The 'NLJ 250', Market Salary, and Math: Employment Data Forum

[thesealocust]

OK, so since a lot of people here may not have done a ton of research into firm hiring, I wrote a primer on law firm rankings, the NLJ 250, and lawyer salaries. It follows my number crunching.

For the tl;dr crowd - I took the NLJ 250 data and calculated some actual stats to help settle the 'but the NLJ 250 is too east coast centric / includes many non 'market' paying firms / waaaaah' disputes that come up all the time on TLS.

First, the hard data: http://www.law.com/jsp/nlj/PubArticleNL ... 2425778391

Now, the analysis. Follow me carefully, it may prove a comfort:

# of NLJ 250 firms: 250
# of Lawyers at NLJ 250 firms: 133,723
# of associates at NLJ 250 firms: 67,648
# of law students admitted each year: Roughly 50,000
# of law students graduating each year: Roughly 43,000
# of law students from the T14 going to NLJ 250 firms: Roughly 2,800
# of law students in the top 14 compared to all law schools: roughly 9%

# of NLJ 250 firms that paid $160,000 in 2008 ('market') in market (IE NYC/DC/IL/LA) areas: 115 (46%)
# of NLJ 250 firms that paid 6 figures (>= $100,000) in market areas: 203 (81.2%)
# of NLJ 250 firms that paid below 6 figures: 12 (4.8%)
# of NLJ 250 firms that did not report salary data: 35 (14%)

But wait thesealocust... the firms at the top of the list are like 10 times the size of the firms at the bottom! I want to hear about per-lawyer salaries, not per firm!

Well I'm glad you asked!

Percentage of NLJ 250 lawyers who work at a firm that pays market: 65.5% (note that comes from just 46% of firms)
Percentage of NLJ 250 lawyers who work at a firm that pays 6 figures: 84.7%

Firms that don't disclose salaries, by NLJ ranking:

Top 50: 5 firms
51-100: 4 firms
101-150: 11(!) firms
151-200: 7 firms
201-250: 8 firms

EDIT: BONUS MATH!

C/O '07 grads: 43,518
c/o '07 responding: 41,707
c/o '07 in NLJ 250: 12.6%

~5,200 biglaw 3L hires in 2007

~4,400 T14 grads in 2007
~2,800 T14 grads were 3L hires (ostensibly post 2L associateship)

People often mention that T14 = 50% or higher placement in the NLJ 250.

Now we can say with some degree of confidence that in 2007 roughly 54% of the total spots in the NLJ 250 went to graduates of the top 14 law schools.

---------------------------

thesealocust's primer on law firm rankings & salaries:

So these posts tend not to generate much discussion on TLS, but I ran some numbers that I thought would be really useful for discussions about which top law schools is topper than all the other top law schools, and other such important matters that tend to come up here.

A note on rankings: There are 3 obvious sources for ranking law firms.

The first is the Vault 100 - often discussed on places such as autoadmit. Firms here are ranked _exclusively_ by a survey of lawyers, much like the peer scores that USNWR uses. Take it in what sense thou whilt - this ranks nothing more than 'prestige'.

The second is the Amlaw rankings, usually 'first 100', 'second 100', etc. These are, as far as I know, strictly a ranking of how much money the firm earns. This is a proxy for size in most respects.

And the one that comes up the most due to its use in the rankins is the much flawed, oft quoted, NLJ 250. People used to USNWR rankings might assume that the NLJ uses some sort of stupid formula to rank law firms based on the size of their libraries, but it's quite a bit simpler: firms are ranked _exclusively_ on their size (# of attorneys). That's it. Easy, right?

Well, without knowing anything about law firms, those metrics sound pretty unrelated. But size often brings prestige and cash, so the top of the top are often the same. The rankings miss a lot of things though:

1) New York City is without a doubt the legal capitol of the world in terms of law firms. As a result firms there are much larger and often pay much more. This means that the NLJ 250 is disproportionately NY centric - it is often claimed that especially in California otherwise well paying and well respected firms don't make the cut since they're not as mammoth.

