Spreading to the Lawyers - Bonuses Cut in Half

What about people who do Spanish translations? Like there aren't enough people in NYC who can do that job.

kind of shocked by the (low) level of those numbers. seriously if these lawyers make so little, who can buy in Manhattan

That's why biglaw/bigtique has always hated IBers. I knew very few lawyers who were able to buy an apartment in Manhattan (barring family money & spouse income).

those are associate salaries - Cravath partners make $1 million and up

Cravath is not the norm for biglaw, and most lawyers don't make partner.

> Cravath partners make $1 million and up

More, actually... partner salaries started at $1 mil in 1992, they grown substantially since then.
But nyc is right, they are up near the top, and only a small percentage make partner.

The majority of lawyers in this town are not partners, and there is a SUBTANTIAL drop to even higher associate salaries.

Many of my friends are mid-level to senior associates at top NY firms. Cravath is one of the best, but there are tons of top-tier firms, and until you make partner, pay is pretty much the same among all of them.

Base pay starts at $160K (this was $125K only a few years ago), and climbs to $250K or so by the 5th or 6th year. Not precise, but it's around there. Bonuses do fluctuate more, the range for this year is on the low end. In the good years, they can go as high as $100-$150K for the more senior associates (I think they were in that range last year, including some "special one-time bonus" many law firms made up to avoid setting precedent.

So a 30-year old lawyer can make $300-$350K all in, which is not too bad.

As for law vs. finance, pay, my friends and I have discussed this a ton. 25-year old lawyers and ibankers probably make similar money all-in, but the ibanker's pay grows faster over the next few years, especially if he/she makes the move to PE or hedge fund. However, the lawyer has a much higher base salary, which is nice for a variety of reasons. More importantly, the lawyer has a lot less fluctuation in their income between he good and bad years, and is a lot less likely to lose their job.

I guess my take is that it's a pretty fair risk-reward trade-off, just in terms of pay.

"The majority of lawyers in this town are not partners, and there is a SUBTANTIAL drop to even higher associate salaries."

Duly noted. I just think you have to remember that most "biglaw" associates make more than $160,000. That's starting pay.

so not too bad

something else to consider: when i-banking contracts and scores of thousands of bankers look for new jobs, I'm not sure what work it is they will be doing in the future or to what industry their skills are transferable. A lawyer is a lawyer and in worst case scenarios can still hang a shingle and have a small practice at the very least of general work. In a bad economy, I'd rather be a lawyer than an out of work banker. (full disclosure: i'm a lawyer)

Laywer here. Lawyers love to hate i-bankers when WS is flush and love to gloat when WS isn't.

No hate. Lawyering is reasonable way to expect a steady, decent income and career for most. The majority live decently but not with the kind of wealth I-bankers or those in finance generally could make. A partner at a most successful firm may earn several million. That is the top of the profession. If you want to earn oodles of money, law isn't the way to go. Never was. Finance traditionally is much more lucritive. But finance is also subject to greater risk along with the rewards. It's a choice. That's all. And a function in part of those not being able to do any math going to law school instead of B school.

decent? reasonable rather. lawyering has a way of destroying decency and morality like no other. over time I learnt to never fully trust them: just hire them,

"Duly noted. I just think you have to remember that most "biglaw" associates make more than $160,000. That's starting pay."

And not anywhere near enough to afford the average manhattan apartment. Hell, not enough to afford any non crack house 2 bedroom...

"not anywhere near enough to afford the average manhattan apartment."

So this leads to a question I've had for a few years now - Are new condos in Manhattan and Brooklyn similar to subprime suburbs in SoCal, just at a higher income bracket? Have people with incomes around $160K been buying $900,000 condos with 0%-5% down and liar loans? If so, how big a percentage of the condo market do they represent?

"And not anywhere near enough to afford the average manhattan apartment. Hell, not enough to afford any non crack house 2 bedroom."

Good thing then they are typically 25.

"lawyering has a way of destroying decency and morality like no other"

you watch 2 much tv

> ccdevi
> 24 minutes ago
> you need a hobby

Ironic...

