Why decline $80,000 for doing nothing?

By Felix Salmon
December 16, 2009
Elizabeth Wurtzel piece has been gnawing at me all day:

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This Elizabeth Wurtzel piece has been gnawing at me all day:

The class of associates that just joined Cravath was asked to defer their arrival for a year in exchange for a sweet deal: They would receive $80,000 to not work, plus they would get benefits and student-loan payments. This offer was optional…

I’ve been told that none of the graduates of Yale Law School who were headed for Cravath accepted their offer of $80,000 to surf and sunbathe, or go forth and save the world. Since no one at either institution is willing to discuss this—and I don’t blame them, because I would be embarrassed too—I don’t know this for certain. But here’s what I’m sure of: Not everybody took Cravath up on this peachy keen opportunity to do anything for a year with pay and benefits. And that by itself is disturbing enough.

What on earth would possess a law student fresh out of Yale Law to decline this offer?

Is it that these students simply can’t think of anything worthwhile to do with one year, $80,000, and the world as their oyster? I know that lawyers can sometimes suffer a failure of imagination, but that’s crazy.

Is it that they feel they can’t afford to live on a mere $80k? Unlikely: they’re fresh out of university, after all, and Cravath is paying their student-loan payments.

Is it that they desperately aspire to the drudgery and 100-hour weeks of a first-year biglaw associate? Surely not.

Is it that they fear their job won’t be waiting for them on their return? If they mistrust Cravath that much, they shouldn’t take the job in the first place.

The only conceivable reason I can think of to decline the offer is if you have school-age kids to support, and that seems improbable for all but a tiny minority of first-year biglaw associates.

I suspect that there’s something very American going on here — something to do with taking pride in hard work — but as an Englishman, I have to say it eludes me. Can somebody fill me in?

Update: There are some great responses in the comments, especially from Future_Lawyer.

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Comments
10 comments so far

Are you being intentionally obtuse? People are turning it down because the don’t want to be branded as un-serious individuals who aren’t cut out for the most demanding assignments and, eventually, partnership. A person who can get a job at Cravath is pretty much guaranteed to be able to make a few hundred grand a year for life, but if they are one of the minority who manage to make partner their earning potential increases by a factor of ten or more.

Posted by pickandroll | Report as abusive

I’d have to agree with pickandroll’s point, it’s pure signalling.

Almost everyone here in the US seems jealous of the six weeks of annual vacation I had in the UK, but nobody is willing to push their companies for more time off. Why? Because the first people to do so are likely to be labeled as lazy.

Posted by petewarden | Report as abusive

Felix,
Less a lack of imagination than a proper use of financial analytics on one’s personal balance sheet:

1) the purely financial aspect
a) Paying of student loans
Many future lawyers have been paying ~45K/year in tuition for the last three years, not including living expenses. For those that have gone straight through from university or spent the time in between in low-paying jobs, there may also be significant debt from undergraduate student loans. Just on the graduate level, you are looking at $135K in loans plus additional living expenses. $80K is a lot, but it certainly doesn’t cover that kind of debt. The Cravath offer, while quite generous, in no way covers all student loans–it may cover a fraction of the monthly interest payment’s for one’s first year out of school.

b) 80K is still 50% of 160K
alternative forms of employment (assuming one desires employment) are hard to come by at the moment. There aren’t all that many jobs available to young graduates with limited work experience paying 80K. If you’re going to be working, might as well be making the full 160K…

2) structure of the legal market
a) Many/most lawyers will not stay in the “BigLaw” system more than 2-3 years.
100-hour work weeks can only be tolerated so long–better to do them younger than older, perhaps. Many lawyers go through a large law firm in a short amount of time so that they can pay off their student loans to then go do “what they really want to do” (whatever that is). Given this limited time frame, it makes sense to get it over with, rather than wait for the inevitable.
There are significant training benefits to working at a firm like Cravath–the sooner you have completed 2-3 years, the sooner you are marketable to other sectors of the legal world. Unfortunately law school does not actually train one to be a lawyer, so this on-the-job training is critical to developing the skills necessary in one’s legal career. Why delay that skill development if you don’t have to?