2) Some firms are extremely well known, pay associates huge amounts of $$$, but are fairly small. Two good examples are Wachtell and Williams & Connolly. The former pays market (~$160 last year) in NYC but gives bonuses that are often near 100% of base sallary (in exchange for ridiculous hours, of course). The latter has the highest starting associate salary - last year $180,000 - but does not pay bonuses. W&C is DC based and has very high profile cases - they defended Bill Clinton, for example.

Why did I pick out those two firms? Because they are comparatively tiny on the NLJ list, Wachtell is #187 - and W&C is #181. Firm size thus can't be an out-and-out proxy for prestige or salary, so we know we're working with flawed data.

3) 250 is a lot of firms - towards the bottom, firm sizes are all right around 200 attorneys and salary varies widely. I don't know why they picked 250 firms, but they did - and since a lot of our data comes via the NLJ 250, we have to work with it.

The most widely sourced data for how well a law school places their graduates comes from NLJ surveys. Here are the links:

Class of 2005, comprehensive data: http://pdfserver.amlaw.com/nlj/20080414 ... trends.pdf

(lest you feel too strongly that you're getting a sense for how to read this data, they also have another chart that is totally different also purporting to be C/O 2005: http://pdfserver.amlaw.com/nlj/20080414 ... trends.pdf )

Additionally, we have the following more brief data for C/O 2008:



And before we seriously start crunching numbers, remember the #1 piece of data to look at before starting law school: The bi-modal salary distribution:



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[JJim1919]

Nice work. If the median salary for lawyers is 72k then things arent really that bad. Yes, I know there is a bimodal distribution, but there are still midlaw jobs all along that curve.

72k still beats the 35k or whatever the average college grad probably makes.

Your T14 stats all seem to show many, many of those firms are paying market. So if you go to a T14 and are median or better your chances of making market are enormously high.

I'm curious to see what this year's NLJ250 % chart looks like though.

[gobucks101]

Good stuff. I love that chart with the median salary of 72k. Helps show that while there is a bimodal distribution, it is not t-14 or kill self. That comes from someone who could live very comfortable on 72k though, so I'm sure other perspectives are different.

[nervous1]

awesome data.

question though....why the large disparity between the class of 2005 NLJ 250 data and the class of 2008? is it because 2008 was a boom year or because NLJ 250 firms did more recruiting / expanded their offices outside of NYC and the East Coast in 2008?

I also think the bimodal data....24% of all 2008 starting lawyers making 160k is very high. Hints at a boom year explanation for the disparity, although the two explanations aren't mutually exclusive.

Finally I agree that NLJ 250 isn't a perfect or perhaps even good proxy of which firms pay market, especially in markets like Chicago and Los Angeles.

[gobucks101]

Just some more points of reference...

[thesealocust]

edit: n/m

[Leeroy Jenkins]

Finally someone explained what a NLJ250 is!! YAy!

[the123kid]

# of NLJ 250 looking to scale back hirings: 246

[bigben]

GUYS, A COUPLE THINGS:

1) The 72k median is based on self-reported surveys with about a 50% response rate. So no, 72k is not the actual median. It is probably closer to the 75th percentile than the median.

2) If you would read this post, you will see that the 2008 graph represents the peak of the trend, and from here on out things are going to change drastically, starting with a huge drop in that pointy part on the right side of the graph.

[thesealocust]

edit: n/m

[06072010]

GUYS, A COUPLE THINGS:

1) The 72k median is based on self-reported surveys with about a 50% response rate. So no, 72k is not the actual median. It is probably closer to the 75th percentile than the median.

2) If you would read this post, you will see that the 2008 graph represents the peak of the trend, and from here on out things are going to change drastically, starting with a huge drop in that pointy part on the right side of the graph.

Agree on point points. Also, 72k median doesn't mean there there is a huge midlaw. Only like 4% of grads work there. I don't think people understand median means.

