Which Biglaw Firms Have The Biggest And Best 401(k) Plans?

One firm -- guess which one -- has a plan with an average account balance of $2.1 million.

senior citizen old woman money cash bonusIf you’re a Biglaw associate, what should you do with that nice bonus check? It’s okay to drop some cash on holiday shopping, and you should also share your bounty with the less fortunate.

But you would also be well advised to put some of your bonus money toward retirement saving. Millions of Americans — including lawyers, and even Biglaw partnersdon’t have enough saved for retirement.

If your firm offers a 401(k) plan, you should try your best to “max out,” i.e., contribute as much as you legally can. If you’re lucky enough to have an employer who matches your contributions up to a point, you should definitely get all the matching money on the table.

And make no mistake, some Biglaw firms have very big 401(k) plans. From Big Law Business (via Morning Docket):

The 401(k) plan at Latham & Watkins LLP is the largest plan among the nation’s 50 top-grossing law firms, according to Bloomberg BNA’s analysis.

Latham’s plan has more than $1.2 billion in assets and 4,899 active participants. The second place in terms of plan size goes to Kirkland & Ellis LLP. The firm’s retirement plan has more than $941 million in assets and 4,155 participants.

You can check out the complete top 10 over at Big Law Biz.

That’s a ranking by total assets. Which plans have the largest average accounts? The top plan shouldn’t come as a huge surprise:

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In terms of the size of the individual account balances, employees at Cravath Swaine & Moore LLP have some of the largest 401(k) accounts in the legal industry. The almost 200-year-old firm has one retirement plan in which its 133 participants, mainly partners and selected employees, enjoy an average account of $2.1 million, according to the firm’s latest annual report.

Based on the high average balance and fairly low number of participants, I’m guessing that associates are in a separate plan. (Associates are able to contribute to a 401(k) plan, per Cravath’s website.)

The second-ranked firm by average balance limits its plan to partners and certain counsel:

O’Melveny & Myers LLP also has a profit-sharing plan in which its 227 participants — partners and eligible counsel attorneys — have accumulated an average balance of $1.1 million in their accounts.

Retirement plans at Debevoise & Plimpton LLP, Shearman & Sterling LLP, Cleary Gottlieb Steen & Hamilton LLP, Millbank Tweed Hadley & McCloy LLP, Simpson Thacher & Bartlett LLP and Davis Polk & Wardwell LLP follow closely behind. These firms have plans in which average accounts per participant range from $467,299 to $865,353.

Without knowing more, it’s hard to make “apples to apples” comparisons of these plans. As Big Law Business notes, there’s a lot of variation. Some firms have a single plan for all employees, while others have separate plans for different groups. The plans have different features and investment options. And some firms also have traditional pension plans, generally for partners, that come on top of 401(k) plans.

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Working in Biglaw isn’t easy. A few years ago, a career satisfaction survey concluded that “Associate” is the unhappiest job in America (and “Partner” isn’t a bowl of cherries either). But there’s no denying that practicing law at the highest levels comes with rich financial rewards.

P.S. If you’re interested in learning more about saving for retirement, tune in on December 8 at noon (EST) when personal-finance guru Michelle Singletary conducts a livechat with Professor William Birdthistle of Chicago-Kent Law School, author of  Empire of the Fund: The Way We Save Now (affiliate link).

Is Big Law Ready to Retire? Largest 401(k) Plans in the Industry [Big Law Business via Morning Docket]
Chances are your nest egg is in mutual funds. But what do you know about them? [Washington Post]

Earlier: Are You — And Your Law Firm — Ready For Retirement?
Empire Of The Fund: An Interview With William Birdthistle (Or: 4 Tips For Lawyers On Saving For Retirement)
How Will You Be Spending Your Biglaw Bonus?


DBL square headshotDavid Lat is the founder and managing editor of Above the Law and the author of Supreme Ambitions: A Novel. He previously worked as a federal prosecutor in Newark, New Jersey; a litigation associate at Wachtell, Lipton, Rosen & Katz; and a law clerk to Judge Diarmuid F. O’Scannlain of the U.S. Court of Appeals for the Ninth Circuit. You can connect with David on Twitter (@DavidLat), LinkedIn, and Facebook, and you can reach him by email at dlat@abovethelaw.com.