Getting Rich as a Big Law Lawyer Forum

[Sackboy]

If you're going to do REITs, keep them in tax advantaged accounts. No reason to be paying taxes on dividends if you don't need to.

[Anonymous User]

I felt stretched managing rent and servicing loans for my first three years of biglaw. No idea how anyone miraculously has extra funds to “invest” in any real estate, let alone multiple properties. Biglaw only starts to pay out with real savings in years 5 and 6, and most people are out by then. Don’t count on the recent special bonuses to set the market moving forward.

Notions of saving / investing significantly as a junior associate are predicated on inherited wealth. That’s just another “how to capitalize on being born rich” thread.

You make gobs of money. You have plenty to invest.

C/O 2011, started with about 200k in debt, had a significant amount saved (and loans paid off) by the time I was no longer a junior associate--just doing index funds, no bitcoin, individual stocks, etc. Suffice to say, I had no financial resources from the family. My spouse doesn't work. I was too early for student loan refinancing so my loans were a lot worse than loans are today. Etc.

Biglaw folks now make a shit-ton more than I did coming up. The debt is higher too. So that about balances out, probably. The idea that ANY biglaw associate can't save significant amounts is silly. You just have to live a lifestyle that works with that.

I do think budgeting, or at least keeping track of spend, when you're younger, does help. It will crystalize what you're spending money on and that gives you a tool to cut back if you're overspending on something (eating out/drinking/etc. being a big one for lawyers).

I echo what everyone else here has said that trying to fit a real estate side gig into a biglaw schedule just seems crazy. We have so, so little free time.

[Anonymous User]

I felt stretched managing rent and servicing loans for my first three years of biglaw. No idea how anyone miraculously has extra funds to “invest” in any real estate, let alone multiple properties. Biglaw only starts to pay out with real savings in years 5 and 6, and most people are out by then. Don’t count on the recent special bonuses to set the market moving forward.

Notions of saving / investing significantly as a junior associate are predicated on inherited wealth. That’s just another “how to capitalize on being born rich” thread.

You make gobs of money. You have plenty to invest.

C/O 2011, started with about 200k in debt, had a significant amount saved (and loans paid off) by the time I was no longer a junior associate--just doing index funds, no bitcoin, individual stocks, etc. Suffice to say, I had no financial resources from the family. My spouse doesn't work. I was too early for student loan refinancing so my loans were a lot worse than loans are today. Etc.

Biglaw folks now make a shit-ton more than I did coming up. The debt is higher too. So that about balances out, probably. The idea that ANY biglaw associate can't save significant amounts is silly. You just have to live a lifestyle that works with that.

I do think budgeting, or at least keeping track of spend, when you're younger, does help. It will crystalize what you're spending money on and that gives you a tool to cut back if you're overspending on something (eating out/drinking/etc. being a big one for lawyers).

I echo what everyone else here has said that trying to fit a real estate side gig into a biglaw schedule just seems crazy. We have so, so little free time.

I'm also class of 2011 with low six figures of debt and no family help post-law school, and also have a couple million bucks saved up just from my biglaw days (and dumping every excess dollar into index funds). I didn't live particularly frugally -- I tried to not go crazy with rent, but I went out every single Friday and Saturday night that I wasn't working (and various times during the week when work allowed), went on vacations, went to shows/concerts/sporting events, and generally had fun. As long as you're not buying a new Chanel purse or Cucinelli sweater every month it's a piece of cake to invest a ton of money.

[ClubberLang]

If you're going to do REITs, keep them in tax advantaged accounts. No reason to be paying taxes on dividends if you don't need to.

What kind of tax advantaged account would you recommend somebody looking to make approximately a biglaw salary as passive income use?

[Anonymous User]

Yeah I mean look at any compound interest calculator. I’ll echo what others are saying. There just isn’t enough time to do anything but work, and I wouldn’t want to spend my limited free time managing real estate.

