| Cravath, Swaine & Moore | Worldwide Plaza, 825 Eighth Avenue, New York, NY 10019-7475 |
| www.cravath.com | (212) 474-1000 Fax: (212) 474-3700 |
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A truly proud history
The august Cravath, Swaine & Moore is the product of two firms, one in New York City, the other in Auburn, NY. The New York City parent was founded in 1819, the Auburn firm in 1823. Early activities of the New York City practice included representing the liquidated Bank of the United States (closed when the truculent and ill-advised Andrew Jackson vetoed a bill extending the charter of the bank). Prominent early members included William Seward, who would become the Secretary of State under Abraham Lincoln. The two firms merged in 1853.
In the early 1900s, Paul Cravath envisioned a firm that would draw on the labor of many junior attorneys who would strive to join a small partnership and leave the firm if they failed in this goal. Most law firms follow this model today. The "Cravath Way" (or "Cravath System") also provides that Cravath lawyers should be promoted only from within the firm. Cravath is unusual in its adherence to this strict dictum and it is still a very unusual thing within the Cravath culture for a lateral to be promoted to partner.
The "Cravath Way"
The "Cravath Way," elucidated by name partner Robert Swaine in 1948, captures Cravath's philosophy. Many of these tenets can still be observed at Cravath today - there are still no merit bonuses at the firm, new associates effectively rely on the efforts of partners and senior associates for their training, and lawyers are still "promoted from within the firm, not from the outside." A rare exception to this ironclad rule occurred in November 1997, when Jeffrey Smith (an environmental associate hired laterally in 1992) was promoted to partner. Despite being told outright that his position would not lead to partnership, Smith went on to build an enormously successful environmental law practice from Cravath's existing client base, earning him the coveted brass partner ring.
Moving in lockstep
Cravath deals with its internal issues in an ad hoc "town meeting" style. "We discuss everything at lunch," says a partner. There are no controlling committees, and all-important decisions are made by consensus, a system that one partner says "borders on chaos" but emphasizes the integral nature of each partner at the firm. Only about two or three members of each entering class will join the 83 partners of Cravath, Swaine & Moore. Thus, partners are rare and special - "like senators," according to one former associate. Cravath legend has it that when a partner dies, every other partner attends the funeral, forming a two-by-two procession called "the Cravath Walk." "It's right that we should be right there with the family," one partner once noted to The American Lawyer.
Cravath partners are bound together by a lockstep compensation system, a pay structure common to English firms but largely abandoned by Americans in favor of more merit-based regimes aimed at increasing retention. As the system has nothing to do with individual merit or rainmaking, no partner receives a bonus, and extraordinary partners are paid the same as their less-celebrated colleagues. Perhaps the payouts are lucrative enough to still potential dissent. The average partner at Cravath makes well over $1 million a year (over $1.5 million in 1997). Similarly, while associates may (and do) get fat bonuses, these bonuses are never, ever based on merit.
Superlative corporate department
Cravath's corporate department is divided into 17 small groups of two to four partners. These groups may be centered around specific areas of practice, such as mergers and acquisitions, banking, securities underwriting, and real estate. Others are focused around a particular corporate or international practice, even a client. For example, Cravath has a Time Warner group, a real estate group, and several securities offerings groups. Many corporate lawyers work on international transactions and with non-U.S. corporations and clients. More than a third of Cravath clients are based outside the United States, but nearly all lawyers are trained at Cravath's New York headquarters. The corporate department is home to about 220 lawyers.
Vacation interrupted by merger
In January 2000, Cravath partner Robert A. Kindler decided to take a break from the New York winter by heading to the Caribbean. But his vacation was rudely interrupted when he received a phone call that Cravath client Time Warner was joining forces with AOL (or rather, being acquired by the chipper online giant). He chartered a plane to New York and went right to work, arriving with such alacrity that he had no time to change - Kindler wasn't even wearing socks when he met with the Time Warner board.
Cravath's involvement in the deal was something of a gamble; it represented Time Warner on a contingency basis, meaning if the merger failed it would receive nothing. (Typically, fees for M&A are based on billable hours, with a bonus premium if the deal goes through and a discount if it doesn't.) The deal, worth a record $165 billion if officially completed, will garner Cravath a whopping $35 million, one of the largest transaction fees ever for a law firm. Unfortunately for Cravath, Kindler won't be able to top his record any time soon, as he left the firm in June 2000 to become a managing director at Chase Manhattan Corp. No word on whether he plans to return to the beach any time soon.
