Deferral Stipend

Remember: Biglaw’s a marathon, not a sprint.

It has been a while since we covered the subject of associate start dates at major law firms — mainly because there hasn’t been much news on this front. When we looked into the topic last year, we learned that about 90 percent of firms were starting their associate classes in the fall, a fairly standard timeline.

Are things different this year? We recently heard a report of one firm starting its associates in January. Is it 2010 all over again?

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Way back in 2008, back when people were wondering just how bad the recession was going to be for Biglaw, Heller Ehrman collapsed. When the firm dissolved, there was a lot of fear that it would be the first of many to fold.

While a few other firms also dissolved during the recession, we didn’t have an epidemic of dissolution across Biglaw. At the end of the day, it looks like only the firms under horrendous management paid the ultimate price.

Of course, many of the people who managed these firms into the ground landed on their feet and found new, high-paying legal jobs. Many of the associates and staff didn’t fare as well. Try getting a job in this economy when you are an associate with no experience who has already been laid off. In the immortal words of Akin Gump partner Steven Pesner, “the job market is not so good right now, in case you did not know.”

Given all that these people have been through, it’s nice to be able to report on a victory for two would-be Heller associates. Heller pushed back their start date and offered them a deferral stipend. Then the firm folded, and Heller never paid out that stipend.

Now, two years later, a California court has ruled that these two members of the Lost Generation should have been given priority when Heller came apart…

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A couple of weeks ago, we reported on the public interest stipend Georgetown Law offered its recent graduates. Georgetown University Law Center gave a three month stipend of $4,000 to its recent graduates who are working for a public interest organization.

Today, we have news that GULC is extending the fellowship for an additional three months. That’s great news for GULC grads. But it’s terrible news for administrators at UCLA Law and UT Law, two schools which are hoping to knock Georgetown out of its vaunted #14 spot in next year’s U.S. News Law School Rankings. Consider GULC’s employment stats sufficiently juked.

Potentially, it’s also terrible news for part-time night students attending Georgetown. This money has to come from somewhere, and right now it looks like part-time students are helping Georgetown cover the budget…

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We’ve done a lot of coverage about deferral stipends, public interest stipends, and other direct payments to graduates who are not able to secure prime, private practice employment.

If you think about it, these programs have popped up with shocking speed. In 2007, there was no such thing as a “deferral stipend” from firms, and the public interest fellowship programs offered by schools were small and for grads who wanted to wait a little while before heading into the open arms of a private law firm. Now, these programs represent the last hope for grads who are unable to secure jobs.

With everybody trying to describe what these programs are, there’s been little time to analyze how these programs work. One aspect is particularly interesting to students considering some of these stipend options: how will the stipend be taxed.

Because each program is different, the tax situations differ wildly. So you really need to work with your career service/human resource people and figure out how your stipend will be taxed.

If you didn’t put in that work with regards to the Georgetown University Law Center post-grad public interest stipend, the taxes totally screwed up your budget…

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Sow your wild oats for a year -- and come to the firm when you're ready to work.

With apologies to Langston Hughes, we have to ask:

What happens to an associate deferred?
Does he dry up, like a raisin in the sun?
Or fester like a sore — and then run?

Run, run — away from Biglaw. That seems to be what at least some deferred associates are doing, as reported last week by the New York Times in an article about how they spent their deferral years — and how some of them aren’t returning to the well-feathered nests of private law firms when called back.

The Times interviewed two deferred associates who aren’t going back to their firms. Nathan Richardson, a 2009 graduate of the University of Chicago Law School who was deferred by Latham & Watkins, spent his year doing environmental law research at Resources for the Future — and plans to remain in public interest. Avi Singh, a 2009 graduate of Harvard Law School who was deferred by Quinn Emanuel, went off to the Santa Clara County public defender’s office in San Jose — and is staying there.

Due to deferrals, Latham and Quinn just lost the services of two bright young attorneys. And maybe, just maybe, this isn’t a bad thing — not just for these lawyers, but for their law firms….

