The latest post in our occasional series on career alternatives for attorneys -- i.e., things you can do with a law degree that don't involve working for a law firm as an associate or contract attorney -- is inspired by a profile in yesterday's Washington Post. The subject: Larry Feldman, "the Subway King of the Mid-Atlantic," who just opened his 1,019th sandwich shop in the region.

The economy may be grim, but Feldman's Subway franchises are doing swimmingly:

Business, says the 58-year-old, is excellent.

"In this economy, people can always withhold from the white-tablecloth restaurant, from the more expensive meal, and eat at Subway for $5," said Feldman, relaxing in a leather chair at one of his busiest stores, at the corner of L Street and Connecticut Avenue NW in downtown Washington. "It's an ideal time for our products. Average unit volume is up about 20 percent."

You're probably not going to Subway as a summer associate (Cosi, maybe). But most people don't have the luxury of being summer associates. So these are good times for Subway shop owners.

Here are some of the rewards for being a successful businessperson:

Feldman is the classic entrepreneur, a lawyer who found his niche in fast food. He came from Brooklyn and became a multimillionaire, gives generously to Democratic politicians and has a weakness for Bentleys. He has a primary home in Boca Raton, Fla., and spends summers at his residence in Vail, Colo. Feldman visits Washington for about a week every month to oversee his burgeoning empire.

Read more about this lawyer-turned-entrepreneur, after the jump.

Got debt? You're not alone.

Back in April, an ATL / Lateral Link job survey on student loan debt received almost 4,000 responses -- and showed that roughly 40% of respondents owed at least $100,000 in student loans.

Back in January, we posted an open thread about law school loans and debt consolidation. Now, six months later, we'd like to revisit the topic, in light of what this tipster points out:

I know it's not strictly legally related, but could you do a piece on the new loan consolidation rates coming out today? I'm sure many of your readers are still carrying heavy law school debt loads, and I know I've read some contradicting information about whether consolidation will be beneficial -- particularly for recent graduates.

More info, from USA Today (always a good source of "news you can use"; and those colorful charts sure are pretty):

[A] raft of changes that will take effect Tuesday will make student loans less onerous for many borrowers. Here's a look at the changes:

• Interest rates on unconsolidated student loans issued before July 1, 2006, will drop to 4.21% from 6.62% for the in-school and grace period and from 7.22% for loans already in repayment. Loans issued before July 1, 2006, carry variable rates that are adjusted every July 1. If you're repaying these loans, consolidating them will lock in a rate of 4.25%. If you recently graduated and are still in your grace period -- the six-month window before you have to start making payments -- you can lock in a rate of 3.61%.

Discussion continues, below the fold.

There have been two lawsuits filed by New York State judges to get their $136,700 salary increased. The judges have gone 10 years without a raise, due to their salaries being linked to those of New York legislators.

New York Supreme Court justice Edward Lehner has found the plaintiffs to be underpaid in the first of the two suits, and he's ruling for a raise. He's given the New York Legislature 90 days to up judicial salaries. Lehner, of course, would be one of the judges to benefit from the ruling, raising an ethical question.

Here is the judges' constitutional claim:

Judges have argued that the Legislature has unconstitutionally linked the salaries of lawmakers and judges, stonewalling the judges from pay increases in line with inflation. Judges say that lawyers fresh out of law school working at New York City firms earn more than they do.

Awww. They have Biglaw envy.

A Justice Orders a Pay Raise for New York's Judges [New York Times]

When traveling abroad for the first time, it seems every American is struck by the brilliance of creating paper money with a correlation between the size of a bill and its value. "That must be nice for blind people," we think.

Well, the D.C. Circuit thinks the same way. In a 2-1 ruling (PDF) issued today, it affirmed a district court decision holding that the U.S. discriminates against blind people with its uniformly-sized bills.

The American Council for the Blind sued the Treasury Department six years ago. If the decision stands, vending machines everywhere will have to be redesigned!

That seems like a better defense than the one the Treasury Department used. From the Associated Press:

The U.S. acknowledges the design hinders blind people but it argued that blind people have adapted. Some relied on store clerks to help them, some used credit cards and others folded certain corners to help distinguish between bills.

The court ruled 2-1 that such adaptations were insufficient. The government might as well argue that, since handicapped people can crawl on all fours or ask for help from strangers, there's no need to make buildings wheelchair accessible, the court said.

