Biglaw, Deferral Stipend, Start Dates

Open Thread: Are Deferral Stipends Too Small?

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We receive a lot of interesting emails here at Above the Law. Once law firms started deferring their deferred incoming associates for a second time, we started getting emails like the one below. Since I don’t really know how to respond to the people who have been asking this type of question, I figured I’d throw it out to you guys for your expert advice:

Can you do a story about the size of deferral stipends? Particularly, breaking down the math of expenses showing that some firm’s stipends are too small. For instance, [Redacted] is paying deferred first years only $3300 per month before taxes. After taxes this only comes out to like $2600 per month. Most law students went to expensive schools with $150,000 debt (not to mention undergrad debt), and have $1,000 per month loan payments starting this month even if you select the maximum 30 year repayment plan. Under the 10 year payment plan, loan payments are $1500 per month. When you consider that rent in New York, DC, Chicago, LA, and San Francisco is at least $1,200 (being very very conservative), that leaves no money to pay for things like food or utilities. They expect us to basically spend more than we make for 3, 6, 9, 12+ months? This is practically a layoff. I don’t have the finances or rich parents to go 6+ months with no money. Firms like [Redacted] need to pay at least the market $5,000 per month so that the deferred first years have enough to live on. Especially when our original offer letter promised us “market compensation.”

Is there anything useful we can tell this person (and the other incoming associates in the same position)? Let’s try after the jump.


“Are deferral stipends too small” as compared to what? It seems to me that deferral stipends are quite generous as compared to being laid off or having your offer revoked. You can’t lose sight of that fact that while on deferral, the firm is paying you to not work at the firm. I haven’t been paid to not work since my mommy helped me fund my spring break trip when I was a freshman in college. (After that, I figured out that real men don’t ask their parents to pay for their vacations). So really any deferral stipend has to be viewed as a gift from the law firm to your bank account.
But that is easy for me to say. Nobody offered me $160,000 and then told me “actually, we’re not sure about that, why don’t you chill out for a year.” And it’s clear that some firms have been more generous than others.
Yet the central question posed by this tipster seems to be: is $3,300/month enough to live on?
I’m just a humble legal blogger who makes significantly less than his awesome wife (hi honey), but I think the answer to that question has to be “yes.” Even in New York. That’s basically a $40K/year job (before taxes) and there are a lot of New Yorkers that get by on that money. Can you live in a Manhattan hi-rise and order take-out every night? No. And you”ll have to get “creative” with your debt repayments (creative = not necessarily answering the phone when your creditors call). But you can make it.
More to the point, there are lot of people living off $40K in major cities that have to work a full time job to earn that money. As a deferred incoming associate, the one thing you have is time. There might not be a lot of spare legal work lying around, but there are lots of things one can do with 35 spare hours a week to supplement one’s income. You are starting at $3,300/month before you spend one hour actually working. Surely, you can cobble some income enhancements together.
You might have been expecting to earn $160,000 by now. I’m sorry for your loss. But I think firms are expecting that their deferred incoming associates have the will and the creativity to take the initiative and find a way to make a living.
It might be difficult, but it is certainly doable.
What do you think? Take our reader poll below.

Earlier: Prior ATL coverage of deferral stipends

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