How much money saved before you'd bounce from biglaw?

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ohsaycanyousee

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How much money saved before you'd bounce from biglaw?

Postby ohsaycanyousee » Mon Jan 20, 2020 12:37 am

Obviously this is a personal question. It varies from person to person. One of my colleagues said as soon as he pays of his loans he'll feel comfortable bouncing. Another colleague said $200K in liquid funds was her number (the amount of a downpayment on a house in a high cost area like NY, LA, DC, or SF).

For me the number is 260K. I got to this number by calculating the amount of money I paid for law school (80K when factoring in loans), plus the opportunity cost of not making a salary for three years (180K conservatively). This number assumes living expenses would have been the same in the small city I went to law school versus the larger city where I would have worked had I not gone to law school. The calculation is not perfect for a variety of reasons (for example, this number assumes living expenses would have been the same in the small city I went to law school versus the larger city where I would have worked had I not gone to law school; doesn't account for taxes; doesn't account for the time after law school I could have also been saving at a non-legal job) but for some reason I've started focusing on 260K as my peace-out number.

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Re: How much money saved before you'd bounce from biglaw?

Postby Bllljd115 » Mon Jan 20, 2020 10:35 am

I think about this constantly. To start transitioning into a new gig - 300K. This is my cushion for what I consider a worst-case scenario - find a new gig, get laid off within 6 months, and a one year recession tanks the stock market (most of my money is in index funds, so I do not want to be burning through that to cover expenses at the same time as the market is at a low).

To just bounce without a new gig lined up - 500K, to incorporate the risk I'm viewed as not employable were I to quit without a job plus my desire to do some traveling for a few months.

Somewhere in between that right now, so I am actively looking. Either way, I would not buy a house if I was thinking of leaving.

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Re: How much money saved before you'd bounce from biglaw?

Postby Anonymous User » Mon Jan 20, 2020 10:52 am

Bllljd115 wrote:I think about this constantly. To start transitioning into a new gig - 300K. This is my cushion for what I consider a worst-case scenario - find a new gig, get laid off within 6 months, and a one year recession tanks the stock market (most of my money is in index funds, so I do not want to be burning through that to cover expenses at the same time as the market is at a low).

To just bounce without a new gig lined up - 500K, to incorporate the risk I'm viewed as not employable were I to quit without a job plus my desire to do some traveling for a few months.

Somewhere in between that right now, so I am actively looking. Either way, I would not buy a house if I was thinking of leaving.


What is your breakdown between investments and cash (whether in a HYSA or other liquid vehicle)?

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Re: How much money saved before you'd bounce from biglaw?

Postby papermateflair » Mon Jan 20, 2020 11:29 am

When I was a junior, it was a year of expenses plus student loans paid off. Once I did that, I felt like I could explore other opportunities, and ultimately lateraled to another firm. Now, it's more about making sure that I have enough saved so that I can take a step back whenever I'm ready, without having to worry about being able to save at the same rate forever (so, if I have a 65% savings rate now, that I can take a job where I'll only have a 40% savings rate because I have enough invested). I think it's less about hitting a number so I can quit, and more about finding something I enjoy better, and honestly having more saved helps me feel like I have that flexibility...

But if you want a number, it's $1m to rage quit big law with nothing lined up, and $2m to rage quit all jobs with nothing lined up :) Probably another 3-4 years for the first, and who knows when for the second, but I'm not great at tracking things so I literally have no idea how long anything will take, and I'm finally starting to think about buying a house so that could set me back and change things.

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nealric

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Re: How much money saved before you'd bounce from biglaw?

Postby nealric » Mon Jan 20, 2020 11:48 am

Wouldn't this be entirely dependent on what you are bouncing to? Big financial difference between leaving biglaw for a $200k in-house job and leaving biglaw for a PI job paying $40k.

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Re: How much money saved before you'd bounce from biglaw?

Postby shock259 » Mon Jan 20, 2020 11:57 am

I didn't focus on a cut off number, but just used my overall mental healthy/sanity as dictating when I needed to leave. I lasted a few years longer than I thought. But when it was time, it was time. I'm now in house @ a lifestyle company. I took a pretty big paycut, but my spending habits have stayed the same and I'm still managing to save each paycheck (just less). And I've got a pretty big little nest egg for myself for my years in big law, which continues to grow and grow on its own.

