Average Salary = Misleading?

Graduate School Law School
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<p>First off, I find it rather interesting and ironic that you are accusing me of arguing for the sake of arguing.</p>

<p>I would also say that I think I'm on perfectly safe ground when I maintain that there is a significant difference between being a competent lawyer and being a competent owner of a law firm, and furthermore that there is no reasonable parallel that can be drawn in the investment banking world. </p>

<p>You might say that a successful investment banker requires sales skills that have nothing to do with banking and whatnot, and I fundamentally disagree. The fact is, your job as a banker is to make money. If you're not making money, then you're not a successful banker. It's really as simple and as complicated as that. Hence, the ability to attract clients is fundamentally integral to a banker. The ability to find profitable arbitrage opportunities and to wheel and deal is fundamental integral to a banker. If you can't do enough of those things such that you can't make money, then nobody is going to think you're a successful banker. The same is true of entrepreneurship - you are either creating economic value, or you're not. If you're not, then you're not a successful entrepreneur. Money is therefore the simple yet ruthless measuring stick by which banking and entrepreneurship will always be measured against. The whole reason for the banking industry to exist in the first place is to make money. Similarly, one of the most important reasons, if not the most important reason, to start any company, is to make money. That's not to say that bankers and entrepreneurs don't have other goals, but I think we can all agree that among their list of goals, money/economic value has to rank very highly.</p>

<p>Law's not like that. Making the most money you can is not integral to success in law. It might be the goal of some individual lawyers out there, but it certainly can't be said about lawyers in general. For example, all those prosecutors trying to put criminals in jail are certainly not doing it for the money. I think we would all agree that you can earn recognition as one of the finest lawyers in the world as a star prosecutor despite the fact that you'd make relatively little money and certainly won't be fattening the wallets of anybody. Similarly, one could make an entire career out of being a public defender. </p>

<p>The point is that law is not congruent with economic value, nor should it be. You can be recognized as a widely respected lawyer even if you don't make much money or economic value. Generating economic value is not integral to being a good lawyer. On the other hand, generating economic value is integral to being a good banker or a good entrepreneur. If you're not generating a lot of value, then you're not a good banker or a good entrepreneur, it's that simple. Hence, I believe I am on entirely safe ground when I draw the distinction between being a good lawyer and being a good entrepreneur.</p>

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<p>I just want to comment on how much I like the civility of these posts, even if there is disagreement on the substance of the post. Of all of the "issue" surrounding being a layer these days, it is the lack of civility that bothers me the most. The tenor of these posts, as well as other threads in the Law School section, is heartening to me.</p>

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<p>Typo on my part; I'm averse not to theoretical econ (I actually like it a lot) but to overly quantitative econ; I'm basically worried about majoring in econ because, in high school, i've only taken one year of calculus, whereas most students in college who major in econ have taken two years, if not more.</p>

<p>I was browsing Princeton Review's website; according to them, many lawyers switch over to i-banking; this perplexes me a bit. If an I-banker needs a strong foundation in finance and accounting (according to princeton review), then how would a lawyer, who likely majored in something humanities-related as an undergrad and likely didn't do much finance-related in law school, be prepared? Would simply practicing law prepare you adequately for the job?</p>

<p>Perplexed but curious,</p>

<p>Gatsby</p>

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<p>That's because PR misled you. Not when they said that lots of lawyers go into IB. That is absolutely true. PR misled you when it said that you need a strong foundation in finance and accounting. Don't get me wrong. Such a foundation would be useful. But the word 'need' is too strong. </p>

<p>Let me give you some examples. What majors do IB's tend to hire the most of for their analyst positions? Finance, accounting, and bus-ad majors, obviously. To some extent, econ majors. But what else? Would you be surprised to discover that IB's hire lots and lots of people who majored in engineering, CS, physics, and math? I recall that out of the MIT School of Engineering (not the Sloan School of Management, but specifically the School of Engineering), IB was and is one of the most popular employers of MIT engineers. The same can be said for other elite engineering programs. But why? Think about it. How many engineers have ever studied finance or accounting? </p>