Budgeting works for some and not for others, but the one thing it has been really helpful for in my experience, is helping you avoid lifestyle creep. When I get the annual biglaw increase, it’s much easier to throw it into savings each month if I’m following my budget and keeping my expenses the same.

I entered biglaw from a non legal job, with about 60k remaining in loans. After 2 years, I now have about 100k in cash, and another 100k in investments (non retirement). I save about half my after tax income in a high COL city. I’m not particularly frugal but I keep my fixed costs low. I definitely go out to eat and go on trips but my rent is pretty cheap and I don’t have a car. A few years of aggressive savings can really set you up for success later.

[Anonymous User]

If you're going to do REITs, keep them in tax advantaged accounts. No reason to be paying taxes on dividends if you don't need to.

What kind of tax advantaged account would you recommend somebody looking to make approximately a biglaw salary as passive income use?

It’s going to be your IRA or 401k.

[Anonymous User]

As somebody just starting out, I’m jealous of the ridiculous bull market of the past 10 years. Who know what’s in store in the next 5-10 years but y’all (c/o 2011) had it pretty good.

[Anonymous User]

As somebody just starting out, I’m jealous of the ridiculous bull market of the past 10 years. Who know what’s in store in the next 5-10 years but y’all (c/o 2011) had it pretty good.

lol yeah, except for the hiring market (less than 50% of my MVP class got biglaw) and the salary/bonus scale, sure.

[Anonymous User]

As somebody just starting out, I’m jealous of the ridiculous bull market of the past 10 years. Who know what’s in store in the next 5-10 years but y’all (c/o 2011) had it pretty good.

Yes and no. I'm the the c/o 2011 anon from above that started out with 200k in debt.

Set aside the fact that c/o 2011 had one of the worst job markets in history (keep in mind, we were doing our summer associate interviews in 2009--middle of the financial crisis--we aren't the class that got Lathamed, but basically every firm cut their summer associate class by more than half for our year, lots of summer associates got no offered, etc.). Obviously not relevant to those of us that were lucky enough to get through--though we grew up in a different way, constantly fearful for our jobs. So I'll give you that.

Comp in general was just less for us. Our bonuses were less. Our base was less. There weren't lateral bonuses of the same kind. There were no retention bonuses. There were no mid-year bonuses.

We did not have the private student loan financing companies. Those really got rolling in 2013 or so--I personally was too far along in repayment to justify using them. So a LOT of us were out of the market for a significant amount of the bull run, since our loans were at 6.8/8.1%.

Some of us (not me, unfortunately) did invest in Bitcoin. They obviously did super well and I envy their yolo-ism, but, that is what it is.

Just very different times but I'd emphasize that c/o 2011 folks did not have the income available to take advantage of the market if they were doing what was the obvious play at the time, i.e., paying off loans. Now, I and others that paid off loans and then got into the market with aggression have done pretty well. I made the mistake (only in hindsight) of prioritizing a home purchase, but that's my own fault. Still, I was well over $1M saved (including net house value) by the time I really had to make a call on whether I'd stay in biglaw when I was a midlevel.

[Anonymous User]

As somebody just starting out, I’m jealous of the ridiculous bull market of the past 10 years. Who know what’s in store in the next 5-10 years but y’all (c/o 2011) had it pretty good.

Yes and no. I'm the the c/o 2011 anon from above that started out with 200k in debt.

Set aside the fact that c/o 2011 had one of the worst job markets in history (keep in mind, we were doing our summer associate interviews in 2009--middle of the financial crisis--we aren't the class that got Lathamed, but basically every firm cut their summer associate class by more than half for our year, lots of summer associates got no offered, etc.). Obviously not relevant to those of us that were lucky enough to get through--though we grew up in a different way, constantly fearful for our jobs. So I'll give you that.

Comp in general was just less for us. Our bonuses were less. Our base was less. There weren't lateral bonuses of the same kind. There were no retention bonuses. There were no mid-year bonuses.

We did not have the private student loan financing companies. Those really got rolling in 2013 or so--I personally was too far along in repayment to justify using them. So a LOT of us were out of the market for a significant amount of the bull run, since our loans were at 6.8/8.1%.

