Average Salary = Misleading?

Graduate School Law School
21

<p>Taxguy is incorrect about graduates of the very best schools. (I don't think thinkingoutloud ever mentioned top programs.) </p>

<p>If you attend a Top 10, or Top 15 program, and place anywhere in the top half of your class, you'll have little trouble getting a job paying over $100,000. Even if you're closer to the bottom of your class, you shouldn't have that much trouble getting a good job. (I know people from top schools that got good jobs without even putting their GPA on their resume.) The vast majority of graduates from top schools, in other words, won't have much trouble finding well-paying work. </p>

<p>However, thinkingoutloud's points are certainly valid for most schools, including many other "Top Tier" schools in the 15-50 range. At most of these schools, you'll probably need to be in the top 20% to get a 100,000 + job, and below that level, you'll probably need to be in the top 5%-10%. (At some schools, no grads will get those jobs.) </p>

<p>The bottom line is that most law schools exaggerate their students' placement and salaries. Most grads at most schools probably don't get private-sector jobs, and most make far less than six figures. ($50,000 is probably closer to the mark, with many, if not most, making far less.) </p>

<p>And, of course, just because grads from the top schools can get high-paying work doesn't mean they'll like it, or be able to do it for very long. </p>

<p>In terms of academia, you're best off going to a top-10 program if you want to do this, or perhaps doing extremely well at a strong local program (combined with clerkships, etc.)</p>

22

<p>Thanks, Susan and Sakky.</p>

23

<p>Here's some info from the U.S. Bureau of Labor Statistics. Elsewhere on their site, they list the average lawyer salary at $107K, and the median at $91K, but exclude sole practitioners (and annual bonuses) from these figures.</p>

<p>"How much does this job pay? </p>

<p>"The middle half of all lawyers earned between $61,060 and $136,810 a year in 2002. The lowest-paid 10 percent earned less than $44,490. The highest-paid 10 percent earned more than $145,600 a year. The pay for lawyers depends on whom they work for. It also depends on how long they have been lawyers and on how many special things they have learned about the law. In general, lawyers are among the highest paid workers in the country.</p>

<p>"How many jobs are there? </p>

<p>"Lawyers held about 695,000 jobs in 2002. About 3 out of 4 lawyers practiced privately either in law firms or solo practices. Other lawyers worked for a wide range of private businesses and government agencies.</p>

<p>"What about the future? </p>

<p>"Employment of lawyers is expected to grow about as fast as the average for all occupations through 2012. This is because there will be more reasons for companies, persons, and governments to hire lawyers. But it is also true that a lot of people will try to become lawyers. This means that a person who wants to be a lawyer will have to work really hard to be one of those who get into law school. Graduates from law school will have to compete for good jobs also."</p>

24

<p>I would agree with the general tone of this thread which is that if you are absolutely intent upon making money, don't become a lawyer. Go work at an investment bank, a hedge fund, a venture capital firm, or some other field in finance. The amount of money those people make, especially the stars, easily dwarfs lawyers' pay. Even the highest paid lawyer can be outearned by even a mid-level investment banker.</p>

25

<p>Sakky, right now I'm vacillating between I-banking (or something else in finance) and law...I basically know what I need to do in order to get a top job in the legal world (relatively easy major at, perferably, a top school for undergrad and super-high LSATS; graduate at top of elite law school class), but I'm sort of in the dark regarding I-banking: namely, does it matter what I major in? Most major in econ, but econ sort of turns me off--would a humanities-related major, like english/history/polysci/philosophy open any doors for finance? Anything else I should know? Thanks for your time and help.</p>

26

<p>With all due respect, Gatsby, I don't see you doing well in finance if econ turns you off. Seems to me the same principles would be involved, and they'd probably want a business/econ/accounting background. </p>

