gives Congress the powers to tax and to borrow money, and, by extension, establish a national bank.

The bank’s opponents, on the other hand, argued that, in Coan’s words, “if Con­gress could incorporate a national bank merely out of convenience, what could it not do?”

At the end of the day, the Supreme Court upheld the bank, ruling implicitly that “Congress is usually in a better position than the courts to determine how to carry those powers into effect.” If the people really object to a piece of legislation, they can vote Congress out of office.

Coan concedes that the national bank situation may not be directly applicable to the health-care situation. And he doesn’t weigh in on one side or another.

Instead, his request is refreshingly modest:

If their decisions follow the lead of most commentators, both courts and the country will fail to appreciate the hard compromises that either result would entail. One bedrock constitutional principle or another must give way. It would make for wiser judicial decision-making — and a healthier democracy — if we began to wrestle with this openly now.