Apparently, that huge ugly number five on the new five-dollar bill was the Treasury Department's first stab at meeting the needs of the blind. Unfortunately, it discriminates against good aesthetic taste.

What do you think of the decision?

Court says money discriminates against blind people [Associated Press]
Amer Cncl Blind v. Paulson, Henry [PDF]

Earlier this month, there was some discussion in the comments about law firms possibly cutting associate salaries to cope with the economic downturn. The scenario sounded far-fetched -- but maybe it's not as far-fetched as some might have hoped.

Look, we aren't saying that the sky is falling. There's a world of difference between a law firm based in Fort Lauderdale, with 128 lawyers and extensive exposure to Florida real estate, and the giants of Biglaw, with hundreds of millions (or even billions) in revenue, profits per partner well into the seven figures, and diversified practices.

But still, nobody would call this good news. From the Daily Business Review:

Attorneys at Becker & Poliakoff are being hit with a 12 percent pay cut for the foreseeable future to help the real estate-dominated firm deal with a drop in profitability and delays in collections.

Becker & Poliakoff is the first major South Florida firm to turn to its lawyers to make cuts to help it deal with the economic slowdown and real estate downturn. Other firms have trimmed staff jobs, including paralegals and secretaries, and cut back on other expenses to help cope with the economic landscape.

Alan Becker, the firm's managing shareholder, informed attorneys and support staff about the pay deferment plan via podcast Wednesday. The cut took effect Thursday and affects only lawyers. No layoffs are expected.

So that's the silver lining to the proverbial cloud. You've suffered a 12 percent haircut on your salary, but at least your job is secure.

We don't know what the Becker & Poliakoff pay scale is, but we're guessing it's well below the $160K scale. Back in 2003, it looks like their starting salaries were in the $63K-$70K range.

But just out of curiosity, what would Biglaw salaries look like if they were trimmed in this manner? If a 12 percent reduction were applied to the first three steps of the standard New York pay scale, salaries would go from 160-170-185 to 141-150-163.

More discussion, after the jump.

Washingtonian magazine has a fun little piece on lawyers profiting from congressmen going after one another.

If you're interested in the intersection of law and politics, and we know many of you are, you'll enjoy this story. Here's how it starts:

Of all the angles played by Washington law firms, few can bring as much joy as having clients who aren’t playing with their own money.

Take the battle between two congressmen, John Boehner of Ohio and Jim McDermott of Washington: In a near-decadelong fight over McDermott’s leak of the contents of privileged and illegally taped conversations involving Boehner, the two ran up legal bills of about $1.6 million.

So who ended up covering that seven-figure legal bill? Find out, after the jump.

If we hadn't already bestowed our Lawsuit of the Day prize, this bizarre tale might have taken the cake.

Meet Donna Campbell (pictured; she looks like a non-green Princess Fiona). When the ex-beauty queen married Arnim Ramdass, she didn't take his name -- and one can hardly blame her.

But she's happy to take his money (which may really be "their" money; more on that below). From the Miami Herald:

Some husbands shower their wives with gifts when they win the Lotto. Arnim Ramdass kept the good news to himself. And when Donna Campbell found out on her own, her husband went AWOL, leaving the former beauty queen emotionally drained and financially desperate.

So she sued.

Campbell v. Ramdass, the lawsuit, comes to a Miami-Dade courtroom this week. It's a tale of luck and betrayal, a case study in how a financial windfall can make a seemingly stable marriage go sour in a hurry. At stake: $600,000 in winnings, Ramdass' cut of a $19 million jackpot he split with 16 other mechanics at Miami International Airport.

Discussion picks up after the jump.

Our last installment of the Asia Chronicles introduced our readers to the financial advantages of working as a Biglaw associate in Asia. We told you of lower taxes, additional payments in the form of (sweet sweet) COLAs, housing allowances, and other assorted goodies.

Unlike Willy Wonka's Chocolate Factory, all of this is real, but some of our readers commented that it all sounded like some kind of marketing ploy, "B-grade Asian job porn," and otherwise too good to be true. Perhaps we came across as too enthusiastic, or maybe we sound like one big recruiting column. Whatever the case, we really do think Asia is the most exciting place in the world to be right now, and not just because the money's better (additional advantages to be discussed in the weeks to come).

