Incoming Associates Getting Deferred Forum

[LHand1993]

This may be a dumb question, but do you have to pay back the stipends, especially if the start date is pushed back?

If it’s a true “stipend” and not an advance, you don’t need to pay it back. I believe that most firms that have deferred start dates now and in the past have true stipends that don’t need to be paid back.

[QContinuum]

This may be a dumb question, but do you have to pay back the stipends, especially if the start date is pushed back?

If it’s a true “stipend” and not an advance, you don’t need to pay it back. I believe that most firms that have deferred start dates now and in the past have true stipends that don’t need to be paid back.

And, if it's an advance and not a true "stipend", almost certainly repayment of the advance will be pushed back if the start date gets pushed back. Inconceivable that a firm would require deferred associates who haven't yet started to start paying back their salary advances.

[2020Graduate]

This is terrifying:

"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."
https://www.law.com/americanlawyer/2020 ... s-of-2020/

From Hugh A. Simons, What To Do About the First-Year Class of 2020? This is an expert who advises and has been in constant contact with the AM 200, V100 throughout this crisis.

Edit to include the link. If you can't read it all, just google the title of the article and click the link from Google. Google will automatically show full text. (FIREWALLS HATE THIS GUY)

[Anonymous User]

Incoming associate at V20. September start date has been confirmed as recently as yesterday. No word yet on whether it will be a remote start or what the logistics will look like but a data point that all firms may not go the way of Orrick/Hogan. Also confirmed no layoffs or pay cuts will be happening.

Was there any discussion of how the firm plans to work around the (planned) September bar?

Unique situation because it's a DC office and everyone takes different bars (then waives in) but start dates are after the proposed September bar dates and there's (and has been) a later start date available.

[curry1]

This is terrifying:

"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."
https://www.law.com/americanlawyer/2020 ... s-of-2020/

From Hugh A. Simons, What To Do About the First-Year Class of 2020? This is an expert who advises and has been in constant contact with the AM 200, V100 throughout this crisis.

Edit to include the link. If you can't read it all, just google the title of the article and click the link from Google. Google will automatically show full text. (FIREWALLS HATE THIS GUY)

This article is evil, and ignores large inflation between the last recession and now (as well as the near doubling of tuition costs). Firms would absolutely be punished for deferring students a year and paying them a miserly stipend. 65k after taxes is like 50k in california/new york and would barely cover interest on 250k/300k in debt + rent for a lot people.

[QContinuum]

This article is evil, and ignores large inflation between the last recession and now (as well as the near doubling of tuition costs). Firms would absolutely be punished for deferring students a year and paying them a miserly stipend. 65k after taxes is like 50k in california/new york and would barely cover interest on 250k/300k in debt + rent for a lot people.

The "logic" is also flat-out wrong. It's baffling that this guy used to be a BigLaw and MBB partner.

Here's his "logic":

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. ... 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. ...

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 ... Skadden [instead] offered a salary advance rather than a stipend—$15,000 ... They weren’t lambasted on the blogs. Indeed, Above the Law [stated] “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 [deferral] stipend to associates [in the class of 2009], but when they mandatorily deferred the [class of 2010], 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.

The "logic" doesn't flow at all. Why is 2010 the better model for 2020, instead of 2009? Like 2009 (but unlike 2010), deferrals in 2020 are taking incoming associates by surprise. Who could've predicted the coronavirus even half a year ago? And again like 2009 (but unlike 2010), the law blog world is tracking deferral dates and stipends with vigor. There are additional reasons why 2020 resembles 2009 more than 2010 (e.g., in 2020, like in 2009 (but not 2010), it's not yet apparent how long the economic contraction will last or how deep it'll bite; in 2020, like in 2009 (but not 2010), firms are entering the year with coffers swelled from a prolonged bull market), but the reasons above are taken directly from Simons' data points.

Maybe Simons thinks 2010's the better model because it's (a single year) more recent than 2009? Or maybe Simons is confident (perhaps via the rumor mill) that firms will turn to deferral advances in lieu of stipends? Trouble is, he never actually makes those arguments in the article. The data points he actually cites directly undermine his conclusion.

[ghostoftraynor]

This article is evil, and ignores large inflation between the last recession and now (as well as the near doubling of tuition costs). Firms would absolutely be punished for deferring students a year and paying them a miserly stipend. 65k after taxes is like 50k in california/new york and would barely cover interest on 250k/300k in debt + rent for a lot people.

The "logic" is also flat-out wrong. It's baffling that this guy used to be a BigLaw and MBB partner.

Here's his "logic":

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. ... 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. ...