<p>Now you might be thinking, well, maybe the engineers didn't study finance/accounting specifically, but engineers are very quantitative anyway, so it wouldn't take them much time to pick that stuff up. Ok, let me give you another example. Other than Wharton, what are the 4 most popular undergraduate programsthat IB's recruit at? I think it's safe to say that it's probably HYPS. But why? Specifically, if you need to have done finance/accounting to get into IB, then why are the IB's recruiting so heavily at HYPS? How many HYPS students have ever studied finance or accounting? I think it's safe to say not many. I don't even think HYPS even has an undergraduate accounting class. And as far as finance is concerned, the best you might get as an undergrad at HYPS is some hybrid version of finance that comes with certain economics undergrad classes. But certainly not any truly formal finance curriculum. </p>

<p>The point is that IB's are going around recruiting lots of people without backgrounds in accounting, or finance, or both. And the reason they can do that is simple. IB's are simply going to take whoever they hire and train them anyway. Is it useful for a candidate to already know some accounting and some finance so that he can get a running start? Of course. Might that candidate's background in accounting/finance then be a boost to getting that person hired by the IB? Sure. But do you absolutely need to know accounting/finance to get in? No you do not. IB's are more interested in a very strong work ethic. That's why they hire lots of MIT engineers, because if anybody has proved that they have the self-discipline and drive to work long and grueling hours, it's the MIT engineers. They also hire pure raw talent, which is why they recruit at the very very top schools, where you obviously have to be highly talented to have even gotten admitted in the first place (in this sense, they are outsourcing part of their HR department to the school's adcom). They are also hiring a 'network'. Banking is really about making deals, and so the people that you know from school can become very important. Graduating from a big-name school gives you access to a tremendously strong alumni network which can and often does come in extremely handy when you're trying to complete a deal. And of course, banks are hiring 'prestige'. Banking is in many ways a sales job, and it's important for banks to present themselves well to clients. A bank will obviously look better when it can say "The guys we're assigning to your account are all Harvard graduates." </p>

<p>Hence, I think you can now understand why IB's hire law-school graduates. First off, it's obviously not all law-school graduates, but predominantly those who graduate from name-brand law schools like HYS. Secondly, it's much of the same reason that IB's hire engineers - they want to bring in guys who work hard and have raw talent, and if you can get through law school, then you probably worked hard and have raw talent.</p>

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<p>Wow, thanks a lot Sakky--that was a truly helpful post. It makes me hopeful: I can major in something easy, humanities-related, go to a top law school (I hope) and have the latitude to choose between law and finance. </p>

<p>I'm a bit unclear about something though: are you suggesting that the law-school graduates who enter IB do so immediately upon graduation? (With the IB's actually going to the top law schools, the same way they go to the top undergrad colleges, and recruiting grads?) Or do the law-school grads typically practice for a few years and then enter IB?</p>

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<p>The answer is both, but mostly the former. IB's will hire graduates from the top law schools immediately upon graduation. Note, it has to be a top law school - those IB's are basically hiring you for the name of your law school and for the raw talent/work-ethic you are supposed to have by coming from a top law school. </p>

<p>Practicing lawyers can and do also get into IB, particularly if they have been working in the financial-services industry. This, however, tends to be significantly harder. There's really only one truly effective way to break into IB - and that's to get recruited upon graduation, either from undergrad or grad-school (usually from an MBA program, but sometimes from another grad-program like law school). It is significantly more difficult to get into IB from another job. It can be done, but the odds do not favor you.</p>

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<p>here take this scenario. The partners in Mr. Rosenberg, Katz and whoever each make $2.5 million per year. Meanwhile at an I-bank the director's make roughly in that range. Move that to managing director. Up the scale to Executive Vice president then move to CFO and finally Chairman of the Board/CEO and you have mega salaries.</p>

48

<p>Dunkaroo,</p>

<p>What could you possibly want to buy that you couldn't afford on a salary of $2.5 million a year?</p>

<p>I know that's not private jet money, but hey - when you die, they don't add up how much money you acquired along the way.</p>

49

<p>^ I'd buy Canada....and then mabye South Africa too!</p>

<p>But as a serious suggestion, if you ever wanted to found a university, mega bucks ARE needed. Why were so many prestigious universities founded by robber barons who simply used money for toiler paper? Rockefeller founded UChicago, Vanderbilt founded Vanderbilt University, Andrew Carnegie founded Carnegie Mellon, etc. At least back in the 1800s, rich people loved to found new private universities that owned.</p>