[JJim1919]

GUYS, A COUPLE THINGS:

1) The 72k median is based on self-reported surveys with about a 50% response rate. So no, 72k is not the actual median. It is probably closer to the 75th percentile than the median.

2) If you would read this post, you will see that the 2008 graph represents the peak of the trend, and from here on out things are going to change drastically, starting with a huge drop in that pointy part on the right side of the graph.

Agree on point points. Also, 72k median doesn't mean there there is a huge midlaw. Only like 4% of grads work there. I don't think people understand median means.

Ehh but 4% also make 75k, 4% make 80k...etc

If anyone who is good in calc could take the area under the middle part of the graph that would be awesome. Because all totaled up there are a significant amount of people who make midlaw type salaries (albeit they probably work biglaw type hours).

[snotrocket]

1) The 72k median is based on self-reported surveys with about a 50% response rate. So no, 72k is not the actual median. It is probably closer to the 75th percentile than the median.

An often overlooked point regarding this distribution. The 50% response rate has been historically the most stable metric in all of the data. So however bad it looks, you can be sure that the truth is much, much worse. Another point that often eludes the uninformed is the percentage of new JDs who manage to land full-time jobs where bar passage is required (i.e. who wind up working as actual licensed attorneys). At the peak of the recent boom (Class of 2007) this figure was 69%. That's another number that will plummet sharply for the foreseeable future.

[gobucks101]

GUYS, A COUPLE THINGS:

1) The 72k median is based on self-reported surveys with about a 50% response rate. So no, 72k is not the actual median. It is probably closer to the 75th percentile than the median.

2) If you would read this post, you will see that the 2008 graph represents the peak of the trend, and from here on out things are going to change drastically, starting with a huge drop in that pointy part on the right side of the graph.

Agree on point points. Also, 72k median doesn't mean there there is a huge midlaw. Only like 4% of grads work there. I don't think people understand median means.

Yea, the 50% response rate is something to keep in mind that I overlooked by not reading the article before. Disagree though PK. I see the median as significant, since you hear such fear mongering about shit law yet not many people on that chart are making the 40k shit law salary we hear.

edit- maybe that is the other 50%.....

[06072010]

GUYS, A COUPLE THINGS:

1) The 72k median is based on self-reported surveys with about a 50% response rate. So no, 72k is not the actual median. It is probably closer to the 75th percentile than the median.

2) If you would read this post, you will see that the 2008 graph represents the peak of the trend, and from here on out things are going to change drastically, starting with a huge drop in that pointy part on the right side of the graph.

Agree on point points. Also, 72k median doesn't mean there there is a huge midlaw. Only like 4% of grads work there. I don't think people understand median means.

Yea, the 50% response rate is something to keep in mind that I overlooked by not reading the article before. Disagree though PK. I see the median as significant, since you hear such fear mongering about shit law yet not many people on that chart are making the 40k shit law salary we hear.

edit- maybe that is the other 50%.....

Check the graph. 35-75 salary range consists of nearly FIFTY PERCENT OF LAWYERS. T20 and above is going to account for 85-90% of the right hand part of the chart with perhaps 10 - 15% consisting of the top of the class at regional schools or otherwise connected folks. If you tossed an overlay of USNEWS ranking over this chart, what do you think it would look like, really?

[bigben]

GUYS, A COUPLE THINGS:

1) The 72k median is based on self-reported surveys with about a 50% response rate. So no, 72k is not the actual median. It is probably closer to the 75th percentile than the median.

2) If you would read this post, you will see that the 2008 graph represents the peak of the trend, and from here on out things are going to change drastically, starting with a huge drop in that pointy part on the right side of the graph.

Agree on point points. Also, 72k median doesn't mean there there is a huge midlaw. Only like 4% of grads work there. I don't think people understand median means.

Yea, the 50% response rate is something to keep in mind that I overlooked by not reading the article before. Disagree though PK. I see the median as significant, since you hear such fear mongering about shit law yet not many people on that chart are making the 40k shit law salary we hear.

edit- maybe that is the other 50%.....

The bolded....ding ding ding! That's right.

