I believe the big 4s take in closer to 35 trainees each/per year. Based on the news, I don't think there are 700/800 people getting called to the bar each year, the number should be closer to 400-450. I suspect a large number of law grads seek their fortunes elsewhere whether by choice or due to their inability to secure a TC.

I don't think small firms are able to absorb a few hundred grads. Most small firms are used to not having any junior lawyers and/or may not have the budget or resources to hire any. I do see a large number of my peers working in smaller firms with less than 25 lawyers eventually. Due to the glut/poor economic conditions, retention rates are at a record low rate and many firms (both big and small) hire without any intention to retain everyone. Most trainees who are not retained tend to trickle down to smaller firms.

To clarify, it is not true that small firms do not even retain, as mentioned by another poster. I know of many friends who were offered retention by smaller firms (including myself), and the retention rate appears comparable to medium size firms. Retention rates vary vastly across different firms, so I will encourage juniors to do their homework before accepting the first offer they receive.

Anyway, please post if you hear news of pay cuts.