With six-figure starting salaries up for grabs after graduation, it is not difficult to imagine why so many law students dream of striking it big. Lining up biglaw after graduation is seen as the golden ticket. The pot at the end of the rainbow. Sure, the chances are slim, particularly once you slide out of the Top 14 schools, but simply knowing there is some chance keeps the students jumping at the thought. On one hand, there is much to be excited about. A law student that potentially never worked a full-time job in his or her life can finish law school and start raking in obscene amounts of money on the basis of nothing more than the belief that the student has illustrated legal “potential” by way of law school academic performance. Where else does this happen? The MD stands no chance in relation because of the extra educational and residency time required. Outside of winning the extremely rigorous competition for an investment banking position out of undergrad or securing a consulting position with one of the big consulting firms, biglaw is arguably the fastest way to earn a big paycheck straight out of school. That’s a lot to be excited about. However, what most prospective law students and current law students completely ignore is the dark side of winning the biglaw lottery. For all the money a law graduate can be immediately earning, there is a lot to sacrifice as a result.
To begin, a little finance lesson is required. Unless a law graduate is entering biglaw having debt-financed next to nothing to attend both college and law school, an incredibly rare situation, making a six-figure salary means very little if much of that paycheck is going to be servicing student debt. After all, what is 160K (market salary in NYC) when you are paying off over 100K of student debt (that’s actually not a bad ratio and on the lower scale)? At the currently egregious interest rates, thousands of those dollars will be stripped away from your paycheck each month to make a considerable dent in the overall principal. For some rather eye-popping examples, visit this Top Law Schools thread. Depending on how much of law school and/or college was financed by student loans, some individuals who make the market NYC rate give half of it away each month. On average, law students need about 3-4 years of the biglaw salary to finally come clean of their student debt. That means that before the biglaw position can actually be considered a “financial” lottery, you need several years of experience under the biglaw umbrella before the shackles of mortgage-sized payments disappear. This really doesn’t seem that bad, right? At the end of the day, assuming you do not get fired before this happens, it is a worthy tradeoff for the influx of cash you will suddenly get to pocket after the student debt is paid. This is especially so considering your salary will continue to increase with each year and you will be eligible for bonuses. To take this even further, some individuals might argue that at worst you’ll still be able to save for retirement at a greater rate than the vast majority of other people by choosing to max out your retirement accounts at a slight expense to your student debt, or even save on a down payment for a house much faster if you have the means to make this a priority. These are all obviously objectives that will vary with each young associate and his or her priorities, but the point still stands that on that type of salary there is a lot of flexibility even with having to make egregious student loan payments. Although true, what all of this fails to consider, however, is the reality of the biglaw work environment.
For one, not one day in biglaw is guaranteed. Although it is generally hard to get fired as a first year associate because it takes a while to settle in and actually get staffed on vital pieces of legal work that you can completely mess up, there is still the off chance that you can be let go just because of the economy. This is known as being Lathamed, a term coined after the mega-firm Latham & Watkins practiced this on a large scale during the peak of the recession. Although less likely today, every single day becomes stressful when you recognize it is vital to your financial future that you stick around at least long enough to pay off your student debt. This becomes even more stressful once you become a second year associate and you’re actually responsible for some real work. Assuming you’re trying your best to deliver the best work product, none of this really matters all that much when you’re stressed from week to week over another important issue: how many hours you are billing. You can be the greatest legal mind to walk this earth, but if you are not billing at least 2,000 hours at most biglaw firms each year, there are going to be some serious potential consequences. This doesn’t sound that stressful until you learn that you are not in control of how many hours you bill, and what you ultimately wind up billing each week is strictly based off of the work you are being fed by associates above you and the partners. In fact, this is the single greatest negative of working in a biglaw firm. You have to accomplish billing enough hours each year to justify your salary to your practice group’s partners, but simultaneously aren’t in control of how much you wind up billing.
There’s also a little caveat to billing that makes lawyers at big firms go crazy: the amount of time you spend in the office is irrelevant, all that matters is the amount of time you bill. If you’re sitting in the office for extended periods of time with little to no work to bill, the fact you are sitting in the office all day does not matter. The firm is not making money merely due to your presence, it is making money only when it can bill you out to the client for the work you have handled. Typically, unless you are extremely efficient (and it does get better with seniority), you will bill on average 7-8 out of every 10 hours worked. Therefore, if you bill 60 hours in a week, you’ve most likely spent 75-85 hours in the office (the chance to work remotely doesn’t really exist until you have built enough confidence with your superiors, typically face time is required).