Some of us (not me, unfortunately) did invest in Bitcoin. They obviously did super well and I envy their yolo-ism, but, that is what it is.

Just very different times but I'd emphasize that c/o 2011 folks did not have the income available to take advantage of the market if they were doing what was the obvious play at the time, i.e., paying off loans. Now, I and others that paid off loans and then got into the market with aggression have done pretty well. I made the mistake (only in hindsight) of prioritizing a home purchase, but that's my own fault. Still, I was well over $1M saved (including net house value) by the time I really had to make a call on whether I'd stay in biglaw when I was a midlevel.

Echoing this - when I started as a first year in 2012 my firm hadn't even reset the comp amounts from the recession cuts, so my big law firm was paying first years $145k, and wasn't paying bonuses unless you were an extremely high biller. Debt may have been lower for some folks, but it was a brutal market to get a job (the summer classes for summer 2011 were a lot smaller than prior years, and people flocked to law school during the recession to ride it out) so landing at a top tier big law firm was pretty hard (I'm sure it's also hard now - not trying to imply I walked to school uphill both ways in the snow or anything!). If you had any debt (which I did) it took time to pay that off, so we couldn't take advantage and buy into the market when it was super low. Obviously if you stick around for 9 years in big law you can do quite well for yourself but it's not like we had $50k in bonuses in 2012 that we could throw at student loans or invest in the market (the bonuses for second years in 2012 were like, $14k max).

[Anonymous User]

Original c/o 2011 200k debt person from above.

I will say, the fear of growing up the way we did in terms of the job, and the relative slim-ness of our starting biglaw class, did mean that partnership was maybe more of a real possibility for the members of c/o 2011 that actually survived. I made it (and never expected to when I was a more junior associate), so I'm in something of a different position than the premise of the original post. My savings to date are now basically irrelevant in the grand scheme of things, etc.

But I will say, I seriously encourage people to take charge of their finances and do the biglaw lawyer equivalent of "living like a resident" for a few years. Having FU money makes biglaw life better regardless of whether you go for partner or not (or make it or not). I never coasted but I sure did feel better enabled to take professional risks, aggressively craft my practice in a way that I felt better with (there's no avoiding the crazy hours etc. but I was able to "find my place" in a way that people more worried about money can't), etc. The only downside to it is that you have to live more frugally than your peers. I felt that frugality, for sure. In some ways I don't even necessarily know what I missed out on. And I'm going to enjoy engaging in some lifestyle inflation over the next couple of years that other people in my class engaged in years ago. But, all in all, 10/10 highly recommend making sure you get your loans paid off and have at least $1M in the bank by your midlevel years. And for god's sake pay off your student loans asap so that you have the flexibility to leave biglaw if you want to--even with student loan refinancing, I feel like you have to pay them off before you can feel comfortable leaving biglaw paychecks behind.

[Sackboy]

As somebody just starting out, I’m jealous of the ridiculous bull market of the past 10 years. Who know what’s in store in the next 5-10 years but y’all (c/o 2011) had it pretty good.

lol yeah, except for the hiring market (less than 50% of my MVP class got biglaw) and the salary/bonus scale, sure.

The last part is pretty much flame. Salary has gone up, but it hasn't been much, if any, higher than inflation.

[Bosque]

As somebody just starting out, I’m jealous of the ridiculous bull market of the past 10 years. Who know what’s in store in the next 5-10 years but y’all (c/o 2011) had it pretty good.

lol yeah, except for the hiring market (less than 50% of my MVP class got biglaw) and the salary/bonus scale, sure.

The last part is pretty much flame. Salary has gone up, but it hasn't been much, if any, higher than inflation.

Not sure what numbers you are looking at, but yeah it has. 2013, inflation adjusted total comp for first years was just under 200k, 8th years just under 400k. 2019 (so not even looking at the special bonus years) it was 220k for first years, 470k for eight years. That’s about 10% after accounting for inflation.