Still, it's not for everyone. For any of you considering a move to Asia, here are some questions to consider:

1. Are you willing to spend time away from your family, friends, and familiar places? Flight time from most places in Asia back to North America is at least twelve hours each way (and could be double that if you have to make connections). Add in getting to and from the airport, layovers, and getting over jet lag, and you may be spending four days on each trip just traveling or recovering from it. Not to mention that even economy airfares are well over a thousand bucks and rising, and business class is usually four times that (although arguably worth it for the fifteen-hour flight from Asia to New York). As a busy corporate associate, you will likely only visit home once a year (but at least it'll be a free trip home). Obviously if you are married and/or have children, the question gets even more complicated.

2. Can you handle frequent travel? Nervous fliers should steer clear of Asia (with the possible exception of Tokyo, where the majority of work is domestic). Lawyers out here commonly travel several times per month to wherever the deals are, from India to the South Pacific. We have seen longtime Asia lawyers with passports as thick as the stack of 1000s in our pockets when we come back from Macau. Though the clients always pay for business class, and Asian airlines, airports and hotels are generally rated the best in the world for service and comfort, some people find travel and time away from home too stressful.

3. Do you have a flexible sleep schedule? American lawyers in Asia are often working with U.S. and European offices of the banks and law / accounting firms on their deals. New York is about twelve hours behind China / Japan, and 10 p.m. Friday conference calls or 4 a.m. closings are not uncommon. Or, given the workload of many Asian offices, you might just be up that late working. Very hot market + small office = lots of billable hours.

Read more, below the fold.

For the second installment of the Asia Chronicles, we're going interactive. Please click on this Youtube link, minimize, and read on.

Come with us, won't you, to a world of your imagination. Imagine that you're an associate at a major U.S. law firm in Asia, paid the same salary and bonus as your colleagues back home. Imagine further that $87,500 of your salary is excluded from federal income tax. Imagine that your firm pays your rent, and, even though this would normally be considered taxable income, it is excluded from taxation as well.

One of the ACLs who lived in this "world that defies explanation" paid off his entire $120K+ law school debt in one year and is on track to put away over a quarter million during the next two years. How? With extra salary and a much lower tax burden, he takes home approximately 15% more cash than he would in the U.S. He has no car or other transportation expenses (walks 10 minutes from home to office), usually works late enough to expense his dinners, and pays no rent. He takes so many business trips that frequent flier miles and hotel points take care of most of his vacation expenses. At least 80% of his paycheck goes straight into his 401K and other investments. The rest goes to magnums of Cristal (he admits he could do better).

Before we jump into the details, let's set out some assumptions:

Assumption #1: There are tons of U.S. firms in Asia; some pay less, some pay more. A sizable group of firms pays competitive packages (yes, we said "packages") at or near the top of the market. This entire discussion focuses on that group because, let's be honest, for most of us "the law" isn't our calling. We don't sit up at night thinking about Section 4(2) of the U.S. Securities Act or wonder about the components of a conversion formula in a share purchase agreement (wait, maybe someti... ok, no ... never). So, for the purposes of this discussion, let's just assume that it's mostly (almost entirely) about the Benjamins. (Or Maos? Lees?)

Assumption #2: There are U.S. lawyers in Vietnam, Indonesia, Thailand, etc. But, to borrow from XOXO/Greedy Associates lingo, this discussion focuses on "BIGLAW" in the major Asian markets (i.e., Tokyo, Singapore and the greater China region) at "Vault"-listed firms. HTH.

On to the main event. Salaries. Three words: New York levels. Bonuses. Three words: New York levels. That's right. When you guys over in New York rejoice over the raises, so do we. But, there's more. A few years ago, there was this evil little SOB of a concept called "tax equalization" whereby firms, for whatever reason (well, we know the reason; you do the math), decided to pay their overseas U.S. associates an amount in salary that was equal, after tax, to what an associate in New York would be paid. Yes, that means poor little Billy in Asia was "theoretically" paying New York city and state tax. Firms have since moved away from this model. In a low-tax region like Singapore or Hong Kong, this means associates can take advantage of the low tax rates. What's that, you say? The U.S. taxes on worldwide income? Fear not. Certain provisions in the tax code are geared towards providing tax breaks for U.S. citizens working worldwide. Bottom line, associates in Asia at U.S. law firms also pay less in taxes each year.

