What were bar stipends in 2012?

[Anonymous User]

I know this varies from firm to firm. Does anyone know what WilmerHale's bar stipend was in 2012?

Additionally, if a candidate clerks for a judge, are there any firms that will pay the bar stipend when the attorney arrives as a 2nd year associate?

[thesealocust]

The market for bar stipends is roughly $10,000-$15,000 after-tax dollars.

How it works ranges from a lump-sum stipend to a combination of salary advances and reimbursable bar/moving related expenses. It's a little hard to pin down because of the variation.

One general truism is that NYC firms favor reimbursing expenses + salary advance while other markets are more likely to give a straight-up stipend. So one firm might cut you a check and you use it to buy your own bar review course, another firm might pay for the review course for you but the only cash you'll see will be in the form of an advance.

At big firms it should generously cover: moving, first months rent + deposit in a modest (but not college student level) dwelling, and bar-related costs.

The tax implications are important: salary advances are tax free, stipends are taxable income (possibly even at the bonus rate), and covered expenses (like for the bar exam) are generally also taxable income.

[09042014]

The market for bar stipends is roughly $10,000-$15,000 after-tax dollars.

How it works ranges from a lump-sum stipend to a combination of salary advances and reimbursable bar/moving related expenses. It's a little hard to pin down because of the variation.

One general truism is that NYC firms favor reimbursing expenses + salary advance while other markets are more likely to give a straight-up stipend. So one firm might cut you a check and you use it to buy your own bar review course, another firm might pay for the review course for you but the only cash you'll see will be in the form of an advance.

At big firms it should generously cover: moving, first months rent + deposit in a modest (but not college student level) dwelling, and bar-related costs.

The tax implications are important: salary advances are tax free, stipends are taxable income (possibly even at the bonus rate), and covered expenses (like for the bar exam) are generally also taxable income.

Salary advances are tax free in the way that they aren't actually giving you money, just loaning it. They are taxed when you income the income later, and pay it back. And bonuses aren't taxed at a special rate, they just withheld at a special rate.

Stipend pwns the shit out of advance. Why is NYC so shitty about this?

[glitter178]

The market for bar stipends is roughly $10,000-$15,000 after-tax dollars.

How it works ranges from a lump-sum stipend to a combination of salary advances and reimbursable bar/moving related expenses. It's a little hard to pin down because of the variation.

One general truism is that NYC firms favor reimbursing expenses + salary advance while other markets are more likely to give a straight-up stipend. So one firm might cut you a check and you use it to buy your own bar review course, another firm might pay for the review course for you but the only cash you'll see will be in the form of an advance.

At big firms it should generously cover: moving, first months rent + deposit in a modest (but not college student level) dwelling, and bar-related costs.

The tax implications are important: salary advances are tax free, stipends are taxable income (possibly even at the bonus rate), and covered expenses (like for the bar exam) are generally also taxable income.

Salary advances are tax free in the way that they aren't actually giving you money, just loaning it. They are taxed when you income the income later, and pay it back. And bonuses aren't taxed at a special rate, they just withheld at a special rate.

Stipend pwns the shit out of advance. Why is NYC so shitty about this?

maybe because the class sizes are so huge?

[09042014]

The market for bar stipends is roughly $10,000-$15,000 after-tax dollars.

How it works ranges from a lump-sum stipend to a combination of salary advances and reimbursable bar/moving related expenses. It's a little hard to pin down because of the variation.

One general truism is that NYC firms favor reimbursing expenses + salary advance while other markets are more likely to give a straight-up stipend. So one firm might cut you a check and you use it to buy your own bar review course, another firm might pay for the review course for you but the only cash you'll see will be in the form of an advance.

At big firms it should generously cover: moving, first months rent + deposit in a modest (but not college student level) dwelling, and bar-related costs.

The tax implications are important: salary advances are tax free, stipends are taxable income (possibly even at the bonus rate), and covered expenses (like for the bar exam) are generally also taxable income.

