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Yet more decisions between bad and worse are upon us. The class of 2020 is due to start arriving in less than six months. There's not going to be enough work for them; they should be deferred. But what should the new start date be? Should firms pay some kind of stipend? When and how should the changes be announced?

New start date

One factor influencing start dates is bar exam timing. New York called off its July exam and Massachusetts, Connecticut and Hawaii have already followed. In response, The National Conference of Bar Examiners has said it will offer exams on September 9 and 10 and also on September 30 and Oct. 1. With backup dates now established, more states are expected to cancel their July sittings.

To allow the new associates time to recover from the exams, and yet not have them arrive as the holidays hit, deferring them to January 2021 is an option. There's precedent for January starts from the class of 2009. Figure 1 summarizes the start dates offered by the 42 of the 50 most profitable firms on the 2009 Am Law 100 for which information was reported in the law blog world.

As the figure shows, it was a mix with many firms offering multiple starts. Only six firms stuck with just September or October starts; a further five offered November as an option, and yet five more offered only November. In all, twenty-eight of the forty-four firms offered 2010 start dates, of which nineteen offered only starts in 2010.

If not a success, the deferrals were at least considered to have been the lesser of two evils. Indeed, many firms used deferrals again with the class of 2010. Students didn't love it but delays were so widespread firms weren't especially punished. Opprobrium was reserved for those who rescinded offers.

However, given the outlook for economic activity, having the class of 2020 arrive in early 2021 would probably be to have them join too soon. Economic forecasting is to be approached with great humility at a time like this, but, if things transpired as Goldman Sachs projected in their latest revision, then in Q1 of 2021 the level of U.S. economic activity would be the same as that of early 2018, i.e. the level of two years ago; it is not until late 2021 that the economy is projected to regain its late 2019 levels.

Infographic credit: Tim Schafer

The Goldman Sachs forecast is one of the less optimistic ones out there. But even if the economy recovers more quickly, there is a case for a deferral to late 2021:

• While it has yet to show up in the HR reports, voluntary attrition has stopped. Current associates won't be going anywhere under their own steam until fall of 2021 at the earliest. Layoffs are more reputationally damaging than deferrals.
• Industrywide, the class of 2020 portends to be a huge class, surpassing even the historic peak of 2008-09. According to the National Association for Law Placement (NALP), the average 2019 summer class was the same size as that of 2008 but the 2019 offer and acceptance rates were significantly higher than those of 2008 (97.6% vs. 89.9% for receiving offers, and 87.5% vs. 79.7% for accepting offers). The class would be a challenge to get busy under normal business conditions.
• Having junior associates be busy is essential to their amassing the requisite experience to become the truly-effective mid-level associates that clients love. Having too many associates on board spreads the work too thin for appropriate growth, seeding a quality problem for the medium term.
• If fresh associates are needed sooner then we know from last time, then associates can be brought on (selectively by practice or office) prior to the date to which they were originally deferred. Obviously, this has to be done within some constraints, e.g. you wouldn't want to pull an associate from a clerkship and risk vexing a judge.

All this is to say that firms should seriously consider pushing the arrival of the class of 2020 past January 2021 and out to fall 2021 or even January 2022. It can be done selectively, e.g. excluding restructuring, labor and employment, life sciences regulatory or litigation groups that have landed a whale.

Financial support

The precedent on offering financial support to incoming associates is broadly misunderstood. There were industry-wide deferrals of the classes of both 2009 and 2010. The former garnered the lion's share of attention, and stick in the memory, because they took people by surprise; the latter may be more instructive in the present situation.

For the class of 2009, the law blog world tracked the deferral dates and stipends with vigor. As Table 1 shows, for deferrals to early 2010, firms were roughly evenly split between offering no stipend and a stipend of about $10,000. McDermott, Will & Emery and Winston & Strawn took an approach that may be apt for the present uncertainty—they paid a stipend on a monthly basis. For the longer-term deferrals, those to fall 2010 and early 2011, stipends were a standard part of the arrangement and ranged from $45,000 to $80,000. The longer-term deferrals had linkages to taking positions at not-for-profits that were generally pretty loose. What was really happening is that firms were leveraging their pro bono client relationships to gin up opportunities that they hoped would induce incoming associates to voluntarily delay their arrival by a year. Pro bono coordinators had never been so busy.

