Had the economy not gone into a tail spin, Christopher Reid would likely be elbow-deep in research for discovery in a patent lawsuit at Ropes & Gray.

Instead, Ropes & Gray announced in March that it was delaying start dates for new associates and those who chose to could work at non-profit agencies for a $60,000 stipend. Reid said he was initially “freaked out” but later decided the non-profit work might pull him out of his research comfort zone by forcing him into court with clients.

“I thought it was good to do something that wasn’t natural to me so I’d learn the most,” said Reid, who said he is working on housing cases in Brooklyn for the Legal Aid Society.

Reid is one of an estimated 125 to 140 law school graduates in New York City whose law firm start dates have been delayed and who are working at government agencies and non-profits, according to the New York City Bar, which maintains a database of non-profit agencies willing to take on deferred associates.

The idea of matching new lawyers to public interest agencies developed after many large law firms found themselves overstaffed earlier this year and put off the start date for first-year associates, in some cases for one year. The firms typically offered stipends to new lawyers, in some cases under the condition they work at public interest agencies.

At the same time, those agencies are seeing a drop in funding. The Interest on Lawyer Account Fund (IOLA), which provides monies to public interest groups through interest on attorney escrow accounts, said it has much less to distribute this year. Christopher O’Malley, IOLA’s executive director, said the fund expects to distribute roughly $14 million in 2010 to eligible public interest groups, down from $23.9 million this year. Donations are also down from law firms that are trimming expenses.

“We’re not able to hire or replace people the way we have been able to at other times in our history,” said Andrew Scherer, executive director of Legal Services NYC, which has taken on deferred lawyers.

During the economic downturn, “when the demand for our services is increasing and the economy is creating more legal problems for low-income people, we need the help that much more,” Scherer added.

In addition to non-profits, government agencies have found room for deferred associates. The New York City Law Department, for example, said it has taken on several for the full year from firms such as Dewey & LeBoeuf, White & Case, and Kelley Drye & Warren. The department’s tort office has eight deferred associates for the year, along with a few others for shorter periods.

“The real difference is they’re getting their own cases instead of being a junior associate,” said Stuart Smith, director of legal recruitment for the Law Department. “They’re not writing memos to a partner; they’re seeing the inside of a courthouse.”

Similarly, the Brooklyn District Attorney’s Office brought on 35 deferred associates to work with prosecutors for 12 to 18 months. After participating in the standard two-week training program, the fellows, as they are known, will handle the same assignments as other first-year assistant district attorneys. They will appear in court twice a week, cover arraignments and work various shifts.

Agencies and non-profits say they are already getting applications from law students who expect to be deferred next year. The Staten Island District Attorney’s Office, which currently has one deferred associate from Cravath, Swaine & Moore, has received two applications for next year from other would-be Cravath lawyers, said Daniel Master, chief assistant district attorney.

“We get very, very good young assistants, and we save the taxpayer money,” Master said. “Cravath gets very well trained people who have courtroom experience that they normally wouldn’t get in a large firm.”

Cravath is paying $80,000 to 48 associates who voluntarily deferred their start dates, though there was no requirement to work at a public interest group, said Rowan Wilson, the hiring partner at Cravath.

HIT THE GROUND RUNNING

In mid-September, the City Bar hosted a week-long training session for deferred associates. Around 80 graduates attended a kick-off breakfast where speakers lectured on the virtues of pro bono and braced them for the year ahead. Lynne Kelley, the City Bar’s executive director, told the crowd the public interest jobs would require them to “learn on your feet.”

“Frankly it’s about a six-month learning curve to catch up,” said Kelley. “That is, it will take six months before you feel you won’t throw up.”

The key for most associates switching from corporate law to public interest work is to concentrate on developing as many legal skills as possible. And the challenge for the agencies is to get the most out of young lawyers who will be around for only about one year.

Yanfei Shen, 26, was slated to start in Brown Rudnick‘s real estate office in Boston. Instead, she is handling largely domestic violence cases through South Brooklyn Legal Services.

“The research skills, public speaking skills, dealing with clients — these are all transferable skills,” Shen said. “And actually, when my firm deferred me, they said they might change my practice area. So if for example I ended up in litigation, they’d be very useful skills.”

Ron Hagiz, a 26-year-old deferred associate from Ropes & Gray working at Legal Aid, said, “They really throw you into the midst of it.”

Nicole Lonsway, whose start date at White & Case was delayed one year, is one of two deferred associates at the HIV Law Project, which has a staff of about 18. Lonsway, 24, has been handling matters ranging from housing to immigration to benefits to wills. And while HIV Law did provide training, much of the learning takes place as you go.

“In a smaller organization you don’t have the resources to take away people’s time to formally train [new lawyers],” Lonsway said. “Here you hit the ground running and train as you go. You can ask questions along the way, and you’re not fully in the dark and always have someone backing you up, but it’s more trial and error on your part and you get to see what works for you.”

The cases are a far cry from the corporate law she studied at the University of Michigan Law School. But despite the differences in practice areas, she said she is getting experience that will transfer to White & Case.

“I already feel my research skills have improved,” she said.

Shekar Krishnan, a University of Michigan Law School graduate now deferred from Weil, Gotshal & Manges, is working largely on tenant-landlord disputes for Brooklyn Legal Services Corporation in Williamsburg, N.Y. Krishnan, 24, said Brooklyn Legal was providing exactly the experience he wanted.

“There are just so many opportunity to get involved with clients,” Krishnan said. “Those skills working with clients, negotiating on their behalf, will carry over into the law firm world. The clients may be different, but the advocacy methods are similar.”

Some whose start dates were delayed only until January found that non-profits were looking for longer-term commitments, said Zakiyyah Salim-Williams, director of the City Bar’s deferred associate extern project.

But a few short-term deferrals did find work. Kevin Wallace, a 25-year-old New York Law School graduate, was deferred from Troutman Sanders for only four months and under no obligation to work at a non-profit, he said. The firm did not offer a stipend, though it did offer a $5,000 salary advance. Wallace considered finding short-term employment, but decided to work at Legal Aid pro bono.

“The other option was bartending or waiting,” Wallace said.

In some cases, associates have the option to extend their deferrals from January to fall 2010. Alexis Berkowitz, a Cornell Law School graduate, asked Shearman & Sterling to extend her deferral so she could work at the Legal Aid Society in its law reform unit. Berkowitz, 27, was president of a human rights group at Cornell and said she had an interest in pro bono before Shearman announced the deferrals.

“I just saw it as an opportunity to ride out the economic storm and do some good work,” she said.

Smith, with the New York City Law Department, said the firms will be “very pleasantly surprised” when they see what the deferred associates can do.

The outcome of this phenomenon of having deferred first-year associates trained in non-profit or government agencies is likely to impact discussions on reforming the law firm hiring model.

Adriene Holder, the attorney-in-charge of the civil practice at Legal Aid, said there are informal talks among non-profits, law firms and law schools about institutionalizing a program where graduates could voluntarily enroll for a year in a public interest organization and then join the firms.

“It’s a concept we’d really like to talk more about,” she said.

Wilson, the hiring partner at Cravath, said the firm would need to evaluate the deferred associates’ experience before giving its incoming lawyers the option to work at agencies their first year.

“[W]e’ll measure what sort of skills these people developed in that year,” he said. “What we would do in the future I don’t know, but we definitely now will have a big data set to look at where we really haven’t had one before.”