Lowery - good question, I've wondered it myself. The piggy-back HELOC was definitely a factor in Manhattan, and I would think that many people took advantage of the lax underwriting standards that enabled them to take out mortgages at four times income. Construction took much longer in NYC, so it wouldn't be apparent as soon, but should become more evident shortly.

just experience. I don't own a TV

"Ironic"

not at all

Comprehensive list of lawyer layoffs:

http://www.law.com/jsp/tal/PubArticleTAL.jsp?id=1202425647706

Let me see if I understand: lawyers erode decency...those in finance do what exactly? Enhance decency? I don't think distinctions in the "decency" realm are really something to focus on when discussing attorneys and i-bankers. The SEC doesn't exist because i-bankers are paragons of virtue and ethics.

paralogic

"And not anywhere near enough to afford the average manhattan apartment. Hell, not enough to afford any non crack house 2 bedroom..."

This is simply not true. Mid-level associates can make $250-$350K all-in. For someone single in their late 20's, that's easily enough to afford a decent 1-bedroom and some 2-bedrooms, even at the peak. For a family, if both spouses are mid-level or senior associates at law firms, probably enough to buy a $1.5MM-$2.0MM apartment which could get you a decent place, even at the peak.

Don't feel too bad for the lawyers. Partners make 7 digits for basically doing no work. They give all the heavy duty work to the new associates and work them to death.

Well, they're all heading toward hell now anyway...

My husband is a partner. If I had also worked while he was an associate and we raised a child we would have had zero family life. He routinely billed over 2600 hours a year. At our current income we could afford the peak, but until last year that wasn't true, and it often takes years to make partner these days. Each child is $35K a year if you choose private school, $70K after-tax for two kids.

Alpine, you do not know of what you speak. At some firms the junior partners are worked into the ground for eight to ten years, when they finally emerge they are often extraordinarily unhealthy and frequently equally unhappy. I don't know the exact figures, but the increase in the number of billable hours by attorneys over the last 20 years has been HUGE. Some firms have fewer hours, and usually pay less money also.

Btw, my husband said that recently his firm has received a number of inquiries from clients, asking for pitches. They are getting the sense that litigation may be heating up.

I have noticed that the misery index among young associates has increased over the past decade or two. Granted, the first real starting salary increases in a while came only in the last few years....

Now sure how its going to shake out, but the law firms have been laying folks off for months now. I don't think the litigation gains are going to make up for all the losses elsewhere. Hell, just the decrease in fund startups could kill business for a while.

" lawyering has a way of destroying decency and morality like no other. over time I learnt to never fully trust them."

As someone who is married to an attorney I can tell you that you are pretty ignorant.

nyc10022 - I agree regarding business. Law firms also like to take advantage of down times to trim both people and bonuses. It won't be pretty. We're lucky in that my husband's firm, while a large international one, is much more litigation based than corporate. Kept the money lower during the flush times, but should reduce the pain during these lean ones. Once credit frees up (if it doesn't God help us all) we may see some interesting M&A activity.

Agreed... we could see a slight uptick. Of course, we're talking about coming off a period of RECORD numbers, so those upticks aren't really going to mean much for a while...

I agree with aboutready on the hours - most partners work a ton, although they do have a bit more flexibility on family life.

As for affording NYC, it's all relative of course. One income vs. two incomes makes a huge difference. Public school vs. private school makes a huge difference. Having a second home makes a huge difference, etc. I still think Manhattan is more affordable for lawyers than almost any other profession, with the obvious exception of finance.

Out of all the associates I have ever known working at BigLaw, I'd say 0% bought into shiny new condos financed 90%. Most rented, a few bought (with substantial family help), a few bought co-ops in the <300k range. Very few partners with children live in Manhattan - vast majority live in the burbs. Strangely, the partners were never eager to rush home to families.

A couple I knew, one originally from Manhattan and both attorneys, making $300k plus bonuses combines income, recently left for California because they could not afford to buy a family-sized apartment in this city. They were young associates (3-5 years in) and the hours they put in were absolutely insane. All of the attorneys I know are choking on student loan debt and work miserable hours; a lot of them have already dropped out of the field entirely.