One of the most frustrating features of biglaw that most biglaw track law graduates do not understand, but will be “lucky” enough to experience almost immediately upon arrival, is the correlation between the biglaw salary and their inability to be available to others. Apart from the future “potential” justification, what forms the basis for paying six-figure salaries to law graduates is the availability theory. For six-figures, what the law graduates are actually being paid for is their ability to be available 24/7. They have no skills or knowledge useful to anybody at a big firm when they start out. Sure, they have the potential to grow into capable lawyers. However, their real value is their ability to sit there and bill, bill, and bill some more. If possible, it’d be great if they could bill in their sleep too. This is how they are valuable, because when they are billed out to the client at a certain hourly rate, researched statistics divide that money roughly into three categories: 1/3 goes to firm overhead and administrative expenses, 1/3 goes to the young associate’s salary, and 1/3 goes to the partner’s pockets. You can see how valuable a young workhorse can be to the firm if he or she religiously bills high hours each month (assuming the work flow is there).
Finally, one more biglaw drawback derived from the availability theory is the inability, on average, to plan anything in advance with anybody outside of work. If something needs to get done over the weekend, you’re doing the grunt work. If something looks like it’ll be an all night affair, you’re on call. Often times young associates find out rather early that planning for anything outside of that particular evening is useless. Something may pop up in their email at any given moment, or a partner will walk into their office and hand them something to do. This, if you connect the dots, is both good and bad. On the one hand, if the pressure is there to service your student debt, you want as much work as possible. Work not only keeps you billing, but assuming the work you are doing is substantive, it allows you to grow in experience. Experience, for most in the biglaw system, is the holy grail of leaving for greener pastures. Generally speaking, the more substantive experience in a particular field of law an associate has, the more marketable he or she will be with respect to potential exit options. On the other hand, knowing your personal relationships are suffering from your inability to execute on anything as close as a day in advance may start to wear you out. Fast.
This is where the student debt discussion comes back full circle. For most law graduates headed to biglaw, there is no hope for escape until the student debt is paid off. Well, there’s always a choice, but then you are potentially leaving biglaw sooner than necessary for the best potential exit opportunities to be available and for what most likely is a rather steep reduction in pay. If this happens, the worst part is realizing that “financial” ticket you were so excited about never even materialized. Bringing you to potentially ask the only question relevant at that point: what was really the point of all of this? This is why the choice to leave is not really a choice to leave until you have enough marketable experience. Prime time exit opportunities begin opening up with around 3 years of experience.
The point of this article is not to dissuade any law students from going the biglaw route if they have the chance to make it happen. Frankly, it doesn’t cover the biglaw model in a sufficiently in-depth level to even attempt to succeed at that objective. What it does attempt to do, however, is help offer a glimpse into some of the general realities of biglaw practice that most law graduates do not consider at any point prior to actually experiencing it all themselves. Yes, there’s the nice salary, but the rationale for that salary has to come from somewhere. That somewhere is often a dark blur in the eyes of a gleeming biglaw track law graduate until he or she comes on board and starts experiencing more than just receiving that nice paycheck. Outside of the lucky few who may find employment at one of the biglaw firms where much of what is discussed above happens only rarely, or winds up in a practice group that succeeds in largely avoiding many of these problems, these are things first year associates at biglaw firms will experience. It is better if they enter informed about what lies ahead rather than simply entering blinded by the starting salary with no understanding of what is most likely in store. Having come to terms with how their lifestyle is likely to play out, and understanding their role in the firm, they will be more efficient and prepared than those who emerge from a dark tunnel not knowing what’s expected. Very often, particularly for those law graduates with mortgage-sized debt, at the end of the day the “financial” success never even materializes. They either escape biglaw as soon as the debt is paid off, or they do so prior, never even tasting the chance of pocketing all of that monthly income.
For all of its negatives, which you can read about all over the internet, there is one thing that nobody can take away from biglaw. Outside of the rare exceptions, after a few years of practice at a biglaw firm, the exit options for associates are some of the best exit options the field of law has to offer. This is why using biglaw as a means to another end, and not the end itself, is a popular way to look at the entire experience. If you can bear to survive for the few years it takes to develop a marketable experience level, there is no legal job that will open up more opportunities for your legal career than a biglaw firm. At the end of the day, that is a very important benefit. Of course, the whole big “IF” in this equation is the hope that you endure the biglaw environment, often predicated on luck more so than anything you can control, long enough for these exit opportunities to actually be an option. Overall, the biglaw experience is most certainly one of a kind, especially for the vast majority of law graduates headed to biglaw firms with large student debt loads. For these young associates, the toughest pill to swallow might be the realization that the student debt payments knocking on the window will largely foreclose the prospect of financial success they thought they had luckily secured upon getting that biglaw offer, at least for several more years to come.
Incoming search terms:
- biglaw exit options
- consulting investment banking biglaw