Cravath System
Encyclopedia
The Cravath System is a hiring practice developed at Cravath, Swaine & Moore
in the 19th Century. It has been partially adapted by most large law firm
s and consulting
agencies.
Recruiting staff: Paul Drennan Cravath preferred to hire the "best of the best" and looked to the better law schools for candidates. Graduates were expected to be members of Phi Beta Kappa/Beta Gamma Sigma
and have served as editors for the school law review
s. A graduate from a university outside the top 5 was expected to be at least the equivalent of a "B" student at Harvard
. Only new graduates were to be hired, except in extenuating circumstances. The belief was that someone who had worked anywhere else had learned bad habits already.
Training staff: Associates would be assigned to a partner for a period of time (usually 18 months or less) where they would learn to break down large tasks into manageable pieces.
Compensation: Early law firm hiring practices paid the associates nothing, except what they could bring in for themselves. By 1910, the Cravath firm was one of the first to hire incoming lawyers on a salary. Since they preferred to hire the best, this led to wide disparities in starting salaries. Collusion
among law firms and law schools led to uniform starting salaries across law firms from the end of World War I to World War II.
Tenure: Generally, only partners may have permanent employment at the firm, and as long as an associate is promotable, they may stay. Those who were not suitable for promotion were dismissed in the "up or out" policy.
Choosing partners: Unless there is some need for expertise unavailable within the firm, partners should only be chosen from within the office.
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: Partners are expected to work with each other. Silos and clique
s are to be avoided.
Scope of the practice: Cravath handled predominantly civil matters
in the early years, and the majority of firms adopting this system are likewise civil law firms.
Influence: The firm would avoid lobbying
or currying favors with politicians. The firm would stick with skill and diligence in applying the law.
As to the firm's management: Cravath believed that a firm must have strong executive direction.
The U.S. military has a similar version to the "up or out" situation. The Defense Officer Personnel Management Act was passed in 1980 (PL 96-513) mandating that officers who had been twice passed over for promotion were required to be discharged from the military.
Cravath, Swaine & Moore
Cravath, Swaine & Moore LLP is a prominent American law firm based in New York City, with an additional office in London. The second oldest firm in the country, Cravath was founded in 1819 and consistently ranks first among the world's most prestigious law firms according to a survey of partners,...
in the 19th Century. It has been partially adapted by most large law firm
Law firm
A law firm is a business entity formed by one or more lawyers to engage in the practice of law. The primary service rendered by a law firm is to advise clients about their legal rights and responsibilities, and to represent clients in civil or criminal cases, business transactions, and other...
s and consulting
Consultant
A consultant is a professional who provides professional or expert advice in a particular area such as management, accountancy, the environment, entertainment, technology, law , human resources, marketing, emergency management, food production, medicine, finance, life management, economics, public...
agencies.
System
Swaine lays out the fundamentals of the Cravath System in the beginning of Volume 2 of the history of the Cravath Firm.Recruiting staff: Paul Drennan Cravath preferred to hire the "best of the best" and looked to the better law schools for candidates. Graduates were expected to be members of Phi Beta Kappa/Beta Gamma Sigma
Beta Gamma Sigma
Beta Gamma Sigma or ΒΓΣ is an honor society for business students and scholars. Founded in 1913 at the University of Wisconsin, it has over 650,000 members, selected from over 500 chapters in AACSB-accredited business schools...
and have served as editors for the school law review
Law review
A law review is a scholarly journal focusing on legal issues, normally published by an organization of students at a law school or through a bar association...
s. A graduate from a university outside the top 5 was expected to be at least the equivalent of a "B" student at Harvard
Harvard Law School
Harvard Law School is one of the professional graduate schools of Harvard University. Located in Cambridge, Massachusetts, it is the oldest continually-operating law school in the United States and is home to the largest academic law library in the world. The school is routinely ranked by the U.S...
. Only new graduates were to be hired, except in extenuating circumstances. The belief was that someone who had worked anywhere else had learned bad habits already.
Training staff: Associates would be assigned to a partner for a period of time (usually 18 months or less) where they would learn to break down large tasks into manageable pieces.
Compensation: Early law firm hiring practices paid the associates nothing, except what they could bring in for themselves. By 1910, the Cravath firm was one of the first to hire incoming lawyers on a salary. Since they preferred to hire the best, this led to wide disparities in starting salaries. Collusion
Collusion
Collusion is an agreement between two or more persons, sometimes illegal and therefore secretive, to limit open competition by deceiving, misleading, or defrauding others of their legal rights, or to obtain an objective forbidden by law typically by defrauding or gaining an unfair advantage...
among law firms and law schools led to uniform starting salaries across law firms from the end of World War I to World War II.
Tenure: Generally, only partners may have permanent employment at the firm, and as long as an associate is promotable, they may stay. Those who were not suitable for promotion were dismissed in the "up or out" policy.
Choosing partners: Unless there is some need for expertise unavailable within the firm, partners should only be chosen from within the office.
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
Part time
A part-time job is a form of employment that carries fewer hours per week than a full-time job. Workers are considered to be part time if they commonly work fewer than 30 or 35 hours per week...
associates and partners, and all business in the office is company business.
Relationships of the partners: Partners are expected to work with each other. Silos and clique
Clique
A clique is an exclusive group of people who share common interests, views, purposes, patterns of behavior, or ethnicity. A clique as a reference group can be either normative or comparative. Membership in a clique is typically exclusive, and qualifications for membership may be social or...
s are to be avoided.
Scope of the practice: Cravath handled predominantly civil matters
Civil law (common law)
Civil law, as opposed to criminal law, is the branch of law dealing with disputes between individuals or organizations, in which compensation may be awarded to the victim...
in the early years, and the majority of firms adopting this system are likewise civil law firms.
Influence: The firm would avoid lobbying
Lobbying
Lobbying is the act of attempting to influence decisions made by officials in the government, most often legislators or members of regulatory agencies. Lobbying is done by various people or groups, from private-sector individuals or corporations, fellow legislators or government officials, or...
or currying favors with politicians. The firm would stick with skill and diligence in applying the law.
As to the firm's management: Cravath believed that a firm must have strong executive direction.
Up or Out
Part of the system was that employees should either be promoted in 3 years, or leave the company. Incoming associates were expected to achieve partner within 7–8 years, and no later than 10 years after the initial hire.The U.S. military has a similar version to the "up or out" situation. The Defense Officer Personnel Management Act was passed in 1980 (PL 96-513) mandating that officers who had been twice passed over for promotion were required to be discharged from the military.