How much do biglaw lawyers make? Forum

[bdubs]

^^ this is a vague description of one of many, many ways it can be done. Some firms have laughably low buy-ins, but retain large chunks of the PPP every year. Some have huge buy-ins, but loan you the money to make them. Some have fixed number of partnership units, some use firm valuation, some use other methods.

I don't think I got any of the process wrong. The valuation methods and amount of money required to buy in will vary, but essentially you are buying a piece of the firm.

I don't see how the "firm" can retain a large chunk of its PPP each year without making substantive investments. Unless the firm management decides that sitting on cash is better than paying dividends. I would assume that equity partners also have some say in how the money is distributed as that money is theirs.

[Renzo]

^^ this is a vague description of one of many, many ways it can be done. Some firms have laughably low buy-ins, but retain large chunks of the PPP every year. Some have huge buy-ins, but loan you the money to make them. Some have fixed number of partnership units, some use firm valuation, some use other methods.

I don't think I got any of the process wrong. The valuation methods and amount of money required to buy in will vary, but essentially you are buying a piece of the firm.

I don't see how the "firm" can retain a large chunk of its PPP each year without making substantive investments. Unless the firm management decides that sitting on cash is better than paying dividends. I would assume that equity partners also have some say in how the money is distributed as that money is theirs.

You didn't get it wrong--you gave one of a dozen or more possible right answers. Some firms use a "corporate" form, requiring no buy-in. Some require a percentage of that individual partner's compensation. Some require a nominal amount up front, and have graduated payments over the first few years. and despite your skepticism, many firms retain some portion of the PPP every year.

The only comprehensively accurate answer is "it depends"

[AP-375]

What about going the general counsel/corporate executive route to get fabulously rich as a lawyer?
Some of those guys have got to make a ton.

[bdubs]

What about going the general counsel/corporate executive route to get fabulously rich as a lawyer?
Some of those guys have got to make a ton.

Not quite, unless you get on as GC of a start up that is wildly successful you will more than likely make far less than an equity partner at a firm. On the other hand it will be far more stable and generally less stressful.

[bdubs]

^^ this is a vague description of one of many, many ways it can be done. Some firms have laughably low buy-ins, but retain large chunks of the PPP every year. Some have huge buy-ins, but loan you the money to make them. Some have fixed number of partnership units, some use firm valuation, some use other methods.

I don't think I got any of the process wrong. The valuation methods and amount of money required to buy in will vary, but essentially you are buying a piece of the firm.

I don't see how the "firm" can retain a large chunk of its PPP each year without making substantive investments. Unless the firm management decides that sitting on cash is better than paying dividends. I would assume that equity partners also have some say in how the money is distributed as that money is theirs.

You didn't get it wrong--you gave one of a dozen or more possible right answers. Some firms use a "corporate" form, requiring no buy-in. Some require a percentage of that individual partner's compensation. Some require a nominal amount up front, and have graduated payments over the first few years. and despite your skepticism, many firms retain some portion of the PPP every year.

The only comprehensively accurate answer is "it depends"

I don't think that ruski was asking about the myriad of partnership structures that exist, I just thought he wanted a general overview of what partnership means. Non-equity partnerships are pretty simple, someone determines your comp based on some metrics of performance. Equity is where it gets more complicated but it can still be boiled down to: you buy the equity and then you get dividends in return for that investment.

[vamedic03]

^^ this is a vague description of one of many, many ways it can be done. Some firms have laughably low buy-ins, but retain large chunks of the PPP every year. Some have huge buy-ins, but loan you the money to make them. Some have fixed number of partnership units, some use firm valuation, some use other methods.

I don't think I got any of the process wrong. The valuation methods and amount of money required to buy in will vary, but essentially you are buying a piece of the firm.

I don't see how the "firm" can retain a large chunk of its PPP each year without making substantive investments. Unless the firm management decides that sitting on cash is better than paying dividends. I would assume that equity partners also have some say in how the money is distributed as that money is theirs.

1) Many reasons to save cash - perhaps for planned expansion, rainy day, etc.

2) Depending on the firm, the partnership often enables the executive committee to make all operational decisions (including compensation)

[Anonymous User]

Someone asked above what I meant when I said that lawyers do well, but not fantastically.

I mean that I think that the majority of big law partners never crack $1m.

That may sound like a fuck ton of money, let's say you have 1 kid and wish to live in ny, so that your commute is shorter and you can see your family:

A decent 2bdr apartment is, min, 2 mil and you need to pay 50 percent down or more to satisfy board rules at many coops.

So say you have a 1 million mortgage. Your savings are crushed by the 1 million down payment.