However, for the class of 2010, things changed. The law blog world took deferrals in stride, reducing the quantity of coverage and toning down the snark. While some firms went again with stipends for those deferred to January (e.g. Sidley Austin, Milbank), Skadden, Arps, Slate Meagher & Flom changed things up. It offered a salary advance rather than a stipend—$15,000, comprising $5,000 in April 2010 and $10,000 upon receipt of final law school transcript, to be repaid out of first year salary. They weren't lambasted on the blogs. Indeed, Above the Law quipped in March 2010: "Sorry, 3Ls, money for doing nothing is so 2009" and "Last year was a different ballgame with deferrals taking incoming associates by surprise. This year, offering salary advances instead of stipends might not be unreasonable."

The financial arrangements for year-long deferrals were similarly modulated. For example, Cravath, Swaine & Moore had offered an $80,000 stipend to associates to voluntarily delay their arrival from fall 2009 to fall 2010, but when they mandatorily deferred the full-time arrival of the summer class of 2009 from the fall of 2010 to that of 2011, they provided a deferral stipend of just $65,000.

The implication is that salary advances (rather than stipends) will probably be 'market' for deferrals to January 2021 and that $65,000 stipends will probably be 'market' for one-year deferrals.

Timing of announcement

Law firms are reticent to announce delayed start dates. It's perceived as connoting financial weakness. There is some basis for this in history, but it's misleading unless unpacked a little.

Back in 2008, Thelen, Thacher, Heller Ehrman and Powell Goldstein pushed the start dates for their classes of 2008 to January 2009. By January of 2009, the first three of these firms had dissolved and Powell Goldstein had combined with Bryan Cave. With some justification, this may be what begat the notion that deferring start dates is a sign of weakness.

However, 2009 was a different story. It started with some prestigious names announcing 'delayed starts' from traditional September dates to later in the fall, evolved to include 'deferrals' to December 2009 and January 2010, and ultimately incorporated optional deferrals to the fall of 2010 and January 2011. Here is how it went:

• January (2009): September starts delayed to later in fall at Clifford Chance, Milbank and Morrison & Foerster.
• February: longer delays announced by Hogan & Hartson (to November 30), Latham & Watkins (to mid-December or fall 2010), and Nixon & Peabody (to January 2010).
• Early March: deferrals to January 2010 announced by O'Melveny & Myers, Chadbourne & Parke, Venable and White & Case (for most).
• March 10th: Cravath announced it too was deferring arrivals and offering start dates of October, November or January.
• Late March and early April: By April 6th over 30 firms had announced push backs.

I don't believe that firms who announce incoming class deferrals now risk being perceived as dangerously weakened. Partly this has to do with the different profiles of the 2008 and current recessions. In 2008, the economy went into a slow quarter-by-quarter decline causing firms with less financial wherewithal to publicly evidence stress sooner than those of greater financial strength. In contrast, the comparative nose dive of the current recession negates serial exposure of firms of differing financial strength.

Infographic credit: Tim Schafer

Given this difference, nothing can be read into how quickly firms react. Further, firms who now announce deferrals of arriving associates can't be considered the especially-financially-pressured movers. Those who could be viewed as akin to the first movers in 2008 (Thelen, etc.) are among those who made significant moves in the last 2-3 weeks. There's a long list of such firms that includes Baker Donelson, Brown Rudnick, Cadwalader, Curtis, Loeb & Loeb; Norton Rose Fulbright, Reed Smith, and Womble Bond Dickinson.

The implication? There's no abnormal reputational risk in announcing deferrals now. It would be well received by current associates who'll recognize it avoids increasing the competition for what work is available.

Closing thought

It's tempting for firms to delay announcing decisions about the arrival of the class of 2020 as we await greater clarity. However, we are already past the time in 2009 by which most firms had announced. There's also an important benefit to incoming associates from moving soon: delay weakens their prospects of securing prestigious paid public interest work and entry into elite LL.M. programs.

Hugh A. Simons is formerly a senior partner and executive committee member at The Boston Consulting Group and chief operating officer and policy committee member at Ropes & Gray. Early retired, he now researches and writes about the business side of law firms and does some consulting for old friends. He welcomes reader reactions at [email protected].