Ideal Biglaw Employment Path

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glitched
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Just asking for some advice :)

Postby glitched » Mon Jun 13, 2011 2:24 pm

lol whoops supposed to be a pm
Last edited by glitched on Tue Jun 14, 2011 11:54 am, edited 1 time in total.

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robotclubmember
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Re: Ideal Biglaw Employment Path

Postby robotclubmember » Tue Jun 14, 2011 10:33 am

glitched wrote:Okay, so if you wanted biglaw, and you had the grades/interviewing ability/good looks to go through any path to get there, what would be your best bet for the most bucks?

This is my guess at the ideal path:
1L Summer: Judical clerkship
2L Summer: SA at law firm
3L Post-graduation employment: A3 Clerkship
Post-clerkship: Associate at law firm

Or would it be better to:
1L Summer: SA at law firm
2L Summer: SA at law firm
3L Post-graduation employment: Associate at law firm

I don't really know what people do for winter... but i am damn well hoping that they... chill. 8)


EDIT - this forum doesn't display tabs/tables nicely, sorry about that.

Since this question is about "best bet for the most bucks", I'll throw in a financial planning perspective. Assuming tax rates don't change (and the top marginal tax rates will have to increase in the next few years, because it's just a matter of arithmetic and Bush tax cuts aren't sustainable), you face a favorable tax impact by going straight to Big Law.

Tax rates right now are:
$ above tax %
0 0.1
8500 0.15
34500 0.25
83600 0.25
174400 0.33
379150 0.35

2 years clerking, assuming you are on of the few dozen that can actually get a SCOTUS clerkship and the $250K bonus with it, leads to this (standard deduction and one personal exemption have been built in, not other deductions or credits are considered because that's too variable):

Comp Tax After Tax Income
A3 Clerk 60000 8625 51375
SCOTUS Clerk 60000 8625 51375
Big Law (yr 1) 410000 114173 295827


You would be making $530,000, and paying $131,423 in tax, leaving you with after tax comp of $398,577.


If you went straight for Big Law (I just assumed a simplified 160 170 180 salary progression):

Comp Tax After Tax Income
Big Law (yr 1) 160000 33625 126375
Big Law (yr 2) 170000 36125 133875
Big Law (yr 3) 180000 38625 141375

You would be making $510,000, and paying $108,375 in tax, leaving you with after tax comp of $401,625.

So the difference would be negligible at current tax rates, except that the clerk would ultimately pay $23,048 more in taxes and make $3,048 in the first three years.

But, I think future tax policy will hike up the highest tax brackets, so I'd guess that in a couple years, that year with the $250K bonus and $160K salary together will result in a huge tax liability, further amplifying the effect mentioned above of paying more taxes but making slightly less, because of the timing of compensation.

I just wanted to add a tax angle to this, but I think either way, it ultimately makes no difference.

Not because the financial impacts are similar, even after accounting for tax impacts. But because you're not getting a SCOTUS clerkship.

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Patriot1208
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Re: Ideal Biglaw Employment Path

Postby Patriot1208 » Tue Jun 14, 2011 11:05 am

Your calculations ignore state, local, medicare, and social security. In NYC your take home pay is 96k on 160k.

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glitched
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Re: Just asking for some advice :)

Postby glitched » Tue Jun 14, 2011 11:53 am

Interesting tax analysis. Lol

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robotclubmember
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Re: Ideal Biglaw Employment Path

Postby robotclubmember » Tue Jun 14, 2011 1:15 pm

Patriot1208 wrote:Your calculations ignore state, local, medicare, and social security. In NYC your take home pay is 96k on 160k.


I am aware of that. If a factor was variable by location or individual, I didn't build it in, because how could I?

