Lawyers pay has surpassed Bankers in many instances

This has got to be due to Big Law partnership models in which excess earnings get distributed directly to partners instead of paid out the huge mutual fund shareholders (like at the big public banks). 

Just thinking about the economics of a $B deal, the gross fee revenue to the IB has got to be multiples higher than that to the legal team(s). I think what's going to give is EB / partnership models like CVP / Baird are going to be a lot more desirable places for productive bankers going forward. No one wants to bring in $100M in fees just so your company can increase a friggin dividend to outside shareholders and pay SEC fines.  

That's probably what has changed. Most of Big Swinging Dicks of the 80s made tens if not hundreds of millions by monetizing their units and taking the company public blah, blah, blah. The problem is that for everyone that comes after them, this means the outside shareholders now claim the profits. 

Interesting article.

The WSJ stated "Managing directors who aren’t in high-ranking leadership roles at banks make an average of between $1 million and $2 million most years, including bonuses often paid largely in stock, more or less unchanged from where it was two decades ago. 
Equity partners at top law firms, meanwhile, can make around $3 million or more a year—more than triple what they were pulling in two decades ago. An elite group of partners who bring in exceptional amounts of business are earning north of $15 million at a handful of firms including Wachtell, Lipton, Rosen & Katz; Kirkland & Ellis; and Paul, Weiss, Rifkind, Wharton & Garrison."

But I feel like they only looked at the best lawyers compared to the 'worst' (a pretty massive oxymoron) or even below-average MDs . If they'd look at the average equity partner compared to the average MD it'd likely be more similar, and of course this isn't counting people who hold similar positions but at PE/VC, or some HF and senior quant strategists who are compensated far more as well. 

I’m seeing fairly young law partners throwing around big dollars though, K&E is paying some folks $3mm that you would think would be earning closer to $1.5mm. They also have a very aggressive model that has lawyers stepping all over each other with little regard for whos client it is 

Holy shit still making millions both of em why we talking about what other guys are making md lawyers etc

Banks becoming publicly listed was a disaster for IB comp.

It’s not that surprising to me - bankers get paid on one thing - a deal closing (ipo, sale, whatever).

Lawyers get paid whenever they do anything. A deal dies at the finish line? Lawyers still get paid, bankers don’t. No deal flow because a recession? Lawyers always have crap they can do and bill for, bankers sit around and pitch (no income).

Also what others have said around all law firms being partnerships vs publicly held.

Thought the reference to private equity in the article was interesting as to how that is helping lawyers. Obviously helps banks too, but I guess PE firms are always running up fees on random add ons or port co work that aren’t necessarily banked.

Similar to the very first comment, but a lot of this is driven by structure of the respective firms.

Most banks are huge bloated institutions with many other divisions. JPM WFC BAC each have over 200,000 employees (!). Even places like GS and MS have 50,000.

Law firms maybe have a few thousand people, max. Much leaner cost structure and virtually everyone at law firms is revenue generating. Not bogged down by hundreds of thousands of operations and technology headcount and billions upon billions of OpEx

Big law partners are easily bringing in more than BB bankers at this point. It is most definitely much easier to attain the 3-5m mark in law than in banking now. Like someone else mentioned earlier, the BB banks are distributing as much as possible to shareholders. Instead of individual bankers having a big name like they used to and commanding super high comp, the banks leverage their brand name more now. The partnership model certainly has its drawbacks, but compensation almost always remains high. 

At lower levels big law is paying like crazy too. Know some people that first year are bringing in around 300 first year in NYC. 

Yeah but Law seems incredibly boring. Can’t imagine doing some of things my friends are doing day to day in big law. 

There is no part of me that is envious of lawyers. The stuff they do, even at the senior level, would be mind numbing to me. I suspect I am like others and wouldn't see a difference between $2m and $3m of annual comp. Sure, it's nice and strokes the ego, but can't imagine you're doing anything differently. 

The two called out by name in the original WSJ article (Barshay and Sprayregen) work literally all the time, vacations, weddings, whatever, for their comp levels. Both seem to enjoy it and are compensated appropriately, but being on calls 18 hours a day into one's 50s-60s takes a very special person.

Agree. 

Adding that on junior level, most of the comp in law is base with a small bonus (relatively), so the risk-weighted comp is even higher compared to bankers (where you don’t know what you’re gonna get as bonus). Obviously this converges when you get more senior.

My gf is in law and she will make at least 50% base more than me after qualifying, had I stayed in banking (both UK; like-for-like seniority; and she is not at one of the top-paying US firms). However, I would like to add that law trainee comp is equivalent to pre-covid ANL1 pay for two years (UK) (however, you can go on international and client secondments). 

I strongly believe that once investment banks become private again the compensation formula will be much higher. I like the idea of partners being equity owners in the company, so they are able to eat what they kill. This is why centerview is killing it with comp

Small point of OP’s, MF PE partners are not hunkering down in $1MM homes unless they’re extremely frugal with their money. Buy side is not experiencing the same decades-long comp stagnation being described