Money, Student Loans

Not All Law Firms Are Created Equal: Some Provide Fewer Benefits Which Can Hurt Your Ability To Pay Off Student Loans

Will working at a smaller law firm put you at a disadvantage when trying to pay down your debt?

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Biglaw firms are known for taking care of their associates, and attorneys at these shops are pampered in unbelievable ways.  Large firms typically provide many fringe benefits including subsidies for buying phones, free rides home from the office late at night, free meals, and paying all manner of bar fees and other professional expenses.  Indeed, Biglaw firms truly have a “cradle to grave” system in which recent law school graduates receive stipends to study for the bar, and departing attorneys get generous severance packages on their way out.

However, not all law firms offer such benefits, and this can really affect one’s bottom line.  Of course, everyone probably understands that smaller law firms do not provide the more extravagant fringe benefits that one can expect at a large firm.  However, many smaller law firms do not pay for some of the most basic costs associated with being an attorney.  Having to pay for professional expenses yourself, and not being able to take advantage of other fringe benefits, can really hurt one’s ability to save money and pay off student loans.  As such, it is important to consider some important perks and benefits when contemplating where to work.

Although it is usually assumed that all law firms pay bar membership fees for attorneys, some firms do not provide this benefit.  Indeed, while working at my first job after leaving Biglaw, I was responsible for paying all of my own bar membership fees.  In addition, I also had to pay for the fees associated with joining the bar of a federal court, even though I was required to be a member of that bar to work on some of the matters assigned to me by my employer.

These expenses added up quickly.  I am a member of two state bars, and I had to pay hundreds of dollars to gain admission to a federal bar.  One year, I paid nearly $1,000 in bar membership fees!  This is a lot of money that could have been devoted to paying down my student loans, and one should try to work at a firm that will cover these expenses to avoid going out-of-pocket for these costs.  In addition, it is best to gain admission to federal bars while working in Biglaw, since then your firm will likely cover the cost.  If you later end up working at a firm that does not pay for these expenses, you will already be admitted to federal bars and will not have to cover this cost yourself.

In addition, although Biglaw firms typically pay for CLEs, and many even have in-house CLE programs, many smaller law firms will not pay for CLE classes.  Indeed, while working at my first job after leaving Biglaw, my firm did not pay for CLE classes, and I had to pay hundreds of dollars a year just to make sure that I fulfilled all of the requirements to keep my law licenses.  There are many ways you can obtain CLE credits on the cheap, and some outlets even offer free CLE classes.  However, one should try to work at a firm that covers these costs so that one can save money to devote more cash toward student loans.  In addition, anyone hoping to leave Biglaw should take care of CLE credits while employed at a larger firm just in case this cost is not covered by your new firm.

Many smaller law firms also do not pay for the costs associated with being a member of a state or local bar association.  I had to let all of my memberships in bar associations lapse while working at my first job after leaving Biglaw, since my firm did not pay for these expenses, and I wanted to save my money to pay down student loans.  Not paying for associates to become members of bar associations is somewhat “penny wise and dollar foolish,” since there are many benefits to joining these organizations, including access to cheap legal research platforms, opportunities to network, and other advantages.  However, the reality is that many smaller law firms do not pay for these costs, and one should consider this when choosing which firm to work at after leaving Biglaw.

After all this “doom and gloom” about perks that smaller law firms might not offer, I wanted to relate one advantage of working at some smaller shops that could benefit your bottom line when paying off student loans.  Although most Biglaw firms (with some notable exceptions) have lockstep bonus structures in which associates with similar experience get a set bonus, many smaller firms offer bonuses based on the number of hours an associate bills.  As a result, an associate who bills an insane number of hours at a smaller law firm might receive a bigger bonus than a similarly-situated associate in Biglaw.  If you are willing to put in extra hours, such bonus systems can really benefit someone trying to pay down student loans, and this perk should be researched when considering employment opportunities.

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All told, there are many aspects about working at smaller law firms that can affect your ability to save money to pay off student loans.  However, with some research and consideration, you can land at a firm that will put you in the best position to pay down your student debt.

Jordan Rothman is the founder of Student Debt Diaries, a personal finance website discussing how he paid off all $197,890.20 of his college and law school student loans over 46 months of his late 20s. You can reach him at Jordan@studentdebtdiaries.com.

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