Don't let things like money or artificial numbers ruin your life, or keep you in a job that is making you miserable for longer than is warranted. You could get hit by a bus tomorrow and not be able to use any of that money you slaved away for.

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Re: How much money saved before you'd bounce from biglaw?

Postby Bllljd115 » Mon Jan 20, 2020 12:00 pm

Anonymous User wrote:
Bllljd115 wrote:I think about this constantly. To start transitioning into a new gig - 300K. This is my cushion for what I consider a worst-case scenario - find a new gig, get laid off within 6 months, and a one year recession tanks the stock market (most of my money is in index funds, so I do not want to be burning through that to cover expenses at the same time as the market is at a low).

To just bounce without a new gig lined up - 500K, to incorporate the risk I'm viewed as not employable were I to quit without a job plus my desire to do some traveling for a few months.

Somewhere in between that right now, so I am actively looking. Either way, I would not buy a house if I was thinking of leaving.


What is your breakdown between investments and cash (whether in a HYSA or other liquid vehicle)?


I have a year's expenses cash on hand, everything else is in a mix of ETFs/bonds. If I were to leave without a job lined up, I'd probably try to have at least 1.5-2 years expenses cash plus a nice little vacation fund.

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Re: How much money saved before you'd bounce from biglaw?

Postby trebekismyhero » Mon Jan 20, 2020 12:32 pm

nealric wrote:Wouldn't this be entirely dependent on what you are bouncing to? Big financial difference between leaving biglaw for a $200k in-house job and leaving biglaw for a PI job paying $40k.


Yeah, I left for the former and it really didn't make a difference lifestyle wise. I was thinking about leaving for something a lot closer to the latter prior to going in-house. I had paid off my loans and had $200k liquid between mutual funds and savings (paying off loans was more the focus than the savings) and was prepared to take a paycut down to $70k for the right PI gig. Glad I didn't financially though.

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Re: How much money saved before you'd bounce from biglaw?

Postby Anonymous User » Mon Jan 20, 2020 5:12 pm

Have about 400k right now between my 401k and taxable accounts, 30 years old, single, no debt, third year big law associate.

When I started the big law gig in 2017 i did a cash flow projection from what my income was from when i quit my pre-lawschool job in the summer of 2014 to what it would have been to this day (netting out all income I made while in law school from SAs, internships, tutoring, etc. and ignoring COL costs and ignoring any potential investment gains I would have made in those years if I actually worked and saved money, i.e. only considering gross W2 income etc.), and I saw I broke even for the "opportunity cost" of having gone to law school, from a financial perspective, at some point this year. So this is the year I'm going to quit and find something with a better work like balance. I paid $0 for law school but if I did pay, would've taken way longer to break even. Law school is not a smart financial decision if you're making even a decently average income pre-law school. Would have been cool to hit a net worth of $500k before quitting the high income, but don't think I can last another 12 months.

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Re: How much money saved before you'd bounce from biglaw?

Postby Anonymous User » Tue Jan 21, 2020 12:23 am

Anonymous User wrote:Have about 400k right now between my 401k and taxable accounts, 30 years old, single, no debt, third year big law associate.

When I started the big law gig in 2017 i did a cash flow projection from what my income was from when i quit my pre-lawschool job in the summer of 2014 to what it would have been to this day (netting out all income I made while in law school from SAs, internships, tutoring, etc. and ignoring COL costs and ignoring any potential investment gains I would have made in those years if I actually worked and saved money, i.e. only considering gross W2 income etc.), and I saw I broke even for the "opportunity cost" of having gone to law school, from a financial perspective, at some point this year. So this is the year I'm going to quit and find something with a better work like balance. I paid $0 for law school but if I did pay, would've taken way longer to break even. Law school is not a smart financial decision if you're making even a decently average income pre-law school. Would have been cool to hit a net worth of $500k before quitting the high income, but don't think I can last another 12 months.

I think this is something for a lot of 0Ls to consider. Even if you pay 0 dollars, you are leaving career progression and 3 years of earnings on the table. That compounds when you are going to law school in your early 20s.