And that’s the “market,” I’d also say there are a ton more firms that pay “market” now than there were 8-10 years ago. Much better chance back in the early 10s you would have a regionally adjusted salary if you were not in a big city market.

[uncle_rico]

I’m sure I’ll get flamed for this but you should be investing in digital assets as part of your investment strategy. You can very well increase your average yearly returns from the standard 9% to 12% or even 15% (at least over the next 10 years) just by ensuring you are allocating a portion to digital assets. Compounded that will lead to significant returns over time.

I understand that there is inherent risk in this space but you simply won’t get rich without risk (other than slaving away and hitting the partner “jackpot”). Invest in “blue chip” assets and the more you research, you will find that you are still on the earlier side of adoption.

[The Lsat Airbender]

You can very well increase your average yearly returns from the standard 9% to 12% or even 15% (at least over the next 10 years) just by ensuring you are allocating a portion to digital assets.

Claiming to know how any asset class will perform over the next 10 years is facially idiotic. (Let alone an asset class that has only existed for roughly 10 years.)

[Anonymous User]

I’m sure I’ll get flamed for this but you should be investing in digital assets as part of your investment strategy. You can very well increase your average yearly returns from the standard 9% to 12% or even 15% (at least over the next 10 years) just by ensuring you are allocating a portion to digital assets. Compounded that will lead to significant returns over time.

I understand that there is inherent risk in this space but you simply won’t get rich without risk (other than slaving away and hitting the partner “jackpot”). Invest in “blue chip” assets and the more you research, you will find that you are still on the earlier side of adoption.

lmao what on earth is a digital asset? How is your Top Shot portfolio doing? (I've made 20x returns on crypto and I still think it's an absolute scam.)

[Anonymous User]

As somebody just starting out, I’m jealous of the ridiculous bull market of the past 10 years. Who know what’s in store in the next 5-10 years but y’all (c/o 2011) had it pretty good.

lol yeah, except for the hiring market (less than 50% of my MVP class got biglaw) and the salary/bonus scale, sure.

The last part is pretty much flame. Salary has gone up, but it hasn't been much, if any, higher than inflation.

Not sure what numbers you are looking at, but yeah it has. 2013, inflation adjusted total comp for first years was just under 200k, 8th years just under 400k. 2019 (so not even looking at the special bonus years) it was 220k for first years, 470k for eight years. That’s about 10% after accounting for inflation.

And that’s the “market,” I’d also say there are a ton more firms that pay “market” now than there were 8-10 years ago. Much better chance back in the early 10s you would have a regionally adjusted salary if you were not in a big city market.

To add to this, much of the increase has been backloaded. And the increase over inflation is even more if you look at the C/O 2011 folks. The BigLaw investor webpage actually has great information about this; I look at it when I want to be depressed about coming out as a c/o 2011 person;) https://www.biglawinvestor.com/biglaw-salary-scale/

[Anonymous User]

The C/O 2011 folks who weren't culled in the market are the boomers of biglaw. Born at the right time to reap absolutely the most insane equities bull market ever and then flexxing about it while simultaneously pretending like it's just a normal outcome.

[Anonymous User]

I felt stretched managing rent and servicing loans for my first three years of biglaw. No idea how anyone miraculously has extra funds to “invest” in any real estate, let alone multiple properties. Biglaw only starts to pay out with real savings in years 5 and 6, and most people are out by then. Don’t count on the recent special bonuses to set the market moving forward.

Notions of saving / investing significantly as a junior associate are predicated on inherited wealth. That’s just another “how to capitalize on being born rich” thread.

Hmm, I don't think this is completely true. I think investing in real estate might be a push (I don't see myself buying any real estate, even for myself, any time soon), but I am getting paid market, currently pay about $3,000 for rent a month (recently had a partner move in, which helps on this front) and after 2 years in Biglaw have about $100k saved up and about $100k in investments with $100k in debt. Planning to pay off my debt in full in February, bring my investments up to about $200k by end of 2022 and looking to either do one more year of Biglaw thereafter or get out. Grew up poor in a single parent household and paid my own way through school.

