Law compensation compared to finance
Just curious if anyone had any insight into how Lawyer/Big Law compensation works. Is there large bonuses in the first few years or not really, I know they get a higher starting salary comparatively to entry level finance and I imagine there is some sort of carry/profit split once you hit partner. Just curious
Based on the most helpful WSO content, here's what you need to know about Big Law compensation compared to finance:
Starting Salaries: Lawyers in Big Law typically start with higher base salaries compared to entry-level finance roles. However, finance roles often include significant bonuses, which can narrow or even surpass the gap in total compensation.
Bonuses in Early Years: Big Law associates do receive bonuses, but they are generally smaller compared to finance. In finance, bonuses can make up a substantial portion of total compensation, especially in investment banking.
Partner Compensation: Once you hit partner in Big Law, compensation can include profit-sharing or a carry-like structure, which significantly boosts earnings. However, reaching partner is a challenging and selective process, similar to climbing the ranks to Managing Director in finance.
Career Longevity and Variability: In finance, compensation is often more variable due to market performance and group success. In contrast, Big Law compensation tends to be more stable, especially for associates, as it is less tied to market fluctuations.
Overall Career Compensation: While Big Law partners can earn substantial amounts, senior bankers (e.g., Managing Directors) often out-earn them. However, when considering the entire cohort (including those who don't make it to the top), the compensation levels between the two fields are more comparable.
In summary, Big Law offers a higher starting salary and more stable compensation early on, but finance roles, particularly in investment banking, can offer higher upside potential through bonuses and senior-level earnings.
Sources: Does not seem fair how much money we are making compared to other industries, The Efficient Career Hypothesis: Almost All Jobs Are Priced In, Finance vs. Law, Struggling between applying to t14 law schools and t15 mBA Programs, Q&A: Recent Law School Graduate at a T30
I heard WLRK gets 100% bonuses, but they also probably work more than anyone in law.
230-260k is pretty standard associate starting TC, goes up at a pretty standard rate till junior partner. The salaries and bonuses continue to get bigger and bigger in the race for top talent. I asked my friend who's a partner at a large firm, and he said this comp
https://www.biglawinvestor.com/biglaw-salary-scale/
was generally accurate, adjust -20% to +20% for type of law, size of firm, etc.
Partner is just owning a part of the firm so you own part of the comp. It's a lot like MBB partner. You get paid based on a few things. Business you bring in, hours you work, and cases you win. Generally speaking, the 2 main types of law partners(this is just what I've heard from people working in big law) are the rainmakers and the litigators. The rainmakers bring in the business and keep the firm running day to day, and the litigators are the people winning huge cases like class actions. You'll see different splits at different places and types of law firms, but generally corporate law is more rainmakers, while class action and criminal/constitutional law is more litigators.
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As someone with close friends who are now MD level in banking and partners at big white shoe law firms and has a decent idea of what both make, it seems like a pretty similar track in terms of comp. Especially when you consider that even a newly minted lawyer at a law firm should be compared to an associate in banking (since law school is basically the same training and accreditation program as being an analyst). Again, not firsthand knowledge, but it seems like you go from making ~250k/yr to about 2-4mm (depending on the firm, the year, your abilities, etc) once you're a partner/MD. Obviously some people make a little more, some a little less. The big difference is that there definitely are roles in finance which can make you a lot more. Not many, but some. Being a hyper successful trader or quant or whatever probably opens up the door to making 8+ figures, and I'm not sure that path exists in Big Law, unless you start your own firm.
The other thing I've noticed is that as your career progresses in finance, your hours get better and better. A 45 year old MD isn't working the same hours as a 25 year old associate. In law, it really doesn't seem like the hustle ever stops. You work your ass off for a decade to make partner, and then you keep working your ass off because you need to bring in business and bill a lot of hours to justify/keep that status.
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