The big news in this report is sobering: The number of large firms paying starting salaries of $160,000 has contracted. $160,000 was the median starting salary from 2008-2011 for associates at the largest firms (those with more than 700 lawyers). In contrast, the median for 2012 associates at those firms is just $145,000. The median starting salary in BigLaw has fallen back to 2007 levels.
This information appears to be reliable. NALP obtained entry-level salary reports from 83 offices that are part of firms with more than 700 lawyers. And NALP has always been a BigLaw organization, with most of its private practice members coming from that sector of law practice: NALP's online directory lists only 30 law firms with 25 or fewer lawyers.
But NALP's salary report doesn't stick to BigLaw. It also contains this nugget: "the overall median first-year salary at firms of all sizes was $125,000 [in 2012], up from $115,000 in 2011." Even in firms of 2-25 lawyers, NALP happily reports, median starting salary was $70,750 in 2012.
What? Anyone who has talked to recent law graduates knows those numbers are way off base. Small firms with a median starting salary of $70,750? Firms overall paying new lawyers a median of $125,000? How could NALP possibly come up with these numbers?
The answer is that NALP received information from a tiny number of small firms: Just 10 offices nationwide provided starting salaries for firms in the "2-25 lawyers" category. Those ten firms can't possibly offer representative information about starting salaries at small firms. Yet NALP claims they do, with a bold header asserting that its "Data Represent Broad-Based Reporting."
NALP compounds its misleading information by assuring readers that "almost 10% of respondents represent[ed] firms of 50 or fewer lawyers" so "the report sheds valuable light on the breadth of salary differentials among law firms of varying sizes at the national level." This statement suggests two things to readers: (1) Only about 10% of law firms have 50 or fewer lawyers, so that percentage affords representative information for NALP's survey. (2) Even at the smallest firms in this group, the median starting salary is $70,750.
NALP knows these implications are wrong. In addition to conducting this salary survey, which is heavily slanted toward large firms, it also collects employment data directly from law schools. NALP's own report on the Class of 2011 shows that 42.9% of the graduates who entered private practice joined firms of 2-10 lawyers. Another 10.5% of those graduates went with firms of 11-25 lawyers, while 6.1% joined firms of 26-50 lawyers. So 59.5% of new law firm associates joined a group that NALP believes can be represented by "almost 10%" of the responses to its salary survey.
The graduates who joined smallLaw in 2011 reported median salaries of $50,000 at the smallest firms (2-10 lawyers) and $65,000 at firms in the next category (11-25 attorneys). Even those reports are wildly optimistic: Only 44% of graduates taking jobs at these small firms report their salaries, compared to 93% of graduates who work for firms of more than 500 lawyers. Graduates are more likely to report high salaries than low ones, so the reported salaries for these small firms almost certainly skew strongly toward the high end of the spectrum.
What about that overall median for lawyers entering private practice? Based on its "salary survey," NALP proudly declares that the median starting salary for all law firms rose from $115,000 in 2011 to $125,000 in 2012. But the actual graduates of 2011 reported a median starting salary at law firms of $85,000. Again, that number almost certainly is too high, because it omits more than half the salaries for lawyers at the smallest firms. But even that inflated number is nowhere near the $115,000 median that NALP's "salary survey" claims for 2011. The latter number, just like the $125,000 claimed for this year, stems from a survey that draws disproportionately from BigLaw--and almost entirely ignores the category of law firms that more than half of private practice attorneys actually join.
C'mon, NALP, I thought law schools and other organizations were going to stop distributing this type of grossly misleading information. Do you really want potential lawyers reading that the median starting salary in all law firms was $115,000 in 2011, when your own data show that it was $85,000 at best? Are you really going to make representations about firms of 2-25 lawyers--a category that employed 9,417 graduates in 2011--based on responses from 10 offices? NALP should issue a clarification pronto. Even better, NALP should study the legal employers who actually hire a majority of our graduates--a group that is itself dwindling fast.
Oh, yes, go to small-town Nebraska and join a one-lawyer firm for a starting salary in the high five figures.
ReplyDeleteSecond!!!!!
ReplyDeleteThird!!!!!!!!!!!
ReplyDeleteTo put it another way, the data on salaries at firms of 2-10 is based on a sample of 0.13% of graduates who got jobs at such firms, i.e., one in every 750.
ReplyDeleteAnd not even a random or otherwise representative sample.
DeleteI like how you "put it another way". Law Prof. what is their motivation for posting such misleading information without a disclaimer, at the very least? I know why law schools do it, is NALP getting some sort of kickback, or benefit from posting this unrepresentative sample?
DeleteI have a novel idea. Instead of self-interested parties reporting industry figures, the NALP/ABA spend a fraction of their considerable available cash on hiring a reputable analytical firm in tracking salary and employment rates for lawyers.
