why do cpa's on average earn less than attorneys

College Majors Business Major
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<p>My son likes business,and he may want to give accounting a shot. I am all for it. I was always curios, however, as to why attorneys on average earn alot more than a cpa? I understand that law school is 3 years of extra education and accounting is 1 extra year. (you now have to earn a masters to sit for the cpa exam). I also understand that if you are not a cpa that being a "regular" accountant is not as much schooling as an attorney, so that I understand. but there is a tremendous amount of responsibility for a CPA.</p>

<p>Do not get me wrong. There are CPA'S that are partners and such that earn 500k or 1mm, but that is not the norm. Most people do not make it to partner. Yes, there are CFO'S that do great, but again, not the norm. Most folks do not make it to CFO.</p>

<p>On the other hand, I see alot of "average" attorneys earning in excess of 250k. I do not see that as the average for a CPA. You see starting salaries for the big 4 at 57-68k. Really? for 70-80 hours of work? </p>

<p>All I am saying is that when you are an accountant, and especially a CPA, you are doing audits for major companies, or doing the books for firms, and or individuals. It is an extremely responsible job. I am just not sure as to why the average CPA does not earn 250k -350k like alot of attorneys do. Also, I am not knocking attorneys, but I am talking about negligence attorneys, (slip and fall cases). Those folks can do great, but I do not see that as much as a responsible career than a CPA auditing the books for IBM OR PFIZER.</p>

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<p>Also, one other point. I have great respect for attorneys. I think law is a great profession. There are attorneys that do struggle, but not many. My issue is not so much how much attorneys earn, as to how little, if you will cpa’s earn in relation to attorneys.</p>

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<p>Also, if you think about it. CPA’S have to know about alot of different subjects regarding accounting. The tax code, international taxes to an extent, all of the different rules and regulations etc. If you are a real estate attorney, that is all you really have to know. Same with being a criminal attorney. That is all you really specialize in. I am cogizant of the fact that alot of attorneys practice different areas of the law. Some do criminal, real estate, etc. They practice alot of areas, however, most attorneys stick to one or two areas of specialization whereas the cpa has to know it all.</p>

<p>I just think (as Rodney Dangerfield) would say, the CPA does not get the respect they should.</p>

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<p>euve69, </p>

<p>First of all, I need to clear up a number of misconceptions here. </p>

<ul>
<li><p>CPAs have to go through MORE schooling than Attorneys due to the continuing education requirement to remain an active CPA. In addition, the CPA Exam is HARDER than the Bar Exam in majority of the States, which means the preparation for the CPA Exam is usually longer and more intense than the Bar Exam. PLUS, you don’t have a chunk of Accounting concepts covered for Attorneys, but you do have a chunk of Legal Concepts (especially those in Commercial Law) covered for CPAs. Bottom line, CPAs go through more education than Attorneys. </p></li>
<li><p>Being a Partner in a Large CPA Firm as you mentioned, is hard to obtain, but it’s JUST AS HARD to be an Attorney today making over $250,000 a year. The vast majority of Attorneys today do not make anywhere near that amount. </p></li>
<li><p>The starting salaries for Accountants without a CPA and with less than 3 years of experience is about $25k if you aren’t in a large area, it’s about $40k in a large area, but the higher cost of living balances it out. When you have over 5 years of experience and a CPA License, you should be at $55k - $65k in regular area and about $75k - $80k in a large area with the higher cost of living. Yes, the work hours are 60-70 hours a week. For the average Attorney, this is about the SAME pay scale range. </p></li>
<li><p>To add to these salary estimates, as mentioned prior, only Attorneys at the very top of the scale would be at $250k plus and the same goes for CPAs. Attorneys with a Top Tier Law School education and over 10 years of experience who are at the TOP of the scale can bring in $250k a year and the same is true with CPAs with over 10 years experience who are in a Senior level within a Top CPA Firm. </p></li>
</ul>