Looking back, I left around 500k on the table. My income is maybe 20 - 30 k higher per year now, but having an extra 500k in index funds/home equity would have more than made up for it.

I personally had around 210k saved up when I bounced as a first year. Almost all in tax advantaged accounts. I didn't have to take much of a pay cut, so I figured fuck it.

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beepboopbeep

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Re: How much money saved before you'd bounce from biglaw?

Postby beepboopbeep » Tue Jan 21, 2020 12:33 am

I'm not sure the message most 0Ls are going to take from this thread is "maybe I'm leaving $500k on the table going to law school." Like, I made $35k/year before starting LS, and wasn't able to save more than a couple thousand. The message these posts would've given me is like "whoa, I could spend 3-5 years in biglaw and leave with $400k."

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Re: How much money saved before you'd bounce from biglaw?

Postby UVA2B » Tue Jan 21, 2020 12:44 am

It's a preposterous question because the original premise is entirely relevant: it's based on too many factors for anyone else to extract wisdom from. If you're dealing with significant debt, your amount saved will likely be less because you spent most of your relatively high earning time paying down those loans. Or maybe your debt is minimal, but you're in a committed relationship where your partner has significant debt, and you feel some obligation to pay down both of your debts because you value the relationship. Or maybe you've invested heavy in online currency, so the number/amount can't be anticipated.

The question really begs anecdotal answers that mostly leave out the context for that person to give that answer.

If you want to make up normative dollar amounts that we can all agree on, that's fine. But the basic premise of the question encourages that the answers will be endlessly, and painfully, pedantic.

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Re: How much money saved before you'd bounce from biglaw?

Postby dabigchina » Tue Jan 21, 2020 1:24 am

UVA2B wrote:It's a preposterous question because the original premise is entirely relevant: it's based on too many factors for anyone else to extract wisdom from. If you're dealing with significant debt, your amount saved will likely be less because you spent most of your relatively high earning time paying down those loans. Or maybe your debt is minimal, but you're in a committed relationship where your partner has significant debt, and you feel some obligation to pay down both of your debts because you value the relationship. Or maybe you've invested heavy in online currency, so the number/amount can't be anticipated.

The question really begs anecdotal answers that mostly leave out the context for that person to give that answer.

If you want to make up normative dollar amounts that we can all agree on, that's fine. But the basic premise of the question encourages that the answers will be endlessly, and painfully, pedantic.

Too wordy. Plz fix. Thx.

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Re: How much money saved before you'd bounce from biglaw?

Postby dabigchina » Tue Jan 21, 2020 1:25 am

beepboopbeep wrote:I'm not sure the message most 0Ls are going to take from this thread is "maybe I'm leaving $500k on the table going to law school." Like, I made $35k/year before starting LS, and wasn't able to save more than a couple thousand. The message these posts would've given me is like "whoa, I could spend 3-5 years in biglaw and leave with $400k."

Maybe that's the message they should be taking away from this thread

Just because they maybe not appreciate the opportunity cost, doesn't mean it's not worth mentioning

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nealric

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Re: How much money saved before you'd bounce from biglaw?

Postby nealric » Tue Jan 21, 2020 12:28 pm

Anonymous User wrote:
Anonymous User wrote:Have about 400k right now between my 401k and taxable accounts, 30 years old, single, no debt, third year big law associate.

When I started the big law gig in 2017 i did a cash flow projection from what my income was from when i quit my pre-lawschool job in the summer of 2014 to what it would have been to this day (netting out all income I made while in law school from SAs, internships, tutoring, etc. and ignoring COL costs and ignoring any potential investment gains I would have made in those years if I actually worked and saved money, i.e. only considering gross W2 income etc.), and I saw I broke even for the "opportunity cost" of having gone to law school, from a financial perspective, at some point this year. So this is the year I'm going to quit and find something with a better work like balance. I paid $0 for law school but if I did pay, would've taken way longer to break even. Law school is not a smart financial decision if you're making even a decently average income pre-law school. Would have been cool to hit a net worth of $500k before quitting the high income, but don't think I can last another 12 months.

I think this is something for a lot of 0Ls to consider. Even if you pay 0 dollars, you are leaving career progression and 3 years of earnings on the table. That compounds when you are going to law school in your early 20s.

