Biglaw...coming to an end?

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TTT-LS
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Re: Biglaw...coming to an end?

Postby TTT-LS » Sat Jan 16, 2010 6:03 pm

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Last edited by TTT-LS on Mon Jul 05, 2010 12:27 pm, edited 1 time in total.

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Aeon
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Re: Biglaw...coming to an end?

Postby Aeon » Sat Jan 16, 2010 6:23 pm

TTT-LS wrote:No it isn't, as long as you make sure not to read into it things it is not purporting to say. Are you alleging that the chart is factually incorrect as to top rates? If not, then it is not bunk.

Not the graph itself, but the chart's labeling identifying various periods is disingenuous.

For one, it selectively places labels identifying presidential administrations (and in any case, it's Congress that sets the levels of taxes, not the White House).
The President has veto and agenda-setting authority. The President is thus an integral part of the legislative process with respect to taxes. To argue otherwise is to show a lack of understanding as to how these things work in the real world. Of course I only spent half a decade working in Congress, so what should I know?

Don't underestimate others' levels of familiarity with the legislative process. The reality is that the President's influence in agenda-setting varies depending on which party is in control of Congress. Whereas it is true that the White House has tremendous access to the "bully pulpit," the President is bound by numerous restraints, not the least of which are political obligations to those who keep him in power. As I'm sure you know, being a Washington insider and all, there are many power currents behind the scenes that dictate policy. Do you really think that any President in modern times exercises full discretion? The President's Chief of Staff and other aides wield immense power out of the view of the public.

All things considered, the President doesn't have line-veto authority, and as I'm sure you know, Congress likes to pass large omnibus bills from time to time that can create quite the dilemma for the White House.

Moreover, it's impossible to compare the highest bracket of income taxation 50 years ago to today.
No, actually, it isn't. Marginal rates are comparable across generations, even if other things aren't. I agree that marginal rates aren't the whole picture, which seems to be your point, but they are still an important part of it.

However, what effective and relative level of income places you in various tax brackets has changed, which is what I was referring to. I can assure you that many more people fall into the highest tax bracket today than did in the immediate post-WWII era.

. . . Finally, it only looks at the federal income tax, not taking into account things like social security and Medicare withholdings, state and city income taxes, property taxes, sales taxes, etc.
This is a non sequitur. We can compare current federal taxation to past federal taxation, and the question of what 's going on at the state level in each period is basically irrelevant.

The chart was originally used here with the implication to show that these are the maximum total tax rates facing individuals in the highest tax bracket over the years. However, without addressing the numerous other taxes that we pay, many of which have been introduced at various times over the past century or so, we cannot get an accurate idea of the actual tax burden on the average "high-income" person. Not to mention that social security and Medicare withholdings are federally-mandated.

The actual average tax burden on the highest income bracket today is over 50%.

Not at the federal level, and definitely not after considering various avoidance measures that bring the effective tax rate down for high income taxpayers.

Avoidance measures are overblown. Many who end up falling into the highest tax bracket don't make millions of dollars per year and cannot afford to hire top accountants to help them ferret money away in off-shore bank accounts or develop complex plans to lower their tax burden.

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Aeon
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Re: Biglaw...coming to an end?

Postby Aeon » Sat Jan 16, 2010 6:27 pm

In any case, this debate over taxation is of no consequence to the original topic of this thread.

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TTT-LS
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Re: Biglaw...coming to an end?

Postby TTT-LS » Sat Jan 16, 2010 6:32 pm

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Last edited by TTT-LS on Mon Jul 05, 2010 12:26 pm, edited 1 time in total.

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TTT-LS
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Re: Biglaw...coming to an end?

Postby TTT-LS » Sat Jan 16, 2010 6:36 pm

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Last edited by TTT-LS on Mon Jul 05, 2010 12:26 pm, edited 1 time in total.

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Series70
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Re: Biglaw...coming to an end?

Postby Series70 » Sat Jan 16, 2010 6:38 pm

Just a bit of a check on the numbers. A close friend of mine works in Big Law here in NYC. With federal, state, and local taxes, he only takes home 55% of his salary. As for bonuses, we're talking 3k these days, if anything at all.

So let's say 163k/yr gross, which translates to $89, 650 net. At an average of 60 hrs/wk, 50 wks/yr, that's an hourly rate of $29.88 net. Not quite what a plumber or construction worker would make, but definitely more than a high-school babysitter. Factor in student loan repayments, though, and it's pretty obvious that you can't live it up right out of law school, even in Big Law. (Funny how the NY Times seems to think this is news.) I suspect it's more of a reality check for the general public, who seem to hold on to this illusion that being a doctor or a lawyer puts you on the fast-track to personal wealth.

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brickman
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Re: Biglaw...coming to an end?

Postby brickman » Sun Jan 17, 2010 10:55 am

viewtopic.php?f=23&t=103192

I'll simply note that the ribstein article is concerned not with the scale of big law, rather the reputational challenge it is experiencing as it's corporate clientele gain an increasingly sophisticated understanding of the value of the professional legal product, the rise of in house counsel, global legal services, and demand for specialized knowledge over a diverse portfolio of lawyers. Also, the availability of information via the Internet, as well as inexpensive foreign document reviewers is chipping away at the economy of scale advantage of the large law firm. It is also worth noting that the large law firm is a relatively new business model, appearing in the 1960's with 100 lawyer groups and going from there. Further, the model that most law firms are, or when big law was at it's most successful, based on was the cravath model in which firm culture and a tournament of associates was employed to build the best and brightest. Now, at many top 200 firms the cravath model has given way to lateral hiring and regional offices, culture is degradded and quality is as well. Ribstein suggests that all of these elements, and many more, will lead to a collapse of a large portion of the big law firms, and will lead to the rise of the medium sized specialized law firm. In short, read the article.

Renzo
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Re: Biglaw...coming to an end?

Postby Renzo » Sun Jan 17, 2010 11:54 am

Series70 wrote:Just a bit of a check on the numbers. A close friend of mine works in Big Law here in NYC. With federal, state, and local taxes, he only takes home 55% of his salary. As for bonuses, we're talking 3k these days, if anything at all.

So let's say 163k/yr gross, which translates to $89, 650 net. At an average of 60 hrs/wk, 50 wks/yr, that's an hourly rate of $29.88 net. Not quite what a plumber or construction worker would make, but definitely more than a high-school babysitter. Factor in student loan repayments, though, and it's pretty obvious that you can't live it up right out of law school, even in Big Law. (Funny how the NY Times seems to think this is news.) I suspect it's more of a reality check for the general public, who seem to hold on to this illusion that being a doctor or a lawyer puts you on the fast-track to personal wealth.

Yes, but you are looking at the first year lawyer's salary and comparing it to what a master carpenter would be making, after maybe 10 yrs experience. 5 years in if you're still at a firm you could be making almost double the 1st yr rate, or you might find yourself in-house or in another job with less hours for a less-than-proportionate decrease in salary.
For the lucky few who do get biglaw gigs, it is a fast-track to personal wealth. But for the majority of grads who don't, it can be ruinous.

legends159
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Re: Biglaw...coming to an end?

Postby legends159 » Sun Jan 17, 2010 11:58 am

wait wtf...55%?

He needs to get married and have a kid ASAP to claim exceptions cause that's ridiculous.




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