You are a first-year associate in a big law firm. The economy tanks. The firm decides you are an expensive piece of overhead and lays you off. Thousands of other lawyers are being laid off and your prospects of finding another lucrative big-law position are slim. Pretty bad, right? If this description resonates then I feel for you. But if that is as bad as it gets for you, be thankful. Many big firms loan incoming first-year associates a loan, in the form of a salary advance, to pay for bar review courses and living expenses in the months between graduation and the start of employment. Thacher Proffit & Wood dissolved and laid off its entire workforce. As reported this week by Legal Times, the firm’s “dissolution committee and bank are pursuing the former associates for repayment of salary advances issued last year to cover their bar and startup expenses.” No lawsuits have been filed to collect the loans, reported to be for $10,000. Legal Times reports that the total amount owed by students could range from $300 to $350k; Thacher owes its bank $32 million. Every penny counts.
To give credit where due, Latham & Watkins announced that it would forgive the loans it made to laid-off incoming associates.