Salary advances are tax free in the way that they aren't actually giving you money, just loaning it. They are taxed when you income the income later, and pay it back. And bonuses aren't taxed at a special rate, they just withheld at a special rate.

Stipend pwns the shit out of advance. Why is NYC so shitty about this?

maybe because the class sizes are so huge?

So are the firms and their revenues. Irrelevant really.

[vanwinkle]

Why is NYC so shitty about this?

Because they can, bro.

[thesealocust]

Stipend pwns the shit out of advance. Why is NYC so shitty about this?

Well, the obvious answer is that it costs the firm substantially less. That's why I brought up the taxes: If an associate needs X dollars to take the bar and move, an advance + reimbursement firm has to come up with X dollars. A stipend firm has to come up with X / (stipend withholding rate) dollars, which if I'm not mistaken amounts to something like 40% more cash.

Running the numbers it looks like in both cases the associate's cash flow is very similar relative to their expenses. NYC housing is so much more expensive that for the firms to provide an associate with the money they need would be an even bigger outlay.

Also keep in mind that while apartment brokers are an expense often unique to NYC firms, NYC firms also often cover all or part of them via reimbursement.

Those starting in NYC at loan/reimburse firms can wind up with (substantially) more cash/liquidity prior to starting work, but between paying back the loan and the different tax treatments of the two plans associates at stipend firms clearly come out ahead on dollars and cents.

[09042014]

LOL at apartment brokers in NYC charging. The ones in Chicago will do it free.

[Old Gregg]

Also keep in mind that while apartment brokers are an expense often unique to NYC firms, NYC firms also often cover all or part of them via reimbursement.

Not if you're moving from within the city, as I imagine most incoming associates (since they hail from CLS and NYU) are doing.

[Old Gregg]

LOL at apartment brokers in NYC charging. The ones in Chicago will do it free.

That's because they're getting their fees from the owner, in which case you're still paying it because the owner just puts it in your rent payment (divided over the term of the lease, of course).

If you're working with a broker, you will always pay a fee. Doesn't matter which market you're in. Those guys don't work for free.

[09042014]

LOL at apartment brokers in NYC charging. The ones in Chicago will do it free.

That's because they're getting their fees from the owner, in which case you're still paying it because the owner just puts it in your rent payment (divided over the term of the lease, of course).

If you're working with a broker, you will always pay a fee. Doesn't matter which market you're in. Those guys don't work for free.

Business expenses aren't always passed onto the customer, often they eat up profit margins.

[Old Gregg]

LOL at apartment brokers in NYC charging. The ones in Chicago will do it free.

That's because they're getting their fees from the owner, in which case you're still paying it because the owner just puts it in your rent payment (divided over the term of the lease, of course).

If you're working with a broker, you will always pay a fee. Doesn't matter which market you're in. Those guys don't work for free.

Business expenses aren't always passed onto the customer, often they eat up profit margins.

OK, but that doesn't mean NYC is a city where brokers always pass their expenses onto a customer.

Given how shitty being a real estate broker is, I highly doubt they write off anything above a trivial number of the fees they're owed (though if anyone here is a real estate broker, please correct me), unless you're Corcoran or something, where you can hope you recoup your fees from significantly higher net-worth clients.

But yes, unless you're dealing directly with an owner, you're pretty much always going to pay a broker fee.

That doesn't make NYC any less of a shitty place, though. Even though broker fees are passed onto the customer in other markets, the customer still pays less in those markets because the fees–based on the monthly rent–are significantly lower.

But that aside, one way of mitigating the fee is to deal directly with the owner/management of an apartment you're looking at. As is with any other industry, eliminating the middle man almost always saves you money.

[Old Gregg]

The market for bar stipends is roughly $10,000-$15,000 after-tax dollars.

I'm not sure this is true. The vast majority of firms, I believe, that offer stipends (and not salary advances) offer $10,000 pre-tax. This usually comes out to around $6,400 post-tax.

[Old Gregg]

Why is NYC so shitty about this?

Because they can, bro.

