Legal Commentary

Last week, I mentioned the depressing news over law firm layoffs.  Since that post, the trend has continued with numerous other firms announcing massive cuts (you can find a detailed "Layoff List" on AmericanLawyer.com).  Some estimate over 1300 lawyers and staff were given pink slips last week alone. Against this backdrop, other changes are happening in how firms pay their associates; not all of it bad.

Orrick, Howrey, and several other firms recently announced significant changes to their compensation systems to reduce starting salaries and a move away from seniority-based pay. Many believe the salary cuts save more money than layoffs.  Other firms -- like Pillsbury, Foley, White & Case, Morgan Lewis, SImpson Thatcher, and Skadden, among others --  have offered to pay their incoming associates often between 1/4 to a 1/3 of their regular salaries if they leave the firm and work for public interest organizations.  The approaches are varied.  Morgan Lewis, for example, has agreed to pay deferred associates graduating in 2009 a $5,000 monthly stipend for one year if they secure a job in the public interest field.  Skadden in a "Sidebar" program has said it will pay associates one-third of their salaries to work for public interest organizations for a year.  The deferral plans are estimated to often save the firms about $100,000 for the year for each associate.

The compensation changes may not be all bad news. Since 2007, the starting salaries at the large mega-firms have hovered around $160,000. Until recently, starting salaries had risen fairly consistently (since the dot.com boom) as firms throughout the country tried to keep pace with the New York pay scale. For some firms, the new compensation changes are out of necessity - as a way to survive the economic downturn -- but I suspect other firms may well see the economic crisis as an opportunity to rein in salaries generally (long perceived by some as excessive). The deferrments encouraging associates to work in the government or the public interest field may also lead to some interesting long-term developments.  In some ways, it has the attributes of the articling requirements that exist in other countries (although, ironically, in Canada, some law societies have contemplated abolishing the articling requirement because of the shortage of placements).

I'd be interested in reactions from lawyers in the public interest field to these deferral plans and whether they suspect it will have any impact -- either on how lawyers view public service or the public interest field generally.