How much will you earn as a lawyer?

Big Law associates got bigger paychecks last year, but other salaries remained flat. What can new lawyers expect to make in their first year? 

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It’s not every day somebody gets a $20,000-a-year raise, no matter how gifted they are at their job or how well they play office politics. However, many first-year Big Law associates got that sweet boost last year. 

The powerhouse New York law firm Cravath, Swaine & Moore was first to make the leap. Its associates had been grumbling about stagnant compensation in the face of rising living costs and the deep debt many had incurred from attending the nation’s top law schools.

So first-year associate pay went up from $160,000 to $180,000. Senior associates also saw raises, based on their years of experience.

The salary increase was a long time coming. It was the first in the nation by Big Law since 2007, and it led to an onslaught of similar announcements by the largest law firms in New York, Washington, D.C., and Los Angeles.

That made big news, partly because the figure was so high and partly because it had been so long. But while law students cheered, few will earn $180,000 upon graduation.

The big pay hike hasn’t exactly trickled down.

 

Salary levels for recent graduates

 

While the biggest and most prestigious law firms set the pace for salaries, other law firms are not always quick to follow. At law firms with fewer than 50 lawyers, the median salary for first-year associates was $90,000, half of what their Big Law counterparts in major markets are making. Even at firms with more than 700 lawyers, the median starting salary fell short of Cravath’s figure, coming in at $155,000.

“It’s not what I expected to see,” said James Leipold, executive director of the National Association for Law Placement (NALP). “After all the publicity surrounding the move to $180,000, I fully expected to see the national median starting salary for law firms move upward, but what the data reveal is that for the most part, only the largest firms in the largest legal markets made the move, and while many offices are paying $180,000 to start, many are not. The result is upward movement in some law-firm size bands while the national median has remained unchanged.”

It took several years for the previous pay hike in 2007 to become the industry standard, and some believe it could be a few years for the influence of Cravath’s new salary to take hold. Still, the legal market has changed significantly in the past decade.

As more law firms grow through mergers and acquisitions, the largest firms are not as similar to one another as they used to be. There are firms with more than 700 lawyers that are made up of small regional offices, many of which do not pay starting salaries of $180,000.

Data from a 2017 salary report by Robert Half Legal, which surveys law firms and corporate counsel offices, revealed slight increases for first-year associate salaries in both small to large law firms. In small firms, those with one to 10 lawyers, first-year salaries ranged from $56,500 to $82,000, an increase of 2.8 percent from 2016. Midsize law firms with 35 to 75 lawyers saw a 3.5 percent increase, with salaries reaching up to $134,250.

 


“Law firms are becoming more like corporations, with more career paths and more differentiated roles.”


 

First-year associates at large firms with more than 75 lawyers saw the biggest jump in salaries. In 2017, associates at large firms were paid between $126,500 and $168,250, a 6.2 percent increase from the previous year.

First-year associates in 2017 benefited from less competition in the legal job market, said Jamy Sullivan, executive director of Robert Half Legal. First-year associates are in high demand, and the majority of law firms surveyed by Robert Half reported that they were having a tough time finding new legal talent. The biggest jumps in salary were in practice areas that demand a higher salary, such as commercial law, compliance, health care and litigation, Sullivan said.

“While some large law firms raised first-year associate salaries to $180,000 in June 2016, generating a buzz throughout the industry, newly minted attorneys who are actually earning these salaries tend to be the exception,” Sullivan said. “These mega firms are extending generous starting salaries to top candidates who graduated from a leading law school in the top percent of their class and possess in-demand skills — technological proficiency, business acumen and strong interpersonal abilities — among other sought-after attributes.”

Most associate salaries are proportional to the level of responsibility the associate is given, Sullivan said. Law grads who enter the legal workforce with several years of work experience, excellent academic credentials and practical experience attract higher salaries. This is especially true in law firms that break away from the traditional associate track. In the past, all associates at a firm made the same salary based on years of service, but more law firms are moving away from that and toward differentiated roles. 

“It doesn’t really make sense that everyone makes the same money anymore,” Leipold told the law firm review website Chambers Associate.  “There needs to be some diversification. Law firms are becoming more like corporations, with more career paths and more differentiated roles, and I think that will continue.”

Salaries for graduates entering business, public interest, judicial and government employment are distinct from those working in law firms, and thus less likely to be affected by the Cravath pay scale. This is especially true for graduates entering the public sector and judicial clerkships, where starting salaries rarely, if ever, exceed six figures.

