Two-Year Clerkship or Straight to Firm?

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Big Shrimpin
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Joined: Fri Oct 24, 2008 12:35 pm

Re: Two-Year Clerkship or Straight to Firm?

Postby Big Shrimpin » Mon Sep 12, 2011 4:55 pm

Anonymous User wrote:Here's my back of the envelope calculations; after taxes and rent I don't think it's a big difference:

Big Firm - New York City
Salary ~ 160k
After-tax ~ 97k (calculation has been done elsewhere on site)
After-rent (2k/month) ~ $73k

Clerkship - Flyover
Salary ~ 60k plus 50k bonus
Federal Income Tax ~ 22k
Payroll Tax ~ 4.6k
State/local Income Tax (assuming 4% combined) ~ 4.4k
After-tax ~ $79k
After-rent (875/month) ~ $69k

wtf? Either you failed 4th grade math or forgot to list your assumptions here. I'm not totally disagreeing with you on your conclusion, but I think it needs a lot of clarification.

Clerking in a flyover district is a good point and seems to be important in the calculus. Moreover, nabbing that clerkship bonus is ESSENTIAL if you've got a big debt load and no interest in academia, gubmint, etc. Here's how I figure things pan out, and if this seems way off base, please someone correct me (I'd rather megapoast than do 3L work):

After taxes/rent at 60k you can't be looking at more than like 30k in your pocket at the end of your first year. Compare that with around 75k in your pocket in nyc biglaw. Assuming a 150k debt load at an effective 7%, and that the clerk puts about 15k toward loans in year one while the biglaw dooder puts about 40k toward loans in year one (assuming having 15k/year left over cash in a flyover gives you similar standard of living as 35k/year in nyc), clerking probably costs 25k over the biglaw gig for year one (for the sake of argument and consistency, I did this calculation assuming you're putting entire lump sum into loans at end of each year, and that interest capitalizes concurrently).

Certainly, a 50k clerking bonus helps, but after taxes (probably being taxed at an effective 33% federal tax on that 50k, considering the 170k base pay), the clerk is probably in a similar position as the biglaw associate after year two. At worst, clerking might cost a few thousand bucks.

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