Associate Start Date at Big Law Firm Deferred to 2023 Due to Work Slowdown

In a dramatic turn of events from pandemic times, legal recruiters are now saying that “demand for associates no longer exceeds supply.”

Inflation has increased dramatically and many experts are predicting that the U.S. (and the rest of the world) will soon experience a recession—two important reasons why business demand for the services of Big Law firms has slowed from its peak in 2021.

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Firms are responding to this work slowdown in a variety of ways. Layoffs and hiring freezes have already taken place, and more are likely. In addition, stealth layoffs may be happening as well. Stealth layoffs occur when firms let attorneys go due to work slowdowns but try to play it off as run-of-the-mill exits so as not to appear weak or in financial distress, which could drive business to competitors.

Big Law firms first began using deferrals back in 2009 when they were faced with the problem of too many employees and not enough work as a result of The Great Recession. However, that crisis was so great that firms could not hope to save face entirely. Thus, they also made use of mass layoffs, stealth layoffs, hiring freezes, and essentially whatever they could think of to save any amount of money.

In 2009, start dates for incoming first-year associates’ were delayed sometimes longer than a year, but many received compensation for taking a deferral with the understanding that they’d be able to come back and resume their careers eventually. However, some associates were never brought back.

Silicon Valley powerhouse Gunderson Dettmer is the first major firm, as far as anyone knows, to defer its incoming associates’ start dates this year. In what was perhaps an episode of wishful thinking, Gunderson adopted the Cravath, Swain & Moore pay scale back in March, offering salaries of up to $425,000 to its most senior associates.

Sources say that firmwide, Gunderson has delayed its new associates’ start date from October 31, 2022, to January 17, 2023. Partners notified the associates by phone, informing them that the deferrals were due to the fact that demand had slowed significantly. Incoming associates were also told their start dates could be delayed even further if demand remained depressed.

Deferred associates will receive about $6,000 per month as a stipend, but will not receive health insurance until they actually begin work. Considering that first-year associates at the firm make $215,000 annually, this is certainly one way to save money, and Gunderson is likely just the first of many firms to defer all or some of their new associates.