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 ... Skadden [instead] offered a salary advance rather than a stipend—$15,000 ... They weren’t lambasted on the blogs. Indeed, Above the Law [stated] “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 [deferral] stipend to associates [in the class of 2009], but when they mandatorily deferred the [class of 2010], 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.

The "logic" doesn't flow at all. Why is 2010 the better model for 2020, instead of 2009? Like 2009 (but unlike 2010), deferrals in 2020 are taking incoming associates by surprise. Who could've predicted the coronavirus even half a year ago? And again like 2009 (but unlike 2010), the law blog world is tracking deferral dates and stipends with vigor. There are additional reasons why 2020 resembles 2009 more than 2010 (e.g., in 2020, like in 2009 (but not 2010), it's not yet apparent how long the economic contraction will last or how deep it'll bite; in 2020, like in 2009 (but not 2010), firms are entering the year with coffers swelled from a prolonged bull market), but the reasons above are taken directly from Simons' data points.

Maybe Simons thinks 2010's the better model because it's (a single year) more recent than 2009? Or maybe Simons is confident (perhaps via the rumor mill) that firms will turn to deferral advances in lieu of stipends? Trouble is, he never actually makes those arguments in the article. The data points he actually cites directly undermine his conclusion.

Completely agree. He cites a various data points but none of it really supports his position. Things got worse last time, in a completely different scenario, so firms should preemptively defer people longer! It's completely possible things do get really bad and all bets are off, but this article didn't even really make that point.

I know its tough for law students/lawyers to go with the flow, but we truly are in an unprecedented situation and nobody knows how it will shake out. Definitely no reason to put a lot of (any) stock in this article.

[2020Graduate]

Here's to hoping you're all right about that article. I 100% hope so. I don't want, but I can handle a January 2021 deferral. 2022 would be a wreck.

[Anonymous User]

From the Reddit thread:

Wachtell announced today: Revised start dates: October 5 and November 9.

When v2 is deferring, things are scary.

Wachtell is probably fine, even if the economy takes another two or three shits on its own face this summer. Their PPP could drop by $2,500,000 and they'd still be top 10.

V10s might screw people out of sheer greed, Latham-style, but they're getting plenty of work for the foreseeable future (anon because I work at a diff v10 and have friends at others).

Occam's razor says these moves are more about convenience and culture than about cutting bait. WLRK for example is smallish, low-leverage firm and so 1) probably don't have the IT/HR depth and breadth needed to onboard a bunch of associates ~~like right now~~ and 2) take pride in their first-year training and access to partners. Like someone else pointed out it's not surprising at all that they're pushing start dates back.

In fact I'm glad they're doing this because it gives leeway for other NYC offices to push things back a bit so as to, y'know, keep people alive without having to deal with rumors about financial trouble. I sincerely hope I can keep WFH until the end of 2020, and I'm one of those boomer-mentality people who actuall likes the office

[Anonymous User]

What start dates does Wachtell typically offer?

My firm (V10) even in ordinary times lets you choose between late September, early October and late October, so this doesn’t necessarily strike me as too big of a deal.

[Anonymous User]

What start dates does Wachtell typically offer?

My firm (V10) even in ordinary times lets you choose between late September, early October and late October, so this doesn’t necessarily strike me as too big of a deal.

This was my thought too. I summered at a V20 as a 1L and saw the class above me start last fall at varying dates (well into October) to accommodate late post-bar trips and such. My V10 hadn't even given us a start date before everything went down, so I assumed it was flexibly in the September/October range.

[Elston Gunn]

That Wachtell change genuinely sounds related to the bar being pushed back.

[Sackboy]

That Wachtell change genuinely sounds related to the bar being pushed back.

This is my assumption.

I don't see Wachtell doing this for economic reasons. Wachtell is uniquely situated for economic downturns. While almost every other firm attempts to ramp up their supply of legal services to match the demand, Wachtell isn't really interested in rampant growth. They keep their supply of legal services artificially low, despite there being 2x-3x the demand for Wachtell to do work (that's how much work Wachtell has said in various publications that they turn down every year). I would not be surprised if numbers came out next year and Wachtell's financials were barely affected relative to everyone else.

[floatie]

That Wachtell change genuinely sounds related to the bar being pushed back.

Right...most NY firms start in mid to late September, and sometimes as late as October. Plus, there is a concern that the NY bar might not even happen on September 9/10 because of how precarious things are in NYC. This "deferral" is pushing the start date back like 2 or 3 weeks, tops.

[kengh]

Have any firms deferred yet beyond January?

[2020Graduate]

Have any firms deferred yet beyond January?