<p>Also, Sakky is right that lawyers don't always make that much, and probably generally make less than investment bankers. It's an exaggeration to say that even the "highest-paid" lawyer can be outearned by a mid-level I-banker, though. There are trial lawyers making billions, and many others making millions. (See Tobacco Settlement.)</p>

27

<p>"Billions" may be a bit of an exageration. I've never heard of a bilionaire lawyer. The guy who represented Penzoil against Texaco earned a 9-figured fee for his firm, and the big tobacco case generated some large fees (that were split between a significant number of lawyers).</p>

<p>John Edward was a legendary trial lawyer, and earned maybe 20 or 30 million in the course of his career. The lawyer I personally know who made the most money made his fortune ($20m) on stock options as general counsel of a pre-IPO company that went public.</p>

<p>If you chose a career based on what's most likely to make you fabulously wealthy, you'll probably be disappointed. If you do somethig you think you'd enjoy, you're more likely to be successful anyway (financially and otherwise), and more likely to be contented with your choice of careers, regardless of remuneration.</p>

28

<p>If you look further into class-action lawsuits, you'll see that there are in fact attorneys who have earned over a billion in fees. And, of course, there are many that make more than I-bankers. </p>

<p>(I would hardly call Edwards "legendary", though he certainly screwed the health-care system out of a good amount of cash. By North Carolina standards, he was certainly effective in that regard.) </p>

<p>I agree with your last paragraph, though. The bottom line is that most lawyers don't make all that much, and you'll need a passion for it to be successful either way.</p>

29

<p>I think I can offer a simple proof. The list of the richest people in the world, and certainly the known billionaires in the world is fairly well established, and is published in periodicals like Fortune or Forbes. Name one person among the richest people in Forbes or Fortune's list of richest people in the world who made his/her fortune from lawyer's fees. Don't just come back to me with a lawyer who also happens to be a billionaire, you have to name one that actually made that billion strictly from working as a lawyer. For example, surely you must agree it's not fair to come back with a name like Robert Rowling, who does have a law degree, and is worth over $2 billion, but that's from being a real-estate and oil/gas mogul (he owns Omni Hotels and is the son of the legendary Texas oil entrepeneur, the late Reese Rowling, from whom he inherited much if not most of his fortune). Robert Rowling hasn't actively worked as a lawyer for several decades, and certainly didn't make his billions by practicing law. Similarly, it's also equally unfair to come back with a guy like Charlie Munger, who is also a lawyer and a billionaire, but is a billionaire because he was one of the original partners in Berkshire Hathaway. Again, it has to be a lawyer who made his fortune off fees.</p>

<p>Here is the list of the Forbes World's Billionaires. You can search through it yourself. By all means, if such super-rich lawyers that made billions off law fees and not through other ways, then by all means, let's hear about it. </p>

<p><a href="http://www.forbes.com/2002/02/28/billionaires.html%5B/url%5D"&gt;http://www.forbes.com/2002/02/28/billionaires.html&lt;/a&gt;&lt;/p>

<p>Or consider this article from the Wall Street Journal. In the year 2004, the most profitable US law firm was Wachtell Lipton Rosen & Katz, whose partners made over $2.5 million each that year. While obviously $2.5 million is a princely chunk of change, it simply doesn't compare to the kind of money that Wall Street star financiers make. The stars on Wall Street can and do easily make over 10 times that amount in a year. </p>

<p><a href="http://www.lawschool.com/bigbucks.htm%5B/url%5D"&gt;http://www.lawschool.com/bigbucks.htm&lt;/a&gt;&lt;/p>

<p><a href="http://www.careers-in-finance.com/ibsal.htm%5B/url%5D"&gt;http://www.careers-in-finance.com/ibsal.htm&lt;/a&gt;&lt;/p>

