New Recruits or Pending Suits

This post by Jim Rhyner, worldwide lawyers professional liability insurance product manager, Chubb Group of Insurance Companies, is one of a series of guest posts on CounseltoCounsel. Special thanks to Jim for his continued contributions.

As one of the professions hit hardest by the financial crisis, the legal industry presents a difficult employment environment for law graduates in the classes of 2009 and beyond. Their prospective employers face challenges too: many firms are financially unable to take on new associates, yet don’t want to lose out on gaining promising talent at the entry level. As a result, a number of new lawyers have been offered deferred employment – sometimes with a stipend to help make ends meet in the interim.

But what happens when that deferred start date arrives, and the firm still isn’t ready to pay new salaries? At several large practices, only a portion of deferred new hires have started on time as planned; others have been postponed, in some cases indefinitely – which could expose the firm to employment practices liability action (keeping in mind that the pool of potential claimants have a legal background).

As a result, law firms must be especially cautious when entering into deferred employment arrangements. The prudent firm will consider including contract provisions that exempt the hiring firm from any liability to or for the prospective employee during the deferment stage. In short, the prospective employee remains a “free agent” in the job market. While this may lead to a high-potential candidate finding another opportunity while waiting for his or her job to start – in the end, it is probably a better outcome to miss out on a newly-minted star attorney than to be sued by one.

How has your firm handled the entry-level recruiting process in the last year?

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