Cost of 1-year clerkship v. straight to big law Forum

[echooo23]

I have an SA lined up in one of NY/DC/Chi/SF/LA, and am considering a flyover state district court clerkship (with bonus). I have tons of debt and I really just want to get to working, but I do want to keep the AUSA door open for the future. What it comes down to is cost.

Can someone who's done the math before tell me how much is left on the table when taking a year off to do a clerkship instead of going straight to work?

[yuzu]

This depends on your bonus amount, the pay scale for the city you'll be clerking in (see JSP-11 step 1), the state tax in the state where you'd be clerking, the state tax in the state where you'd be working, the cost of living in each city, etc.

If you want something quick and dirty: it's ~160k biglaw salary vs. ~58k salary + $35k bonus. The difference is $67k, or maybe $45k after taxes, and maybe you save $10k in rent and other cost-of-living differences, so your cost is $35k in after-tax dollars. But that's really back-of-the-envelope math, and you should get firmer numbers if you're making decisions based on this. Ask your firm specifically what their clerkship bonus policy is - some generous firms pay $50k for any clerkship, and some firms are much less generous.

Other things to consider: moving expenses (firms often reimburse moving expenses but the court won't), healthcare (I think you pay a portion of healthcare costs as a clerk), having a car (if you would have otherwise taken public transit in NY for example), bar expenses (though your firm may still reimburse them), any bonus you might have been paid as a first-year associate, etc.

[Anonymous User]

I thought $50k was the prevailing market bonus in the markets OP listed . . .

[Anonymous User]

If you want something quick and dirty: it's ~160k biglaw salary vs. ~58k salary + $35k bonus. The difference is $67k, or maybe $45k after taxes, and maybe you save $10k in rent and other cost-of-living differences, so your cost is $35k in after-tax dollars. But that's really back-of-the-envelope math, and you should get firmer numbers if you're making decisions based on this. Ask your firm specifically what their clerkship bonus policy is - some generous firms pay $50k for any clerkship, and some firms are much less generous.

I am a current federal clerk who thought a bit about this before applying. Market bonus for one-year federal clerkship is $50K (obviously you need to see what your firm pays). ~58K salary is about right (I am getting paid closer to ~64 but it just depends on where you are located). So very loosely, the difference for me is $160 - $114 = $46K. If you're firm pays a stub-year bonus (which mine does not), that's also something you are off-setting for a year. Also, if your firm does not give a year seniority to clerks, that's another thing to consider (market is to give at least 1 year seniority).

Several things make this closer: (1) I currently have very low COL compared to the city I will be going (as in 600/month rent as opposed to 1800-2000/month rent). That's $15K "savings" right there. (2) I pay no state taxes. (3) Even if you have to pay state taxes, post-tax this difference will be closer. (4) On the flip side, any additional money I would have made in my biglaw job I would have put this difference into my student loans (bearing 6%+). If you would do the same, you should accordingly increase the difference of clerking by this 6%-7%.

All said, I think I am forgoing about $25K post-tax dollars this year. For me, the investment in your career make this worth it. Also, it's been an amazing job with very very mangeable hours. In my opinion, you also become a better lawyer. Finally, some suggest that clerking can prolong your biglaw career by a year. If that's true then it would pay for itself. This claim is a bit suspect but it's at least possible.

[Citizen Genet]

I thought $50k was the prevailing market bonus in the markets OP listed . . .

It really, really depends. The tippy-top firms in all of those markets will pay $50k, but good firms in those markets may still opt to go lower. For example, K&L Gates, Reed Smith, Greenberg Traurig, Norton Rose, and presumably many other V100s in those cities do not pay $50k bonuses.

Now, Sidley, Williams Connelly, Gibson Dunn, Quinn Emmanuel -- they'll pay $50k in those cities. (I assume in all of them, but I only know about a few cities.) But those firms seem to be a minority, not the lead.

$50k as a standard, prevailing clerkship bonus is a flame. One that needs to die.

