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Saving for education

The race among Big Law firms to woo the best law school graduates continued Friday, with Orrick, Herrington & Sutcliffe announcing that it will start helping its first-year associates pay down their student debt this year.

A handful of other firms have launched programs to help associates refinance student loans, which can easily reach six figures. Orrick’s program is novel because the firm is making direct contributions to first-year associates’ loan payments. Orrick said it will contribute $100 per month to associates’ debt load up until the associates receive their first bonus, which is typically 16 months into their tenure with the firm.

“There really is a war for talent right now,” said Siobhan Handley, Orrick’s chief talent officer. “We’re looking for distinguishing factors and this was a way to do that.”

With 40 to 50 new associates a year, the commitment amounts to between $64,000 and $80,000 for Orrick. That’s just over half what it pays a single first year now that it has joined other top firms in raising first-year associates’ pay to $180,000.

The contribution may seem like little more than a rounding error for the firm, where profits per partner reached $1.79 million last year. But the move still drew praise from associates and industry observers.

“This is an important signal that law firms recognize that law school is too expensive,” said Kyle McEntee, executive director of Law School Transparency, a nonprofit that tracks tuition rates and student debt. “Even when a firm pays $180,000, the graduates still need help repaying their loans to live comfortably.”

Law school students who graduated in 2014 had an average of $118,670 in student debt, according to Law School Transparency.

Associate James Fee, who graduated from Boston College Law School in 2015 and works in Orrick’s New York office, agreed that any help toward paying down his roughly $150,000 in law school debt is meaningful.

“It’s nice to have an acknowledgement,” Fee said. “Especially when you’re starting out and you’re trying to figure out how to corral all these obligations.”

Orrick is partnering with the nontraditional lender Social Finance Inc., a San Francisco-based company that works with law firms to help associates refinance their student loans at lower their interest rates. In April, Social Finance vice president Daniel Macklin said that several large firms are considering making contributions toward their associates’ debt.

Associates who graduated from law school in 2015 will be the first to benefit from Orrick’s program, which goes into effect Sept. 1. Handley said the payments can go toward undergraduate debt as well as law school debt, and are available to both partner-track and career associates.

Orrick’s move follows a slew of attempts by firms to set themselves apart for associate recruiting and retention. Last year Latham & Watkins launched a program with the bank First Republic that would allow associates to pay as little as 2.5 percent interest rates on their student debt. In May, Winston & Strawn announced a 20-week gender-neutral parental week program. And in June, Cravath, Swaine & Moore raised associate pay, prompting most top Am Law 100 firms to follow suit.

Other firms, including Sullivan & Cromwell and McGuireWoods, have recently announced that they will also work with lenders to help their associates refinance student loans.

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