In other media
Cravath has been on the forefront of other changes in the media world, including work on Viacom's $40 billion bid to purchase CBS. The deal involved complicated issues concerning the division of power between officers of a corporation and its board of directors. Sumner Redstone of Viacom had his eye on the CEO position of the resulting company, with majority control over the board, but Mel Karmazin of CBS wanted control of the company's operations. Cravath lawyers came up with a unique corporate charter that circumscribes the power of the board of directors for a three-year period. "The Viacom board was very concerned that they were not just turning over the ship, lock stock and barrel," Cravath partner Allen Finkelson told The New York Law Journal.
MCI WorldCom has also been keeping Cravath M&A lawyers busy. In May 1999, MCI WorldCom signed an agreement to acquire SkyTel for a $1.2 billion stock exchange. Through the deal, MCI WorldCom will enter the world of wireless communication, since SkyTel's main products include e-mail and Internet paging services. Cravath also helped MCI WorldCom with its proposed $115 billion purchase of Sprint Corp.
Finicky litigation squad
Cravath is one of the most prominent litigation firms in New York. "While Cravath is known as a corporate firm, and it does have the top floors of the building in a kind of metacommentary," says one associate, "the litigation department is excellent and not considered a step down, except literally." There are approximately 125 lawyers in Cravath's litigation department. Cravath's litigation expertise spans from antitrust and IP to white-collar crime and securities actions.
Cravath can be quite finicky in the cases it takes, passing up potentially lucrative assignments that other firms have leapt at. On Cravath's nix list: breast-implant cases against Bristol-Myers Squibb, repetitive stress cases for IBM, and cigarette cases for Phillip Morris and BAT Industries. To explain the rejection of these cases, the firm has suggested the work would put severe strains on the litigation department and involve hiring large numbers of additional attorneys - some they might not otherwise hire.
Few offices, big business
In their efforts to establish themselves as "global" firms, Cravath's competitors have hastened to open up branch offices around the world. By contrast, Cravath offers only three offices: New York, London (founded in 1973), and Hong Kong (started in 1994 after much dissension among partners). The firm plans to expand its London office.
The dearth of branch offices is no reflection of the firm's international expertise or clientele. International companies that have turned to Cravath include Bayer, Nestle, Unilever, and Salomon Brothers Hong Kong. Perhaps the firm's most impressive international work has been for the various entities devoted to creating Europe's economic, political, and social convergence (The European Community, European Investment Bank, Euratom, and so on). Here, Cravath has done extensive finance work, handling the first ECU and euro offerings registered with the SEC.
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Top tier only
Despite the extremely hot job market for law students, Cravath can still afford to be very picky. Insiders report that law students who don't hail from a top-10 law school have a tough time getting an offer at Cravath. But given the need for lawyers at most large law firms, now may be a good time to apply. One lawyer says, "Comparatively, [Cravath is] one of the most selective firms, but right now it's a law student's market, no matter where you're looking." Insiders also report that Cravath is bringing on a larger class of summer associates than usual.
During on-campus interviews, Cravath interviewers look for more than just outstanding grades and law review. "They also prize confidence and personality," say insiders, "as well as some prior experience in business or finance." Cravath is extremely selective about making callback invites, perhaps because only Cravath's busy and high-billing partners interview second-round applicants. As a result, those invited for callbacks at Cravath have better odds of receiving an offer than at most other firms.
Full day of interviews
Cravath breaks the callback interview mold in several respects. First, the firm requires a full day of interviews rather than the typical half-day. Applicants arrive at Cravath in the morning and check in with the legal recruiting staff. They are then asked to sit in the reception area with other applicants who are interviewing that day. "Everyone sits around looking nervous," say associates who have gone through the process. Eventually, when a partner's schedule frees up, an applicant is escorted to his office. There's no exquisite science to it, say insiders, except that "usually if you're interested in corporate they'll try to have mainly corporate partners interview you."
Also unique to Cravath is the fact that each interviewee has no set schedule and, therefore, there is no time limit for each interview. "You just sort of interview with a partner until he decides he's had enough and then sends you back to the holding pen," explains one associate. "My first interview was only fifteen minutes long, so I thought the partner hated me. Then my next partner interview was nearly two hours long."
At some point, the applicant breaks for lunch with two Cravath associates. "These are the only Cravath associates you will speak to all day," says an insider. The two associates later report to the firm on how the lunch went. Although Cravath professes to value associates' opinions of recruits, one source tells Vault.com, "After lunch you fill out an assessment form, but I don't think the partners care at all. Associates essentially have zero input into Cravath hiring." If it's free food you're after, make sure to put on a happy face: "The lunch-host associates are chosen by legal recruiting - and they look for personable people. If they think you hate Cravath, you will not be asked to take a candidate to lunch."