[Anonymous User]

Depending on how detailed of a contrast you want, there's at least one other thing to consider. It's not like you make $58k (clerkship salary) in taxable income one year and then $160k (BigLaw salary) + $50k (clerkship bonus) the next. The breakdown by taxable year matters.

A couple of assumptions to illustrate: (1) You would start either a clerkship or BigLaw August 15. (2) Both jobs pay you every two weeks. (3) You made no money during the tax year that your clerkship starts other than once you started the clerkship (i.e., the second half of 3L). (4) You're a 3L and starting your clerkship this fall (2014). (5) No year-end bonuses, but you get a $50k clerkship bonus. Some of these not assumptions are accurate for everyone (or even for most people), but varying them doesn't change the basic point.

If you clerk...

In reality, you end up with 17 pay periods in 2014 with no income and 9 pay periods in 2014 at your semi-weekly clerkship pay rate. Total taxable income for 2014 is 58,000/26*9 = 20,076. Your effective tax rate on this is basically zero, so take home pay is 20,076.

Then, you have 17 pay periods in 2015 at your semi-weekly clerkship pay rate plus 9 pay periods at your law firm rate plus your clerkship bonus. Total taxable income for 2015 is (58,000/26*17) + (160,000/26*9) + 50,000 = 37,923 + 55,384 + 50,000 = 143,307.

Post-tax, your income is 20,076 taxed at basically zero plus 143,307 taxed at some pretty high rate.

If you don't clerk...

You end up with 17 pay periods in 2014 with no income and 9 pay periods in 2014 at your semi-weekly law firm rate. Total taxable income for 2014 is 160,000/26*9 = 55,384.

Then, you have 26 pay periods in 2015 at your semi-weekly law firm rate. Total taxable income for for 2015 is 160,000/26*26 = 160,000.

Post-tax, your income is 55,384 taxed at some moderate rate plus 160,000 taxed at some pretty high rate.

As a result, pre-tax you're looking at approx. 163,000 versus approx. 215,000. However, once you take into account the actual income per tax year and the applicable tax rate (including variations between BigLaw state versus clerkship state taxes), the difference is even smaller. Someone with more tax skills (or a tax calculator) can do the math.

[echooo23]

I thought $50k was the prevailing market bonus in the markets OP listed . . .

It really, really depends. The tippy-top firms in all of those markets will pay $50k, but good firms in those markets may still opt to go lower. For example, K&L Gates, Reed Smith, Greenberg Traurig, Norton Rose, and presumably many other V100s in those cities do not pay $50k bonuses.

Now, Sidley, Williams Connelly, Gibson Dunn, Quinn Emmanuel -- they'll pay $50k in those cities. (I assume in all of them, but I only know about a few cities.) But those firms seem to be a minority, not the lead.

$50k as a standard, prevailing clerkship bonus is a flame. One that needs to die.

How can I find out what the firm will pay short of asking them, which I think is too early since I don't have a clerkship lined up yet (and won't unless I know for sure that I will get a bonus - which illustrates current problem)?

[Citizen Genet]

I thought $50k was the prevailing market bonus in the markets OP listed . . .

It really, really depends. The tippy-top firms in all of those markets will pay $50k, but good firms in those markets may still opt to go lower. For example, K&L Gates, Reed Smith, Greenberg Traurig, Norton Rose, and presumably many other V100s in those cities do not pay $50k bonuses.

Now, Sidley, Williams Connelly, Gibson Dunn, Quinn Emmanuel -- they'll pay $50k in those cities. (I assume in all of them, but I only know about a few cities.) But those firms seem to be a minority, not the lead.

$50k as a standard, prevailing clerkship bonus is a flame. One that needs to die.

How can I find out what the firm will pay short of asking them, which I think is too early since I don't have a clerkship lined up yet (and won't unless I know for sure that I will get a bonus - which illustrates current problem)?