“Jobs in government and jobs as judicial clerks are likely to be steady, as they have been for many years, despite economic booms and busts,” Leipold said.

According to 2015 NALP data, public interest employers, such as public defenders and nonprofits, paid a median salary of $47,000, with salaries ranging from $31,000 to $70,000.

Judicial clerk salaries were low and tight in range. More than 40 percent of reported salaries fell between $45,000 and $55,000. Salaries varied, however, depending on the type of court. Clerks in federal courts, for instance, reported the highest salaries, with 60 percent earning $60,000 or more. At the state level, clerks reported salaries between $45,000 and $55,000. On the local level, 50 percent of clerks reported salaries of less than $45,000.

In 2015, government salaries in the 25th and 75th percentiles were $45,000 and $63,538, respectively.  Salaries tend to be the highest for graduates working for the federal government. Surprisingly, local government employees reported higher salaries than those working for state governments.

Jobs in the business sector, both J.D.-advantage and bar-passage-required, provide slightly higher starting salaries. The most common reported salaries for law graduates employed in business were between $60,000 to $70,000, according to NALP data.

J.D.-advantage jobs, or those not requiring a law license, reported salaries of $55,000 and $85,000 for the 25th and 75th percentiles. For jobs requiring bar passage, salaries were slightly higher, at $58,240 and $90,000 for the 25th and 75th percentiles. 

However, identifying a salary trend in business is difficult, since 90 percent of business salaries are between $36,000 and $140,000.  The wide variety of legal jobs in the business sector accounts for the broad diversity in reported salaries. The highest earners were in fields such as consulting, compliance, management, tax and in-house counsel.

Surprisingly, only 26 percent of business jobs surveyed required a law license, but those that did tended to pay more. For example, corporate counsel positions for lawyers with zero to three years of experience paid between $87,000 and $166,750 in 2017, according to Robert Half.

“Jobs in business are likely to continue to be important sources of jobs for new graduates, and we would expect to see continued growth in the J.D.-advantage job sector as private-practice opportunities continue to diminish and the businesses that compete with law firms continue to grow in size and importance,” Leipold said.

 

The bimodal lawyer salary distribution

 

In the early 1990s, lawyer salaries fell on a standard bell curve between $10,000 and $200,000, with large law firms in major legal markets paying salaries between $75,000 and $85,000. But salary increases at large law firms began to outpace the rest of the legal market. By 2001, large law firms were paying first-year associates $125,000 on average.

The growth at the top end of the legal market created a bimodal salary distribution with two peaks. One cluster of law graduates made between $45,000 and $60,000, while another cluster of Big Law associates made about $125,000. When the 2007 compensation hike hit, the salary gap only widened. In essence, a two-tiered profession emerged.

There were Big Law associates making well over six figures, and then there was everyone else. Prosecutors, public defenders, small town lawyers, nonprofit workers and corporate employees brought home significantly smaller paychecks.

The most recent salary distribution curve, released by NALP in 2015, revealed that salaries between $40,000 and $65,000 accounted for about half of all reported first-year salaries. Yet, the mean salary for all graduates was $83,797, and the mean salary for all full-time law firm jobs was $94,591. The mean salaries were heavily influenced by salaries of $160,000, which accounted for about 17 percent of reported salaries. Relatively few of the reported salaries for the Class of 2015 were close to either mean salary.

The bimodal salary distribution is not unique to recent graduates. The salary gap is widening throughout the profession, as 2016 U.S. Bureau of Labor Statistics (BLS) show.

Writing for the blog Law School Cafe, Deborah Merritt, a professor at The Ohio State University Moritz College of Law, explained that recent increases in lawyer salaries at the 25th, 50th and 75th percentiles were not keeping up with the rate of inflation.

“The uneven salary distribution for lawyers, in other words, continues to widen, Merritt wrote. “At the high end, salaries are still increasing faster than inflation. But for the majority of salaried lawyers (at least 75 percent), salaries are falling in constant dollars, and earnings in other occupations are outpacing them.”

After adjusting for inflation, Merritt found that the median salaried lawyer earned 2.9 percent less in 2016 than in 2006. For example, lawyers who earned $77,580 in 2016, which was the 25th percentile, earned 6.5 percent less in constant dollars than lawyers in the 25th percentile in 2006. Despite these declines, the national mean salary has increased from $134,837 (adjusted for inflation) to $139,880.