It's a combination of his answer and some history. Back in the good ol' days, NYC firms justified the salary advance because they provided stub-year bonuses, where as firms that offered stipends traditionally did not provide such bonuses. In those days, the numbers tended to even out (putting aside nerds who like to jerk off over present value and all that bullshit).

Salary-advance firms are now typically providing a stub-year bonus of $2,500 (pre-tax).

So yes, NYC firms are being shitty about this because of shitty bonuses, but the motive in the first place wasn't shitty.

[09042014]

Why is NYC so shitty about this?

Because they can, bro.

It's a combination of his answer and some history. Back in the good ol' days, NYC firms justified the salary advance because they provided stub-year bonuses, where as firms that offered stipends traditionally did not provide such bonuses. In those days, the numbers tended to even out (putting aside nerds who like to jerk off over present value and all that bullshit).

Salary-advance firms are now typically providing a stub-year bonus of $2,500 (pre-tax).

So yes, NYC firms are being shitty about this because of shitty bonuses, but the motive in the first place wasn't shitty.

This makes sense, thanks.

[Anonymous User]

Also keep in mind that while apartment brokers are an expense often unique to NYC firms, NYC firms also often cover all or part of them via reimbursement.

Not if you're moving from within the city, as I imagine most incoming associates (since they hail from CLS and NYU) are doing.

Is this true even if you're an NYU/CLS student hoping to move from crappy student housing to a nicer apartment? It's obviously easier to look for housing when you're in the city already, but still brutally difficult without a broker. Will firms really not reimburse broker fees for students already in NYC?

[Anonymous User]

My firm (V10 NYC) doesn't have a carveout specifically for NYC law students, but the reimbursement information is all under the header of "relocation expenses" so I suppose it's possible they don't consider a move from NYC a "relocation" - since I personally was out of state, I never really thought about it. I'm actually not sure.

[Anonymous User]

When should we expect that sort of information to start trickling out from firms?

[JO 14]

I may have misunderstood. I was told that the firm would cover the bar review course and bar fee. To me “cover” meant they would pay the costs directly (as opposed to stipends or advances).

[09042014]

I may have misunderstood. I was told that the firm would cover the bar review course and bar fee. To me “cover” meant they would pay the costs directly (as opposed to stipends or advances).

They give you some walkin' around money too.

[RVP11]

My firm (V10 NYC) doesn't have a carveout specifically for NYC law students, but the reimbursement information is all under the header of "relocation expenses" so I suppose it's possible they don't consider a move from NYC a "relocation" - since I personally was out of state, I never really thought about it. I'm actually not sure.

CSB.

[Old Gregg]

My firm (V10 NYC) doesn't have a carveout specifically for NYC law students, but the reimbursement information is all under the header of "relocation expenses" so I suppose it's possible they don't consider a move from NYC a "relocation" - since I personally was out of state, I never really thought about it. I'm actually not sure.

It's not a "carve out." Usually just in the form of, "you are eligible for moving expenses reimbursement if you're relocating from outside a certain radius from the office."

[JO 14]

I may have misunderstood. I was told that the firm would cover the bar review course and bar fee. To me “cover” meant they would pay the costs directly (as opposed to stipends or advances).

They give you some walkin' around money too.

Thanks. Walking around $ sounds great! They mentioned “incidentals” but since I live in my SA city, I kind of blew it off. . . perhaps not my best moment!

[LawIdiot86]

I may have misunderstood. I was told that the firm would cover the bar review course and bar fee. To me “cover” meant they would pay the costs directly (as opposed to stipends or advances).

They give you some walkin' around money too.

My firm pays a "relocation allowance" only if you are relocating to the city and pays for the bar review and exam. No stipend or advance.

[Old Gregg]

Thanks. Walking around $ sounds great! They mentioned “incidentals” but since I live in my SA city, I kind of blew it off. . . perhaps not my best moment!

Now you just have to hope that it's enough money to tide you over before you start.

One V10 firm offered a salary advance of $10,000... and made their associates start in January. But no problem: Lot's of people can live off of $10,000 in borrowed money for 7 months.