<p>I would say the CPA profession is much more stable and predictable though than being an Attorney as the market is FULL of Attorneys right now, but only the Attorneys at the top of the scale get the worthwhile cases and assignments. While to be honest, there’s not ENOUGH quality CPAs in the marketplace. </p>

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<p>I agree to an extent. But there are a ton of attorneys who do negligence like my brother in law who are in practice for approx 25 yrs raking in 300k plus per year. He has his own practice, but there are alot of attorneys out there who are doing that. </p>

<p>My contention was not the amount that attorneys make. They deserve it, heck, they went to school so why not. It was the fact that it just seemed to me that the CPA was not earning what they should. </p>

<p>Look at what you said. 5 yrs cpa experience in a big market ant they make 75-80k Really?? No offense but my electrician and plumber (who are skilled as well) make 175-250k per year. </p>

<p>I think a CPA with 5 yrs in a large market should be making every bit of 125-150k for the hours they put in, and the technical work that they perform.</p>

<p>I am not saying it is brain surgery, but 80k for 75 hrs of work is not great for someone that holds a professional liscense.</p>

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<p>@euve69, I think a lot of professions would make similar queries- for example engineering.</p>

<p>Why do people think it exorbitant to pay an engineer charging $175/hr. to certify with his stamp, taking on liability for the decision, that something is safe; yet think nothing of paying $400/hr. for an attorney to render an opinion or try his best (including travel time and review time, etc.) with no guarantees? Why does an engineer’s invention customarily revert to the person who hired him, but an actor, writer, or performer gets lifetime residual royalties on works they invent regardless of who was paying them when they were invented? Life is not fair.</p>

<p>I think the main reason for this is the protections historically provided by the American Bar Association. There are rules that for “professional courtesy” attorneys can only discuss a case with another attorney (providing billable hours for both sides), and that certain actions use an attorney, etc. The aggregate result of these protections serves members of the profession. These protections against eroding of attorney work practices serves to build a larger barrier to hourly cost reduction.</p>

<p>What do you think is the reason?</p>

<p>Maybe there should be an American CPA Association that strengthens the public value of members of that profession?</p>

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<p>You are correct, life is not fair. Why does a ballplayer make 10 or 20 million a year and a brain surgeon 2 million a year? Free Market Enterprise!! So yes, maybe there should be a stronger advocacy group for the CPA. It is a very responsible position, and in my opinion, do not get compensated the way they should.</p>

<p>The other thing to do is not be a CPA if someone does not like the pay. It is that simple. </p>

<p>I was just analyzing the situation one day and was scratching my head.</p>

<p>Here is one interesting fact. The association that puts out the CPA exam certainly makes it one of the toughest tests out there currently. It is a weed out field, that is for sure. That said, they should step up to the plate and lobby for greater pay.</p>

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<p>IMO the biggest problem is that the major accounting firms underpay their employees and that hurts the profession’s overall pay scale. While major law firms start associates out at very generous salaries, accounting firms start employees at relatively low salaries especially considering that CPAs now need 150 credits and most new employees already have a masters degree. Again, in my opinion, the accounting firms take advantage of the fact that most accountants want that Big 4 experience on their resume and this lets them get away with underpaying their junior staff. Many accountants leave the Big 4 earlier than they might otherwise want (to go to a company) because of this pay scale. Still accounting is a fine career (I’m a CPA as is my son) and eventually the better salaries will come.</p>

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<p>I thought I would chime in:</p>

<p>CPAs generally put in a LOT less hours than attorneys. Yes, CPAs can work very hard and have long hours during tax season. However, the rest of the year tends to be much easier. Attorneys, especially at the big firms paying large salaries, work like dogs throughout the year. Being a lawyer at a big firm is really a burn out job.</p>

<p>Secondly, I know a number of lawyers who are or were unemployed. I know of few CPAs that are or were unemployed. Being a CPA can get you employed forever unless you are incompetent.</p>

<p>Third, There are MANY more accounting/CPA jobs available than law jobs. Every government agency hires LOTs of accountants. These same agencies hire much less lawyers.</p>

