wealth from being an associate

(On Campus Interviews, Summer Associate positions, Firm Reviews, Tips, ...)
Forum rules
Anonymous Posting

Anonymous posting is only appropriate when you are revealing sensitive employment related information about a firm, job, etc. You may anonymously respond on topic to these threads. Unacceptable uses include: harassing another user, joking around, testing the feature, or other things that are more appropriate in the lounge.

Failure to follow these rules will get you outed, warned, or banned.
User avatar
OrdinarilySkilled
Posts: 266
Joined: Sun Jun 20, 2010 10:22 am

Re: wealth from being an associate

Postby OrdinarilySkilled » Wed Jun 30, 2010 9:57 pm

Just diversify your bonds and invest in nuclear bombs.

Edit: I'm just relaying what my financial advisor told me. (LinkRemoved)
Last edited by OrdinarilySkilled on Wed Jun 30, 2010 10:33 pm, edited 1 time in total.

User avatar
TheTopBloke
Posts: 486
Joined: Sat Jun 13, 2009 7:29 pm

Re: wealth from being an associate

Postby TheTopBloke » Wed Jun 30, 2010 9:58 pm

OrdinarilySkilled wrote:Just diversify your bonds and invest in nuclear bombs.


They have no utility, and the storage fees are astronomical.

rundoxierun
Posts: 1893
Joined: Wed Dec 03, 2008 1:46 am

Re: wealth from being an associate

Postby rundoxierun » Wed Jun 30, 2010 10:16 pm

A couple points that need to be made here:

A) State tax paid is deductible towards federal tax so you cant simply add up tax rates.

B) People with higher incomes have means to practice tax avoidance(not the same as tax evasion).. tax avoidance is absolutely recommended as the tax laws are put in place to encourage the sorts of behavior that leads to the avoidance of tax. If u cant get your effective tax rate to ~30% or below you simply arent doing it right.

C)99.9999% of people on TLS are terrible at any sort of numerical analysis or anything to do with numbers/money. Due to this, all arguments will become circular and go absolutely nowhere.

User avatar
stratocophic
Posts: 2207
Joined: Tue Dec 22, 2009 6:24 pm

Re: wealth from being an associate

Postby stratocophic » Wed Jun 30, 2010 10:20 pm

TheTopBloke wrote:
OrdinarilySkilled wrote:Just diversify your bonds and invest in nuclear bombs.


They have no utility, and the storage fees are astronomical.
You're thinking about this all wrong. TCR is clearly to acquire them and extort first world countries for aid money.
--ImageRemoved--

User avatar
romothesavior
Posts: 14772
Joined: Fri Jun 26, 2009 4:29 pm

Re: wealth from being an associate

Postby romothesavior » Wed Jun 30, 2010 10:23 pm

tkgrrett wrote:C)99.9999% of people on TLS are terrible at any sort of numerical analysis or anything to do with numbers/money. Due to this, all arguments will become circular and go absolutely nowhere.


This is among the most credited responses ever on TLS. (Except for when ray is involved, that guy usually offers thorough analysis.)

User avatar
rbgrocio
Posts: 560
Joined: Wed Dec 10, 2008 7:58 pm

Re: wealth from being an associate

Postby rbgrocio » Wed Jun 30, 2010 10:24 pm

eddietx12 wrote:Say you're an associate for 7 years, earning 160-170-180-190-200-210-220 = 1.33 million
Uncle Sam takes 50%, so you end up with $665,000 USD in nominal wealth. That's about 90k a year nominal income.

Say you invested everything in a 3% secured instrument, if you can find one, you get like $700k or so at the end of 7 years, post tax, saved up at 3% a year.

This is the MAXIMUM you can save theoretically, assuming no expenses, no tax evasion or funky business or more than 3% returns.

Expenses (student loans, mortgage scam, wife, etc., = 90%), marginal rate of saving = 0.10
An average national savings rate is considered to be 10%

So your net worth will thus be only $70k when all is said and done by the time you make partner, congratulations.



I guess this is for people who do not know how to save.

Making way less than than I can make my net worth be more than 70k. However, most ppl are not willing to do what my husband and I do to save.

User avatar
redsox
Posts: 612
Joined: Mon Jun 08, 2009 1:40 pm

Re: wealth from being an associate

Postby redsox » Wed Jun 30, 2010 10:30 pm

eddietx12 wrote:I think I'm going to design a software program for cable-boxes which connects to a user's Google account, and replaces the ads on tv with customized ads tailored to the user's google search history. I don't want to watch women's pantie ads when I watch my TV, I'd rather watch ads about cars, personal finance, dog food, or things that are more geared to my lifestyle - things that Google knows all about.