<p>Now don't get me wrong. I don't doubt that there are lawyers that have earned billions of dollars in fees from cases. The problem is that this doesn't translate into billions of dollars directly into an individual lawyer's pocket. Not even close. The fees that a lawyer picks up doesn't go directly to him/her, but rather to the firm, as standard revenue. The firm then obviously has to pay out expenses - the salaries of associates, secretaries, paralegals, and everybody else, the rent of the office space, Furthermore, many of these big-money cases usually drag on for years, so if you want to properly account for what happened using standard accounting principles, you actually have to amortize the fee that you collect over all the years that you spent working on the case. For example, if you got paid in year 5, it's not like the associates who were working under you for those 5 years are simply going to forgo salaries during years 1-4. They are going to demand to be paid every year. So while you made money in year 5, you lost money in the preceding 4 years, and that has to be accounted for. Finally, and most importantly, big law firms have lots and lots of equity partners, and you have to share the profits of the firm with all of them. If you're a partner, and you win a big case, it's not like you can keep all the money for yourself. I think it's plain to see that it would be extremely difficult for an individual lawyer to have put a billion dollars in his pocket through fees. Made a billion dollars of fees? Sure. But to have billions of dollars in his pocket? Very doubtful.</p>

30

<p>Joe Jamail, who landed an 11 billion dollar verdict for Penzoil against Texaco, has an estimated net worth of $1.2 billion, and was number 378 on the Forbes list. So now I have heard of a billionaire lawyer (but only one).</p>

<p>Susan777, perhaps you wouldn't call John Edwards "legendary," but I'm not alone in doing so. Here's a quote from the Washington Monthly:</p>

<p>"Until he moved to the Senate, Edwards was a personal injury lawyer---the kind people most love to hate---and a very talented one. More than half his cases were medical malpractice suits. Many involved infants born with brain damage or other serious conditions that entail a lifetime of expensive medical care. Edwards also won cases against hospitals, cities, and corporations. "As a lawyer, he was the whole package," says Mike Dayton, editor of North Carolina Lawyers Weekly. "He's prepared, he's smart, and he's very personable." And he continued winning massive verdicts. In 1990, he was the youngest member inducted into The Inner Circle of Advocates, an invitation-only group of the nation's top 100 trial lawyers. By the mid-1990s, Edwards had become legendary. "After trials," recalls Howard Twiggs, a Raleigh lawyer and former president of ATLA, "jurors would approach Johnny and ask him for his card." It is said that insurance companies would suddenly become interested in settling when Edwards' name was added to a plaintiff's team. Edwards won a $7 million verdict for the parents of a 16-year-old who'd killed himself the day after being dismissed from a psychiatric hospital, an incredibly difficult case to win, Dayton says, because in North Carolina the plaintiff must prove that the entire burden of negligence lies with the defendant. In 1997, Edwards successfully sued a doctor for $23 million on behalf of the parents of a baby severely brain damaged by oxygen deprivation during labor."</p>

31

<p>And, I would hardly call hard fought victories in front of impartial juries on behalf of seriously injured plaintiffs "screwing" the insurance companies. Sounds more like the leagl system working to me.</p>

32

<p>I agree, Concerneddad.</p>

<p>By the way, we should never assume that a large jury verdict means a commensurately large attorney fee. I saw an article recently that pointed out that a lot of cases are submitted to a juries after "high-low" settlements have been concluded (e.g., a floor of one million dollars even if the jury finds for the defendant, and a ceiling of three million regardless of how much in excess of that the jury awards).</p>

<p>The real settlement value of a case is limited by the available insurance coverage. It's not unusual for a judges to reduce an award after a finding a jury verdict was enflamed by passion. Many times, there are also post-verdict settlements (for less than the amount of the verdict) to avoid the delay and uncertain caused by appeal.</p>

33

<p>Fine, fair enough, Joseph Jamail. Although in my previous post, I put up an old Forbes link. According to the 2004 Forbes list of billionaires, he's actually #472. He made a 1/3 of a billion in fees off the Pennzoil case, although that was in 1980's money, so that money was lot more valuable than today's money. And the key is that he wasn't working for somebody else or wasn't even a partner of a major firm - he founded and ran his own firm. So, really, he was not really a pure lawyer as such, but actually a hybrid lawyer/entrepreneur. But OK, fine, I will accept that there is one billionaire who made his money off lawsuits. </p>