I call flame. This is mathematically impossible unless you haven’t paid any taxes or spent any money in two years and had preexisting savings. Market pay after tax in years 1 and 2 generated $120-130k net income; after paying $3k in rent and serving loans (another $3k at least), you would have at most $60k left over per year, before spending any other money. Let’s assume you are an extremely conservative spender and don’t travel or go out much and cook at home, ect.: spending $2k a month, you’re saving at most $40,000 in year 1 and $50,000 in year two. If you live in a high COL city (where most BL is) and lead a normal social life, you’re spending a lot more, and saving a lot less.

On this math, I don’t see how one could possibly reach $200k in combined savings/investments.

[Anonymous User]

I felt stretched managing rent and servicing loans for my first three years of biglaw. No idea how anyone miraculously has extra funds to “invest” in any real estate, let alone multiple properties. Biglaw only starts to pay out with real savings in years 5 and 6, and most people are out by then. Don’t count on the recent special bonuses to set the market moving forward.

Notions of saving / investing significantly as a junior associate are predicated on inherited wealth. That’s just another “how to capitalize on being born rich” thread.

Hmm, I don't think this is completely true. I think investing in real estate might be a push (I don't see myself buying any real estate, even for myself, any time soon), but I am getting paid market, currently pay about $3,000 for rent a month (recently had a partner move in, which helps on this front) and after 2 years in Biglaw have about $100k saved up and about $100k in investments with $100k in debt. Planning to pay off my debt in full in February, bring my investments up to about $200k by end of 2022 and looking to either do one more year of Biglaw thereafter or get out. Grew up poor in a single parent household and paid my own way through school.

I call flame. This is mathematically impossible unless you haven’t paid any taxes or spent any money in two years and had preexisting savings. Market pay after tax in years 1 and 2 generated $120-130k net income; after paying $3k in rent and serving loans (another $3k at least), you would have at most $60k left over per year, before spending any other money. Let’s assume you are an extremely conservative spender and don’t travel or go out much and cook at home, ect.: spending $2k a month, you’re saving at most $40,000 in year 1 and $50,000 in year two. If you live in a high COL city (where most BL is) and lead a normal social life, you’re spending a lot more, and saving a lot less.

On this math, I don’t see how one could possibly reach $200k in combined savings/investments.

not the OP, but I am assuming the answer is : crazy market returns/meme stocks/crypto etc. I think someone here said they have "a few million dollars" as a senior/mid and also there was a thread where every other person in their 4/5/6th year had a net worth of over a million.

Just to echo the post right before you, equity markets have been just crazy the past 10 years and if you were invested (even in just the index or if you stroke gold with one of these individual stocks/crypto) then you made a shit load of money and your net worth isn't going to make sense just looking at biglaw income.

[Anonymous User]

I’m an incoming sixth year associate and no one I know my year or below, not a single one, has a net worth of a million dollars from biglaw alone, or even from casual index buying from only their biglaw salary. And I’m close enough with a good number of law school friends and colleagues for that information to be shared. The only people I know with that level of assets as a mid-level associate were independently wealthy or, as the other poster said, “struck gold” on a crypto or meme stock asset. And those cases are extremely rare—do some investment guidance reading.

Anyone reading this thinking about law school or large firms should understand how unrepresentative this TLS sampling truly is.

[Anonymous User]

The C/O 2011 folks who weren't culled in the market are the boomers of biglaw. Born at the right time to reap absolutely the most insane equities bull market ever and then flexxing about it while simultaneously pretending like it's just a normal outcome.

Except not really, for the reasons noted above. We missed a decent chunk of it to paying off loans (in hindsight a bad choice but, I’m sorry, no one was actually recommending that people not pay off the 6.8%\8.1% loans we had, which were pre-private refinancing), those of us that bought houses missed out on more. Markets have treated as well, yes, but yeah. Way, way less than half of my NW is attributable to market gains. The significant majority of it is savings, despite the meaningfully lower income (even adjusted for inflation) we had. Again, the big exception being people that jumped into crypto or certain individual stocks.