Attorneys at the firm who have done it. Obviously they need to be people you (1) trust enough to ask and (2) don't mind potentially offending.

[echooo23]

I thought $50k was the prevailing market bonus in the markets OP listed . . .

It really, really depends. The tippy-top firms in all of those markets will pay $50k, but good firms in those markets may still opt to go lower. For example, K&L Gates, Reed Smith, Greenberg Traurig, Norton Rose, and presumably many other V100s in those cities do not pay $50k bonuses.

Now, Sidley, Williams Connelly, Gibson Dunn, Quinn Emmanuel -- they'll pay $50k in those cities. (I assume in all of them, but I only know about a few cities.) But those firms seem to be a minority, not the lead.

$50k as a standard, prevailing clerkship bonus is a flame. One that needs to die.

How can I find out what the firm will pay short of asking them, which I think is too early since I don't have a clerkship lined up yet (and won't unless I know for sure that I will get a bonus - which illustrates current problem)?

Attorneys at the firm who have done it. Obviously they need to be people you (1) trust enough to ask and (2) don't mind potentially offending.

I don't know anyone who fits the bill. Now what?

[mx23250]

I have an SA lined up in one of NY/DC/Chi/SF/LA, and am considering a flyover state district court clerkship (with bonus). I have tons of debt and I really just want to get to working, but I do want to keep the AUSA door open for the future. What it comes down to is cost.

Can someone who's done the math before tell me how much is left on the table when taking a year off to do a clerkship instead of going straight to work?

Try to avoid using the term "flyover state", it gives a bad impression of yourself.

user outed for pointless use of anon

[Citizen Genet]

How can I find out what the firm will pay short of asking them, which I think is too early since I don't have a clerkship lined up yet (and won't unless I know for sure that I will get a bonus - which illustrates current problem)?

Attorneys at the firm who have done it. Obviously they need to be people you (1) trust enough to ask and (2) don't mind potentially offending.

I don't know anyone who fits the bill. Now what?

There's an old blog post (LMGTFY..... there we go, it's here: http://lawclerkaddict.blogspot.com/2007 ... chart.html) that has old data on what firms used to offer. Be warned that the data is old. It's from 2007, also known as the year that law firms replaced water fountains with wine spigots and only hired paralegals who had been through massage therapy school so that associates would have a stress-reliever near by. Some of those firms may have backed away from the $50k number and some may have adopted it.

Beyond that, aside from asking the firm about it, you can buy a Ouija board.

[echooo23]

I have an SA lined up in one of NY/DC/Chi/SF/LA, and am considering a flyover state district court clerkship (with bonus). I have tons of debt and I really just want to get to working, but I do want to keep the AUSA door open for the future. What it comes down to is cost.

Can someone who's done the math before tell me how much is left on the table when taking a year off to do a clerkship instead of going straight to work?

Try to avoid using the term "flyover state", it gives a bad impression of yourself.

Didn't mean to give a bad impression. Just using the terminology I've read here to indicate a district that is not on most peoples' radars. My apologies.

[echooo23]

How can I find out what the firm will pay short of asking them, which I think is too early since I don't have a clerkship lined up yet (and won't unless I know for sure that I will get a bonus - which illustrates current problem)?

Attorneys at the firm who have done it. Obviously they need to be people you (1) trust enough to ask and (2) don't mind potentially offending.

I don't know anyone who fits the bill. Now what?

There's an old blog post (LMGTFY..... there we go, it's here: http://lawclerkaddict.blogspot.com/2007 ... chart.html) that has old data on what firms used to offer. Be warned that the data is old. It's from 2007, also known as the year that law firms replaced water fountains with wine spigots and only hired paralegals who had been through massage therapy school so that associates would have a stress-reliever near by. Some of those firms may have backed away from the $50k number and some may have adopted it.

Beyond that, aside from asking the firm about it, you can buy a Ouija board.

Very helpful. Thanks!