For additional corroborating evidence, see this post where the author notices that nearly all the NLJ250 salary earners seem to have reported their income on the survey.

[06072010]

http://thinkingonthemargin.blogspot.com ... aries.html



Color me shocked!

[gobucks101]

Ben it is such a nice sunny day. Don't bring your whole facts and truth here. My Magic 8 Ball told me that "Outlook good"

[bigben]

AHA, I have found the proper figures in this article:





So there you have it, 12% of all grads were getting NLJ250 at the peak of the biglaw bubble. It is worth noting that this was a "bubble" and therefore it was not sustainable or based on reality, thus we should not really expect it to return to that level even when the economy does start recovering.

Now the question is where that 12% figure is going to go from here. It seems to me that most people who are in the field, as well as desperate law students who are researching this question fanatically, seem to think that a contraction of greater than 50% is quite realistic. When you have a growing list of firms that are going so far as to cancel their summer program altogether, I can't disagree.

[bigben]

Ben it is such a nice sunny day. Don't bring your whole facts and truth here. My Magic 8 Ball told me that "Outlook good"

Sorry about that.

[nervous1]

AHA, I have found the proper figures in this article:





So there you have it, 12% of all grads were getting NLJ250 at the peak of the biglaw bubble. It is worth noting that this was a "bubble" and therefore it was not sustainable or based on reality, thus we should not really expect it to return to that level even when the economy does start recovering.

Now the question is where that 12% figure is going to go from here. It seems to me that most people who are in the field, as well as desperate law students who are researching this question fanatically, seem to think that a contraction of greater than 50% is quite realistic. When you have a growing list of firms that are going so far as to cancel their summer program altogether, I can't disagree.

# of law students in the top 14 compared to all law schools: roughly 9%

12% of all grads were getting NLJ250 at the peak of the biglaw bubble

[06072010]

AHA, I have found the proper figures in this article:





So there you have it, 12% of all grads were getting NLJ250 at the peak of the biglaw bubble. It is worth noting that this was a "bubble" and therefore it was not sustainable or based on reality, thus we should not really expect it to return to that level even when the economy does start recovering.

Now the question is where that 12% figure is going to go from here. It seems to me that most people who are in the field, as well as desperate law students who are researching this question fanatically, seem to think that a contraction of greater than 50% is quite realistic. When you have a growing list of firms that are going so far as to cancel their summer program altogether, I can't disagree.

# of law students in the top 14 compared to all law schools: roughly 9%

12% of all grads were getting NLJ250 at the peak of the biglaw bubble

These two statistics could be wholly unrelated. Not sure what you're trying to prove.

[nervous1]

http://www.nalp.org/uploads/1229_natlsu ... evised.pdf

Looking at this...

Total Grads Class of 2007 — 43,518
Total Reported to NALP -- 41,707

Isn't that better than 50%?

Also 23% in private practice, full-time worked at a 501+ law firm with 145k-160k as 25th-75th salary.

[nervous1]

AHA, I have found the proper figures in this article:





So there you have it, 12% of all grads were getting NLJ250 at the peak of the biglaw bubble. It is worth noting that this was a "bubble" and therefore it was not sustainable or based on reality, thus we should not really expect it to return to that level even when the economy does start recovering.

Now the question is where that 12% figure is going to go from here. It seems to me that most people who are in the field, as well as desperate law students who are researching this question fanatically, seem to think that a contraction of greater than 50% is quite realistic. When you have a growing list of firms that are going so far as to cancel their summer program altogether, I can't disagree.

# of law students in the top 14 compared to all law schools: roughly 9%

12% of all grads were getting NLJ250 at the peak of the biglaw bubble

These two statistics could be wholly unrelated. Not sure what you're trying to prove.

I wanted to give the 12% of all lawyers a bit of perspective....ALL the students in the top 14 are only 9% of all graduating lawyers.

[CE2JD]

So... are some of you just trying to find stats that might lead you to think you actually have a decent chance at biglaw coming from outside the top25?