In case you haven’t been paying attention, deferrals seem to be en vogue in Biglaw right now.
How did this blast from the recession past arrive here in 2023? Here’s a quick reminder. Back in April, following a round of layoffs, Cooley kicked off the most recent race to shrink incoming associate classes by deferring its first-years to January 2024. Gunderson soon followed with its second round of deferrals, again to January 2024. Then, Fenwick jumped on the bandwagon, deferring only its incoming corporate and technology transactions first-years to January 2024. Last week, Cooley was back again, offering a year-long deferral for select incoming corporate associates, this time with a $100K stipend.
This is a bit concerning, right?
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The American Lawyer spoke to several law firm consultants and recruiters concerning the likelihood of more deferrals coming down the pipeline, and the general consensus seems to be that more may be on the way sometime soon for certain practice areas.
“Fenwick and Cooley are examples of firms that are generally respected and give cover to others to push back,” one consultant told Am Law, while others said that firms that went on hiring sprees back in 2021 — especially firms that “rely on deal activity tethered to the tech sector” — may be inclined to defer their incoming classes. Here’s more from Am Law:
Recruiters generally agreed that while unfortunate, deferrals are likely a prudent business decision and certainly, a better alternative to layoffs.
Some recruiters added that deferrals can be a useful mechanism to retain talent, by keeping incoming associates in the queue while providing a meaningful amount of work and experience to current associates.
“Deferrals allow firms to retain the top talent they’ve recruited,” [Jennifer] Henderson[, co-founder of legal search firm Hatch Henderson Fivel,] said. “And they can always bring them back sooner if demand improves.”
Henderson went on to call Cooley’s deferrals “humane” — after all, it’s of no use to have new associates start their careers in an environment where there’s not enough work to go around.
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Is your firm planning to start making major deferral offers to associates? If you have any intel, please don’t hesitate to let us know. You can email us or text us (646-820-8477). Thank you for your assistance.
Associate Deferrals Reveal Concerns of a Sustained Downturn, Especially in Tech [The American Lawyer]
Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.