Doesn't seem like it.

December 2019
DLA Piper (https://www.abajournal.com/web/article/ ... e-programs)

January 2021
Dickinson Wright (https://www.law.com/2020/04/20/pay-cuts ... -pandemic/)
Fox Rothschild (https://abovethelaw.com/2020/04/am-law- ... -measures/)
Hogan Lovells (https://www.globallegalpost.com/big-sto ... -89388015/)
Orrick (https://www.law.com/americanlawyer/2020 ... s-to-2021/)
Reed Smith (https://www.law.com/americanlawyer/2020 ... -response/)
Shiff Hardin (https://abovethelaw.com/2020/04/50-perc ... ff-hardin/)

Date Not Public Information
Kelly Drye (https://abovethelaw.com/2020/04/am-law- ... t-dates/2/)

[mtf612]

Reviewing the 2009/2010 deferrals that came with stipends, it seems that some firms handed out cash to incoming associates to basically go on vacation, and other firms required graduates to do pro-bono / public interest work at an affiliated group.

Assuming your firm pushes your start date to January, without requiring remote work at a public interest group, what type of side-hustle will you take on to make extra cash and keep yourself from total boredom?

[Sporty1911]

Reviewing the 2009/2010 deferrals that came with stipends, it seems that some firms handed out cash to incoming associates to basically go on vacation, and other firms required graduates to do pro-bono / public interest work at an affiliated group.

Assuming your firm pushes your start date to January, without requiring remote work at a public interest group, what type of side-hustle will you take on to make extra cash and keep yourself from total boredom?

Going to preface this by saying it is almost impossible to predict what the general economy will look like between October-January, so what kind of side-hustle I go for could just be based on availability. Also, depends on whether or not I'll be studying for the bar, because theres a chance it could be held any time throughout October, November, and early-December, and if that were the case I would probably just focus on studying (I am lucky enough to be in a position where I can do so).

But, assuming we have taken the bar at that point and the economy is revving itself back up, I would probably first try to get some kind of research and writing gig for a paper/blog/website (Lawfare, etc.) that is in the substantive field of law I will be practicing in. Feel like this would allow me to keep up my writing skills, gain some more substantive knowledge in a field, and also make some money doing it.

In lieu of that, I don't really know. My first instinct would be to bartend/work at a coffee shop, but who knows what those industries are going to look like and what the supply of those jobs will be like in the fall/winter.

[LHand1993]

Reviewing the 2009/2010 deferrals that came with stipends, it seems that some firms handed out cash to incoming associates to basically go on vacation, and other firms required graduates to do pro-bono / public interest work at an affiliated group.

Assuming your firm pushes your start date to January, without requiring remote work at a public interest group, what type of side-hustle will you take on to make extra cash and keep yourself from total boredom?

Going to preface this by saying it is almost impossible to predict what the general economy will look like between October-January, so what kind of side-hustle I go for could just be based on availability. Also, depends on whether or not I'll be studying for the bar, because theres a chance it could be held any time throughout October, November, and early-December, and if that were the case I would probably just focus on studying (I am lucky enough to be in a position where I can do so).

But, assuming we have taken the bar at that point and the economy is revving itself back up, I would probably first try to get some kind of research and writing gig for a paper/blog/website (Lawfare, etc.) that is in the substantive field of law I will be practicing in. Feel like this would allow me to keep up my writing skills, gain some more substantive knowledge in a field, and also make some money doing it.

In lieu of that, I don't really know. My first instinct would be to bartend/work at a coffee shop, but who knows what those industries are going to look like and what the supply of those jobs will be like in the fall/winter.

I've contacted professors I'm close with asking them if they need any RAs for the upcoming summer. I'm hoping I can do that in addition to any remote jobs like writing or proofreading, whether or not it's legal writing. While obviously doing legal work is ideal, it's not like this is 2L summer and we need to be doing some kind of legal work--so I'm taking anything I can get, legal or otherwise.

[wishywashy]

Re: what to do with the time a stipend with no PI/pro-bono requirement buys you:

I would likely go to a municipality or maybe state level entity and see if I could help there (hopefully with pay, but without could work). Munis and states are going to be really squeezed and this is one of those times where a little effort from the right people in the right places can relieve a lot of pain (basically you can help in a way that gets magnified because it is in a state or city agency).

Everything from contract review, to legal research, labor and employment issues, code/zoning, inspections issues, helping muni court judges stay above water - almost any area of practice. These places will really need folks to help and they will have a hard time buying that labor with their limited resources. If you have a political mind then policy makers at state and city level need good help too - those local programs matter and could use smart folks assisting in their creation.

