Law better than private equity??

Just coming off another thread about Neel Sachdev and his $60mm pay package (20 per year) along with numerous other cases of lawyers in the city earning $10mm+ per year and average pay at some firms over 3mm… it seems that from a compensation perspective law trumps finance in London (even top tier PE if we exclude senior and founding partners). If someone is only concerned with comp (despite how mind numbing some corporate law work is) it seems they should choose the law path—also considering it is likely significantly easier to become a Biglaw partner compared to partner at a MF

 
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This has been discussed at great lengths here, so if you're genuinely interested recommend doing a search. But you're forgetting carry which brings PE comp above law in most cases, and IMO it is much harder to hit partner in biglaw than MF.

TLDR; law and PE are very different careers, even if you go into M&A law. Someone who likes law would be very unhappy in PE, and someone who likes PE would be bored to death in law.

Comp is a factor when choosing careers, but when comparing two high-paying, very different careers, you need to weigh your interests and skills as well... this is a 40-year decision and you will burn out pretty quickly if you don't like your job.

 

Aren’t there a lot fewer MF partners and u can get stuck around principal level. + carry less likely to materialize / inconsistent and law in some ways more of a sales job similar to IB

 

Literally ANY senior job (definitely including law) ends up having a sales element. That said, PE seniors are not heavily sales guys like IB. There are entire IR teams that deal with that.

You will also get carry starting around ASO/VP level at most places.. and while for juniors it may not come through if you're moving around, getting pushed out before VP etc, it's definitely materalizing and consistent for most MD level folks

 

The top 255 PE dealmakers in the UK brought in £2.7B in carry in 2021/21. No doubt this is skewed to the very top - but that's £10.6M per head. Adding cash comp, you're probably looking at £11.5M per head for the very top PE dealmakers. The top lawyers in the City are generally at $10-$15M (https://www.fnlondon.com/articles/boom-time-top-lawyers-pay-swells-abov…). No real difference at the very top.

 

Yeah but the top 255 deal makers from a PE perspective are what, top 20-25% of UK PE partners? Whereas the top lawyers are pretty much all named in the article. I’d hazard to guess if you picked off the top 50 UK biglaw lawyers it wouldn’t be $500m total comp (and less if you use pounds) based on reporting. And there are a lot more biglaw partners than PE partners out there in London.

 

This has been discussed at great lengths here, so if you're genuinely interested recommend doing a search. But you're forgetting carry which brings PE comp above law in most cases, and IMO it is much harder to hit partner in biglaw than MF.

TLDR; law and PE are very different careers, even if you go into M&A law. Someone who likes law would be very unhappy in PE, and someone who likes PE would be bored to death in law.

Comp is a factor when choosing careers, but when comparing two high-paying, very different careers, you need to weigh your interests and skills as well... this is a 40-year decision and you will burn out pretty quickly if you don't like your job.

Each of the big law firms has literally hundreds of Partners, whereas most PE funds only have a handful. Most law firms operate on a lock-step compensation model where senior partners are very happy to patronise and mentor the junior partners - but in PE you compete for a fixed pool of carry, in a much more eat-what-you-kill type of environment, and at many firms the founders / seniors are reluctant to give up their precious carry. Would say it's much easier to get 'stuck' from a career perspective in PE.

The buy-side investors hitting it big on carry are the outliers in this industry, and there are going to be much fewer of those now that the industry is becoming mature. If you really want carry as a lawyer you can always go in-house - I'm sure the GC at Apollo is extremely well remunerated.

It's 100% worth emphasising the points others have made about the business being flow-based. In IB/PE you spend years building relationships and formulating ideas for deals that might not even happen. But at a good corporate law firm you can quite easily slip into a revenue generating role and continue landing business purely through longstanding relationships held by the senior partners, which you will inherit once the seniors retire.

You also don't have to be a PE or M&A lawyer. There's plenty of niche and lucrative sub-fields within law that you can specialise in. Your chances of surviving, having a long-term career, and eventually comping 7-8 figures p.a. are materially higher in one of these sub-fields than in PE tbh (assuming equal levels of interest in all career paths).

Also I'm aware that the US has a problem with underemployed lawyers, particularly with law school being so expensive there. This isn't really an issue in the UK, where tuition is much lower, and law firms will sponsor and pay for law school. Overall it's a pretty secure and downside-protected career once you have your foot in the door.

 

at least in london, law's pretty clear of finance at a senior level

 

This is comparing a top 0.1% biglaw partner with a middle 50% or so PE partner.   I’d compare comp here to like Scott Kleinman or one of the other people who has ascended to a top three or four seat at a large PE firm.  There are like one or two lawyers ever who have become a billionaire off being a lawyer while a ton of investment side professionals across a bunch of different assst classes have.
 

The place where things have really leveled off is actually on the restructuring/ distresssd side of the house for non-founders vs lawyers.

