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I tried researching how firms handled the 2008-9 recession. However, I could not seem to find any information about how a firm’s salary cuts and furloughs impact summer associate classes and offer rates. If a firm cuts salaries and furloughs non-attorney staff is this a sign that summers should be worried?

Anonymous User wrote:I tried researching how firms handled the 2008-9 recession. However, I could not seem to find any information about how a firm’s salary cuts and furloughs impact summer associate classes and offer rates. If a firm cuts salaries and furloughs non-attorney staff is this a sign that summers should be worried?

I’d think next year’s class will be smaller. This year, who knows. It’s firm dependent. If a firm has a summer class, I don’t think offer rates will be too much affected since they know of the crisis before the summers actually start (but that’s just a hunch. Not based on anything).

Cutting summers doesn’t really save short term revenue since there isn’t really a cost there yet. Those costs don’t get baked in until next year. If the recovery is supposed to be swift, like some are predicting, I think that’s good for summers. But again, these are uncertain times

ChickenSalad wrote:

Anonymous User wrote:I tried researching how firms handled the 2008-9 recession. However, I could not seem to find any information about how a firm’s salary cuts and furloughs impact summer associate classes and offer rates. If a firm cuts salaries and furloughs non-attorney staff is this a sign that summers should be worried?

I’d think next year’s class will be smaller. This year, who knows. It’s firm dependent. If a firm has a summer class, I don’t think offer rates will be too much affected since they know of the crisis before the summers actually start (but that’s just a hunch. Not based on anything).

Cutting summers doesn’t really save short term revenue since there isn’t really a cost there yet. Those costs don’t get baked in until next year. If the recovery is supposed to be swift, like some are predicting, I think that’s good for summers. But again, these are uncertain times

How do you figure? If you are a big firm planning to pay 100 summers 30,000 for 10 weeks of busy work, that seems like millions in potential savings if things get real bad.

You are correct. I'm in management at a law firm and there is no doubt that summer programs are considered highly expendable. Additionally, recent law grads in general are quite expendable, and the risk is that people who just finished the bar will end up with nowhere to really launch their careers if their first offer explodes.

Anonymous User wrote:

ChickenSalad wrote:

Anonymous User wrote:I tried researching how firms handled the 2008-9 recession. However, I could not seem to find any information about how a firm’s salary cuts and furloughs impact summer associate classes and offer rates. If a firm cuts salaries and furloughs non-attorney staff is this a sign that summers should be worried?

I’d think next year’s class will be smaller. This year, who knows. It’s firm dependent. If a firm has a summer class, I don’t think offer rates will be too much affected since they know of the crisis before the summers actually start (but that’s just a hunch. Not based on anything).

Cutting summers doesn’t really save short term revenue since there isn’t really a cost there yet. Those costs don’t get baked in until next year. If the recovery is supposed to be swift, like some are predicting, I think that’s good for summers. But again, these are uncertain times

How do you figure? If you are a big firm planning to pay 100 summers 30,000 for 10 weeks of busy work, that seems like millions in potential savings if things get real bad.

A 100 person summer program is a $3 million investment in billable workers that will start working full time 18 months from now. So unless a firm thinks that the economy will still be cratered 18 months from now or they have serious short term liquidity needs it would be pretty short sighted to cut a summer program entirely. A lot of firms aren't that far past feeling the pain of being short on quality mid-levels and senior associates due to the reduction in hiring and the stealth layoffs that occurred during the financial crisis.

4LTsPointingNorth wrote:

Anonymous User wrote:

ChickenSalad wrote:

Anonymous User wrote:I tried researching how firms handled the 2008-9 recession. However, I could not seem to find any information about how a firm’s salary cuts and furloughs impact summer associate classes and offer rates. If a firm cuts salaries and furloughs non-attorney staff is this a sign that summers should be worried?

I’d think next year’s class will be smaller. This year, who knows. It’s firm dependent. If a firm has a summer class, I don’t think offer rates will be too much affected since they know of the crisis before the summers actually start (but that’s just a hunch. Not based on anything).

Cutting summers doesn’t really save short term revenue since there isn’t really a cost there yet. Those costs don’t get baked in until next year. If the recovery is supposed to be swift, like some are predicting, I think that’s good for summers. But again, these are uncertain times

How do you figure? If you are a big firm planning to pay 100 summers 30,000 for 10 weeks of busy work, that seems like millions in potential savings if things get real bad.

A 100 person summer program is a $3 million investment in billable workers that will start working full time 18 months from now. So unless a firm thinks that the economy will still be cratered 18 months from now or they have serious short term liquidity needs it would be pretty short sighted to cut a summer program entirely. A lot of firms aren't that far past feeling the pain of being short on quality mid-levels and senior associates due to the reduction in hiring and the stealth layoffs that occurred during the financial crisis.

And on the other hand any biglaw firm paying market could find 100 qualified applicants willing to start on a week’s notice

wwwcol wrote:

4LTsPointingNorth wrote:

Anonymous User wrote:

ChickenSalad wrote:

Anonymous User wrote:I tried researching how firms handled the 2008-9 recession. However, I could not seem to find any information about how a firm’s salary cuts and furloughs impact summer associate classes and offer rates. If a firm cuts salaries and furloughs non-attorney staff is this a sign that summers should be worried?

I’d think next year’s class will be smaller. This year, who knows. It’s firm dependent. If a firm has a summer class, I don’t think offer rates will be too much affected since they know of the crisis before the summers actually start (but that’s just a hunch. Not based on anything).

Cutting summers doesn’t really save short term revenue since there isn’t really a cost there yet. Those costs don’t get baked in until next year. If the recovery is supposed to be swift, like some are predicting, I think that’s good for summers. But again, these are uncertain times

How do you figure? If you are a big firm planning to pay 100 summers 30,000 for 10 weeks of busy work, that seems like millions in potential savings if things get real bad.

A 100 person summer program is a $3 million investment in billable workers that will start working full time 18 months from now. So unless a firm thinks that the economy will still be cratered 18 months from now or they have serious short term liquidity needs it would be pretty short sighted to cut a summer program entirely. A lot of firms aren't that far past feeling the pain of being short on quality mid-levels and senior associates due to the reduction in hiring and the stealth layoffs that occurred during the financial crisis.

And on the other hand any biglaw firm paying market could find 100 qualified applicants willing to start on a week’s notice

Sure, but if you're the only firm in your peer group that cuts their summer program, then the 100 "qualified" applicants that you hire at the last minute will be much different than you're used to. Plus, those applicants won't have had the chance to sample practice groups in a no-stakes internship, so assigning new hires to practice groups will be much more of a crap shoot.

I think in this scenario the firm would still extend offers to its 2020 summer class to start fall 2021, they just wouldn’t pay them to do nothing during summer 2020.

cfcm wrote:I think in this scenario the firm would still extend offers to its 2020 summer class to start fall 2021, they just wouldn’t pay them to do nothing during summer 2020.

They wouldn't be able to start in the fall because they'd be going into their 3L year of law school. Maybe in this scenario they would extend offers to the 2020 summer class for spring/post 3L graduation.

Lawschool123456 wrote:

cfcm wrote:I think in this scenario the firm would still extend offers to its 2020 summer class to start fall 2021, they just wouldn’t pay them to do nothing during summer 2020.

They wouldn't be able to start in the fall because they'd be going into their 3L year of law school. Maybe in this scenario they would extend offers to the 2020 summer class for spring/post 3L graduation.

That is exactly what cfcm was saying