[Citizen Genet]

There's an old blog post (LMGTFY..... there we go, it's here: http://lawclerkaddict.blogspot.com/2007 ... chart.html) that has old data on what firms used to offer. Be warned that the data is old. It's from 2007, also known as the year that law firms replaced water fountains with wine spigots and only hired paralegals who had been through massage therapy school so that associates would have a stress-reliever near by. Some of those firms may have backed away from the $50k number and some may have adopted it.

Beyond that, aside from asking the firm about it, you can buy a Ouija board.

Very helpful. Thanks!

Ouija board advice works every time.

[badaboom61]

I thought $50k was the prevailing market bonus in the markets OP listed . . .

It really, really depends. The tippy-top firms in all of those markets will pay $50k, but good firms in those markets may still opt to go lower. For example, K&L Gates, Reed Smith, Greenberg Traurig, Norton Rose, and presumably many other V100s in those cities do not pay $50k bonuses.

Now, Sidley, Williams Connelly, Gibson Dunn, Quinn Emmanuel -- they'll pay $50k in those cities. (I assume in all of them, but I only know about a few cities.) But those firms seem to be a minority, not the lead.

$50k as a standard, prevailing clerkship bonus is a flame. One that needs to die.

How can I find out what the firm will pay short of asking them, which I think is too early since I don't have a clerkship lined up yet (and won't unless I know for sure that I will get a bonus - which illustrates current problem)?

It would probably be appropriate to ask; just ask recruiting generally what their policy on clerkships. If you don't want to ask, it's probably somewhere in the range of 30-50k, and the difference shouldn't have any impact on whether you want to take a year off to clerk.

[Anonymous User]

I thought $50k was the prevailing market bonus in the markets OP listed . . .

It really, really depends. The tippy-top firms in all of those markets will pay $50k, but good firms in those markets may still opt to go lower. For example, K&L Gates, Reed Smith, Greenberg Traurig, Norton Rose, and presumably many other V100s in those cities do not pay $50k bonuses.

Now, Sidley, Williams Connelly, Gibson Dunn, Quinn Emmanuel -- they'll pay $50k in those cities. (I assume in all of them, but I only know about a few cities.) But those firms seem to be a minority, not the lead.

$50k as a standard, prevailing clerkship bonus is a flame. One that needs to die.

I don't mean to sound snobby, but I think more clerks will end up working at firms in the second group you listed than firms in the first group (and at the school I attended, you probably are not working at K&L et al. unless you got very poor grades). I am personally going to a firm in the bottom half of the V50 (picked it over one of the names in the 50k tier you cited) and am getting 50k. I don't mean to claim that some firms don't pay less than 50k, but with all due respect, your claim that 50k is a "flame" in major market biglaw is wrong.

[A. Nony Mouse]

I thought $50k was the prevailing market bonus in the markets OP listed . . .

It really, really depends. The tippy-top firms in all of those markets will pay $50k, but good firms in those markets may still opt to go lower. For example, K&L Gates, Reed Smith, Greenberg Traurig, Norton Rose, and presumably many other V100s in those cities do not pay $50k bonuses.

Now, Sidley, Williams Connelly, Gibson Dunn, Quinn Emmanuel -- they'll pay $50k in those cities. (I assume in all of them, but I only know about a few cities.) But those firms seem to be a minority, not the lead.

$50k as a standard, prevailing clerkship bonus is a flame. One that needs to die.

I don't mean to sound snobby, but I think more clerks will end up working at firms in the second group you listed than firms in the first group (and at the school I attended, you probably are not working at K&L et al. unless you got very poor grades). I am personally going to a firm in the bottom half of the V50 (picked it over one of the names in the 50k tier you cited) and am getting 50k. I don't mean to claim that some firms don't pay less than 50k, but with all due respect, your claim that 50k is a "flame" in major market biglaw is wrong.

What is your evidence for the bolded?