ReplyDeleteThen the "reasonable" prospective law student could then carry out their due diligence.
I think that NALP data and law school data should be audited. There is no reason for NALP to make a report that it know is based on a handful of firms.
ReplyDeleteWho can we comPlain to about this?
Audited??? Oh, please. What a complete waste of time. Do the terms "Enron" or "Arthur Andersen" mean anything to you?
DeleteWhy would anyone want to go into biglaw? Don't you know you can hang a shingle and wait for a $5M case where your client was left a quadriplegic as a result of a google car careening into your client's car. Take the insurance limit and your fee for the case is a cool $1.65M. Just move to an accident prone area and watch the money rain on you. Biglaw is for suckers. You get paid a pittance (when you factor the hours, taxes, etc.) and you get treated like a bastard child by partners that suffer from erectile dysfunction and are going bald. Open an office in Suffern ('n pain), NY and watch the money from those PI cases flow in like fish on the port after a monsoon.
ReplyDeleteProblem solved.
ReplyDeleteI have seen local attorneys take on cases - from beginning to final disposition - for $400. Small law does not pay well. NALP is a cesspool.
ReplyDeletePeople joining small firms who can even find work in my market in North Carolina are starting at between $40k and $45k. And those are good cases. I recently was approached by a Duke grad who is interning while being paid as part of a post-graduate fellowship and is looking for work, or to set up his own firm. It is a brutal market.
ReplyDeleteanonymous 2:37, where are you in NC? I'm a 2L at Wake Forest. top 20% of class, secondary journal. I had a couple interviews at OCI and am trying to figure out where i can find a firm job (ideally looking at Charlotte/Raleigh as top preference).
ReplyDeleteGo away. Are you actually here looking for a job?
Deleteall is not totally lost. my two person midwest firm just hired a law grad (lower tier 2 school) who just took the bar for 125k.
ReplyDeleteI don't know the really important thing about NALP--who funds it, and commissions its research. However, I note that seven of its 13 directors work for law schools (and the other six work for big law).
ReplyDeletehttp://www.nalp.org/directors#Board_of_Directors
The damned thing is that I somehow associated NALP with decent research. See e.g.
http://www.nalp.org/2011selectedfindingsrelease
I would like to believe that this outlandish salary report is some rare blunder, but I suspect that NALP is just a scamming outfit, albeit one capable of occasional forays into honesty if they think it can get headlines.
dybbuk
The BigLaw board members are also - well maybe not complete zeros - but cyphers - I know a few of the firms they come from and I have never heard of these people.
DeleteWhat is the median salary of people doing solo practices?
ReplyDeleteis this a joke?
Delete@9:35 PM
ReplyDeleteMost of the solos I know are fall into two categories.
1) If they survive more than 3 years, then they likely will net $50,000 to $80,000 these days. There simply are not enough hours in the day to make a lot more as a solo.
2) Most fail within the first 3 years. They end up finding a job with a small practice of 10 lawyers or less, or they leave the law profession entirely.
Based on the number of faces that I see disappearing, my rough guess is that between 50% to 75% fail as solo practicioners.
It is not all bad in small firms, but the ones that do well tend to have niche practices with a few of the top lawyers in that field - and that is a tiny minority of law firms.
DeleteThere are certain practices where BigLaw finds it very hard to play well - for example intellectual property litigation - because the conflicts of interest are a nightmare (for BigLaw IP litigators defending against the trolls are wonderful because there are so few conflicts.) The corporate types also tend to treat the specialists badly - calling them "service partners" etc. and complaining that their practices lack leverage the way that corporate M&A does (i.e., it is hard for a partner doing IP, Telecom, Antitrust, Pharma, international, employment, etc., to manage 10-20 associates.)
Still, even that is a minority of lawyers. Solo law general practice or small law general practice is a tough way to make a living because the typical client has a small amount at stake in absolute terms (albeit massive to the client) and not a lot of money to pay legal fees. The $100 per hour a lawyer may want to charge is more than many Americans make per day after tax.
~50-75% failure is a fairly well-established estimate for new businesses in the long term (5-10 years) so it wouldn't surprise me if solo firms suffered attrition that was at least this high.
Deletehttp://smallbiztrends.com/2008/04/startup-failure-rates.html
I'm an attorney in a small inhouse department in the south. We start attorneys just out at $65-70K and never have an problems attracting bright law graduates who were highly ranked at good schools.
ReplyDeleteWhen the NALP's data violates the law of supply then you know there's a problem.
A small inhouse department is not BigLaw. Hello.Your time commitments are not the same. And what do you mean "highly-ranked." BigLaw = T10.
DeleteI think everyone needs to understand the nature of NALP. It's board has 13 members 7 of whom are law school representatives. Of the balance, most are with firms I have heard of - but the individual-board-member is in the "who?" category - so the current President is Charlotte L. Wager (the previous was law school) a Jenner & Block hiring person, etc., that few people ever seem to have heard of. Also ten women, three men, matching the bias towards recruitment.