I'm going to sell my software to Google and Comcast/Tivo/DirecTV after I patent it, for about $1.310m, so I can get rid of my debt and become a millionaire. The way Google and the cable-box will interact will be by a wifi connection/network to my personal computer, which will run on the Google operating system.


You'll still end up watching women's pantie ads. Google knows your search history.

User avatar
stratocophic
Posts: 2207
Joined: Tue Dec 22, 2009 6:24 pm

Re: wealth from being an associate

Postby stratocophic » Wed Jun 30, 2010 10:31 pm

redsox wrote:
eddietx12 wrote:I think I'm going to design a software program for cable-boxes which connects to a user's Google account, and replaces the ads on tv with customized ads tailored to the user's google search history. I don't want to watch women's pantie ads when I watch my TV, I'd rather watch ads about cars, personal finance, dog food, or things that are more geared to my lifestyle - things that Google knows all about.

I'm going to sell my software to Google and Comcast/Tivo/DirecTV after I patent it, for about $1.310m, so I can get rid of my debt and become a millionaire. The way Google and the cable-box will interact will be by a wifi connection/network to my personal computer, which will run on the Google operating system.


You'll still end up watching women's pantie ads. Google knows your search history.
180

User avatar
truffleshuffle
Posts: 84
Joined: Sun May 02, 2010 11:42 pm

Re: wealth from being an associate

Postby truffleshuffle » Wed Jun 30, 2010 10:31 pm

tkgrrett wrote:B) People with higher incomes have means to practice tax avoidance(not the same as tax evasion).. tax avoidance is absolutely recommended as the tax laws are put in place to encourage the sorts of behavior that leads to the avoidance of tax. If u cant get your effective tax rate to ~30% or below you simply arent doing it right.

John Edwards did this pretty damn well.
http://www.forbes.com/forbes/2005/0314/046a.html

rundoxierun
Posts: 1893
Joined: Wed Dec 03, 2008 1:46 am

Re: wealth from being an associate

Postby rundoxierun » Wed Jun 30, 2010 10:33 pm

redsox wrote:
eddietx12 wrote:I think I'm going to design a software program for cable-boxes which connects to a user's Google account, and replaces the ads on tv with customized ads tailored to the user's google search history. I don't want to watch women's pantie ads when I watch my TV, I'd rather watch ads about cars, personal finance, dog food, or things that are more geared to my lifestyle - things that Google knows all about.

I'm going to sell my software to Google and Comcast/Tivo/DirecTV after I patent it, for about $1.310m, so I can get rid of my debt and become a millionaire. The way Google and the cable-box will interact will be by a wifi connection/network to my personal computer, which will run on the Google operating system.


You'll still end up watching women's pantie ads. Google knows your search history.


and am I the only one who knows that Google TV already exists and will soon be brought to market within the next couple of months?

User avatar
PLATONiC
Posts: 358
Joined: Mon Oct 05, 2009 8:13 pm

Re: wealth from being an associate

Postby PLATONiC » Wed Jun 30, 2010 11:35 pm

Mirrored wrote:This is absolutely retarded.

First, you fail to understand how graduated taxes work. Probably because you've never actually paid taxes and just had mommy and daddy fund you.

Second, you really fail to understand how deductions can factor into this, especially with 401k matching.

And then you fail to level the associate salaries which are lock step at most firms. And forget bonuses.

And you forget that students that are making these big firms from less prestigious schools are likely to have graduated in the top 15-5% of receiving significant scholarships and probably full rides.

If you go to a non-t14 school and are paying sticker, you are also not a candidate for biglaw jobs. Thus the most debt is given to those least able to pay it.


+1

Anonymous User
Posts: 273050
Joined: Tue Aug 11, 2009 9:32 am

Re: wealth from being an associate

Postby Anonymous User » Thu Jul 01, 2010 5:06 am

Umm top 5% at T15 but paying sticker... I guess I have no shot at big law then according to the quote above that you +1ed. FAIL.

Anonymous User
Posts: 273050
Joined: Tue Aug 11, 2009 9:32 am

Re: wealth from being an associate

Postby Anonymous User » Thu Jul 01, 2010 3:29 pm

Anonymous User wrote:Umm top 5% at T15 but paying sticker... I guess I have no shot at big law then according to the quote above that you +1ed. FAIL.


Good thing you set him straight on the big $$$ in your future!

Take that guy on the internet!