That means you're spending about $80k a year on your mortgage alone.

But in an apartment, you also have to pay your condo fee or maintenance fee, depending on if you're in a condoner coop. For a 2bdr, this will be around $1500 a month. Include utilities, and there goes another $20k a year.

Next, school. $35k for private, once you factor in all the various costs. Public would be great, but better pray your kid is smart enough for Hunter or, eventually, Stuy.

Now, let's consider retirement. Here the tax considerations get tricky, but we can make a stab at it. You're going to need to maintain your standard of living when you retire and most firms require you to withdraw from the partnership when you hit 65. That's going to require a TON of money. So you need to be saving 200k a year, and that probably understates it. And remember, no employer match and most of that is taxable income.

But wait, there's more! Do you know how much a good ppo health insurance plan costs? Try $750 a month or so.

Now let's just consider where we are so far. We haven't paid for food, or any vacations, or clothes, or any entertainment. Nor life insurance, fire insurance. We haven't considered the cost of a car, which is theoretically optional in new York but the kind of thing you'd figure a "rich" person can afford. Want your nice Audi A6? Be ready to drop well in excess of $1000 a month for insurance, lease payment, and parking.

And here's the kicker. You live in NYC, so your tax rate, aggregating state, city, and federal, is 50 percent. So for the 350k or so in expenses I just mentioned above? You've got to earn 700k to make that work. Leaving 200k for all the fun stuff, except you've got a kid who eats up a chunk of that, meaning....that as a partner making 900k in NY, your disposable income isn't that much higher than, say, a single 5th year associate.

And thee aren't too many ways out of this corundrum. Your wife wants to work? Great, but drop another 50k in child care expenses. Live in the suburbs to save on tax and housing cost and school? Well, you're going to lose 60min with your wife and kids each day, which wouldn't matter except that you work till 730 and young kids go to bed around 9 and the marginal cost of the 30 min in the evening is huge.

Now, you're definitely not poor. You're sending your kids to top schools. You have a beautiful home and a nice car. If you really want something, you can have almost anything. But you're not rich, not by NY standards when there are literally thousands of people making multiples of your salary. You're at the very very very top end of the upper middle class.

[bdubs]

Someone asked above what I meant when I said that lawyers do well, but not fantastically.

I mean that I think that the majority of big law partners never crack $1m.

That may sound like a fuck ton of money, let's say you have 1 kid and wish to live in ny, so that your commute is shorter and you can see your family:

A decent 2bdr apartment is, min, 2 mil and you need to pay 50 percent down or more to satisfy board rules at many coops.

So say you have a 1 million mortgage. Your savings are crushed by the 1 million down payment.

That means you're spending about $80k a year on your mortgage alone.

But in an apartment, you also have to pay your condo fee or maintenance fee, depending on if you're in a condoner coop. For a 2bdr, this will be around $1500 a month. Include utilities, and there goes another $20k a year.

Next, school. $35k for private, once you factor in all the various costs. Public would be great, but better pray your kid is smart enough for Hunter or, eventually, Stuy.

Now, let's consider retirement. Here the tax considerations get tricky, but we can make a stab at it. You're going to need to maintain your standard of living when you retire and most firms require you to withdraw from the partnership when you hit 65. That's going to require a TON of money. So you need to be saving 200k a year, and that probably understates it. And remember, no employer match and most of that is taxable income.

But wait, there's more! Do you know how much a good ppo health insurance plan costs? Try $750 a month or so.

Now let's just consider where we are so far. We haven't paid for food, or any vacations, or clothes, or any entertainment. Nor life insurance, fire insurance. We haven't considered the cost of a car, which is theoretically optional in new York but the kind of thing you'd figure a "rich" person can afford. Want your nice Audi A6? Be ready to drop well in excess of $1000 a month for insurance, lease payment, and parking.

And here's the kicker. You live in NYC, so your tax rate, aggregating state, city, and federal, is 50 percent. So for the 350k or so in expenses I just mentioned above? You've got to earn 700k to make that work. Leaving 200k for all the fun stuff, except you've got a kid who eats up a chunk of that, meaning....that as a partner making 900k in NY, your disposable income isn't that much higher than, say, a single 5th year associate.

And thee aren't too many ways out of this corundrum. Your wife wants to work? Great, but drop another 50k in child care expenses. Live in the suburbs to save on tax and housing cost and school? Well, you're going to lose 60min with your wife and kids each day, which wouldn't matter except that you work till 730 and young kids go to bed around 9 and the marginal cost of the 30 min in the evening is huge.

Now, you're definitely not poor. You're sending your kids to top schools. You have a beautiful home and a nice car. If you really want something, you can have almost anything. But you're not rich, not by NY standards when there are literally thousands of people making multiples of your salary. You're at the very very very top end of the upper middle class.