The only boomer-like quality we had was, potentially, marginally better partnership prospects because our class was thinner. But that was a marginal benefit.

[Anonymous User]

2017 grad here.

I know a two 2017 grads who are close to 1mm, both are in Texas at market paying firms who (i) were on full rides to our school and (ii) spend basically no money. No meme stock investing, but levered index fund investing (SSO) and one bought a house pre-housing rush. At 400k comp, they probably took home c. 40k more than a NYC biglaw associate + saved 18k more or so in rent.

For reference one of them I know for a fact saved 100k off his salary his first year.

I've moved four times to different cities (NYC now), am on a sub-biglaw scale and expect to hit around 500k when my bonuses in Q1. I'm likely right around par for the course. Had limited debt as well due to working / aggressive scholarship money.

[Anonymous User]

I call flame. This is mathematically impossible unless you haven’t paid any taxes or spent any money in two years and had preexisting savings. Market pay after tax in years 1 and 2 generated $120-130k net income; after paying $3k in rent and serving loans (another $3k at least), you would have at most $60k left over per year, before spending any other money. Let’s assume you are an extremely conservative spender and don’t travel or go out much and cook at home, ect.: spending $2k a month, you’re saving at most $40,000 in year 1 and $50,000 in year two. If you live in a high COL city (where most BL is) and lead a normal social life, you’re spending a lot more, and saving a lot less.

On this math, I don’t see how one could possibly reach $200k in combined savings/investments.

$3k in rent and $2k a month in expenditures is “conservative”? I have never spent those in my entire life, even when living “liberally.”

How on earth do you manage to rack up a $2k/month bill? That is insane to me even in NY/DC, both of which I have lived in.

We clearly have very different senses of “conservative.”

[Anonymous User]

I call flame. This is mathematically impossible unless you haven’t paid any taxes or spent any money in two years and had preexisting savings. Market pay after tax in years 1 and 2 generated $120-130k net income; after paying $3k in rent and serving loans (another $3k at least), you would have at most $60k left over per year, before spending any other money. Let’s assume you are an extremely conservative spender and don’t travel or go out much and cook at home, ect.: spending $2k a month, you’re saving at most $40,000 in year 1 and $50,000 in year two. If you live in a high COL city (where most BL is) and lead a normal social life, you’re spending a lot more, and saving a lot less.

On this math, I don’t see how one could possibly reach $200k in combined savings/investments.

$3k in rent and $2k a month in expenditures is “conservative”? I have never spent those in my entire life, even when living “liberally.”

How on earth do you manage to rack up a $2k/month bill? That is insane to me even in NY/DC, both of which I have lived in.

We clearly have very different senses of “conservative.”

Lol, ok.

The poster who alleged $200k saved over two years said he or she paid $3k/month in rent, so I used that number as a default. You can get studios for less for sure, and rent outside NYC/SF is easier, but most biglaw attorneys choose to spend that much or more on rent for convenience. I’m going to assume that $3k includes utilities, WiFi, ect. for the below, and it typically wouldn’t.

If you manage to spend less than $2k a month in those cities (prepandemic — obviously during quarantine life was a lot cheaper), you’re living under a rock.

How to hit $2k a month in NYC? Incredibly easily:

$200 - gym
$120 - subway pass
$1200 - going out to dinner/drinks twice a week, assuming cooking at home or seamless from the office the rest of the time ($150/night twice a week for four weeks). This does not include ubers/cabs, cover fees, ect., and obviously excludes high end dining / Michelin star restaurants
$800 - groceries / standard household items
$100 - clothes / dry cleaning

That’s $2,420 a month NOT INCLUDING gifts, plane tickets and lodgings for weddings and bach parties, visiting family, vacation, any nice purchases or hobbies (cameras, athletic wear, speakers, whatever), and assuming only two nights a week out, which probably isn’t representative for many folks in their late 20s.

Also this is for men. For women, there are a host of other unavoidable expenses.