Anonymous User
Posts: 273050
Joined: Tue Aug 11, 2009 9:32 am

Re: wealth from being an associate

Postby Anonymous User » Thu Jul 01, 2010 3:54 pm

what the f is t15

User avatar
Rock Chalk
Posts: 593
Joined: Sun Feb 21, 2010 3:11 pm

Re: wealth from being an associate

Postby Rock Chalk » Thu Jul 01, 2010 4:39 pm

Flagrant abuse of anonymous posting ITT.

westbayguy
Posts: 153
Joined: Thu May 22, 2008 6:41 pm

Re: wealth from being an associate

Postby westbayguy » Thu Jul 01, 2010 5:50 pm

Can I summarize where we are for everyone?

Big Law pays alot (160k) to someone 25-28 or so. The price to get this privilege is 0-180000 in debt. (we'll ignore UG debt because you could skip law school, make 55 grand a year to start and pay those debts forever too- try living on that).

So you make 160K (plus bonus and lock step increases for 5 years) and have no time for a life anyway. You pay fed state and city taxes and your OVERALL rate will be somewhere betwen 35 and 40% due to the deductibility of your 401k contribution, and state and city taxes. Yes your MARGINAL rate is higher (40%+)- but overall its not THAT bad.

You can live like a pauper, pay off your loans and save less OR you can treat your student loans like a mortgage and NOT pay them down in 5 years. Allowing for inflation and the time value of money, you're probably better off parking that money in a 401k or other tax deferred investment. Or you could even buy a house/condo with 3% down (expensive and stupid, but you could) and then you would be able to take the mortgage interest deduction and also deduct real property taxes. The government would be subsidizing your mortgage to the extent of your marginal tax rate. Translation, you'll pay less in taxes, take more home. You build equity and live in a nice place. Who knows, by year 5 you could move to Brooklyn Heights or Prospect Park. Forget the car- you don't need one n NYC. Parking is ridiculously expensive and you're better off taking cabs everywhere and renting CityCar or Zipcars for weekends. You won't have time for vacations anyway. Maybe you won't be rich, but you can definitely "save" over 100 grand in those 5 years.

Oh and some LRAPS will kick back in if you bail on big law after 5 years and help pay your remaining debt. Why lose LRAP benefits by paying down early? Bank the extra money. If you WANT topay down after year 5 you can- otherwise let the schools or IBR pay.

So now you are THIRTY, have 100 grand in the bank, and the prospect of making Millions the rest of your life at a firm, OR doing government work, earning GS 15 (150k a year+ after 5 years of practice) and retiring in 25 years with a pension.

If you didn't go to law school you'd be the head of the electronics department at Best Buy (assuming they are still in business) making 75 grand and working the same 7 days a week you do at the firm. NOW is law school a bad investment?

In the end you are going to be 30-35 years old, with 100K or more in the bank, maybe some stupid student debt, with a skill and options for the rest of your life. Options that most would kill for. Get your head out of your ass and realize there is no free lunch- law school is kind of a crap shoot, but IF you have the opportunity to do big law out of law school- you have the world at your feet. Yeah I wish I had been born left handed with a 90 mph+ fast ball and a devastating curve so I could have 20 mill by age 30, but that didn't happen. I'll take law as a fall back any day.

User avatar
stratocophic
Posts: 2207
Joined: Tue Dec 22, 2009 6:24 pm

Re: wealth from being an associate

Postby stratocophic » Thu Jul 01, 2010 7:22 pm

westbayguy wrote:Can I summarize where we are for everyone?

Big Law pays alot (160k) to someone 25-28 or so. The price to get this privilege is 0-180000 in debt. (we'll ignore UG debt because you could skip law school, make 55 grand a year to start and pay those debts forever too- try living on that).

So you make 160K (plus bonus and lock step increases for 5 years) and have no time for a life anyway. You pay fed state and city taxes and your OVERALL rate will be somewhere betwen 35 and 40% due to the deductibility of your 401k contribution, and state and city taxes. Yes your MARGINAL rate is higher (40%+)- but overall its not THAT bad.

You can live like a pauper, pay off your loans and save less OR you can treat your student loans like a mortgage and NOT pay them down in 5 years. Allowing for inflation and the time value of money, you're probably better off parking that money in a 401k or other tax deferred investment. Or you could even buy a house/condo with 3% down (expensive and stupid, but you could) and then you would be able to take the mortgage interest deduction and also deduct real property taxes. The government would be subsidizing your mortgage to the extent of your marginal tax rate. Translation, you'll pay less in taxes, take more home. You build equity and live in a nice place. Who knows, by year 5 you could move to Brooklyn Heights or Prospect Park. Forget the car- you don't need one n NYC. Parking is ridiculously expensive and you're better off taking cabs everywhere and renting CityCar or Zipcars for weekends. You won't have time for vacations anyway. Maybe you won't be rich, but you can definitely "save" over 100 grand in those 5 years.