Sorry buddy, if you want a job that pays well over $1 million then biglaw partner might be one of your best statistical bets. Just because a lot of partners don't break this much doesn't mean it isn't an option.

If you want to make more than $1 million per year you have to be really good at whatever it is you do, law is no different. Just work hard.

[Renzo]

Anyone who thinks $1mm a year isn't rich by NYC standards is fucking deluded.

[Aqualibrium]

Anyone who thinks $1mm a year isn't rich by NYC standards is fucking deluded.

I personally don't think anyone with less than $1 million in easily liquifiable assets is "rich."

[buzzkillington]

Anyone who thinks $1mm a year isn't rich by NYC standards is fucking deluded.

Haha true. Keep in mind though that the poster you are referring to wants (and I am probably missing something):

- Manhattan condo with excessive condo fees
- Private school for kids
- Luxury vehicle
- Top of the line health insurance
- $50, 000 for child care expenses (why not just hire a personal nanny/chef for that?)

[DoubleChecks]

Someone asked above what I meant when I said that lawyers do well, but not fantastically.

I mean that I think that the majority of big law partners never crack $1m.

That may sound like a fuck ton of money, let's say you have 1 kid and wish to live in ny, so that your commute is shorter and you can see your family:

A decent 2bdr apartment is, min, 2 mil and you need to pay 50 percent down or more to satisfy board rules at many coops.

So say you have a 1 million mortgage. Your savings are crushed by the 1 million down payment.

That means you're spending about $80k a year on your mortgage alone.

But in an apartment, you also have to pay your condo fee or maintenance fee, depending on if you're in a condoner coop. For a 2bdr, this will be around $1500 a month. Include utilities, and there goes another $20k a year.

Next, school. $35k for private, once you factor in all the various costs. Public would be great, but better pray your kid is smart enough for Hunter or, eventually, Stuy.

Now, let's consider retirement. Here the tax considerations get tricky, but we can make a stab at it. You're going to need to maintain your standard of living when you retire and most firms require you to withdraw from the partnership when you hit 65. That's going to require a TON of money. So you need to be saving 200k a year, and that probably understates it. And remember, no employer match and most of that is taxable income.

But wait, there's more! Do you know how much a good ppo health insurance plan costs? Try $750 a month or so.

Now let's just consider where we are so far. We haven't paid for food, or any vacations, or clothes, or any entertainment. Nor life insurance, fire insurance. We haven't considered the cost of a car, which is theoretically optional in new York but the kind of thing you'd figure a "rich" person can afford. Want your nice Audi A6? Be ready to drop well in excess of $1000 a month for insurance, lease payment, and parking.

And here's the kicker. You live in NYC, so your tax rate, aggregating state, city, and federal, is 50 percent. So for the 350k or so in expenses I just mentioned above? You've got to earn 700k to make that work. Leaving 200k for all the fun stuff, except you've got a kid who eats up a chunk of that, meaning....that as a partner making 900k in NY, your disposable income isn't that much higher than, say, a single 5th year associate.

And thee aren't too many ways out of this corundrum. Your wife wants to work? Great, but drop another 50k in child care expenses. Live in the suburbs to save on tax and housing cost and school? Well, you're going to lose 60min with your wife and kids each day, which wouldn't matter except that you work till 730 and young kids go to bed around 9 and the marginal cost of the 30 min in the evening is huge.

Now, you're definitely not poor. You're sending your kids to top schools. You have a beautiful home and a nice car. If you really want something, you can have almost anything. But you're not rich, not by NY standards when there are literally thousands of people making multiples of your salary. You're at the very very very top end of the upper middle class.

glanced over all of that sort of anecdotal stuff (which i tend to mentally discount anyways )

there's a lot of conflicting data out there on this, BUT -- recent US census data puts top 2% median HOUSEHOLD income at $250k...meaning a lawyer that doesnt crack $1m but who is still well above $250k is already in the top 2% of earners in the US

that seemed a bit low to me and i saw a lot of conflicting evidence...so i always wondered about that one...and an even better study was done that did the breakdown by city

it had a column for top 20% and top 5%, taking into account city dynamics -- i vaguely remember Manhattan being the most expensive (no surprise here)...yet for a household of 4, the household income would "only" need to be around $750k (from what i remember) to be in the top 5%. of Manhattan. probably >5% if you take into account the rest of the country.

im pretty sure, by most (even subjective) standards, top 5-2% is closer to doing 'fantastically' than simply doing 'well'

[Bildungsroman]

Someone asked above what I meant when I said that lawyers do well, but not fantastically.

