Several prominent US law firms have postponed the start dates for some first-year lawyers, reflecting a decreased demand for corporate legal work. However, legal industry experts believe this move also signals anticipation of a rebound in the cooled mergers and acquisitions (M&A) market. Cooley, a Palo Alto-founded law firm, recently announced that incoming corporate associates could delay their start dates by a year, offering a $100,000 stipend as an incentive. Alternatively, they may begin in January but could be assigned to a different practice group.
Fenwick & West, another Silicon Valley-based firm, has also postponed the start dates for its incoming corporate and technology transactions associates until January. However, entry-level litigation and tax associates will commence as planned in October. Those beginning in January will receive a $15,000 stipend. Both Cooley and Fenwick & West have a significant client base in the technology sector, which has seen a reduction in jobs as companies prepare for an economic downturn after an aggressive hiring phase during the pandemic.
Cooley attributed the delay in associate start dates to "market conditions" in a statement. The firm announced layoffs in November, including 78 lawyers, due to decreased client demand and broader challenges within the US legal industry.
The decision to honor job offers while deferring start dates, rather than rescinding them, is reminiscent of a strategy widely adopted during the 2009 financial crisis when law firms faced significant layoffs.
Legal recruiters note that the absence of widespread layoffs this time indicates that law firm leaders believe deal-making activities will pick up again. They are cautiously managing their staffing levels to be adequately staffed while recognizing the realities of the current market conditions.
Stephanie Biderman, a partner at legal recruiting firm Major, Lindsey & Africa's associate practice, explains that the reason for fewer large-scale layoffs currently is the potential for a rapid resurgence in deal work and the difficulty of finding qualified professionals in the event of a sudden upturn.
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, another Silicon Valley firm, announced in April that start dates for graduating law school associates would be assessed case-by-case. At the time of writing, the firm has not responded to a request for comment.
Several other law firms, including Baker Hostetler, Goodwin Procter, Morrison Foerster, Reed Smith, Vinson & Elkins, and Wilson Sonsini Goodrich & Rosati, have confirmed that their incoming associate classes are expected to start in the fall, indicating a more optimistic outlook.
While many law firms remain in a holding pattern with their workforces, experts suggest that this situation can only be sustained for a while. There will come a point when the wait-and-see approach must be reassessed, according to Stephanie Biderman.