Looking back, I left around 500k on the table. My income is maybe 20 - 30 k higher per year now, but having an extra 500k in index funds/home equity would have more than made up for it.

I personally had around 210k saved up when I bounced as a first year. Almost all in tax advantaged accounts. I didn't have to take much of a pay cut, so I figured fuck it.


It really depends what your career options were like prior to law school. If (like me) you were a humanities major making $30k a year (maybe $40k in today's dollars), and you are going to a school that puts you in a good position for biglaw (as I did), it's pretty much a slam dunk financially. If you were at MBB consulting or doing ibanking, the value proposition is far less compelling (though it's possible you have other reasons to leave those career paths).

I left biglaw with around zero net worth, which meant I had at least earned out of the debt hole. I broke even financially on law school at about 5 years post graduation. That's probably as good as can be done if you borrowed to attend. But I also left to an in-house job that wasn't much of a pay cut in a lower COL area. I didn't hate biglaw, and I'm glad I did it for a while, but it wasn't something I saw myself doing for the rest of my life.

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Re: How much money saved before you'd bounce from biglaw?

Postby papermateflair » Tue Jan 21, 2020 1:06 pm

nealric wrote:
Anonymous User wrote:
Anonymous User wrote:Have about 400k right now between my 401k and taxable accounts, 30 years old, single, no debt, third year big law associate.

When I started the big law gig in 2017 i did a cash flow projection from what my income was from when i quit my pre-lawschool job in the summer of 2014 to what it would have been to this day (netting out all income I made while in law school from SAs, internships, tutoring, etc. and ignoring COL costs and ignoring any potential investment gains I would have made in those years if I actually worked and saved money, i.e. only considering gross W2 income etc.), and I saw I broke even for the "opportunity cost" of having gone to law school, from a financial perspective, at some point this year. So this is the year I'm going to quit and find something with a better work like balance. I paid $0 for law school but if I did pay, would've taken way longer to break even. Law school is not a smart financial decision if you're making even a decently average income pre-law school. Would have been cool to hit a net worth of $500k before quitting the high income, but don't think I can last another 12 months.

I think this is something for a lot of 0Ls to consider. Even if you pay 0 dollars, you are leaving career progression and 3 years of earnings on the table. That compounds when you are going to law school in your early 20s.

Looking back, I left around 500k on the table. My income is maybe 20 - 30 k higher per year now, but having an extra 500k in index funds/home equity would have more than made up for it.

I personally had around 210k saved up when I bounced as a first year. Almost all in tax advantaged accounts. I didn't have to take much of a pay cut, so I figured fuck it.


It really depends what your career options were like prior to law school. If (like me) you were a humanities major making $30k a year (maybe $40k in today's dollars), and you are going to a school that puts you in a good position for biglaw (as I did), it's pretty much a slam dunk financially. If you were at MBB consulting or doing ibanking, the value proposition is far less compelling (though it's possible you have other reasons to leave those career paths).

I left biglaw with around zero net worth, which meant I had at least earned out of the debt hole. I broke even financially on law school at about 5 years post graduation. That's probably as good as can be done if you borrowed to attend. But I also left to an in-house job that wasn't much of a pay cut in a lower COL area. I didn't hate biglaw, and I'm glad I did it for a while, but it wasn't something I saw myself doing for the rest of my life.


Agree with this - I was also a liberal arts major, but graduated into the recession and wasn't confident in my ability to even land a $30k/year job. But assuming I could have landed that, we're only talking about forgoing $90k over 3 years, plus the law school debt, and I broke even probably 3 and a half years into big law (having six figure but not $200k in debt helped). There's no way I would be making anything close to my salary now without law school. On the other hand, if I had majored in something that would have led to an actual job, the calculations would be totally different.

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Re: How much money saved before you'd bounce from biglaw?

Postby yankees12345! » Tue Jan 21, 2020 2:59 pm

My target is about $40,000 cash, with all loans paid off. That’ll be after about a year and a half of big law.

Y’all doing great out there building up hundreds of thousands of dollars. I’m impressed.

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Re: How much money saved before you'd bounce from biglaw?

