Impact of COVID-19 on Training Contracts

Hi all
Apologies if this question has popped up elsewhere.

I'm a TC holder with a Magic Circle firm due to begin my GDL with BPP in September. I'm in a slightly different position to many TC holders as I'm already in full time work and will be changing careers to go into law. While I don't expect anybody here to have a crystal ball and I'm fully aware the situation is constantly changing, would it be a likely assumption that the economic impacts of COVID-19 could lead to firms looking to renege on training contract offers or look at job cuts? Does anybody have any insights from previous global economic downturns?

Would appreciate any views/insights!

Thanks

Reply 1

999tigger

Original post by Nicktim

They wont break a contract, but they can be less lenient by anyone failing to make an offer.
We are in unprecedented times, so review the situation in 2-3 months time. I expect you will be fine and if they think of a downturn they are more likely to let NQs go and have a sort of recruiting freeze. An MC firm even though international will suffer with everyone else from a reduction in business activity. During a recession they look to expand in the counter cyclical activities such as litigation and insolvency. I think you will be fine as I assume you already have results. MC firms have the money to look long term.

Reply 2

username1494444

Assuming your TC doesn’t start for at least two more years.... you will be fine. Feel free to message me on TCLA if you want further rationale on this - Jess

Reply 3

jacketpotato

I got a TC offer from a MC firm in summer 2008, and started my TC in 2010.

A few months after I accepted the offer, Lehmans went bust and the 2008 credit crunch started, so it was a pretty comparable situation.

Most of the large city firms went through a redundancy programme with their associates in 2009-10, but I don't think any major firm reneged on TC offers. I think your TC is pretty safe.

The consequences were as follows:
- A lot of the large firms offered their incoming trainees an option to defer their TC for a year with a cash incentive. We were offered £10k to defer! All you had to do was fill in an application form telling the firm how you'd use the money in a productive way, e.g. to go travelling or to learn a language. Deferring was completely optional.

- The next trainee intake was reduced. Both because the market had slowed, and because some people opted to defer.

- When we got to qualification in 2012, the retention rate was lower than it is now. It was more like 70% than the 90%+ most firms have posted in the past few years.

- My firm did withdraw offers from one person who failed core modules on the LPC. Mind you, frankly, there is no excuse for a MC trainee to be failing LPC modules - the LPC isn't that hard but you do need to take it seriously and put in the work.

(edited 4 years ago)

Reply 4

Blancosdos

Original post by jacketpotato

Do you have any idea how firms will approach recruitment during this cycle?(I plan to apply for TC's in the Summer- Hopefully Corona will die down by then!)

Reply 5

username1494444

Original post by Blancosdos

Do you have any idea how firms will approach recruitment during this cycle?(I plan to apply for TC's in the Summer- Hopefully Corona will die down by then!)

There isn’t going to be one approach.

Unlike the recession of 2008, the circumstances this time round are very different.

Some will move assessments online and continue as planned
Some will delay recruitment processes until things are back to normal

Reply 6

jacketpotato

Original post by Blancosdos

Do you have any idea how firms will approach recruitment during this cycle?(I plan to apply for TC's in the Summer- Hopefully Corona will die down by then!)

It's very difficult to tell. Firms won't decide until they have more data showing the longer term impact of the virus on their revenues.

It is likely that the virus will lead to a recession, and that will lead to firms reducing the size of their trainee intakes. I suspect the next TC round will be more competitive than the last one.

We may see firms using online tests or video calls rather than face-to-face interviews if the virus is still around in the summer.

Reply 7

999tigger

Imo I think TCS will be cut depending on how severe the impact is in the individual firm.
The first tactic will be to stop retaining NQs.
A recruitment freeze is easy as well.
Different firms have different strategies. but dont underestimate how ruthless they can be.
I cant see how we arent heading for a recession.

Reply 8

username1494444

Compared to many industries, law is likely to see a much smaller reduction of vacancies (as a percentage), well if 2008/2009 is anything to go by anyway...

Reply 9

TC1997

What do people think is going to happen to incoming trainees who are supposed to be starting in August? At a silver circle sized firm in London

Reply 10

jacketpotato

Original post by TC1997

What do people think is going to happen to incoming trainees who are supposed to be starting in August? At a silver circle sized firm in London

I don't think anything will happen. I'd be gobsmacked if your TC didn't start as normal.

It is possible that some trainees in your intake might be given an option to defer, but this won't be mandatory.

As a senior associate in a large city firm, transactional departments like corporate and finance are definitely quieter than they were, but there is still work around. Litigation, employment and restructuring are busy.

(edited 3 years ago)

Reply 11

TC1997

Yeah we've been asking the question but they seem to be as in the dark as we are at the moment. The current line is staying as normal but wanted to see if others thought this was likely. Thanks for your help