<p><a href="http://www.forbes.com/finance/lists/setters/keywordSearchSetter.jhtml?passYear=2004&passListId=10&passListType=Person&passKeyword=jamail%5B/url%5D"&gt;http://www.forbes.com/finance/lists/setters/keywordSearchSetter.jhtml?passYear=2004&passListId=10&passListType=Person&passKeyword=jamail&lt;/a&gt;&lt;/p>

<p>Compare that to all the billionaires who made their money from banking/high-finance, and I think my point still stands - it's easier to make more money from banking than from law.</p>

34

<p>"Made a billion dollars of fees? Sure. But to have billions of dollars in his pocket? Very doubtful."</p>

<p>The issue was never dollars-in-pocket, Sakky -- it was simply whether any lawyers "make" a billion dollars. While we're on the subject, I'm sure most investment bankers also have to share many of their proceeds with partners, employees, overhead, etc. </p>

<p>"And the key is that he wasn't working for somebody else or wasn't even a partner of a major firm - he founded and ran his own firm. So, really, he was not really a pure lawyer as such, but actually a hybrid lawyer/entrepreneur. But OK, fine, I will accept that there is one billionaire who made his money off lawsuits."</p>

<p>So now someone who opens his own firm is not really a "pure" lawyer, but rather a "hybrid lawyer/entrepreneur"? News to me. </p>

<p>The truth is, legal knowledge and experience can help people make tons of money in various different fields, including real estate and other investments. I'm not sure why we'd arbitrarily remove these earnings from consideration of how much someone makes in his career as an attorney. </p>

<p>"Compare that to all the billionaires who made their money from banking/high-finance, and I think my point still stands - it's easier to make more money from banking than from law."</p>

<p>No one ever disputed this. The one point I contested was the idea that "[e]ven the highest paid lawyer can be outearned by even a mid-level investment banker." I think we can agree this is an exaggeration. The most successful attorneys do in fact earn more than most mid-level investment bankers. </p>

<p>"Susan777, perhaps you wouldn't call John Edwards "legendary," but I'm not alone in doing so."</p>

<p>I'm sure there's plenty of people that would consider any decent trial lawyer "legendary". However, North Carolina is not exactly the most competitive pool. </p>

<p>"And, I would hardly call hard fought victories in front of impartial juries on behalf of seriously injured plaintiffs "screwing" the insurance companies. Sounds more like the leagl system working to me."</p>

<p>If you consider a system that drives up everyone's health-care costs, and therefore make health-care insurance unaffordable for many people, "working", then I guess I can't really argue with you. Let's just be clear that Edward's fortune was obtained to the detriment of most Americans. (Juries may be "impartial", but they are also easily swayed by emotional appeals, even when there is little or no actual evidence of negligence. In my opinion, this is one area that should probably be ajudicated by educated judges, not juries.)</p>

35

<p>If there's no actual evidence of negligence, the verdict won't stand. It will be subject to a judgment N.O.V., or overturned on appeal.</p>

<p>In my opinion, nothing about a judge's education renders her more qualified to decide an appropriate pain and suffering award than a jury of 12 people.</p>

<p>Here in California, pain and suffering awards in medical malpractice cases are limited to $250,000, and medical insurance is still extremely expensive. The trial lawyer makes a convenient fall guy for the cost of health-care, but not a convincing one.</p>

36

<p>Susan777, with all due respect (as you will learn in practice what always comes next is a slam), you must have gulped down the kool-aid. The hard facts simply do not support your belief that lawsuits are the reason that medical costs have risen. And, since I have been invloved in such cases -- even one tried to a judge -- be careful what you wish for. Care to know what judge awarded a child who was eviscerated by a defective lawnmower? I can tell you it is not the dollar amount you would hope for if you represented Toro.</p>