ReplyDeleteAt a fundamental level NALP is run by law schools and those lawyers you seem to always find on committees earnestly trying to raise their professional profile by agreeing with everyone else on the committee. I think it is fair to say that the opinion of almost all lawyers of the career services offices and deans in their law school is somewhere between poor and awful - these people form NALP's regular leadership. There is no way that NALP would be anything other than a pollyanna about the employment situation and no way that NALP would ever publish statistics that would upset the law schools who supply its leadership. There is also no way that the tentative self-promoting law firm members of NALP would ever argue with the career services types - their board seat at NALP is a resumé filler, nothing more.
It would be nice if organisations with broader interests, like say the ABA or the state bar associations would take an interest - except that in my experience most of those active in these organisations are also get-along types looking for resumé filler and trying to raise their profiles.
The bigger issue is that a First Year Associate is just not worth $160k a year, or even $145k Realistically, pay of the order of $50-70k just about makes sense for a first year - but it should rise rapidly to $100k plus at about 3+ years. The problem is the law schools have a cost structure and tuition cost that mandates $160k starting salaries, even when they don't make sense.
One side effect of the high starting salaries is that when legal recessions ends, there will be a lot of associate lateraling as large firms look to back-fill their deficiency of 2 years plus associates (and there is a recession here compounding the demand shortfall (i.e., the system could not absorb 50,000 attorneys a year without a recession (maybe 20,000) but with a recession it can absorb even less.) That too won't solve the problem because first years are still overpriced, but now firms will see the overpay as an investment in someone who could jump ship at 2 years, just when they start to be profitable.
"One side effect of the high starting salaries is that when legal recessions ends, there will be a lot of associate lateraling as large firms look to back-fill their deficiency of 2 years plus associates (and there is a recession here compounding the demand shortfall (i.e., the system could not absorb 50,000 attorneys a year without a recession (maybe 20,000) but with a recession it can absorb even less.)"
DeleteThe question is how much of the erosion is economically secular-structural and how much of it is just cyclical through this business cycle.
I look to Doug Noland with respect to the credit bubble, in terms of macro-analysis.
He continues to think that the entire economic structure in this country i still massively distorted with an over-emphasis towards consumption and services .
I think that we still have to shift away from the FIRE economy, whether we want to do so or not.
The only think that the government *can* do at this point is to run massive deficits if the want to avoid massive liquidation (circa 1920).
The question is how much of the erosion is economically secular-structural and how much of it is just cyclical through this business cycle.
DeleteAbsolutely. I would suggest that there was a secular-structural adjustment in progress before the recession and that it underlies most of the shortfall in legal jobs - and the recession is making things look worse, but not a whole lot worse than the reality (i.e., it is the difference between 20,000 jobs for 50,000 new lawyers and 22,000 jobs)
Interesting to see how utterly irrelevant NALP (and AALS and USNWR and law school generally) has become to the majority of the bar. Umpteen thousand small firms in the country and 10 -- count 'em 10 -- return the survey. The rest probably threw them away unopened.
ReplyDeleteRPL
How do we know NALP even spent the postage on those firms?
DeleteGood point. Perhaps they know better than to waste the postage.
DeleteRPL
what I would like to see (or create) is a flowchart of the process of collecting this information. That would allow me to point out the ways and at which points the law schools can manipulate this data.
ReplyDeleteOne other thing that seems to be forgotten in these reports is that there are schools who actively try to prevent that the salaries of their graduates are known. How can NALP know accurate salaries when some schools surveys (such as my own school's survey) does not ask for salaries of individuals who don't have legal jobs?
ReplyDeleteWhen one realizes that according to my calculations based on all the law graduates I have known in the last 4 years (which is plenty) only 30% were able to get jobs in the legal field, it seems pretty odd that NALP is only reporting on the salaries of 30% of all law graduates. Given that so many don't get legal jobs, where is the category in NALP for the salaries of the remaining 70% of law graduates which is a more accurate description of the salaries a law graduate can hope to make? This would be real eye-opening, which is why it isn't reported.
If someone comes back w/ it is being reported, then that would be wildly inaccurate, given that schools such as my own law school specifically avoided asking the salary of anyone with a non-legal job because a majority of my school's graduates were working in retail and that would have brought the salary figure down for the school.
I say that when 70% of all graduates aren't even working in the legal field, it's time to start getting figures on the salaries they are making. Prospective students have a right to know what kind of jobs they most likely will be working in after graduation and the salaries for those jobs, not some figures on pie in the sky dream jobs that only 30% of the graduates are lucky to get.
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ReplyDeleteNALP has errors! Unrealistic yearly income!
ReplyDelete