Also a mid tier MD at an average BB coverage group will likely make less than an average biglaw partner at a magic circle / Vault 10 firm. 

 

Look at the sheer # of partners at biglaw firms that average 4-8 mil per year. Looking at Kirkland alone, assuming that the average doesnt deviate materially from the median, 250 partners there alone are making more than 7.4 mil. No, the proper comparison isnt to just scott kleinman

https://en.wikipedia.org/wiki/List_of_largest_United_States-based_law_f…

 

Look at the sheer # of partners at biglaw firms that average 4-8 mil per year. Looking at Kirkland alone, assuming that the average doesnt deviate materially from the median, 250 partners there alone are making more than 7.4 mil. No, the proper comparison isnt to just scott kleinman

https://en.wikipedia.org/wiki/List_of_largest_United_States-based_law_f…

He is comparing to a $20m outcome which reporting reads as the number 1 pay package in UK biglaw, so yes Kleinman or similar is the comp there. If we are looking at top quartile equity partners at Kirkland, it’s likely not super far off a mid-tier partner at a MM firm like InvestIndustrial or Vitruvian but it’s incredulous to say it’s the same at the top between both professions.

 

Situation is significantly different in the US. I would never choose being a top lawyer over a top PE partner. Comp is just better for PE over here in the states

 

If you like numbers, go into finance. If you like words, go into law. 

 

There may be some validity in what you say considering that in UK law has an edge in certain aspects over finance. I saw plenty of international deals where parties decide to ignore their local laws and opt for UK law to be applied to their contracts because it's friendlier and they don't want to risk a South African court giving a shitty decision because judge Jonathan Ubuebe doesn't understand what is a convertible. So London, compared to NY, may not be limited to working only with local clients which allows them to have many more sources of revenue than what one initially assumes

also the debate IB vs. law is way different in UK vs. US. In UK we don't have to do an additional 3 years for the JD. You can go directly for law and at 22 start in a Magic Circle/US firm. 

 

I don’t care how much the lawyers make. No matter how bad finance sucks, biglaw sucks more. I’ve seen enough to validate that claim. Biglaw partners seem even more soulless than their finance cohorts. Also, being on the buyside, I’m not impressed with them. They don’t counsel - you have to tell them what to do. They are well paid middle men and transcribers. 

 

I’m not impressed with them.

neither they about you lol

law is just a job, IB is just a job, PE is just a job, and that's it. You're all there to pay your bills, support your family if you have any, and save some extra bucks for whatever you want to do. The dick measuring contests just screams insecurity.

as a matter of fact, I always found it funny people saying that "I tell lawyers what they need to do". True, in the same manner as your VP tells you what to do. You're just there to put the shots, so are lawyers. They work for Apollo Global Management as their client, so they don't care who is responsible for the correspondence, if it's you, if it's Jimmy, if it's Billy, etc. in the same way as businesses need lawyers, so lawyers need businesses. 

I agree, sometimes law can be mind numbing, but in certain transactions, they're expertise is maybe more important than whatever your firm does (e.g. Caesars intercompany transactions with Paul Weiss and Apollo).

maybe you rely on your anonymity, but if you were to say something like that to seniors in your firms, I'm sure they'll humble you pretty quickly

 

All the comments also forget to factor in the preferential tax treatment carry gets (for now...) which is a 1.36x factor on the comp. Lastly, there are a ton of ways to keep carry offshore and tax optimize, so I guarantee you the 2.5b figure is likely conservative.

Any risk-taking endeavor will be rewarded at a much higher rate than one where you trade your time. Capital always out-earns labor, and deservedly so.

 

Bit of an over-generalisation but your point stands (sort of). You need to contextualise the fact that top partners in law aren't relying purely on expertise but also salesmanship and business development, which fits your description of risk-taking.

 

So many people here casually take carry for granted. In practice most people in PE will struggle to survive past senior assoc/VP, and almost certainly won't make it past VP/Principal. The numbers just don't work out for that to be possible.

 

So many people here casually take carry for granted. In practice most people in PE will struggle to survive past senior assoc/VP, and almost certainly won't make it past VP/Principal. The numbers just don't work out for that to be possible.

If you think you are burning out of industry as a senior associate / VP, I wouldn't count on the ability to make equity partner, with significant partnership draws, at a biglaw firm (which is where the money is).  Most biglaw firms these days are an eat what you kill type model (some still have modified lockstep but are mostly losing people who generate a ton of business).    

The entire premise of this thread: I think I'm not going to be able to make it to the top 1% of private equity so lets look at another industry (biglaw) that pays the top 0.1% of earners extremely well comes with the assumption that its easy to be a rainmaker partner at a biglaw firm which isn't the case.   

For what its worth, the highest billable rate I have seen caps out in the ~$2k - $2.25k range for corporate type partners and those are senior statesman types so its pretty easy math to see that you need to taking from other people's fee streams to earn $10m+ on 2k-2.5k hours.    

 

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