Oh and some LRAPS will kick back in if you bail on big law after 5 years and help pay your remaining debt. Why lose LRAP benefits by paying down early? Bank the extra money. If you WANT topay down after year 5 you can- otherwise let the schools or IBR pay.

So now you are THIRTY, have 100 grand in the bank, and the prospect of making Millions the rest of your life at a firm, OR doing government work, earning GS 15 (150k a year+ after 5 years of practice) and retiring in 25 years with a pension.

If you didn't go to law school you'd be the head of the electronics department at Best Buy (assuming they are still in business) making 75 grand and working the same 7 days a week you do at the firm. NOW is law school a bad investment?

In the end you are going to be 30-35 years old, with 100K or more in the bank, maybe some stupid student debt, with a skill and options for the rest of your life. Options that most would kill for. Get your head out of your ass and realize there is no free lunch- law school is kind of a crap shoot, but IF you have the opportunity to do big law out of law school- you have the world at your feet. Yeah I wish I had been born left handed with a 90 mph+ fast ball and a devastating curve so I could have 20 mill by age 30, but that didn't happen. I'll take law as a fall back any day.
If only my high school fastball had been a little less Jamie Moyer-esque :cry:

doctoroflaw
Posts: 10
Joined: Wed Jun 23, 2010 6:32 pm

Re: wealth from being an associate

Postby doctoroflaw » Fri Jul 02, 2010 11:05 am

While the original math is certainly not credited, there is a larger problem. All of the assumptions about 7-8 years in biglaw are far too optimistic. During the boom years, 40% of associates left after 3 years. 80% left after 5. What do you think those numbers look like now?

After being pushed out, burning out, or making a lifestyle decision, your income will drop substantially. Going from $200k+ to $120k wherever you land will have a lot larger impact than the effective tax rate on 160k.

You don't become wealthy by being an associate. As a poster above mentioned, business is really the only way to get rich. Other people contribute a portion of their hourly output -> you. Enough people and you become rich. Only 3 real ways to become wealthy in today's world: (1) start a business, (2) invent something very useful and marketable [i.e. SNUGGIE], (3) professional athlete/musician/writer/comedian/actor/gambler [not happening].

Working in big law will hopefully position you to be in positive net worth territory. If you don't have a lot of loans, you could probably accumulate $100k before being pushed out. However the real value is in getting that second position where the hours don't drain you and you get paid an income in the top 10% of earners (80k+ personally or 115k+ as a household). Alternatively, you hold out and try to land somewhere in midlaw to become a partner and make good-great money.

westbayguy
Posts: 153
Joined: Thu May 22, 2008 6:41 pm

Re: wealth from being an associate

Postby westbayguy » Fri Jul 02, 2010 11:15 am

You don't become wealthy by being an associate. As a poster above mentioned, business is really the only way to get rich. Other people contribute a portion of their hourly output -> you. Enough people and you become rich. Only 3 real ways to become wealthy in today's world: (1) start a business, (2) invent something very useful and marketable [i.e. SNUGGIE], (3) professional athlete/musician/writer/comedian/actor/gambler [not happening].

Working in big law will hopefully position you to be in positive net worth territory. If you don't have a lot of loans, you could probably accumulate $100k before being pushed out. However the real value is in getting that second position where the hours don't drain you and you get paid an income in the top 10% of earners (80k+ personally or 115k+ as a household). Alternatively, you hold out and try to land somewhere in midlaw to become a partner and make good-great money.


I'll agree, invent something, start your own business, be a world class athlete- all good ideas. But sole practitioner doing PI can get you there too. So can alot of other law jobs.

No one her has really defined "rich". I would think most people just really want to be "comfortable", able to live in a nice house with a nice car and able to do whatever they want without thinking about it too much. Not rock star rich, but nice. For that, you don't need to take in 300k per year or more and don't need to be a big law partner. Also you all seem to forget you will likely have a spouse/significant other contributing. Being an obsessive lawyer, you are likely to marry the same. Now if you both do government work you'll be making 150 per year plus. Same if you go "in house" to one of those clients you slaved for as a big law associate. Do you really think you won't be able (with your spouse's income) to pay your student loans, buy a house, and live happily ever after on that- even in NY or DC? Wrong if you think not. And after 30 years you WILL have millions in your 401k, a fully paid house, and you will pay thorugh the nose for your kids to go to college and law school because of your success.