So whether you're in NYC or Macron, GA there will be work that needs to be done. Only caution might be conflict issues that pop up if you're at an agency that decides to go for the throat of a company that is your future firm's client - just ask your firm.

Bonus: if the job evaporates later then you have a solid connection with that state/muni level agency for a maybe job.

tl;dr - even if there is not a pro bono restriction you should consider pitching in at the city or state level with the skills you've developed (but watch for maybe conflicts issues).

[Anonymous User]

This might have already been discussed (I didn't go back and read 9 pages), but I think deferring until October
(or even January) is problematic. Presumably the deferral decided in order to give the country time to get a handle on Coronavirus and to allow people to start after the October bar exam. However, there is widespread agreement that Coronavirus is going to come back as early as September and linger throughout flu season (all fall and winter).

If a firm is deferring start dates at least in part because of Coronavirus, how is opening back up in the fall/winter--during the second wave--going to solve anything? Doesn't it just open the door for the firms to defer again until the Coronavirus is cured (which could reasonably take over 18 months)?

[LHand1993]

This might have already been discussed (I didn't go back and read 9 pages), but I think deferring until October
(or even January) is problematic. Presumably the deferral decided in order to give the country time to get a handle on Coronavirus and to allow people to start after the October bar exam. However, there is widespread agreement that Coronavirus is going to come back as early as September and linger throughout flu season (all fall and winter).

If a firm is deferring start dates at least in part because of Coronavirus, how is opening back up in the fall/winter--during the second wave--going to solve anything? Doesn't it just open the door for the firms to defer again until the Coronavirus is cured (which could reasonably take over 18 months)?

I think this is a valid concern. However, I do think that if there is a second wave in the fall/winter, some firms will try and get incoming associates started remotely. I also think some firms will future defer incoming associates.

This is total speculation, but perhaps firms (that are still planning on having a summer program) will use the remote starts that will likely be necessary for their summer programs as a dry run for onboarding incoming associates remotely in the event their offices are still closed. If it goes well and they believe they have the technological infrastructure to onboard an entire incoming class remotely, that's good for us. But it could also be disastrous and make the firms to believe that deferring incoming associates until they can onboard them in person is their best option.

[Sporty1911]

This might have already been discussed (I didn't go back and read 9 pages), but I think deferring until October
(or even January) is problematic. Presumably the deferral decided in order to give the country time to get a handle on Coronavirus and to allow people to start after the October bar exam. However, there is widespread agreement that Coronavirus is going to come back as early as September and linger throughout flu season (all fall and winter).

If a firm is deferring start dates at least in part because of Coronavirus, how is opening back up in the fall/winter--during the second wave--going to solve anything? Doesn't it just open the door for the firms to defer again until the Coronavirus is cured (which could reasonably take over 18 months)?

You are correct in saying that we are likely to see another wave of the coronavirus starting in the fall. But I believe the thinking is that by then, we will have much better mechanisms in place to temper the effects of the virus. There is definitely going to be increased testing + tracing capacity, and there is a reasonable chance that there will be a therapeutic treatment that shows some efficacy in lessening the severity of COVID. Even without some sort of miracle treatment, I think its fair to say there will be a more tailored approach to containing the virus, which will allow some kind of new normal to set in.

I think it would be possible for associates to start out in this environment. Maybe with a 1-2 day in-person orientation and then mainly WFH. Or a virtual start. I think the main concern we should have is that the bar won't be able to be administered in the fall or winter. That is probably the main thing motivating firms to push back start dates.

[Anonymous User]

You are correct in saying that we are likely to see another wave of the coronavirus starting in the fall. But I believe the thinking is that by then, we will have much better mechanisms in place to temper the effects of the virus. There is definitely going to be increased testing + tracing capacity, and there is a reasonable chance that there will be a therapeutic treatment that shows some efficacy in lessening the severity of COVID. Even without some sort of miracle treatment, I think its fair to say there will be a more tailored approach to containing the virus, which will allow some kind of new normal to set in.

I think it would be possible for associates to start out in this environment. Maybe with a 1-2 day in-person orientation and then mainly WFH. Or a virtual start. I think the main concern we should have is that the bar won't be able to be administered in the fall or winter. That is probably the main thing motivating firms to push back start dates.

I wonder if the bigger issue is even if we have treatments, effective testing, and tracing, will we have billable work? In other words, is our work going to dry up between March and October? Take NYC for example. The city has been locked down since mid to late March and if the city doesnt materially reopen until June 1 (for example), will the clients have work to give to BigLaw? What kind of M&A, PE, or VC deals are moving forward immediately following a 2+ month global lock down? What does a litigation department look like after state and federal courts have been closed for months and have a huge backlog? (I'm clerking currently and can tell you that we have been granting any and all adjournment requests since March).

