NEWS ANALYSIS

Trainee deferment schemes: what does the future hold? After KLegal offers its future trainees £10,000 not to come to work, Jennifer Currie asks whether graduates should be worried


If your employer offered you £10,000 not to come into work for a year, what would you do? As ridiculous as it sounds, this is the question that a handful of graduates have been wrestling with as a result of KPMG-tied law firm KLegal&#39s decision to defer the start dates of its future recruits.

As The Lawyer revealed back in July, KLegal was the first law firm to publicly admit that it was using cash sweetners in order to reduce its number of graduate recruits. KLegal managing partner Nick Holt says the current economic climate, combined with the firm&#39s recent merger with McGrigor Donald, meant there were just too many trainees and not enough work. &#34You do your hiring two years ahead,&#34 says Holt. &#34So when we hired our graduates to start in September 2002, we had certain assumptions about the size of the firm. McGrigors had made some similar growth assumptions and so when we put the two firms together we had to look at the total number of trainees.&#34

As a result, only six trainees out of an original intake of 21 have started at KLegal&#39s London office this autumn. Of the 24 graduates due to start at McGrigors&#39 Scottish offices, nine are currently wondering how best to spend the next year &#45 and, of course, their £10,000 cheque. Although Holt&#39s personal view is that the graduates would be wise to &#34invest in their careers&#34, he is quick to add that the money has no strings attached and can be spent according to individual desires. After four years of student life, you&#39d think that an offer of £10,000 would be met with rapture.

But considering that these graduates must have been planning how to spend their £28,000 annual salary, the £10,000 so-called &#39sweetener&#39 must now taste bitter to some. &#34The reaction from our trainees was varying,&#34 says Holt carefully. &#34Some were not happy. Others were disappointed because they had already taken a year off. But at the end of the day they were understanding.&#34 Andrew Foster of legal recruitment consultancy Hughes Castell advises those who have deferred to &#34do something interesting&#34 with their time. &#34Do something that is personally fulfiling, particularly if the firm you are going into is not very &#39touchy feely&#39,&#34 he adds. &#34It might be to go travelling, or it might be something study-related such as taking a business course or learning a new language. It&#39s now taken as read that commercial lawyers need business as well as legal skills, particularly if they are aiming for partnership.&#34 KLegal&#39s decision may be big news in this country, but it is an issue that US firms have been grappling with for a while.

US technology giant Brobeck Phleger & Harrison has asked half of its incoming autumn associates to defer their start dates with the firm. Those who choose to wait until March 2003 will receive &#39health benefits&#39 until their start date, while those who opt to start in January 2004 will be paid a stipend of $2,000 (£1,300) a month plus health benefits regardless of how they pass the time. Yet any associates who devote themselves to public interest work will see their monthly payments rise to a whopping $3,000 (£1,950) a month. Of course, there is also the option of jumping ship altogether &#45 with a severance payment package of $30,000 (£19,580) to cushion your fall. Mara Brazer, Brobeck&#39s director of communications, hopes that the associates, who have until mid-September to make up their minds, will see it as an opportunity to do something out of the ordinary. &#34Many law students would enjoy doing public interest work but they don&#39t pursue it because they can&#39t afford the low salaries or they fear they will not be able to switch to a corporate track,&#34 says Brazer, adding that the firm has tried to offer its associates &#34creative alternatives&#34. &#34We believe that by taking these prudent measures we will be able to keep our associates busy whenever they join us,&#34 she adds. Other professions, such as banking and accountancy, have been siphoning off their graduate intakes for years. Currently in practice at management and IT consultancy Accenture is a scheme that sends all recruits on three to six-month stints of &#39grad leave&#39 as soon as they start work. Regarded as fully fledged employees during this period, Accenture&#39s graduates are retained on half their annual salary and receive full pension and health benefits, as well as a rather tasty £10,000 joining bonus.

Meanwhile, further up the ladder, a growing number of professionals are opting for career break schemes, which give employees the chance to spend anything from six months to six years out of the office &#45 with the guarantee of their job back at the end of it. So is taking a break before your career has even started really so bad? As Foster of Hughes Castell agrees, the majority of law graduates have nothing to fear at the moment because so few firms have asked their recruits to hang back.

But how rosy is the future? &#34I certainly understand that there are firms who are quietly deferring trainees already,&#34 says KLegal&#39s Nick Holt. &#34And privately other firms have said that [asking graduates to defer] is something they would like to do or are thinking of,&#34 he adds. &#34But we decided we had to take more transparent action than others and we still think it was the right thing to do.&#34