Big Law Firms Delay Start Dates for New Lawyers Amidst Weakened Demand
At least two prominent law firms in the United States have made the decision to postpone the start dates for some first-year lawyers in a move described by one recruited as “can kicking” in a slower legal market.
This move not only reflects the decreased demand for certain corporate legal work but also indicates a belief that the stagnant M&A (mergers and acquisitions) market will regain momentum, according to experts in the legal industry, Reuters report.
Cooley recently announced that it is providing incoming corporate associates with the option to delay their start dates by one year in exchange for a $100,000 stipend. Alternatively, they can begin in January but may be assigned to a different practice group.
And Fenwick & West announced last week that their incoming corporate and technology transactions associates would not commence until January, while entry-level litigation and tax associates would start as originally planned in October.
Those associates beginning in January will receive a stipend of $15,000. Both Cooley and Fenwick & West were established in Silicon Valley and primarily cater to clients in the technology sector. With U.S. tech companies cutting down their workforce after extensive pandemic-related hiring, they are preparing for an economic downturn.
Cooley said “market conditions” were the reason for the reason for the delay in associate start dates. In November, the firm had announced layoffs of 150 employees, including 78 lawyers, due to reduced client demand for their services and the overall decline in the U.S. legal industry.
During the financial crisis in 2009, law firms faced a similar situation and began deferring start dates for new associates while honoring job offers. This approach has been adopted again, instead of resorting to widespread layoffs.
Legal recruiters note that the decision to defer start dates, rather than rescinding offers or implementing large-scale layoffs, indicates that law firm leaders anticipate a resurgence in deal-making activities.
They are cautious about being understaffed but also acknowledge the current market conditions.
When corporate deal-making surged in 2021, many major law firms aggressively expanded their workforce. However, as the M&A market cooled down, some firms had to make scattered layoffs.
Stephanie Biderman, a partner at legal recruiting firm Major, Lindsey & Africa’s associate practice, explained that the limited scale of layoffs in recent times is attributed to the quick potential rebound of deal work and the challenge of finding qualified professionals once the market picks up again.
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, another Silicon Valley firm, stated in April that start dates for law school graduates joining as associates this spring may be deferred on a case-by-case basis. As of now, there has been no response from the firm’s spokesperson regarding this matter.
Although many law firms are currently in a state of uncertainty regarding their workforces, this situation cannot be sustained indefinitely, cautioned Stephanie Biderman. She asked, “For the most part, firms are in that wait-and-see pattern, but when does that wait-and-see end?”