<p>Fourth: Being a lawyer takes a LOT longer and requires a LOT more money. Not only do you need to have a college degree,but you must also attend law school for three years thereafter ,which is quite expensive. To be a CPA only requires 5 years of training. </p>

<p>Fifth: Yes, you do read about the few lawyers making 250K+ and the newly hired lawyer earning $150K+. However, these are few and far between. The folks who start out at 150K+ graduated from the top 20 law schools our of 300+ law schools. In addition, they were probably in the top 10% of their class. Other lawyers start off at a much lower salary and are even lucky to get jobs today. My son has a friend who started off being an attorney with the social security administration. His starting salary was 45K.</p>

<p>Thus, you need to take all of the salary statistics in context with what is going on in each profession…</p>

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<p>Happy, I think you nailed it. I was thinking the same thing. I think it all comes down to the fact that the big 4 start folks out at 57-68k so they are really keeping the salaires “low” for lack of a better word. I think being a cpa is great, and accounting is a great profession. You will always have job security for the most part unless you are an imbecile. lol </p>

<p>However, I do hope that the salaries do come up in the future since being a CPA specifically is a very responsible position.</p>

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<p>Tax Guy,</p>

<p>I do agree with you that the education requirements for an attorney are greater to a degree. 2 extra years of schooling, however that is mitigated by two factors. First, as a CPA, there is alot of continuing education. I know this from my CPA. He constantly has to take courses, so it may not be as expensive, but I bet if you add up all of the continuing education over the years, it is more than the two extra years of law school, or at least close to it.</p>

<p>Second, the big 4 work you to death. My freind works for Ernst, and believe me he works 60-80 hrs a week all year round. Yes, Feb March and April are the worst, but there is always auditing to be done. It does not matter if it is July, or April 15th, that is a big fallacy, the big 4 work you hard no matter what time of the year it is.</p>

<p>That said, I do agree with you that attorneys do not all start out at 150k, true. However, over time, after they cut their teeth on a few jobs, if they have something on the ball, they should be making 200k per year on their own, or just working for a midsize law firm. There will always be the attorneys that stuggle, just like any profession, but on the whole, I think most do better than cpa’s</p>

<p>I also agree that CPA’S do have job security. Unless you are a schmuck, yes, you should do well, but the same can be said for an attorney. I have never seen many attorneys starve.</p>

<p>All in all, I think being an accountant is a great profession. Especially if you are a CPA, because lets be honest, there is only so far you can go with a BS/MS In accounting. You need the CPA designation to make any real decent money down the road. That is akin to going to law school and not passing the Bar exam. You will only go so far unless you pass that BAR EXAM.</p>

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<p>Euve69, I worked in the tax department at Touche Ross,which was the predecessor of Deloite Touche. Other than in tax season, we really didn’t work that hard. Most accountants could have a “normal” life without having to put in 60-80 hours per week. Yes, there were times where I had to work on weekends and overtime;however, these were relatively few and far between.</p>

<p>Also, it is true that CPAs need 80 hours of continuing education every two years. However, attorneys need continuing education too. You have also said that ,'I have never seen many attorneys starve." You must not have been watching what was happening in the legal field from 2008-2012. It was a blood bath in the legal profession. Many lawyers lost their jobs. Firms had to make substantial cuts in salaries and bonuses due to changing billing practices and other changes in the legal profession.</p>

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<p>

</p>

<p>I think it really varies depending on where you work and what you do. I worked in Risk Services and it wasn’t as bad as you make it sound. In my experience there was kind of an ‘arc’ in work/life quality. Senior associates and Managers got it the worst, but associates and senior managers/directors were more balanced outside of busy season (admittedly, mostly because the latter started having obligations to bring in revenues that meant that they couldn’t/shouldn’t be billing as many hours personally any more). </p>

<p>I do think you might have an unrealistically rosy view of what it is like to find a $250K job as an attorney these days.</p>

