NEW YORK, Dec 8 (Reuters) - On Nov. 28, the New York-based law firm Cravath, Swaine & Moore told its staff that 2011 year-end bonuses would be almost identical to those for the previous two years. At the low end, first-year associates will receive $7,500, while seventh-year associates will get $37,500.

Other firms quickly fell into line, as they have tended to do each year following Cravath's announcement, which is traditionally the first of the bonus season. News of the Cravath numbers, first reported by the Wall Street Journal's Law Blog, was soon followed by announcements of similar rates from Skadden, Arps, Slate, Meagher & Flom; Milbank, Tweed, Hadley & McCloy; Shearman & Sterling; and Proskauer Rose.

The only problem is that major law firms are actually making more money in 2011 than they did in 2010. According to a Wells Fargo Wealth Management survey released in September, profits per partner at 125 of the nation's largest law firms rose 7.6 percent for the first half of the year, and revenue increased 4.5 percent. A survey released by the American Lawyer on Dec. 1 revealed that 84 percent of law firm leaders said that they expected profits per partner to rise next year.

So if profits are up and expected to keep rising, why are associate bonuses staying the same?

Part of the reason, say attorneys, consultants and legal bloggers, is simple image management. In a sluggish economy that affects many clients, and with the Occupy Wall Street movement protesting wealth disparity around the country, some firms are wary of how it looks to dole out piles of cash to young attorneys.

"I think there is a sensitivity there," said Leroy Inskeep, head of the associate compensation committee at DLA Piper. "We've got clients who are struggling. They don't want to see big bonuses."

Inskeep said big law firms are "part of Wall Street," and that the Street's reputation of excess extends to them as well as the investment banks.

'AN UNDERLYING GREED'

That attitude marks a noticeable shift from prerecession days, when law firms viewed associate bonuses as a kind of bragging right -- a signal to other firms, clients and potential lateral hires that they were competitive, said Bruce McEwan, a law-firm consultant and editor of the blog Adam Smith, Esq. In 2007, Cravath gave $35,000 to first-year associates and up to $110,000 for senior associates -- eye-popping numbers that other firms were nevertheless quick to match.

Competitive bonus rates also helped firms hang on to associate talent, which was relatively scarce during the boom years of 2004 to 2007, McEwan said.

But now firms are on "red alert" about handing big checks to already well-compensated associates, he said.

The glut of associates now on the market helps too, said former Kirkland & Ellis partner Steven Harper, who retired in January after 30 years at the firm. In 2009, when law-firm layoffs peaked, about 4,600 attorneys lost their jobs at large firms nationwide, according to the Layoff Tracker, a website that reports law-firm employment data.

But Harper, who now edits the blog Belly of the Beast and is an adjunct professor at Northwestern University School of Law, said that firms' newly found sensitivity also provides a convenient excuse for partners to keep more money for themselves.

"First and foremost, there is an underlying greed. That is the overriding aspect," Harper said.

Bill Lee, co-managing partner at Wilmer Cutler Pickering Hale and Dorr, disagreed, and said this year's bonuses reflect more long-term thinking by law firms.

"Leading law firms do not micro-manage bonus levels with a false precision to the profit levels for a given year," Lee said. "Instead, those firms consider the longer term need to fairly and competitively compensate the young lawyers who are their future."

Wilmer Cutler, which uses a merit-pay bonus system, has not yet announced its 2011 bonuses.

MIXED MESSAGES

At least a couple firms haven't been concerned with the perception issue: Boies Schiller & Flexner is giving out bonuses from $75,000 for associates who have been with the firm at least a year, up to $200,000 for its highest performers.

And litigation boutique Susman Godfrey, which has traditionally handed out the biggest year-end bonuses -- and which, unlike large corporate law firms, takes about half its cases on a contingency basis -- gave out bonuses in 2010 ranging from $45,000 to more than $100,000, according to the legal blog Above The Law. Ten associates received bonuses of about half their salaries.

Susman partner Bill Carmody said that the sheepishness that some firms feel now about lavishing big bonuses on young attorneys isn't part of his firm's equation. "I don't think it's going to hit the calculus for our firm." Referring to associates, he said, "We appreciate the people who helped us with the income we've made."

Carmody said the firm's bonuses, which it will hand out in January, "are going to come around last year's numbers."

Some associates say all the jockeying over bonuses, in both directions, sends mixed messages.

"On the one hand, firms put out this image that they're doing fine," said a fifth-year associate at a New York law firm who requested anonymity because she was not authorized to speak for her firm. "On the other hand, we understand with Occupy Wall Street that the public isn't going to look kindly on lawyers making big bonuses at the end of the year. It's a calculated move."

'IT'S ABOUT DIVIDING THINGS UP FAIRLY'

Regardless of the reason, the associate said, the issue is not just about dollars, but fairness.

"I don't think there are many associates who would tell you we deserve more money," the associate said. "It's about dividing things up fairly. It's unfair to characterize it as an argument that we just want more money."

In 2007, Cravath's first-year bonus was just over 1 percent of the firm's profits per partner of $3.3 million, according to The American Lawyer; in 2010, that percentage had decreased to 0.23 percent, while partner profits were down just slightly -- to $3.17 million. If 2011 profits are higher than 2010, as expected, this year's bonuses will constitute an even smaller percentage of profits.

Cravath attorneys declined to comment for this story, but in the end, what happens there is more likely to have an impact on bonus structures than any fear of bad public relations.

Given the right conditions, law firms would change course in a heartbeat, the chairman of a major U.S. law firm told Reuters. "If Cravath did it, we'd all get over it," he said.

(Reporting by Leigh Jones)

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