Ohhh, and it doesn't stop there. Remember the reference we made to "packages" above? Firms in Asia (except in, only God knows why, Singapore ) foot the bill for their associates' housing expenses. Many firms pay this housing allowance in cash each month, some pay the rent directly to the landlord. Many firms then let associates keep the difference between the rent and the allowance. The word on the street is that a certain Wall Street law firm whose name begins with an S and ends with a T pays top of the market at about $80,000 a year. So, if you're an associate at this unnamed Wall Street firm that rhymes with Pimpson Cratcher and your rent is $40,000 each year, you're pocketing an extra $40,000. It's the "special bonus" that never stops giving.

According to Evan Jowers of Kinney Recruiting (who has eyeballed perhaps more offer letters from the major US and British firms in Hong Kong / China than any other person in the industry), "The housing / expat packages at the top U.S. and British firms in Asia are likely to go higher in the next year or two. Many of these firms have substantially raised their packages in only the past 6 months, with there now being many more firms in the what I consider to be competitive housing allowance range in Hong Kong, $65,000 to $80,000, than a year ago. In fact, the number of firms with housing packages over $70,000 in Hong Kong has more than doubled in the past six months."

More delicious details, after the jump.

Time for a shout-out to this writer's home state. Over in New York, Biglaw lawyers tend to look down upon their cousins across the river. Dismissive jokes about "Jersey firms" are commonplace.

But large-firm lawyers in New Jersey are doing just fine, thank you very much. From a tipster:

As a Jersey guy, you may find this interesting: According to the NJ Law Journal, Lowenstein Sandler just became the first NJ firm with profits per partner in the seven figures: $1,102,700. Average compensation per partner is not far behind, at $977,500.

And it's not just Lowenstein Sandler that had a good year. Although New Jersey firms slowed their hiring and trimmed equity partner ranks in 2007, showing signs of being affected by the dire economic times, they still did pretty well. From the New Jersey Law Journal (subscription):

Growth in total revenues and net profits [among the New Jersey Top 20 firms] thus slowed in 2007. Revenue rose by 7.67 percent to $1.53 billion from $1.42 billion in 2006, compared with a 9.6 percent hike in last year's survey.

Profit growth was even slower, up only 5.62 percent to $519.3 million from $491.6 million, compared with a 9.9 percent bump the prior year.

When fewer lawyers produce more revenue, it means each is working harder. Indeed, revenue per lawyer showed a pronounced spike: up 5 percent to $517,650, more than three times the 1.4 percent rise to $493,000 reported last year.

Likewise, since there were fewer equity partners sharing the bottom line, profits per partner growth enjoyed an eight-fold increase, rising 6.62 percent to $594,100, compared with a sluggish 0.8 percent to $557,200 in last year's survey.

By New York standards, PPP of $600K is small potatoes. But it's still a handsome income -- and grows more appealing if the hours, cost of living, taxes, and partnership prospects are better over in Jersey. [FN1]

Time for New Yorkers to think about jumping to the other side of the Hudson? Or time for another round of pay raises for Garden State associates?

[FN1] These matters are open to debate, of course. Some New Jersey firms, such as the super-profitable Lowenstein, have reputations as sweatshops for demanding a lot of their associates.

Streamlining for Austere Times [New Jersey Law Journal (subscription)]

We inquired into this topic previously, and one of you even put up a Community post. What's up with those special bonuses for senior associates over at Sullivan & Cromwell?

This gossip has been circulating:

Rumor has it that S&C put out a memo about the senior bonuses [last week]. Apparently, the $2.5 million they "put aside" [mostly] went to cover the Cravath special bonus. The actual amount of the bonus was unknown as of last night as far I could tell.

The memo, which I don't have, seemed to suggest that the money was spent, but that they were going to give a small amount because they had promised. If S&C senior associates are lucky, maybe they'll get a gift certificate to Chili's.

And it's true. We couldn't get our hands on the memo, but we have confirmed with sources at the firm that S&C paid out its special "senior associate bonuses" last week. We don't know the numbers for all years, but word on the street is that current fifth-years received around $2,500.

Three grand is small compared to the whopping year-end bonuses that Sullivan already paid to its senior associates. But contrary to our tipster, it buys you more than a few meals at Chili's. Maybe the Cheesecake Factory?