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<p>If u average in the salaries of all the unemployed and under-employed law school graduates, the picture looks very different. </p>

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<p>dmitri,</p>

<p>I am not saying that you can just go out and get a 250k job right away. I do think that after 10-15 years or so that alot, not all, but alot of attorneys do make 200k plus per year. Maybe it is me because I reside in New York but I do not see many attorneys with 10 plus years of experience making less than 125-175k per year.</p>

<p>I will say that during the real estate debacle, that alot of real estate attorneys had a difficult time but outside of that specialty, most attorneys do very well.</p>

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<p>GMT</p>

<p>I guess you can look at any profession and there are underemployed or unemployed folks out there, but lets be honest here. Being an attorney is a great profession on the whole. Yes, some attorneys struggle, yes some students out of law school find it hard to find that first good job. I understand that there is supply and demand issues in any walk of life, but lets be honest here. If you had a son or daughter and they said hey dad, I want to be an attorney, or if your son or daughter brought home their boyfriend or girlfriend and said, dad Bill is studying law, I do not think you would be upset!!</p>

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<p>

I would be VERY concerned. </p>

<p>There are too many law graduates chasing too few jobs. And at the same time, many legal services are being outsourced to india, where an endless army of english speakers can do the work for a small fraction of the price while one America lawyer in the U.S. signs off on the work.</p>

<p><a href=“Employees In The Outsourcing World Are Serious Business Partners - Forbes India Blogs”>http://forbesindia.com/blog/business-strategy/employees-in-the-outsourcing-world-are-serious-business-partners/&lt;/a&gt;&lt;/p&gt;

<p><a href=“You can do anything with a law degree? No, no you cannot.”>http://www.slate.com/articles/life/culturebox/2014/05/you_can_do_anything_with_a_law_degree_no_no_you_cannot.html&lt;/a&gt;&lt;/p&gt;

<p><a href=“Why Attending Law School Is The Worst Career Decision You'll Ever Make”>http://www.forbes.com/sites/jmaureenhenderson/2012/06/26/why-attending-law-school-is-the-worst-career-decision-youll-ever-make/&lt;/a&gt;&lt;/p&gt;

<p><a href=“http://www.salon.com/2013/04/06/law_school_is_a_sham/”>http://www.salon.com/2013/04/06/law_school_is_a_sham/&lt;/a&gt;&lt;/p&gt;

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<p>Lawyers think they deserve to make more money than everyone else, not just more than the accountants. They think they deserve to make more, they charge more, and people pay them more. I’m not sure why that is. But it’s true.</p>

<p>I don’t know much about either field, but I would guess that it’s easier to become a CPA than it is to get through law school and the bar exam. But wages aren’t based on the difficulty of your college major. If they were, people with undergraduate degrees in Physics would be pulling down all the cash after college. I’m sure they do alright, on average, but I’m pretty sure the philosophy majors who go on to law school do better in the end.</p>

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<p>Upset wouldn’t be the term I would use. However, I would be worried about that person’s chances especially if they attended a non top 20 law school. However, if they majored in accounting, I would bet that they would find a decent job.</p>

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<p>GMT,</p>

<p>All I can say is that I live in NY, and if any attorney that graduates law school has ANYTHING on the ball, they get their first job making whatever they can, and then go into private practice or work for a small to midsize firm pulling in 6 figures within 5-7 years.</p>

<p>If you set up a private practice to do negligence work or divorce work just to name a few, are you really going to outsource the case to a schmo in India? Come on, lets get real here. Now you are making attorneys into customer service reps for Dell computer where everything is outsourced.</p>

<p>I like the Accounting field, but GMT if you have a Daughter for example, and she says Daddy Daddy I am going to marry Charlie and he is a musician or an artist and I think he will make it big, or Daddy my fiance is an attorney, which one would you choose. Please, lets stop making the attorney profession like toll takers where EZ pass made them obsolete. I think we are going a bit overboard.</p>