That said, I should have factored in the other stuff. Since the maximum taxable earnings for SS tax is $106,800, let's assume that that makes no real impact, except that during years ' and 2 the clerk would pay about $3,000 less in taxes. FUTA has a wage base of $7,000 so let's consider that negligible for comparative purposes. Medicare has no wage base so everything would be taxed at an even rate, so it's not a significant factor either since the total pre-tax earnings are within $20K of each other. It's the timing of the wages that results in the differences on taxes paid. But, Expect tax rates to rise, which means, it's smarter to collect as much earnings as soon as you can.

The analysis only showed that there isn't a serious difference. I posted it because after I did it, I figured, why not share it? But yeah I couldn't tell you what the tax impacts for you individually would be in whatever locality you're at, I don't know all that.

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TheKingintheNorth
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Re: Ideal Biglaw Employment Path

Postby TheKingintheNorth » Tue Jun 14, 2011 6:42 pm

I think he was using most bang for your buck as a metaphor for time and effort.

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rayiner
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Re: Ideal Biglaw Employment Path

Postby rayiner » Tue Jun 14, 2011 6:54 pm

Some firms won't even automatically hold an offer open for corporate associates who want to leave to clerk then come back.

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ahduth
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Re: Ideal Biglaw Employment Path

Postby ahduth » Tue Jun 14, 2011 7:11 pm

rayiner wrote:Some firms won't even automatically hold an offer open for corporate associates who want to leave to clerk then come back.


Those firms sound like firms you don't want to work for anyhow.

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rayiner
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Re: Ideal Biglaw Employment Path

Postby rayiner » Tue Jun 14, 2011 7:15 pm

ahduth wrote:
rayiner wrote:Some firms won't even automatically hold an offer open for corporate associates who want to leave to clerk then come back.


Those firms sound like firms you don't want to work for anyhow.


I know of at least one very reputable firm that does it.

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ahduth
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Re: Ideal Biglaw Employment Path

Postby ahduth » Tue Jun 14, 2011 7:18 pm

rayiner wrote:
ahduth wrote:
rayiner wrote:Some firms won't even automatically hold an offer open for corporate associates who want to leave to clerk then come back.


Those firms sound like firms you don't want to work for anyhow.


I know of at least one very reputable firm that does it.


Please share. If firms are being jerks, this is a great forum to air them out.

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FantasticMrFox
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Re: Ideal Biglaw Employment Path

Postby FantasticMrFox » Tue Jun 14, 2011 9:24 pm

glitched wrote:.

I like your avatar and the show :D

Renzo
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Re: Ideal Biglaw Employment Path

Postby Renzo » Sat Jun 18, 2011 5:43 pm

ahduth wrote:
rayiner wrote:
ahduth wrote:
rayiner wrote:Some firms won't even automatically hold an offer open for corporate associates who want to leave to clerk then come back.


Those firms sound like firms you don't want to work for anyhow.


I know of at least one very reputable firm that does it.


Please share. If firms are being jerks, this is a great forum to air them out.


Not giving someone leave to go do something that borders on completely useless to the firm is "being a jerk"?

Really, you'd learn as much about corporate law if you spent your year surfing instead of clerking. So when you come back, not only will you be a year behind your classmates in terms of useful experience, you'll be out of practice from being away for a year. Why would a firm promise to hold a spot for you?

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ahduth
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Re: Ideal Biglaw Employment Path

Postby ahduth » Sat Jun 18, 2011 6:31 pm

Renzo wrote:
ahduth wrote:
rayiner wrote:I know of at least one very reputable firm that does it.


Please share. If firms are being jerks, this is a great forum to air them out.


Not giving someone leave to go do something that borders on completely useless to the firm is "being a jerk"?

Really, you'd learn as much about corporate law if you spent your year surfing instead of clerking. So when you come back, not only will you be a year behind your classmates in terms of useful experience, you'll be out of practice from being away for a year. Why would a firm promise to hold a spot for you?


Yeah, I think I misunderstood corporate law. Holding spots for transactional people is silly. Litigation seems more... reasonable.




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