In related news, the Sunday Styles section of the New York Times has an interesting article entitled "Not-So-Personal Finance." It's all about how among young people -- say, folks in their twenties and thirties -- open discussion of salaries and compensation isn't as taboo / tacky as it is among older folks. Lawyers get a shout-out:

Several workers under 35 said that greater salary transparency among friends only makes sense in an age when there is so much information freely available online. Young professionals, in fact, have all sorts of ways to find out how much their friends make, even without asking. Associates at law firms anonymously report their own salaries to Web sites like www.greedyassociates.com.

Greedy Associates? That's a bit "five years ago." If you check out their front page now, you'll see it's overrun with spam and postings about lawyer salaries in Kiev (no offense to our Ukrainian brethren).

We realize that the readership of Above the Law isn't exactly a random sample, but please take our poll:

Not-So-Personal Finance [New York Times]

Earlier: Associate Bonus Watch: Sullivan & Cromwell Matches (and More)

Starting salaries for new associates in the London offices of U.S.-based firms can be quite generous. They often exceed the New York going rate of $160,000, approaching $200,000 at top shops. See here (noting that Weil and Cleary pay newly-qualified lawyers the equivalent of $180K, and Latham pays NQs the equivalent of $190K, in London). [FN1]

But top U.K. firms, known collectively as the "Magic Circle," aren't quite as generous to their London associates. From the ABA Journal:

[W]hile some magic circle firms may up the ante at least a little this year, some partners are complaining that junior lawyers already are overpaid.... Says an unnamed Clifford Chance partner: “People should be grateful for having jobs in the current market. I could easily see the rises not happening now and being deferred until later in the year.”

Currently, starting lawyers at leading London firms reportedly make between 63,500 pounds and 65,000 pounds. That translates to a range of about $125,000 to $128,000 in U.S. dollars.

Additional detail, from Legal Week:

Partners with City giants including Linklaters and Clifford Chance (CC) - normally early movers - told Legal Week they are not expecting to see significant increases this year, as they feel the impact of the credit crunch.

Linklaters, Freshfields Bruckhaus Deringer and Allen & Overy (A&O) are all in the process of reviewing their salary bands, with partners conceding substantial rises are unlikely. Increases at the junior end are thought to be particularly unlikely.

Insofar as the market for legal services is becoming increasingly global -- London has been gaining on New York as a global financial capital, and competing with it for talent -- pay stasis in London is bad news for those seeking pay raises in New York.

NY to 190? As the Brits like to say, "Not bloody likely."

[FN1] These figures are generated by converting pounds to dollars. But yes, we know that London is even more insanely expensive than New York.

Firms to hold off on major pay hikes after crunch [Legal Week]
London Partners to Associates: At $125K, We’re Paying You Too Much [ABA Journal]

While the results are still flowing in from last week's ATL / Lateral Link survey on bar stipends, signing bonuses, and salary advances (1,130 responses and counting), today's survey looks at money flowing in the opposite direction: from individual associates to great big institutions.

In other words, let's talk about your student loans and other big debts.

The Brokeback Lawfirm scandal folded its pup tent months ago. But there's still stuff to cover at one of ATL's favorite firms, the venerable Sullivan & Cromwell.

Here are two items. First, from a tipster:

If I recall correctly, Sullivan & Cromwell sent out a memo in December or January saying that even though they paid the "special bonuses" in December, they still intended to pay additional profit-sharing bonuses in February. [February is over] and as far as I know, not a word from S&C. Can you guys please make a big deal over this?

The tipster's memory is slightly off. From chairman H. Rodgin Cohen's earlier bonus memo:

[T]he Firm will pay senior associates compensation in addition to salary and bonus through our new Senior Associate Supplemental Bonus Plan ("the Plan"). We have decided to accelerate payments under this new Plan to result in the following [market-matching bonuses] being paid on December 14 to our senior associates, with final supplemental payments to be made in the Spring of '08.

We are now officially into spring 2008. So ATL hereby "make[s] a big deal over this." Has S&C paid the supplemental bonuses to its senior associates? If so, can someone please give us the skinny?

Second, here's an interesting rumor of a partner departure from S&C, from a different tipster:

Carlos Spinelli-Noseda is a partner at S&C (do a Google search and check the cached website). At this point, however, you can't find him on the firm's external or internal website anymore. No idea what's up with him, but apparently he [was] involved in a firm event about 10 days ago...

We're intrigued. Partner departures are more common farther down the Am Law 100, but they're rare at a place like Sullivan & Cromwell.