I mean that I think that the majority of big law partners never crack $1m.

That may sound like a fuck ton of money, let's say you have 1 kid and wish to live in ny, so that your commute is shorter and you can see your family:

A decent 2bdr apartment is, min, 2 mil and you need to pay 50 percent down or more to satisfy board rules at many coops.

So say you have a 1 million mortgage. Your savings are crushed by the 1 million down payment.

That means you're spending about $80k a year on your mortgage alone.

But in an apartment, you also have to pay your condo fee or maintenance fee, depending on if you're in a condoner coop. For a 2bdr, this will be around $1500 a month. Include utilities, and there goes another $20k a year.

Next, school. $35k for private, once you factor in all the various costs. Public would be great, but better pray your kid is smart enough for Hunter or, eventually, Stuy.

Now, let's consider retirement. Here the tax considerations get tricky, but we can make a stab at it. You're going to need to maintain your standard of living when you retire and most firms require you to withdraw from the partnership when you hit 65. That's going to require a TON of money. So you need to be saving 200k a year, and that probably understates it. And remember, no employer match and most of that is taxable income.

But wait, there's more! Do you know how much a good ppo health insurance plan costs? Try $750 a month or so.

Now let's just consider where we are so far. We haven't paid for food, or any vacations, or clothes, or any entertainment. Nor life insurance, fire insurance. We haven't considered the cost of a car, which is theoretically optional in new York but the kind of thing you'd figure a "rich" person can afford. Want your nice Audi A6? Be ready to drop well in excess of $1000 a month for insurance, lease payment, and parking.

And here's the kicker. You live in NYC, so your tax rate, aggregating state, city, and federal, is 50 percent. So for the 350k or so in expenses I just mentioned above? You've got to earn 700k to make that work. Leaving 200k for all the fun stuff, except you've got a kid who eats up a chunk of that, meaning....that as a partner making 900k in NY, your disposable income isn't that much higher than, say, a single 5th year associate.

And thee aren't too many ways out of this corundrum. Your wife wants to work? Great, but drop another 50k in child care expenses. Live in the suburbs to save on tax and housing cost and school? Well, you're going to lose 60min with your wife and kids each day, which wouldn't matter except that you work till 730 and young kids go to bed around 9 and the marginal cost of the 30 min in the evening is huge.

Now, you're definitely not poor. You're sending your kids to top schools. You have a beautiful home and a nice car. If you really want something, you can have almost anything. But you're not rich, not by NY standards when there are literally thousands of people making multiples of your salary. You're at the very very very top end of the upper middle class.

FTFY.

[JG Hall]

Someone asked above what I meant when I said that lawyers do well, but not fantastically.

I mean that I think that the majority of big law partners never crack $1m.

That may sound like a fuck ton of money, let's say you have 1 kid and wish to live in ny, so that your commute is shorter and you can see your family:

A decent 2bdr apartment is, min, 2 mil and you need to pay 50 percent down or more to satisfy board rules at many coops.

So say you have a 1 million mortgage. Your savings are crushed by the 1 million down payment.

That means you're spending about $80k a year on your mortgage alone.

But in an apartment, you also have to pay your condo fee or maintenance fee, depending on if you're in a condoner coop. For a 2bdr, this will be around $1500 a month. Include utilities, and there goes another $20k a year.

Next, school. $35k for private, once you factor in all the various costs. Public would be great, but better pray your kid is smart enough for Hunter or, eventually, Stuy.

Now, let's consider retirement. Here the tax considerations get tricky, but we can make a stab at it. You're going to need to maintain your standard of living when you retire and most firms require you to withdraw from the partnership when you hit 65. That's going to require a TON of money. So you need to be saving 200k a year, and that probably understates it. And remember, no employer match and most of that is taxable income.

But wait, there's more! Do you know how much a good ppo health insurance plan costs? Try $750 a month or so.

Now let's just consider where we are so far. We haven't paid for food, or any vacations, or clothes, or any entertainment. Nor life insurance, fire insurance. We haven't considered the cost of a car, which is theoretically optional in new York but the kind of thing you'd figure a "rich" person can afford. Want your nice Audi A6? Be ready to drop well in excess of $1000 a month for insurance, lease payment, and parking.

And here's the kicker. You live in NYC, so your tax rate, aggregating state, city, and federal, is 50 percent. So for the 350k or so in expenses I just mentioned above? You've got to earn 700k to make that work. Leaving 200k for all the fun stuff, except you've got a kid who eats up a chunk of that, meaning....that as a partner making 900k in NY, your disposable income isn't that much higher than, say, a single 5th year associate.

