Does big law pay higher than IB at the partner level?
Just saw a really interesting video by Bloomberg titled "How Will Private Equity Change Big Law?" (can't link on WSO, so you will have to search it on youtube - worth the watch). Based on what was said by a HLS alum at mark 3:30, some partners are poached by other firms and paid "20 million a year, guaranteed for five years". we're talking 100m contracts?
this is not possible in IB right? I'm trying to make an apples to apples comparison and thinking of top paying IB firms like qatalyst, cvp, possibly smaller boutiques like m klein or dyal and cannot imagine someone being poached even at the partner level and being paid 100m contracts. maybe im thinking about this wrong though, please
Based on the most helpful WSO content, Big Law can indeed pay higher than IB at the partner level, but this is highly dependent on the specific circumstances. Equity partners at top law firms can earn anywhere from $800k to $10 million annually, with some exceptional cases reaching even higher figures. The example you mentioned of a $20 million annual guarantee for five years is rare but not unheard of in Big Law, especially for top-tier rainmakers or partners with a significant book of business.
In contrast, while IB managing directors (MDs) at top firms can earn $1-2 million annually, the pay ceiling in IB is generally lower than the extreme outliers in Big Law. The structure of private law partnerships, which allows for profit-sharing and private ownership, gives Big Law an edge in offering such massive contracts. On the other hand, IB firms, especially public ones, are more constrained by shareholder interests and compensation structures.
So, while $100 million contracts are possible in Big Law for top partners, they are virtually unheard of in IB, even at elite boutiques like Qatalyst or Centerview.
Sources: Lawyers make more than bankers now?, Struggling between applying to t14 law schools and t15 mBA Programs, Q&A: Recent Law School Graduate at a T30, Big Law to Investment Banking -- Thoughts?, Talk me out of law school (HYS law)
The avg big law partner at a top firm is making miore than the avg MD on the street. Zero question. Hourly rates pushing or exceeding 3k/hr. The inflation has been insane relative to flat MD comp over the past 20 years.
It's just much, much harder and more random to become a biglaw partner though.
Like you can become a IBD MD, PE/HF "partner" from a wide variety of schools but if you don't go to one of 6-7 law schools your chance at becoming one of those partners making comp like that is slim to none.
I dont think thats really true, doesnt seem that hard or that slow anymore
Lol not even true these days, it’s just attrition that stops people
(1) What do you think the average big law partner at a "top firm" is making?
(2) What do you think the average MD on the street is making?
The point is that many if not most MDs are not equity partner equivalents. They are counsels or non equity partner equivalents. And the guy who is making 25mm at Kirkland is comparable to the likes of a Eric at CVP or one the Uber group heads at EVR who are making 50mm+. Equity partners and senior MDs at the top firms are pretty equivalent
This.
What does comp typically look like for IB MDs at a BB in your experience? 2mm? Not for the hitters but typical mid-level md
Tenured, mid level non group head MD
Coverage / M&A - 2-2.5
Capital Markets - 1-2
This is for the US, assume a 20% discount for London and 40% for the continent and Asia.
law firms are the definition of selling shovels when everyone is rushing for gold because they don't take risk. This to a degree is also the same for IB, but in IB you are very limited to a specific set of of product on which your compensation is primarily tied.
Law firms serve on many more fronts: funds structures, M&A, employment, tax, litigation, etc. so more revenue streams that partners split
it will be interesting to see the implications of AI in law firms, from one side you work faster and need less juniors on matters, but because law firms are paid on an hourly basis this means that you'll get paid less as the hours get drastically reduced (unless you bump your fees to reflect the 'efficiency' i.e., that you're doing it faster)
I remember reading a paper years ago proposing that law firms follow a sort of stock option model to ensure that there is a longer-term interest in growing the firms vs. spliting whatever is gained at the end of the year among partners and start almost from breakeven for the next year. So might see PE firms becoming even more creative on compensation mechanisms.
Everyone below partners will probably get fucked, there's no other way to put it nicely
A banker may make more but 1) it is much, much more variable and black box and 2) law partner comp is all cash and they often have the ability to more tax planning given partnership structure.
All in all -- I think big law partner is better from a comp perspective and "comp clarity" than banking.
Source: my wife is a big law partner.
You're Asso1 and your wife is a partner?? Do say more
Old anon title. I'm one of the much older guys that has exited banking that just still pokes around here for entertainment.
These discussions are invariably pointless, the personalities differ between MD and partners at law firms and people generally aren’t deciding between the two. Either outcome is somewhat uncommon and the exits from finance are broader than law. Do whichever you prefer and don’t worry about something that is for a first year analyst or associate a decade plus down the road.
curious to hear what the personality differences are?
Biglaw partners (at least on the transaction side) I'd say are more bookish/introverted than IBD MDs.
The closest comp I think is that the type of person who could become an II-ranked analyst could become a transactions biglaw partner.
https://www.wallstreetoasis.com/forum/investment-banking/lawyers-pay-has-surpassed-bankers-in-many-instances
There was a deece thread on this awhile back, this is a very real phenomenon
Depends heavily on the partnership structure, whether you’re an equity partner, etc
If to the benefit then yes, very much so
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