We did some preliminary poking around, but didn't learn anything. A firm spokesperson didn't respond to multiple telephone and email messages. The usual news sources have no stories about his defection to another firm. On LinkedIn, he's still listed as an S&C partner (although it's true, as noted by the tipster, that his bio is gone from the S&C website).

We tried contacting Mr. Spinelli-Noseda directly. Our email didn't bounce back, but we didn't get a response either. When we dialed his direct extension, a receptionist answered the telephone with the firm name, not his name. When we asked to speak with him, the secretary asked us -- in a vaguely hostile tone -- who we were and why we were calling. She took down our contact info, but did not offer to put us into voice-mail, and we never received a return call.

If you know what's going on, please email us. Thanks.

Posted below is the European fee schedule of Allen & Overy. At current exchange rates -- approximately $1.55 to the Euro, and $2.00 to the British pound -- this means that partners bill out at about $1,050 an hour in Paris, and $1,190 an hour in London. Says a source: "Twelve-hundred bucks an hour for a partner in London? Ridiculous."

On the other hand, if a $1,200-an-hour partner can solve your problem in six minutes -- with a well-placed telephone call, or an absolutely brilliant judgment call -- maybe she's worth it. Perhaps you should be more worried about $600-an-hour junior associates (to say nothing of $350-per-hour paralegals).

We have a strange obsession with Linda Greenhouse, the Supreme Court correspondent for the New York Times. When we spotted her recently at Jennifer 8. Lee's D.C. book talk for The Fortune Cookie Chronicles, we practically leapt out of our seats in excitement. [FN1]

If you're a fellow LG groupie, and if you're at Yale Law School, here's some good news. As one tipster excitedly chirped to us, "Linda Greenhouse is going to be a Yale Law sort-of-professor!" From the Yale Daily News:

After 30 years covering the Supreme Court for The New York Times, Pulitzer Prize-winner Linda Greenhouse will take a new post as a journalist-in-residence and senior fellow at Yale Law School starting next January, the Law School announced Wednesday.

Greenhouse, who accepted a buyout from The Times last month, will return to the law school from which she earned a Master of Studies in Law degree in 1978 to conduct her own research and give lectures and seminars, although it is not yet clear whether she will teach a formal course. She will also be involved with the Law School's Supreme Court Clinic and will help pioneer its new Law and Media Program.

More details in the YLS press release. Surely this can only help Yale maintain its sizable lead over #2 Harvard and Stanford in the U.S. News rankings. (Yale has an overall score of 100, with Harvard and Stanford almost ten points behind, at 91.)

As you may recall, Linda Greenhouse received a cool $300K in her Times buyout. It's a pittance compared to Biglaw bucks, but a princely sum in the world of journalism.

And now Greenhouse will be supplementing this with a draw on the well-endowed coffers of YLS -- we're guessing low six-figures (for what doesn't sound like very much work). She'll probably begin work on another book, too, for which she can expect a good-sized advance. Her last book, Becoming Justice Blackmun, was a national bestseller.

Linda Greenhouse to Linda Greenbacks!

[FN1] The use of "we" is especially appropriate here because Kash and I attended this reading together.

Yale Law School nabs Linda Greenhouse after Times departure [Yale Daily News]
Linda Greenhouse Returning To Yale Law School in 2009 as Journalist-in-Residence [Yale Law School]

Ed. note: Yesterday's guest post about how Barack Obama's tax plan might affect Biglaw associates, authored by Ted Frank, generated a record number of comments on ATL: 564 (and counting). It also generated lots of reaction throughout the blogosphere (links collected below). So we thought we'd invite Ted to do a follow-up.

Here it is. Ted wrote it in response to the following reader email, which makes many of the arguments that surfaced in the 564+ comments. From an Obama defender:

I'm sorry, but you are losing your credibility by posting this false propaganda on Obama. Look at Obama's website. It clearly states, "Asked About Raising the Cap, Obama said, 'You Might Have the Equivalent of a Doughnut Hole'--NOT That He Would Completely Remove the Cap." Obama "has stated in various venues that ‘his inclination... has been for a 'donut' where the uncapping would take place above some threshold income level -- probably around $200,000 or $250,000' his economic adviser Austan Goolsbee said in an email. A donut would protect a certain portion of income (e.g., between $100,000 and $200,000) from the payroll tax and could be phased in over decades."