[bdubs]

I really just want to get to working, but I do want to keep the AUSA door open for the future

I know of several people who did biglaw for 2-4 years and then clerked before getting an AUSA gig. That might be less stressful for you financially and give you a nice transition opportunity into the AUSA role. Another plus side is also having more time and flexibility to try to get a clerkship in the location where you want to wind up.

[Anonymous User]

I thought $50k was the prevailing market bonus in the markets OP listed . . .

It really, really depends. The tippy-top firms in all of those markets will pay $50k, but good firms in those markets may still opt to go lower. For example, K&L Gates, Reed Smith, Greenberg Traurig, Norton Rose, and presumably many other V100s in those cities do not pay $50k bonuses.

Now, Sidley, Williams Connelly, Gibson Dunn, Quinn Emmanuel -- they'll pay $50k in those cities. (I assume in all of them, but I only know about a few cities.) But those firms seem to be a minority, not the lead.

$50k as a standard, prevailing clerkship bonus is a flame. One that needs to die.

I don't mean to sound snobby, but I think more clerks will end up working at firms in the second group you listed than firms in the first group (and at the school I attended, you probably are not working at K&L et al. unless you got very poor grades). I am personally going to a firm in the bottom half of the V50 (picked it over one of the names in the 50k tier you cited) and am getting 50k. I don't mean to claim that some firms don't pay less than 50k, but with all due respect, your claim that 50k is a "flame" in major market biglaw is wrong.

What is your evidence for the bolded?

My school maintains an internal database of where people do SAs. A large plurality of that group works at a V20 -- which I attribute primarily to large class sizes at those firms -- and very few work at Reed Smith, K&L, etc. Fewer still work for those firms in NYC or other major markets; if you end up at K&L, it's probably because you had a strong desire for biglaw in Pittsburgh, Charlotte, or the like. Not saying they are not good firms, just that they are not likely employment outcomes from those who clerk at my school. (And yes, I realize that outcomes may be different at other schools where fewer folks get SAs and/or clerk, but I would think that of those who clerk at those schools, most will go to higher-ranked firms or firms that otherwise pay the full 50k bonus).

[A. Nony Mouse]

Thanks. I am entirely outside the NYC/biglaw/$50K bonus bubble, so I was curious. (I have no idea which of us is more representative, I just don't think I know anyone who went to a firm that would pay a $50K bonus.)

[Anonymous User]

Thanks. I am entirely outside the NYC/biglaw/$50K bonus bubble, so I was curious. (I have no idea which of us is more representative, I just don't think I know anyone who went to a firm that would pay a $50K bonus.)

Sure, that's fair. I went to one of HYSCCN, and your mileage may vary at other schools.

[echooo23]

Thanks. I am entirely outside the NYC/biglaw/$50K bonus bubble, so I was curious. (I have no idea which of us is more representative, I just don't think I know anyone who went to a firm that would pay a $50K bonus.)

Sure, that's fair. I went to one of HYSCCN, and your mileage may vary at other schools.

OP here. Thanks, but I'm not at HYSCCN and am going to a firm in a major market but more in the 1st group than the 2nd. So it is unlikely, or at least questionable, that the bonus will be $50,000. Without asking the firm directly, but based on the limited info I could find, it appears that Citizen is right, at least as to my circumstances. And I know you didn't mean to, but your comment did come off as snobby.

[Citizen Genet]

I thought $50k was the prevailing market bonus in the markets OP listed . . .

It really, really depends. The tippy-top firms in all of those markets will pay $50k, but good firms in those markets may still opt to go lower. For example, K&L Gates, Reed Smith, Greenberg Traurig, Norton Rose, and presumably many other V100s in those cities do not pay $50k bonuses.

Now, Sidley, Williams Connelly, Gibson Dunn, Quinn Emmanuel -- they'll pay $50k in those cities. (I assume in all of them, but I only know about a few cities.) But those firms seem to be a minority, not the lead.

$50k as a standard, prevailing clerkship bonus is a flame. One that needs to die.

