Big law firms are notoriously resistant to change. But recession changes everything, even time-tested routines for hiring new associates. The reports started in March, when Morgan, Lewis & Bockius; White & Case; and Orrick, Herrington & Sutcliffe deferred new hires for six months to a year. In the next two months, more than 50 Am Law 200 firms followed suit, offering $50,000 to $80,000 subsidies to associates who spent a year working for nonprofits or government agencies. Recorder affiliate The American Lawyer estimates — and more than 20 of these firms were interviewed — that between one-third and one-half of their incoming hires have taken the offers, and in the fall will be starting at the likes of the American Civil Liberties Union and Human Rights First.
It’s an unusual, but perhaps necessary, move for cash-strapped firms, allowing them to save $60,000 to $100,000 for each associate who works elsewhere for the year. But it’s still a pricey choice. By our calculations, firms like Morgan, Lewis; Orrick; Dewey & LeBoeuf; and Goodwin Procter will each be paying more than $3 million in non-tax-deductible stipends to an absent workforce. And some firms, such as Shearman & Sterling and Skadden, Arps, Slate, Meagher & Flom, have gone even further, offering optional deferrals without imposing any work requirement. Publicly, at least, many firms say it’s money well spent. “Our clients have reacted very favorably to the idea, since they want the most-experienced lawyers,” says Morgan, Lewis hiring partner Eric Kraeutler.
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