37

<p>"If there's no actual evidence of negligence, the verdict won't stand. It will be subject to a judgment N.O.V., or overturned on appeal."</p>

<p>As I said, "little or no". I'm sure you know enough about the actual practice of law to know why the above safeguards are generally inadequate. </p>

<p>"In my opinion, nothing about a judge's education renders her more qualified to decide an appropriate pain and suffering award than a jury of 12 people."</p>

<p>Forgive me for not being more clear. By "educated", I mean a judge that has actually been trained in medical and technical matters to the extent that they can offer truly informed judgements on issues like medical negligence. </p>

<p>"Here in California, pain and suffering awards in medical malpractice cases are limited to $250,000, and medical insurance is still extremely expensive. The trial lawyer makes a convenient fall guy for the cost of health-care, but not a convincing one."</p>

<p>First off, those limits don't eliminate those compensatory costs that shouldn't have been awarded in the first place. Secondly, and more importantly, insurance isn't a state-specific system. Large damage awards in other states will generally impact insurance rates in California as well as everywhere else. </p>

<p>I don't think our broken tort system is the only reason for high health costs, but it's certainly a major one, and one that should be remedied. (At least as long as we're pretending to care about the high cost of health care.)</p>

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<p>"Susan777, with all due respect (as you will learn in practice what always comes next is a slam), you must have gulped down the kool-aid. The hard facts simply do not support your belief that lawsuits are the reason that medical costs have risen. And, since I have been invloved in such cases -- even one tried to a judge -- be careful what you wish for. Care to know what judge awarded a child who was eviscerated by a defective lawnmower? I can tell you it is not the dollar amount you would hope for if you represented Toro."</p>

<p>See above.</p>

<p>P.S.: I've gotta think the kool-aid in law school generally relates to NOT blaming lawyers for any of society's problems! ;^)</p>

39

<p>"The issue was never dollars-in-pocket, Sakky -- it was simply whether any lawyers "make" a billion dollars. While we're on the subject, I'm sure most investment bankers also have to share many of their proceeds with partners, employees, overhead, etc. "</p>

<p>I think you're reaching. If you follow the context of the thread, it has always been about earnings, not raw revenue. After all, what does it mean to 'make' money, in the context of earnings, if what we're really talking about is straight raw revenue?</p>

<p>But fine, if you insist on defining the word "make" in terms of raw revenue, then I would say that almost every investment banker "makes" at least millions, if not hundreds of millions of dollars, perhaps even billions, in the sense that almost every investment banker, even the low-level ones, are involved in deals that, when you sum them up by revenue, total in the many millions, if not billions. </p>

<p>So whatever definition of the word 'make' you want to use, the average I-banker will easily come out on top over the average lawyer. </p>

<p>"So now someone who opens his own firm is not really a "pure" lawyer, but rather a "hybrid lawyer/entrepreneur"? News to me. "</p>

<p>Well, yeah. You can be the greatest lawyer in the world, but that doesn't mean that you're going to be successful at running your own law firm. Running your own successful law firm takes more than just being good at law, it takes business savvy, it takes good marketing, it takes the ability to manage employees. None of these traits are necessarily held by most lawyers, even very good ones. Law skills and business skills are not equivalent. </p>

<p>"The truth is, legal knowledge and experience can help people make tons of money in various different fields, including real estate and other investments. I'm not sure why we'd arbitrarily remove these earnings from consideration of how much someone makes in his career as an attorney. "</p>

<p>And by the same token, I could argue that knowledge of finance and investments REALLY helps people make money - so if you want to engage in a broadly-defined use of the term 'legal knowledge', then I can broadly define what banking and finance is. In other words, hello Warren Buffett. </p>