Most attorneys who live in the burbs can't make it home before bedtime. Nothing worse than arriving at 8:00 when the little ones need to go to bed by 8:30. Even if they could leave on the 7:00 train, it wouldn't get them home early enough to not piss off the person putting the kids to bed. I know a ton of partners who live in the city with children, but most of them have been partners for at least 6 or so years. Then it wasn't particularly hard to afford an ample-sized apartment.

Newbuyer, you're not wrong, and that says a lot about the affordability of Manhattan. Because it's not particularly affordable for all but partners at better firms, unless one has owned property for some time. New doctors have it even worse.

Most attorneys who live in the burbs can't make it home before bedtime. Nothing worse than arriving at 8:00 when the little ones need to go to bed by 8:30. Even if they could leave on the 7:00 train, it wouldn't get them home early enough to not piss off the person putting the kids to bed. I know a ton of partners who live in the city with children, but most of them have been partners for at least 6 or so years. Then it wasn't particularly hard to afford an ample-sized apartment.

Newbuyer, you're not wrong, and that says a lot about the affordability of Manhattan. Because it's not particularly affordable for all but partners at better firms, unless one has owned property for some time. New doctors have it even worse.

Definitely. I think prices will fall to a point at which a junior associate can comfortably afford to buy a 1-bedroom on his/her own. The last time this was true for the Upper West Side was 1997.

So, lets say $150-200k salary. At the 3x rule, we're talking $450-600k. When could you NOT find a one bedroom for $600k on the UWS?

Then again, I guess loans are big for those folks.

So what do you define as "comfortable"?

If you didn't have any student loans, family, etc., $600K might be doable on $200K. We qualified for a $720K mortgage on an $800K condo with really low carrying costs at an income of $290K (based on projected bonuses), 7th year associate, in 2001. After 9/11, when bonuses were cut about $50K I can tell you that the mortgage seemed awfully onerous at an income of $240K.

Student debt is a large part of the equation. More so when you are specialized (many Patent attorneys have masters or PHD's to go with their JD, and some have BS, MS, JD, LLMs all on student loans). The question is if Biglaw can't afford manhattan at 300K combined income. Who is left in large numbers to pick up the slack? A reduced Wall Street can't pull the apple cart all by itself.

Ah, but you forget that junior associates haven't always cracked 100k. In fact, the reason for the first big pay jumps way back in 98/99 was the competition with dotcoms for talent. And personally, I wouldn't be comfortable at a mortgage 3x gross income. Not to mention that prevailing interest rates were higher. When 1-bedrooms in a solid doorman co-op on the UWS were plentiful for 300k, 1-3rd years were barely making 100k and interest rates were 8%.

So, lets say $150-200k salary. At the 3x rule, we're talking $450-600k. When could you NOT find a one bedroom for $600k on the UWS?

What is this 3x rule?

What is the difference between 10022 and 10023?

Fine, say you're making 200k (4th yr associate). Say you want to borrow 600k. At 6.5%, that's 3792.41 (amortized over 30 years). Say your maintenance is 1000. Your monthly nut is 4800ish. That's almost half your disposable income out the door on your housing. Not a ratio I would be comfortable with.

And that's assuming you've managed to save about 100k for downpayment and closing cost.

3x gross is the "rule of thumb" most people use to gauge how much their housing should cost relative to income.

1/3 net income (after taking off max. 401(k) and IRA) is the ratio of housing expenses to income I would be personally comfortable with.

I agree. 3x is too tight for comfort, much less fun (and we didn't have any student loans, but did have a child). I'd rather rent.

> What is this 3x rule?

Its a rule of thumb on what you can afford for housing, a place 3x your yearly gross income. Granted, its a more national rule of thumb, so NYC can be a little off (both ways) depending on the market and whether or not you could bonus.

Given that we're talking about a large group, I figured it might be a quick way to a ballpark number. I didn't include loans, but I didn't include bonus either.

> That's almost half your disposable income out the door on your housing. Not a ratio I would be
> comfortable with.

Thats Manhattan for you...

> 1/3 net income (after taking off max. 401(k) and IRA) is the ratio of housing expenses to income I
> would be personally comfortable with.

Everyone has personal comfort levels, but that would be a drastic decrease for a lot of buyers compared to the last few years. If more folks go to those levels, then thats really going to smack down prices.