Postby barkschool » Tue Jan 21, 2020 5:27 pm

I definitely need to figure out where my money is going

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Re: How much money saved before you'd bounce from biglaw?

Postby BaileyJohnson » Wed Jan 22, 2020 1:02 am

Goal is to have about 200k saved up and loans paid off (started off at about 78k in debt) by the time I get third year bonus ($50k). I believe I'm currently on track so just under 23 months to go, then I will likely actively start looking

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Re: How much money saved before you'd bounce from biglaw?

Postby wet.ink.sigs » Wed Jan 22, 2020 2:43 am

I stayed in big law as long as I physically could, instead of waiting to hit some magical number. At that point, I had over $300k. All loans paid off. That said, I might have somehow found that I had the stamina to stick it out longer if my financial situation had been worse...

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Re: How much money saved before you'd bounce from biglaw?

Postby PeanutsNJam » Wed Jan 22, 2020 3:03 am

People who are struggling to save up 200k by their 3rd year bonus likely are paying for a 1BR in NYC/SF and living alone, eat out a lot, and/or have an SO/family member they are supporting, and have over 100k loans.

If you're a single person, have a roommate (even in NYC/SF), temper your eating out/general spending, 200k is doable by end of 3rd year.

If you're a dual income household, the sky is the limit.

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Re: How much money saved before you'd bounce from biglaw?

Postby ohsaycanyousee » Wed Jan 22, 2020 3:08 am

UVA2B wrote:It's a preposterous question because the original premise is entirely relevant: it's based on too many factors for anyone else to extract wisdom from. If you're dealing with significant debt, your amount saved will likely be less because you spent most of your relatively high earning time paying down those loans. Or maybe your debt is minimal, but you're in a committed relationship where your partner has significant debt, and you feel some obligation to pay down both of your debts because you value the relationship. Or maybe you've invested heavy in online currency, so the number/amount can't be anticipated.

The question really begs anecdotal answers that mostly leave out the context for that person to give that answer.

If you want to make up normative dollar amounts that we can all agree on, that's fine. But the basic premise of the question encourages that the answers will be endlessly, and painfully, pedantic.


Sure, every response should be understood in its context. But that's why many of the people who posted here explained the reasoning underlying their number. At any rate, the question was motivated less by a desire to extract wisdom than out of sheer curiosity.

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Re: How much money saved before you'd bounce from biglaw?

Postby dabigchina » Wed Jan 22, 2020 3:11 am

nealric wrote:
Anonymous User wrote:
Anonymous User wrote:Have about 400k right now between my 401k and taxable accounts, 30 years old, single, no debt, third year big law associate.

When I started the big law gig in 2017 i did a cash flow projection from what my income was from when i quit my pre-lawschool job in the summer of 2014 to what it would have been to this day (netting out all income I made while in law school from SAs, internships, tutoring, etc. and ignoring COL costs and ignoring any potential investment gains I would have made in those years if I actually worked and saved money, i.e. only considering gross W2 income etc.), and I saw I broke even for the "opportunity cost" of having gone to law school, from a financial perspective, at some point this year. So this is the year I'm going to quit and find something with a better work like balance. I paid $0 for law school but if I did pay, would've taken way longer to break even. Law school is not a smart financial decision if you're making even a decently average income pre-law school. Would have been cool to hit a net worth of $500k before quitting the high income, but don't think I can last another 12 months.

I think this is something for a lot of 0Ls to consider. Even if you pay 0 dollars, you are leaving career progression and 3 years of earnings on the table. That compounds when you are going to law school in your early 20s.

Looking back, I left around 500k on the table. My income is maybe 20 - 30 k higher per year now, but having an extra 500k in index funds/home equity would have more than made up for it.

I personally had around 210k saved up when I bounced as a first year. Almost all in tax advantaged accounts. I didn't have to take much of a pay cut, so I figured fuck it.


It really depends what your career options were like prior to law school. If (like me) you were a humanities major making $30k a year (maybe $40k in today's dollars), and you are going to a school that puts you in a good position for biglaw (as I did), it's pretty much a slam dunk financially. If you were at MBB consulting or doing ibanking, the value proposition is far less compelling (though it's possible you have other reasons to leave those career paths).