Stop worrying and enjoy the ride.

doctoroflaw
Posts: 10
Joined: Wed Jun 23, 2010 6:32 pm

Re: wealth from being an associate

Postby doctoroflaw » Fri Jul 02, 2010 11:42 am

westbayguy wrote:
You don't become wealthy by being an associate. As a poster above mentioned, business is really the only way to get rich. Other people contribute a portion of their hourly output -> you. Enough people and you become rich. Only 3 real ways to become wealthy in today's world: (1) start a business, (2) invent something very useful and marketable [i.e. SNUGGIE], (3) professional athlete/musician/writer/comedian/actor/gambler [not happening].

Working in big law will hopefully position you to be in positive net worth territory. If you don't have a lot of loans, you could probably accumulate $100k before being pushed out. However the real value is in getting that second position where the hours don't drain you and you get paid an income in the top 10% of earners (80k+ personally or 115k+ as a household). Alternatively, you hold out and try to land somewhere in midlaw to become a partner and make good-great money.


I'll agree, invent something, start your own business, be a world class athlete- all good ideas. But sole practitioner doing PI can get you there too. So can alot of other law jobs.

No one her has really defined "rich". I would think most people just really want to be "comfortable", able to live in a nice house with a nice car and able to do whatever they want without thinking about it too much. Not rock star rich, but nice. For that, you don't need to take in 300k per year or more and don't need to be a big law partner. Also you all seem to forget you will likely have a spouse/significant other contributing. Being an obsessive lawyer, you are likely to marry the same. Now if you both do government work you'll be making 150 per year plus. Same if you go "in house" to one of those clients you slaved for as a big law associate. Do you really think you won't be able (with your spouse's income) to pay your student loans, buy a house, and live happily ever after on that- even in NY or DC? Wrong if you think not. And after 30 years you WILL have millions in your 401k, a fully paid house, and you will pay through the nose for your kids to go to college and law school because of your success.

Stop worrying and enjoy the ride.


I'm not worried, you cut my paragraph that basically said you work biglaw to get a great position earning $80k+. I agree completely with what you are saying, just disagree on the assumption people will stay in biglaw for more than 4 years that was circulating above. After $80k it is really all gravy, you're happiness won't be correlated with income anymore.

You are right that if you have a spouse that will work full-time as well, you are pretty much set. Expenses for your 1-3 kids will eat away at some of that benefit and biglaw hours might make it hard to find the right guy/girl, but in general it definitely helps.

I have a full scholarship and my soon to be fiance will be in a similar earning bracket. I'm not worried, just discussing "wealth" from being an associate/employee. Average net worth for self-employed head of households is $335k to $67k if they work for someone else.

To put this all in perspective: in the US, 25% have negative net worth, 25% more have less than $50k net worth, and another 25% of the population has less than $190k in net worth. A full 75% of the population has less than $190k in net worth, and that includes older people who have been saving their entire lives. Our generation is probably much worse off in general with substantial UG debt, credit card debt, etc.

Wealth depends on area and personal preference but wealthy probably means a net worth of ~$3-5 million. At that point you can pretty much stop working if you want to and live off equity and interest from investments. Some define it to be a lot higher and most of the population would define it as above 250k-500k. Comfortable probably means $70k+, having health insurance, a family, a house, and happiness.

User avatar
jdubb990
Posts: 184
Joined: Tue Aug 11, 2009 12:16 am

Re: wealth from being an associate

Postby jdubb990 » Sat Jul 03, 2010 7:36 pm

Taxes can easily take 50 percent of income from an individual making over $100k a year. Think about it: add up the sales tax for all of your purchases in one years time+ property tax (home, cars, etc.)+income tax federal+income tax state. The founding fathers are rolling in their graves with disgust that the American people let this stand.

Many people also contend that such enormous taxes are unconstitutional seeing as "pursuit of happiness" and "property" are the same thing. I am not saying I'm necessarily a believer of that notion, but I can understand why they would say that.

I tend to rant and rave about this type of stuff because I've worked in a couple gov't offices, even in an executive branch of state government where I was not too many rungs down the ladder; in these positions I saw how inefficiently tax payer's money is spent. It's my theory that we get taxed much more than necessary because things are conducted in such inefficient manner in our governing bodies.

User avatar
existenz
Posts: 927
Joined: Tue Dec 22, 2009 3:06 am

Re: wealth from being an associate

Postby existenz » Sun Jul 04, 2010 5:03 pm

...
Last edited by existenz on Thu Jul 29, 2010 5:27 pm, edited 1 time in total.




Return to “Legal Employment”

Who is online

The online users are hidden on this forum.