And thee aren't too many ways out of this corundrum. Your wife wants to work? Great, but drop another 50k in child care expenses. Live in the suburbs to save on tax and housing cost and school? Well, you're going to lose 60min with your wife and kids each day, which wouldn't matter except that you work till 730 and young kids go to bed around 9 and the marginal cost of the 30 min in the evening is huge.

Now, you're definitely not poor. You're sending your kids to top schools. You have a beautiful home and a nice car. If you really want something, you can have almost anything. But you're not rich, not by NY standards when there are literally thousands of people making multiples of your salary. You're at the very very very top end of the upper middle class.

lesson: don't have kids

[nealric]

Not every biglaw partner lives in Manhattan.

[vamedic03]

Not every biglaw partner lives in Manhattan.

and, not every biglaw partner wastes their money of an Audi - Rodgin Cohen drives a subaru.

[Anonymous User]

Not every biglaw partner lives in Manhattan.

and, not every biglaw partner wastes their money of an Audi - Rodgin Cohen drives a subaru.

Using Rodge Cohen as an example for anything isn't really helpful.

[Rotor]

Just for the record since the standard of "fabulously wealthy" has come into question:

When I agreed with one of the earlier posters and said I didn't think most biglaw lawyers got fabulously wealthy, I wasn't thinking Manhattan condo & an Audi A6. I was thinking along the lines of buying, maintaining & operating this:

--ImageRemoved--

For me, I'll be more than thrilled to have the condo & A6 and invites to the yacht from the fabulously wealthy client.

[ruski]

For me, I'll be more than thrilled to have the condo & A6 and invites to the yacht from the fabulously wealthy client.

really? you'll be more than thrilled to be 50 years old taking orders from a client who is barely more than half your age and 10x more successful and wealther.

[DoubleChecks]

Just for the record since the standard of "fabulously wealthy" has come into question:

When I agreed with one of the earlier posters and said I didn't think most biglaw lawyers got fabulously wealthy, I wasn't thinking Manhattan condo & an Audi A6. I was thinking along the lines of buying, maintaining & operating this:

--ImageRemoved--

For me, I'll be more than thrilled to have the condo & A6 and invites to the yacht from the fabulously wealthy client.

whoah, when did the discussion shift to fabulously wealthy? i just thought it was about doing 'well' versus doing 'fantastically' or how law partners who make it arent 'rich'...and how apparently making shy of 1m/yr is only doing well

if we're talking about being fabulously wealthy, well then i think you need to have a networth of at least 25m

for yearly income, it'd prob be more in line w/ this:
--ImageRemoved--

[Rotor]

For me, I'll be more than thrilled to have the condo & A6 and invites to the yacht from the fabulously wealthy client.

really? you'll be more than thrilled to be 50 years old taking orders from a client who is barely more than half your age and 10x more successful and wealther.

Well, considering I'll be a 5th year associate at 50 and taking orders from junior partners (not quite) half my age I'd better be huh?

I don't mind if others make or have more than me. Good for them. As long as I'm happy with my own lot, what's it matter what someone else has?

[Rotor]

whoah, when did the discussion shift to fabulously wealthy?

Sat Oct 16, 2010 7:24 pm

[ruski]

For me, I'll be more than thrilled to have the condo & A6 and invites to the yacht from the fabulously wealthy client.

really? you'll be more than thrilled to be 50 years old taking orders from a client who is barely more than half your age and 10x more successful and wealther.

Well, considering I'll be a 5th year associate at 50 and taking orders from junior partners (not quite) half my age I'd better be huh?

I don't mind if others make or have more than me. Good for them. As long as I'm happy with my own lot, what's it matter what someone else has?

i agree with you 100%. i was just saying for people who enter law just for the money they will be sadly disappointed.

[Bumi]

If you want to get fabulously wealthy as a lawyer, biglaw isn't the way to do it.

then what is the way to do it?

Create the next big thing. Start the next Google, the next Microsoft, the next Facebook. Do what they did: CREATE a need, don't just satisfy one. If you want to become fabulously wealthy before you turn 65, that is really the only way to do it.

So, the way to become fabulously wealthy as a lawyer is to become a programmer?

[IAFG]

If you want to get fabulously wealthy as a lawyer, biglaw isn't the way to do it.

then what is the way to do it?

Create the next big thing. Start the next Google, the next Microsoft, the next Facebook. Do what they did: CREATE a need, don't just satisfy one. If you want to become fabulously wealthy before you turn 65, that is really the only way to do it.

So, the way to become fabulously wealthy as a lawyer is to become a programmer?

lol @ people who were perfectly successful, respected programmers who give it up to become lawyers.