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This was bound to happen at some point. There have been countless associates who were promised jobs at law firms. They stopped looking for other jobs in reliance on that job offer. Then during the recession they were deferred, or their offers were rescinded. They are the leading citizens of the Lost Generation.

Do they have any legal claims against their would-be employers?

Almost certainly not, but it looks like somebody is ready to try to find out. The ABA Journal reports:

A would-be associate has sued San Francisco law firm Howard, Rice, Nemerovski, Canady, Falk & Rabkin for deferring and then rescinding her job offer.

A clean test case on the issue of offer rescission? Not quite. As with most things, there’s a racial angle…

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DLA Piper recently rejoined the ranks of Biglaw firms paying a $160,000 starting salary. Welcome back to the pack. Unfortunately, some incoming associates hoping to start at DLA will have to wait quite a bit before they are able to cash in on that $160K dream. A tipster reports:

DLA Piper just told their incoming first years (i.e., the people who graduated in May 2010) about their start dates. A few months ago they told everyone that they’d either be starting in January 2011 or January 2012, but didn’t state who would be starting when, how many people they expected to start on either date, or any other specific information.

They made the calls [yesterday] and almost everyone is deferred until January 2012. They said they “expected” to give a stipend of $5k a month for pro bono work but didn’t definitively confirm anything.

Well, DLA Piper has now provided information about the situation to Above the Law. All of these kids — who summered with DLA Piper in 2009 — knew there was a possibility of getting deferred until 2012. But only half of them actually will. The rest will start relatively on-time…

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A little over a year ago, law firms came up with a unique plan to deal with the problem of too many associates and not enough work to go around: the deferral. It did not apply just to incoming associates; it was also offered up to those already at the firm who were open to a year-long sabbatical.

We know that many of you decided (or had to) seek out work in the public sector. But when the mainstream media picked up on the fact that law firms were paying their employees to go away from a year, they focused on those doing fun things, like the Skadden Sidebar associate planning a trip around the world. How many other deferred dreamers have taken the opportunity to do something offbeat?

Or something about beats. Rap Genius, a website that analyzes rap lyrics (called ingenious by Nick Antosca of the Huffington Post for its breakdown of Empire State of Mind), is the creation of a DL Pursuer. The site is now nine months old, and Mahbod Moghadam (Stanford Law ’08) is hoping it’s his escape out of law. Which would be a good thing, since Dewey & LeBeouf is having a hard time reabsorbing its DL Pursuits associates.

Moghadam is quite a character: he sent us a bizarre photo involving a carrot, he’s the ex-boyfriend of Victoria of Downtown Girls, and he convinced two Yale friends to quit their jobs (at Google and D. E. Shaw) to work with him on Rap Genius. What kind of Jedi mind tricks is this guy using?

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Do you remember the scene in the Amityville Horror House movie where the toilet says to the family, “Get out”? That seems to be what firms are telling incoming associates when they defer first-years until 2012.

Today, we’ve got another firm that has decided to put some of its incoming associates on the long march towards nowhere in particular. Missouri Lawyers reports:

St. Louis-based Bryan Cave is among the firms that have pushed off start dates on new associates to 2012.

The firm’s St. Louis office made 14 total offers last fall to 2010 law school graduates, but told seven of them at the time that they wouldn’t be starting until January 2012, said managing partner Peter Van Cleve. The other seven were extended offers to start in January 2011.

Remember, Bryan Cave is still trying to absorb the members of the class of 2009 — at least the ones who didn’t already take the firm’s offer to split…

double red triangle arrows Continue reading “Incoming Bryan Cave Associates: Welcome to 2012.”

When it comes to deferring incoming associates, what is the new normal? A couple of months ago, we reported that Mintz Levin was deferring its class of 2010 associates to 2012. At the time, Mintz Levin didn’t reveal any information about its deferral stipend.

Today, tipsters are telling us about the Mintz Levin stipend. Let’s just say that 2010 graduates waiting for a job at Mintz Levin should strongly consider driving a cab or something. They’ll need an extra source of income to make ends meet…

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