In addition, that "$34,000 paycut" in the post title is misleading. Even if all your assumptions were correct (which they weren't), the after tax pay cut under Obama is < $20,000. I love your site, but please correct this ridiculous false article before you lose all credibility.

And now, without further ado, Ted Frank.

* * * * * * * * * *
First, as I show in the spreadsheet, a $20,000 tax increase is the equivalent of a $34,000 before-tax paycut for a New York City resident, which would have the same after-tax effect. The $34,000 figure is accurate: that's just math. The Obama tax plan would have the same effect on a NYC fifth-year associate being paid market as a $34,000 paycut.

Obama has never said he will have a doughnut-hole, only that his SS tax could include a doughnut-hole. When Hillary Clinton attacked Obama at the November 15 Nevada debate for wanting to eliminate the cap, Obama didn't say that the attack was incorrect; he defended the policy because eliminating the cap would only affect what he called the "upper class." The press has accurately reported that Obama has also proposed eliminating the cap; even Obama's own website links to a thinktank's analysis of the benefits of a cap elimination.

It would be really easy for Obama to promise to include a "doughnut-hole" or to not eliminate the SS-tax cap. He certainly hasn't been afraid to promise drastically expensive programs of new spending or even tax giveaways to large swaths of the population who aren't paying much tax now.

But when it comes to Social Security, Obama is suddenly vague; when he does discuss details, it is to cite examples (e.g., Warren Buffett) that could not be accomplished without eliminating the cap entirely. And the only reason a politician acts that way is because he supports the more drastic, politically unpopular plan, but doesn't want to get tagged with it before the election, and will say after the election "I only said I would 'consider' a doughnut-hole."

How Barack Obama's Tax Plan Will Affect You [Microsoft Excel file]

Additional discussion and links, after the jump.

[Ed. note: Today we bring you some "news you can use": a practical look at how political choices might affect your personal finances. This post is by Ted Frank, who blogs at Overlawyered.com and PointofLaw.com, and who has guest edited ATL in the past. Take it away, Ted.]

BigLaw lawyers love Obama. If one searches by law firm various databases on-line for campaign contributions, one sees an overwhelming sea of blue, and most of it to Obama.

But how will Obama affect BigLaw wallets? On Above the Law, we regularly see commenters threaten to abandon law firms for falling $5,000/year short of market. I therefore thought it worthwhile to examine the effects of Obama’s tax and spending plans on take-home pay.

We all know that Obama wants to end the Bush tax cuts. That is a 3% bump across the board to the bad old days when associates faced a marginal federal tax rate of 36%.

But the real hidden tax is that Obama plans to end the social-security tax cap. Right now, you may notice, sometime during the summer or early fall, your take-home pay suddenly goes up because they stop deducting FICA. Current law caps social security taxes: in 2008, the cap is at $102,000. Obama proposes to abolish this. That mid-summer bump will be no more: add about several thousand dollars to your annual tax bill.

But social-security taxes are not only on employees. The government also charges 6.2% to employers that you never see on your W-2s. But rest assured the partners see this, and will notice that the expense of keeping an associate has risen several thousand dollars a year when FICA taxes double and triple. Will they swallow that additional expense, or take it out of your bonus?

Find out, after the jump (or click here).

The powers-that-be at Mayer Brown have made their decisions on bonus and salary adjustments, as announced in an email last night. And it appears that they've taken a page from the Dechert playbook, according to one associate:

"The second paragraph [of the memo] is a shock. We were never informed of financial ramifications for failing to enter our time."

It might be slightly annoying, but it's the growing trend. Expect more firms to adopt policies that tie compensation to timely time entry. Email exhortations without financial consequences don't seem to be very effective.

(And it's arguably not that big an imposition. You already slave away at the firm for ten or twelve hours a day -- so what's another five minutes at the end, to enter your time before heading home? It's just a matter of getting into the habit of doing it, instead of letting a backlog build up.)

The Mayer Brown memo, after the jump.

A quick update on yesterday's post about Seyfarth Shaw. A source there tells us:

Here are the "official" numbers for Seyfarth NYC and "Others," excluding Atlanta (no idea where they are -- presumably lower). Great for the mid/upper classes, but no so great for 1st-2nd years. Some grumbling also from income partners since they don't get paid a whole lot more than a senior associate and have to deal with all the administrative headaches associated with income partner status.

For those of you who are interested, the salary ranges appear after the jump.