I'm worried about firms deferring until October and then in September when the second wave hits, firms further deferring until January. I'm equally as worried about the second wave causing additional lock downs. If the country locks down again in September there is no saying how long the lock down will be. Presumably it can be longer than the current lock down especially when hospitals are overwhelmed (whether at capacity or not) between normal flu cases and COVID cases. Such second wave, when combined with flu season, could realistically result in lock downs that are way longer than the current lock down. Should that happen, we aren't going to be worrying about deferrals, we're going to be worrying that our offers are rescinded because there is simply not enough work to justify hiring a new class of associates.

[Sporty1911]

You are correct in saying that we are likely to see another wave of the coronavirus starting in the fall. But I believe the thinking is that by then, we will have much better mechanisms in place to temper the effects of the virus. There is definitely going to be increased testing + tracing capacity, and there is a reasonable chance that there will be a therapeutic treatment that shows some efficacy in lessening the severity of COVID. Even without some sort of miracle treatment, I think its fair to say there will be a more tailored approach to containing the virus, which will allow some kind of new normal to set in.

I think it would be possible for associates to start out in this environment. Maybe with a 1-2 day in-person orientation and then mainly WFH. Or a virtual start. I think the main concern we should have is that the bar won't be able to be administered in the fall or winter. That is probably the main thing motivating firms to push back start dates.

I wonder if the bigger issue is even if we have treatments, effective testing, and tracing, will we have billable work? In other words, is our work going to dry up between March and October? Take NYC for example. The city has been locked down since mid to late March and if the city doesnt materially reopen until June 1 (for example), will the clients have work to give to BigLaw? What kind of M&A, PE, or VC deals are moving forward immediately following a 2+ month global lock down? What does a litigation department look like after state and federal courts have been closed for months and have a huge backlog? (I'm clerking currently and can tell you that we have been granting any and all adjournment requests since March).

I'm worried about firms deferring until October and then in September when the second wave hits, firms further deferring until January. I'm equally as worried about the second wave causing additional lock downs. If the country locks down again in September there is no saying how long the lock down will be. Presumably it can be longer than the current lock down especially when hospitals are overwhelmed (whether at capacity or not) between normal flu cases and COVID cases. Such second wave, when combined with flu season, could realistically result in lock downs that are way longer than the current lock down. Should that happen, we aren't going to be worrying about deferrals, we're going to be worrying that our offers are rescinded because there is simply not enough work to justify hiring a new class of associates.

Honestly, I have no idea if there is going to be enough work to go around. I don't think anyone knows right now, and I think speculating on how much work there will be is pretty counterproductive because I think, as of right now, there is just as much of a chance that work will totally dry up as there is of seeing a slight rebound in the types of commercial, white-collar activity that drives Big Law practices. With such an interconnected economy, I just don't know enough to even speculate what could happen. So, yeah, I do worry there may not be enough work to justify bringing in a class of associates.

I do think that we should expect industry-wide deferrals to January, though. My firm has not announced deferrals and is one who's start date would not be effected by a September bar, and I am still fully expecting to be deferred to January. Logically, it just makes too much more sense for firms to give themselves a few months of a buffer to ride out the uncertainties brought about by the virus--uncertain bar administration dates, current, internal financial concerns, and broader economic uncertainty.

Two points, though. On the public health front, while secondary lockdowns are almost certain to occur, they will hopefully not be on a country-wide basis and will be much more tailored. There is going to be more (even if it not enough) testing throughout the country which will allow faster identification of outbreaks and hotspots. I would expect more tailored lockdowns that target those hotspots to go into place, like ones on a city or county wide scale. I don't know how long these would last--maybe 2-3 weeks if China/ S. Korea are indicators--but the idea is that they would contain outbreaks before they got back to the scale we see today. In turn, this would mean less of a disruption to whatever level of economy activity we have at the time.

Secondly, I think firms will be more hesitant to rescind offers this time around. As we all know, firms are extremely reputation focused, and rescinding offers is one of the worst things a firm can do for its reputation. Additionally, I have read that firms learned in the last financial crisis that there due to rescinding incoming associate offers, there was a dearth of midlevel associates to take on the increased work that came in later years with the rebounding economy, so they had to turn to expensive lateral hiring to fill that gap. My intuition is that this time around, firms will try take many more steps before rescinding offers so as to avoid that outcome.