Friday, November 1, 2013

How Much Do Corporate Lawyers Really Make? Partner Edition!

 42. The answer is 42. Oh, wait, that was for a different, probably less important question.  The question at hand, is, of course, the only one why people may find themselves sticking extremely tumid, pestilent, putrid and possibly cancerous pineapples up their lawyerly buttholes for a number of years: how much green can extract from this pineapple before my ass is completely ripped apart?  Well! Ladies and gents, as you know, I have attempted to answer this question in a previous post at least for associates. And that answer is well known more or less, given that at most "big law" firms or elsewhere, the variance in associate salaries is minimal. In short, it's enough to keep you stuffing shit up your ass for usually at least a few years (depending on your tolerance for citrus I guess), but not enough to keep you from bitching about it incessantly like a 5-year old girl with the great barrier reef up her vagina.

Now on to the bigger question - and this one is a bit funny - because for all the griping and moaning I hear from most lawyers, it seems many are confused about what the answer actually is and accordingly, whether this is something that justifies why they don't care about pursuing a lifelong career in anal citrus storage or why they absolutely do.

So, how much do the boss monkeys make?  The problem in answering this is that, a lot of this just isn't public - as far as I can tell.  And partners I am sure aren't going to open their yaps and start blabbing about this, lest the IRS take notice and come after them for all the cash they are hiding. Ha.  But really, you hear about "PPP" - or profits per partner - and people often use this as the the proxy for the take-home amount for partners.   This is misleading: a PPP value, which you see widely used by the various rankings to sort law firms is an average number derived from taking total profits and number of partners that are self-reported largely by law firms and then doing the division.  It does not take into account skews due to outliers, types of partners (maybe), the range of actual compensation across the board (the spread), etc.  If you have been basing your decision to join the legal work force based on that one firm that will pay you 2 bucks a year to be sit on your ass and command associates around, you may be in for a surprise to learn that you may only get that 2 bucks if you are a 20-year partner. If you are unconvinced, look at the study below that shows the graph of average compensation sorted by firm PPP, which shows that the average compensation is usually less than PPP - shouldn't they really be about the same.... or at least in some cases higher and some cases lower in about equal proportions?

So, I did some looking around, and talked to some friends who have recently become partners are close thereto.  It's hard to comment on this exactly and precisely, but MLA does a pretty good job here.  I think, in general, I would make the following general suppositions or presuppositions or whatever they are called about law firm partner compensation based on this study and chats with friends:
  • Average annual compensation for partners is reported to be $681,000/year based on the MLA study.  This sounds about right. But this is across the board. Let me break it down a bit more.
  • Equity partners make more than salaried partners, period (.).  (. )( .) haha i forgot about that one. Salaried partners I think max out probably around 500-600k, if that, and probably start around 200-300k, or lower for lesser firms. Let's say this - if you are a fifth or sixth year working at a top NY or international firm (and especially if you have some other bonuses like expat gigs or something) you are probably making more than junior salary partners at a lot of shops.
  • "Spread" is important.  And by "spread" I mean the multiple between the lowest earning partner and the biggest rainmaker. A spread of about 3 I think is the narrowest you'll get.  So first year partners get 1 buck. 20+ year partners get 3 bucks.  And each year in between you get a 100k increase in your salary or something like that (but really who knows how it is adjusted!). At a lockstep place - it is more or less exactly like this - and you will basically be forever that associate - waiting until the next year to go find your dream. Guess what - you're living it! :D!!  At eat-what-you-kill or other places, who knows.  I heard once that at one shop partners were reviewed biweekly for hours and pay adjusted accordingly. Wowza.
  • The MLA study gives you some insight into how the pay increases work according to tenure - average (across ALL partners) for years:
    • 1-5 is $400k, 
    • 6-10 is $633k, 
    • 11-20 is $790k, 
    • 20+ is $926k.  
    • Again, this does not adjust for firm type or whatever.  So probably seems more deflated than what you may be used to seeing - but this is your reality check too.
  • If you are at a big / top law firm, I'm talking like bags to riches wall street baller type, as a first-year partner, you may stand a good chance at making close to a buck, but this depends entirely on the firm and all the other stuff above - equity partner, good spread.  There's a counsel at my firm that makes north of 500, which is a really good deal, and makes me think that first year partners here probably make around 800 at least.  I know a first year partner at a decent firm (not a big wall st firm but well-known in regional circles and an international player) that makes 600-700 - so right in that sweet spot. These of course do not consider the buy-in I am assuming, which is probably significant. (There is a 'buy-in' at most places. Your capital investment into the partnership. duh.)
Yes; you can be a baller too.
Food for thought.