ZOHAR LAZAR / www.wsj.com
In shows, movies, stereotypes, and beliefs all over the world being a lawyer is considered one of the top careers any individual could have. This is based on the fact that they are thought to make hundreds of thousands to millions a year. But the question is, is this actually true? or is this all just some fake news to make more people go into the legal industry?
Now it is no surprise that the top lawyers in the country do make hundreds of thousands of dollars, for example, an associate at Ropes and Grey LLP, with a headquarters in Boston, was reported to make an average of $253,557 a year with an extra $65,041 additional bonus (glassdoor). Although this may be true this is only for a select few firms, mainly corporate firms. However, not all corporate associates will be making this much money. In 2019, the average salary for a first-year associate was only $113,600 (glassdoor). This was $139,957 less than the average salary of an associate at Ropes and Grey LLP (glassdoor).
As an associate, you have to be able to prove yourself to your co-workers and your superiors, as it is your first year working in the law firm and although you are paid the least, you are expected to work the most to earn your place as a partner later on. As for different positions in a law firm, partners both junior, senior, and managing partners, are all extremely well-paid, especially in corporate firms. This is due to reasons which will be discussed later in this article.
It is important to note that the specific Lawyers who were able to make so much money, were all lawyers working in the corporate field. This is because of the companies that each of the firms works with, and the knowledge required by each and every attorney. Every top-charting corporate firm represents the biggest and highest revenue earning brands. With the high revenue, and names of the brands and corporations, come high yearly fees to make sure all the company’s patents are in check, their books are up to record legally, and that all of the parts of their firm and registered and following the law. All of this already accounts for the firm’s yearly revenue, however, if one of the companies that they represent end up getting sued, these are extra fees that will be earned by the lawyer based on hours billed working on the case, and a portion of the rewards if they win. It is also important to note that corporate lawyers will get paid regardless of if they win the case or not.
When discussing the income of different partners, it becomes more difficult to fully distinguish how much each individual is actually making due to differences in policies depending on the firm, as well as how many individuals actually hold shares in the firm itself. A partner in a law firm is considered as an individual who owns shares in a firm and profits off of the revenue that the firm makes that year. Some firms will have just partners and a managing partner and some will have junior, senior, and managing partners. As this may be confusing, the simple explanation is: a junior partner has the right to vote on the future of the firm and receives a portion of the profit per partner of the firm, however, they will have substantially less voting power and less portion of the profit per partner than senior partners.
Partners in the law firm make a portion of the overall revenue that is earned by the firm. Some firms will distribute this equally to all partners, and some will distribute it based on seniority, resulting in managing partners making the most, followed by senior partners and then junior partners. However, the decision as to who gets how much is never disclosed by the firm, and they have the right to give each individual however much they think they deserve which could lead to much inequality within the firm’s distribution of income.
A recent example of this is the 400 partners at Kirkland & Ellis LLP, they were all invited to an oceanfront resort in Southern California to celebrate another year of success within their firm. At one of the seminars during the trip, a slide showed that the firm earned $3.76 billion in revenue that year. Being the intelligent individuals they are, the partners quickly did the math and realized they would each be making $1.75 million to $15 million each (wsj).
What was not mentioned, however, was the other 540 partners who were not invited to the luxurious retreat and still stuck in their office making more profit for the firm. Although also carrying the same partner title, the partners that were not invited to the retreat are only predicted to make $800,000 each at most (wsj). Now, one would be illogical to complain about a 6 figure salary but when your peers carrying the same title are making 7 to 8 figures each, it leads to the question of who gets more money and why?
Regardless of the ways they are getting paid, it is more important to discuss the trade-offs of income distribution in the legal industry and how it is normally not a fair distribution based on who works the most but rather other factors such as gender and race. It would not be fair to mention income inequality and not point out the fact that female partners and partners of a different race other than white make up a very small percentage of the lawyers making 7 to 8 figures a year. Although more than 1 in 3 lawyers is women, they make a substantially less amount than their counterparts and are less likely to be promoted to a partnership level. However, when they do, they are most likely the partners who get the title but not the luxurious trips to oceanfront resorts like the partners at Kirkland & Ellis LLP.
Sources:
Comments