I left biglaw with around zero net worth, which meant I had at least earned out of the debt hole. I broke even financially on law school at about 5 years post graduation. That's probably as good as can be done if you borrowed to attend. But I also left to an in-house job that wasn't much of a pay cut in a lower COL area. I didn't hate biglaw, and I'm glad I did it for a while, but it wasn't something I saw myself doing for the rest of my life.

The population of 0Ls isn't that black and white. There's definitely a middle ground too. If you are an econ/accounting major/business major making 60-80, that 190k payday looks great. However, by going to law school, you're giving up 3 years of income very early in your career in order to make that happen. Even if you go for free, the effects of 180-240k of foregone income early in your career compounds. That money could have sat in an index fund earnings 7-10% a year for the next 40 years.

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Re: How much money saved before you'd bounce from biglaw?

Postby ohsaycanyousee » Wed Jan 22, 2020 3:14 am

Anonymous User wrote:Have about 400k right now between my 401k and taxable accounts, 30 years old, single, no debt, third year big law associate.

When I started the big law gig in 2017 i did a cash flow projection from what my income was from when i quit my pre-lawschool job in the summer of 2014 to what it would have been to this day (netting out all income I made while in law school from SAs, internships, tutoring, etc. and ignoring COL costs and ignoring any potential investment gains I would have made in those years if I actually worked and saved money, i.e. only considering gross W2 income etc.), and I saw I broke even for the "opportunity cost" of having gone to law school, from a financial perspective, at some point this year. So this is the year I'm going to quit and find something with a better work like balance. I paid $0 for law school but if I did pay, would've taken way longer to break even. Law school is not a smart financial decision if you're making even a decently average income pre-law school. Would have been cool to hit a net worth of $500k before quitting the high income, but don't think I can last another 12 months.


How the heck did you manage to save so much? Granted, I'm in an extremely high cost area, but my savings rate is around 80K a year and I live pretty modestly (don't really purchase clothes/electronics; only go out for drinks around once or twice a month; live with my girlfriend in a two bedroom).

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Re: How much money saved before you'd bounce from biglaw?

Postby wishywashy » Wed Jan 22, 2020 7:52 am

ohsaycanyousee wrote:
Anonymous User wrote:Have about 400k right now between my 401k and taxable accounts, 30 years old, single, no debt, third year big law associate.

When I started the big law gig in 2017 i did a cash flow projection from what my income was from when i quit my pre-lawschool job in the summer of 2014 to what it would have been to this day (netting out all income I made while in law school from SAs, internships, tutoring, etc. and ignoring COL costs and ignoring any potential investment gains I would have made in those years if I actually worked and saved money, i.e. only considering gross W2 income etc.), and I saw I broke even for the "opportunity cost" of having gone to law school, from a financial perspective, at some point this year. So this is the year I'm going to quit and find something with a better work like balance. I paid $0 for law school but if I did pay, would've taken way longer to break even. Law school is not a smart financial decision if you're making even a decently average income pre-law school. Would have been cool to hit a net worth of $500k before quitting the high income, but don't think I can last another 12 months.


How the heck did you manage to save so much? Granted, I'm in an extremely high cost area, but my savings rate is around 80K a year and I live pretty modestly (don't really purchase clothes/electronics; only go out for drinks around once or twice a month; live with my girlfriend in a two bedroom).


They said "have about 400k right now between 401k and taxable accounts" and market is up what in the last 3 years? Google says S&P did 22% in 2017, 2018 -4% and 2019 30.43%. I assume that 400K is pretax $$$ in + after tax $ in + market returns on both for those 3 years. That is probably how they got there. Some quick napkin math says if you put in 80K a year for each of those 3 years you should have around $330k with gains. If they put around $100k a year in then the same napkin math spits out a little over $400k so it makes sense. I would guess they are living on about $2k/mo or more if they had little or no student loans (figure 20k of the $100k every year was pre-tax money, that means saving $80k post tax means saving $3k per pay check or about $6k per month).

Again its all napkin math and doesn't account for dividends re-invested etc. but it seems doable especially with the yearly raises and Cravath scale bonuses figured in.

Seriously? What are you waiting for?

Now there's a charge.
Just kidding ... it's still FREE!




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