After each interview, the legal recruiting staff confers with each partner, debriefs him, and tries to collect a consensus among all the partners. Insiders say that in most cases all partners must unanimously agree to extend an offer. According to one associate, "The full day of interviews can either be fun or torture - it's all in the luck of who ends up being free to interview you." The majority of successful Cravath applicants receive an offer within 24 hours.
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Cravath boot camp
One insider describes Cravath as a "respectful military base" - an unusual and strangely apt metaphor. Like the military, Cravath is an institution that thrives on tradition and stability. Another source took a few moments to psychoanalyze the distinguished firm: "This firm's culture is rooted in being at the top of the status quo. As a symbolic example, Cravath was one of the last [law firms] to go casual - and then only on Friday, and during the summer only. There is a civility and old-time professionalism that still governs and yet there is an all-business feel. Cravath is just starting to relax a bit, which feels like a welcome relief."
Strong meritocracy
For all its Star Chamber decision-making and its flat bonus system, Cravath is a strong meritocracy. Results matter, "not face time" or background. "The culture is one that is very eclectic with a focus on merit and ability," says one associate in the corporate group. "Nobody cares how you dress or what music you listen to, as long as you can get the job done, and get it done correctly. I find the achievement-based culture here inspiring but not for the faint-hearted." Other associates concur that "the partners care about results and little else." This focus results in a "collegial" and "surprisingly casual" atmosphere, as associates compete only with their own potential. As one litigator summarizes, "If you work hard and well, you will be respected. If not, you will not be respected."
Time to rotate
Cravath uses a rotation system that "marries" associates to a few partners for one year. During that year, associates work with these partners almost exclusively and receive their assignments from these partners. A corporate associate suggests that "because of the rotation system, there are two firm cultures. The first is that of the oppressed, who work at all hours of the day and night and barely have time to pick up their heads and watch life go by. The rest work for partners with a light caseload, who skip out at 8:30 p.m. and never come in on weekends. The first group doesn't like the second. The second doesn't notice the first." Associates suggest that their experience at Cravath depends significantly on the partners they are assigned to. One insider warns that prospective Cravath lawyers should "definitely think about the rotations. As people imagine shorter and shorter careers, there is some real downside to being locked into a non-marketable rotation for a year and a half." On the other hand, another attorney points out the value of "not being forced to specialize early on."
Opening doors
Many associates cite the firm's stellar reputation as their favorite thing about Cravath. One associate asks, "If you really want to be a high-powered Wall Street lawyer, why would you want to go anywhere else?" Many insiders comment that they thought Cravath would do wonders for their resume and open doors down the road. One source raves, "Undoubtedly the best thing about working for Cravath is the range of opportunities available to you when you leave. Cravath's reputation extends far and wide, and you can count on being able to name your price at a law firm anywhere in the country or even outside it."
Respect and civility . . . but where's the charm?
According to insiders, "partners are generally respectful but often not chummy." One corporate associate says, "I have never been treated with anything other than the utmost respect and professional courtesy by any partner here." While many associates describe the partnership as "civil," one suggests that partners "fall short in terms of respecting our private lives and our time. But they are very busy." Cravath associates say how one is treated by partners may be up to the luck of the draw. "It depends on the partner. Some have not gone to charm school." On the other hand, one associate suggests that partners are very friendly "once they get a chance to know you."
Looking forward to bonus time
Despite a $125,000 starting salary for first-year associates, associates gripe about their pay. Many seem personally hurt that Cravath is no longer a "salary leader." "Frankly, we are more profitable than all but a handful of firms. We should be paid above market," says one irritated insider. A corporate lawyer puts it this way: "Cravath should be paying a premium over what other New York law firms are paying because associates here are expected to assume significantly more responsibility than associates in the same class at other New York firms." "It doesn't make sense that Skadden associates make more money than we do," sighs another associate. Some duly note that the final amount Cravath associates will bring home remains uncertain because bonuses have not been announced. According to one source, "The general view among associates is that bonuses should be substantial this year."
Simply the best
While it's not always easy, Cravath associates are confident that they practice at the best law firm in the country (and the associates we surveyed at other firms agree with them). "I think [Cravath] is regarded as the best law firm, and we are," says one associate proudly. "In each area we practice in, our reputation is superb," volunteers another insider. Recounts one associate: "In law school, this firm was the name to use when describing a firm. 'If you want to go work at Cravath...' Other firms are the Cravaths of the South or the West. It always seems to come back to Cravath."
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Christine Adams Beckett
Recruiting Manager
(212) 474-3217
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Davis Polk & Wardwell;Simpson Thacher & Bartlett;Sullivan & Cromwell;Wachtell, Lipton, Rosen & Katz
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