“The BLS figures also underscore the growing income divide in our profession. Law has always been a profession with two hemispheres, but the data reviewed above suggest that the income gulf is widening” Merritt wrote.  “The gulf itself is a negative feature for some current and prospective lawyers; they feel that the profession is financially risky, with outcomes determined by factors beyond their control.”

 

Look at the data

 

In spring 2008, Vanderbilt University Law School held its Admitted Students Day. It seemed like a great time to be entering law school.  After all, Big Law salaries had been significantly increased the year before, and the law graduate employment rate was at its highest in 20 years. However, the economy had just entered a recession.

It was the beginning of a downturn that would soon be called the Great Recession. 

“When this class took their LSATs and applied for law school, there were no signs that the legal economic boom was . . . slowing, and yet by the time they graduated, they faced what was arguably the worst entry-level legal employment market in more than 30 years,” NALP’s Leipold said in a 2012 press release.

Kyle McEntee was one of the admitted students touring Vanderbilt Law School that day. The school’s staff did their best to alleviate concerns over the uncertain future, releasing a list of where 196 of the 223 Class of 2007 graduates were employed. The information solidified McEntee’s decision to attend Vanderbilt, but it also inspired him to share the information online.

If other prospective students had more transparent employment and salary data, he reasoned, they could make better decisions about where to attend law school. The following summer, McEntee and fellow Vanderbilt Law student Patrick Lynch founded Law School Transparency, an organization dedicated to providing school-specific employment data.

“I would never rely on a single number,” McEntee said of national statistics. “What a student should do is look at a school and see what percentage of graduates are actually getting those types of jobs you want right out of law school.”

Unfortunately, school-specific employment data, such as the figures Vanderbilt Law School released to its admitted students in 2008, are hard to come by.

NALP collects the data but only law schools can release their own data. Only two in three law schools provide it to Law School Transparency, which then publishes it online.

A lack of employment data about the other 60 to 80 law schools can be frustrating to prospective law students weighing the risks and rewards of attending a particular school.

McEntee and the Law School Transparency team want to help students avoid the traps of nationwide figures.

 


“What a student should do is look at a school and see what percentage of graduates are actually getting those types of jobs you want right out of law school.”


 

It is rare for graduates to earn salaries close to the national median, McEntee said. For most students, regional and state employment statistics are better indicators of the salaries they can expect after graduation. Individual law school employment data is the most reliable.

“If you go to [New York University School of Law] and want to practice in a Big Law firm, then you want to pay attention to those Big Law salary increases,” McEntee said. “But if you are looking at smaller schools in the Midwest, that number is going to be irrelevant to you, because that is not a job you are likely to get. Even if you get a similar job where you live, it is not going to pay as much.”

McEntee mentioned New York University as an example of reliable employment data, and for good reason. Nearly all of its 2015 law graduates who were employed reported salary information. About half of them went to work for law firms of 500 or more lawyers and reported salaries of about $160,000. Other grads held judicial clerkships with a median salary of $63,000, public interest jobs with a median salary of $50,000 and government jobs with a median salary of $63,000.

Interestingly, these salary distributions follow the national bimodal distribution between Big Law jobs and other types of legal employment. Though these median salaries fall slightly above the national median for each job category, 70 percent of New York University law grads stayed in the New York metropolitan area, which has a high cost of living.

Employment numbers from University of Tennessee College of Law tell a different story. Though not as reliable, since only 70 percent of employed graduates reported their salaries, the numbers indicate that many University of Tennessee grads went on to work at smaller regional firms. The average salary was $60,000, with law firm salaries falling between $50,000 and $110,000 and public interest salaries falling between $46,000 and $59,000. While only a few graduates went to law firms with 500 or more lawyers, a good proportion of graduates accepted jobs at small firms with 10 or fewer attorneys.

“The ideal is to look at the school-level statistics when the school provides them,” McEntee said.

Not all law schools release complete employment data, even though it would help current and prospective students make better decisions about their careers, McEntee said. As more Big Law firms implement the Cravath pay scale, the national mean and median salaries will likely rise, but this is not necessarily the most reliable data for most prospective law students. McEntee suggests they look at comparable law schools in the same region to see where graduates are employed and how much they make.

 

For more insight on the legal job market, read the rest of this article in the digital version of Fall 2017 National Jurist.

 


Tyler Roberts is an editor for The National Jurist.


 

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