I don't mean to sound snobby, but I think more clerks will end up working at firms in the second group you listed than firms in the first group (and at the school I attended, you probably are not working at K&L et al. unless you got very poor grades). I am personally going to a firm in the bottom half of the V50 (picked it over one of the names in the 50k tier you cited) and am getting 50k. I don't mean to claim that some firms don't pay less than 50k, but with all due respect, your claim that 50k is a "flame" in major market biglaw is wrong.

Eh, I stand by it. And to be clear, I wasn't limiting it to "major markets;" I was talking about BigLaw everywhere. You're saying, "Well, clerks who work in those cities probably will go to the best firms in those markets. So they can expect $50k." Which is basically what I said: if you're going to a market leader in NYC, DC, Chicago, LA or SV, then you can expect $50k. But, even within those markets, there are plenty of firms that will not pay $50k who are still Vault 100 firms. And once you get outside of those markets, it is even less likely that you'll get a $50k bonus at any firm. Because of what you've noticed -- a lot of clerks go to great firms in huge markets -- a lot of 2Ls and 3Ls have the mistaken belief that $50k is just the accepted standard for a bonus. So you've got some kid who wants to work at Perkins Coie in Seattle thinking he's going to get $50k. Or, on the mistaken assumption that he can go to any reputable litigation shop in LA and get that same bonus. But it's just not the case. So "$50k as a standard, prevailing clerkship bonus" is a flame. (And one that needs to die.)

[84651846190]

TBF, getting a job at Perkins Coie Seattle is a lot harder than getting a job at some firms in the V20, especially as a lateral/post-clerkship candidate.

[legalese_retard]

Depending on how detailed of a contrast you want, there's at least one other thing to consider. It's not like you make $58k (clerkship salary) in taxable income one year and then $160k (BigLaw salary) + $50k (clerkship bonus) the next. The breakdown by taxable year matters.

A couple of assumptions to illustrate: (1) You would start either a clerkship or BigLaw August 15. (2) Both jobs pay you every two weeks. (3) You made no money during the tax year that your clerkship starts other than once you started the clerkship (i.e., the second half of 3L). (4) You're a 3L and starting your clerkship this fall (2014). (5) No year-end bonuses, but you get a $50k clerkship bonus. Some of these not assumptions are accurate for everyone (or even for most people), but varying them doesn't change the basic point.

If you clerk...

In reality, you end up with 17 pay periods in 2014 with no income and 9 pay periods in 2014 at your semi-weekly clerkship pay rate. Total taxable income for 2014 is 58,000/26*9 = 20,076. Your effective tax rate on this is basically zero, so take home pay is 20,076.

Then, you have 17 pay periods in 2015 at your semi-weekly clerkship pay rate plus 9 pay periods at your law firm rate plus your clerkship bonus. Total taxable income for 2015 is (58,000/26*17) + (160,000/26*9) + 50,000 = 37,923 + 55,384 + 50,000 = 143,307.

Post-tax, your income is 20,076 taxed at basically zero plus 143,307 taxed at some pretty high rate.

If you don't clerk...

You end up with 17 pay periods in 2014 with no income and 9 pay periods in 2014 at your semi-weekly law firm rate. Total taxable income for 2014 is 160,000/26*9 = 55,384.

Then, you have 26 pay periods in 2015 at your semi-weekly law firm rate. Total taxable income for for 2015 is 160,000/26*26 = 160,000.

Post-tax, your income is 55,384 taxed at some moderate rate plus 160,000 taxed at some pretty high rate.

As a result, pre-tax you're looking at approx. 163,000 versus approx. 215,000. However, once you take into account the actual income per tax year and the applicable tax rate (including variations between BigLaw state versus clerkship state taxes), the difference is even smaller. Someone with more tax skills (or a tax calculator) can do the math.

Also, since you have tons of debt (that I assume includes student loans), you can also deduct some of the interest you are paying (up to $2,500/year). I don't remember the salary levels vs. the deductible amounts, but once you pass the $75K/year threshold, none of that interest is deductible.