Some large law firms, when announcing year-end associate bonuses, also announce base salaries for the new year. In Biglaw, the salary scale hasn’t budged since January 2007, when Simpson Thacher announced the $160K scale (providing for base salaries ranging from $160,000 for first-year associates to $280,000 for eighth-year associates).
You could view this as a compensation cut, since we have had some inflation (even if not high inflation) since 2007. According to the inflation calculator of the Bureau of Labor Statistics, $160,000 in 2013, the latest year available, had the same buying power as $142,407 in 2007. Of course, law school tuition has climbed quite a bit since 2007 — so even for the lucky souls who land Biglaw jobs, the value proposition of a law degree isn’t as appealing today as it was back in 2007. You’re paying more for a degree that gets you less.
What’s the solution? Work for a firm that will pay you more than $160,000 as a starting salary, of course! Let’s say hello to the newest member of the $160K-Plus Club….
(Fun fact: one of the members of Martoma’s trial team, Roberto Braceras, is the son-in-law of Judge José A. Cabranes. So if the Martoma case ever winds up before the Second Circuit, Judge Cabranes may have to recuse.)
Martoma earned millions while at SAC Capital, and some of that money will be making its way into the coffers of Goodwin Procter. And some of that money will then get paid out as associate bonuses, which the firm recently announced….
Well, the bonus scale has been set. Cravath led — by copying their bonus payments from last year — and now everybody is following. I’m on record saying that these bonuses are underwhelming and disappointing.
Gone are the days where the first-year bonus represented a significant chunk of your law school debt. Sure, you can pay down some interest with your bonuses, or you can prudently save it, or maybe even invest it. But you can also blow it. I mean, it’s a “bonus,” right? In this depressed market, your bonuses look less like deferred compensation and more like “found money.” Instead of making a fiscally sound decision, using your bonuses for profligate, discretionary spending might make you feel better. (Disclosure: Elie Mystal is not a registered financial adviser and is too… stupid to follow a budget.)
Bonuses range from $10,000 for first-year associates to $60,000 for senior people. Professor Paul Caron of Tax Prof Blog tells me that associates can expect to take home about 60% percent of that, depending on where they live and how many dependents they have.
What can a young lawyer buy with that? In addition to what’s in the ATL holiday gift guide, here are 10 things…
The days of wild spending on associate salaries seem like a distant memory washed away in the Great Recession. It was an exciting time to be a lawyer when every year (or even mid-year) a firm-wide email would explain that the pay scale was going up as part of the ongoing arms race among Biglaw firms to attract talent. That trickled down to Midlaw and the Boutiques and suddenly there were coke-fueled orgies all around.
You mean this groundbreaking Newtonian equation might be wrong?
One of the things I’ve learned in my time here at Above the Law is that most people are desperate to justify the decisions they’ve made, even if you can logically show them that they made the wrong call. People who go to terrible law schools argue endlessly that either their law school isn’t so terrible, or that they personally made a good call to go to a terrible school. People who are willing to take a massive pay cut to get the hell out of a soul-destroying Biglaw firm will still tell you that they “really valued” their time there. Obama voters look the other way while the “progressive” president allows robots to indiscriminately rain down death from the sky. Republicans act like they’re just supporting the “conservative fiscal policies” of the nutjob racists and homophobes they vote for.
Everybody wants to feel like every decision they made was the “right” one in some way. People like me who are willing to publicly admit that they’ve made some freaking awful decisions that haunt them to this day (like defaulting on my debts) are rare.
I don’t think we needed a whole study to make that point. I certainly don’t think we learn a lot by asking lawyers — generally employed lawyers — if they are “happy” with their decision to go to law school. What are they going to say? “Dear God, no. I hate my life. Please help me.”
But some law professors did ask that question, and SURPRISE, it turns out that going to an “elite” law school doesn’t automatically make you happier with your career decisions than going to a slightly less elite law school. Wow. In other super shocking news, marrying the hottest stripper in the club doesn’t make your marriage significantly more stable than marrying the second hottest stripper in the club….
We’ve waited a long time to type these words. A major law firm just raised starting salaries for first-year associates.
Before you start chanting “NY to 190,” however, there are some things you should know. The raise relates to associates in what some might call a “secondary” legal market; we’re not talking about New York, or Washington, or Los Angeles. Associates at this firm, even post-raise, won’t be making the magic number of $160,000 a year.
That said, the legal market in question is rather large, and the law firm in question is a national and even international player. So the move could have ramifications beyond just the affected associates….
Very few people work in Biglaw for the thrill of being surrounded by lawyers. Nor are Biglaw refugees heard lamenting, on the odd chance they are lamenting leaving Biglaw at all, the fact that they are no longer surrounded by fellow attorneys. What do they miss, if anything? The money.
Biglaw refugees are not the only ones stirred by the thought of Biglaw’s outsized profits. Those profits are the nectar that draws the droves of worker-bee law students into the welcoming embrace of law schools. And the gruel that sustains the overworked bodies and minds of Biglaw’s associates and junior partners as they slave in the mineshafts hoping for their day in the sun. Biglaw’s millions are also the elixir that lubricates the arthritic joints of senior partners who insist on staying in their positions of power well past the expiration dates that their forebears adhered to. More than ever, it is about the money….
The National Association for Law Placement (NALP) has new numbers on the legal job market for recent graduates, and like it has been every year since the start of the Great Recession, those numbers are a horror show. A freaking horror show. They might as well put three recent graduates in a room with one job offer in it, handcuff the graduates to a pole, and give the offer to the one that eats through his arm first.
The other two would then get to leave the room unemployed, with some bite wounds, instead of unemployed with over $100,000 in debt, which is how people are actually leaving law school.
Do you want some good news? The lateral hiring market is hot. NALP executive director Jim Leipold called it a “feeding frenzy” for experienced associates. So if you got a job and held onto it through the 2009 layoffs, pick up your phone. It’s probably a recruiter calling. Congratulations on all your success.
If instead you were not lucky enough to be born five years earlier and have just graduated or are about to graduate, I don’t have anything for you — other than this here hacksaw. Chop, chop….
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