<p>"The one point I contested was the idea that "[e]ven the highest paid lawyer can be outearned by even a mid-level investment banker." I think we can agree this is an exaggeration. The most successful attorneys do in fact earn more than most mid-level investment bankers"</p>

<p>Fine, fair enough, I was using hyperbole to prove a point. What I should have said is even highly successful attorneys (not the most successful, but highly successful ones) can be outearned by most mid-level I-bankers. Again, case in point, according to the WSJ, the equity partners at Wachtell Lipton Rosen & Katz each made $2.5 million in 2004. A $2.5 million pay-year really isn't all that spectacular on Wall Street. Once you've reached the Director level of I-banking, which is what I and many others generally consider to be mid-level, you can reasonably expect to make ~$2.5 million in a year. And when you've really started to hit the big-leagues, which means that you've gotten to Managing Director (but you still haven't gotten to partner, which means you still haven't made it to The Show), you are looking at a 8-figure pay-year.</p>

40

<p>Hey, Sakky. </p>

<p>I think we agree on the basics, and I feel like you're arguing now just to argue. But whatever. I simply noted that your statement was, in fact, exaggeration/hyperbole, because there may in fact be other readers here who don't realize that. (Again, I agree with your general thesis.) As others have stated, even an fairly lowbrow intellect like Edwards can make more in one case than the $2.5 million a year of a mid-level I-banker. But yes, most I-bankers make more than most lawyers, and someone purely concerned with money would be better served going into that field (or, to be honest, many basic sales positions. I know someone without a high-school degree who made more than most attorneys peddling copy sales.)</p>

<p>The one point where I feel you're really stretching is is your further discussion of lawyer vs. entrepreneur. You now proceed to argue that since business skills are necessary to run your own solo firm, then it doesn't really qualify as being a attorney. This is, as I think pretty much every objective person will agree, simply silly. The truth is, you do need to be a successful businessman, generally, to be a successful attorney, especially if you start your own practice. This is hardly surprising. Sometimes, you need to be a successful salesman. If you're a trial lawyer, you may need to be a successful actor at times. Does this mean that you're not really being an attorney at those times? No, it simply means that being a successful attorney requires all kinds of different market skills. (The same could be said of a doctor or advertising executive who opens up his own practice/firm.) In any profession, people who go out on their own will tend to make more money if they're successful, and being successful generally requires various business and people skills. </p>

<p>(Investors, of course, also need to be sales people, if they want to convince people to invest in certain ways. And they also probably need to know certain legal rules as they proceed. Doesn't mean they're not investors or bankers.) </p>

<p>In terms of the other issue, I, personally was simply talking about "making" that much money. Whether you go by gross earnings or net profits, the bottom line is that the people getting huge verdicts and settlements are clearly making more than most I-bankers, mid-level or otherwise. </p>

<p>On the other hand, if we're going to use the "involved with deals" logic that you apply, then every cent of the tobacco settlement, etc., must be considered money money "made" by the attorney. (Neither analogy makes much sense, of course.) </p>

<p>Will the average I-banker come out on top of the average lawyer? Quite likely. This was never at issue. </p>

<p>In terms of the "related-knowledge" issue -- I'll happily agree that Buffet is a member of the subset of investors, generally speaking, just as lawyers that use their knowledge making billions in other areas (beyond strict litigation and counseling) are a subset of attorneys, generally speaking. Investors/financial types generally make more than almost anyone else in society, with attorneys (on average) further down the line, but ahead of most folks. </p>

<p>I think your main point is that attorneys who are employed by firms, whether partners or otherwise, really aren't all that loaded in comparison with people in other areas. I completely agree. Anyone who's a true financial whore and makes "Biglaw Partner" their ideal is probably misguided. Most partners, even at the largest firms, probably make under a million a year. My only point is that there are some areas where attorneys can in fact make "real" money, and one nice thing about those areas is that they're not school or grade specific.</p>