b) starting later can be detrimental to a woman’s career.
Individuals that choose to have families pick a number of different points to begin them. CW (which certainly doesn’t always hold, and I hope the commentariat will excuse my gross generalizations) holds that it may be held against an individual if they have a child while an associate. Sure, firms will do all they can to appear accommodating, etc; but the truth remains that given a choice between an associate that can be fully productive and one that can only be 80% productive because they are otherwise occupied, the 100% committed associate is preferred. A number of female attorneys fear that it is not ‘safe’ to have a child until they have made partner. Alternatively, they may plan to take time off to have a child at some point within their career, and it is critical to future marketability to have had their ‘BigLaw’ experience prior to starting their family if they want to come back at a seasoned level. That Ms. Wuertzel couldn’t envision this speaks to her choices….

3. The changing environment of law firms
“If they mistrust Cravath that much, they shouldn’t take the job in the first place.” In what industry should one so thoroughly trust one’s employer that any job should be taken for granted or assumed to be there? In finance, offers are rescinded all the time. In journalism, as you well know, magazines go under all the time. No, Cravath will not go under next year, nor the next ten. But the business of law IS changing. The security that lawyers once had as a class is evaporating. The only reason that this option exists–the option to be paid for nothing–is that Cravath partners are taking it on the chin for its associates. They would rather pay them to do something else for a year than tell them there is no job waiting for them.
How many law firms would do this for their incoming associates? Many, like Latham and Watkins, would simply fire more than half their incoming class two months into their tenure. Cravath’s culture won’t allow that kind of restructuring because they refuse to hire lateral attorneys. Therefore, a cut to a particular class reverberates up their staffing pyramid in a way cuts at other firms would not. How sustainable is that model? Lawyers are naturally risk-averse, so I imagine most of the YLS alums that opted against time off do not intend to be the first to find out the answer in the negative.

Posted by Future_Lawyer | Report as abusive

Good insightful responses so far. As a Brit working for a prominent US financial firm I’ve pondered similar things before.

I think a lot has to be made of how much more asymetric the risk-reward profile is for workers in the US. $80k is ok for a year but with no guarantee after that the fear of losing out and being left with nothing and no safety net must be huge, not to mention the stigma. On the flip side the potential rewards far eclipse those in Europe.

The work ethic still gets me though. What I feel is some US employees overestimate their own contribution, equating effort and output as success. Over here we’re more pragmatic about how much value we each add (or indeed what constitutes value). We can’t, and shouldn’t expect to be, all relentless working high flyers.

Malcolm Gladwell has a good example in his Outliers book of historical attitutes to work in Europe contrasted with the rest of the world. He suggests that to achieve subsistence Asian agriculture meant backbreaking work growing rice, as opposed to European wheat growing that left most of the growing season to do little and then nothing over winter. What it did give was plenty of time for skilled craft, less intesity but more value added.

When I look at some of the ample low grade mass consumer junk on offer in the US (crap cars, fast food, celebrity culture, strip malls etc) I find it interesting that a lot of the quality stuff is from lazy European countries (sports cars, fine cuisine and wine, art and design, designer boutiques etc).

Finally, on current trends of dwindling resources and deteriorating environments there are strong arguments for working smarter not longer.

Posted by vk9141 | Report as abusive

Sublimated puritanism. The need to be seen to be one of the elect.

Posted by Gaw | Report as abusive

If it’s the optics, I wonder how many would take the 80k and go to work anyway?

Posted by Rockfish | Report as abusive

For many, career success is where they derive their whole sense of self worth. That is undoubtedly doubly true of the incoming class at Cravath.

Should they give up (or postpone) their whole sense of self for a measly eighty grand?

Posted by DanHess | Report as abusive

I learned this in law school: when an offer’s too good to be true, it probably is.

Posted by HBC | Report as abusive

How large is the entering class of associates at Cravanth? If it’s small enough (and since they all went to Yale), I assume they know each other. Assuming they know each other, why can’t they collude to all take the $80k offer? That way, none of them look like they aren’t committed to the firm.

Posted by ZacharyST | Report as abusive

…the Prisoner’s dilemma

Posted by vk9141 | Report as abusive
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