Morgan, Lewis & Bockius canceled its 2010 summer associate program on Tuesday, the first big firm to publicly do so.
The move is another sign that firms don't expect a talent shortage in the coming years. Firms nationwide face decreased demand for legal services and reduced associate attrition.
Morgan Lewis was in a unique position this summer because, while many firms scaled back, it actually increased the number of people in its program. This year's class was up 30 percent nationwide over last year, but down 11 percent in California. The firm has more than 1,300 lawyers and about 158 in California. In 2008, it hosted 81 summer associates, and in 2009, it hosted 105.
In a letter to law school deans, Morgan Lewis' firmwide hiring partner Eric Kraeutler said the firm first wanted to fulfill present obligations.
"We continue to be committed to law school recruiting and entry-level hiring. However, our highest priority is to provide opportunities for our existing associates and 2009 summer associates," Kraeutler wrote.
Firm Chairman Francis Milone addressed attorneys and staff via videoconference to inform them of the change of plans. Milone also detailed other cost-cutting measures, including a decision to eliminate lockstep compensation in favor of a performance-based system. The firm did not detail changes to the compensation/advancement structure.
The firm has also previously informed the current crop of summer associates that start dates for those offered permanent jobs would be pushed into the fall of 2011. The firm has told current summer associates that they will have the chance to do subsidized public interest work for a year before starting at the firm.
Dozens of firms cut their summer associate programs this spring, some by 30 to 50 percent, according to data collected from the National Association of Law Placement.
But only five firms canceled their 2009 summer programs altogether. And most were midsize firms. They included Dallas-based Winstead, which has 279 lawyers; San Diego's Luce Forward, which has 181 lawyers; Washington, D.C.-based Sughrue Mion, which has 117 lawyers; and Atlanta's Morris Manning & Martin, which has 153 lawyers.
The largest of those that canceled was Boston's Edwards Angell Palmer & Dodge, which has 554 lawyers.
Legal recruiter Stacy Miller Azcarate said demand for associates will rebound one day, but for now, firms are doing the math and finding a fat summer program no longer makes sense.
"People see so many associates on the market right now that when the market picks up a year or two from now, a firm won't need to pull from its summer associate programs," Azcarate said. "Therefore, it doesn't make economic sense for a firm to maintain an expensive summer associate program right now, and that's prudent business thinking."
A few other firms have deferred start dates for their 2009 summer classes. Last week, Orrick, Herrington & Sutcliffe deferred start dates for its current summer class to January 2012 and delayed its fall on-campus recruiting by a few months.
Orrick's on-campus-hiring partner, Stephen Venuto, said to recruit on its normal schedule without knowing how many offers it could make would be "irresponsible."
Also on Tuesday, Hogan & Hartson deferred start dates for its current summer associates until 2011. The firm told The Recorder's sister publication, The Am Law Daily, that it has pushed back start dates in Northern Virginia and Washington, D.C., but will assess start dates for its other offices on a case-by-case basis.