

Bimodal Salary Distribution for New Law School Graduates - brudgers
http://www.nalp.org/salarydistrib

======
cylinder
This isn't new at all. Everyone in my law school class knew this before going
in but still decided to roll the dice.

The major issue here is the US higher ed system which is massively
unproductive and by and large a scam.

You don't need 3-years after your 4-year undergraduate degree to become a
lawyer. In the UK, where common law comes from, you simply study law as an
undergraduate. You finish at 22 and you're not saddled with massive debt and 3
more years of wasting your working age pursuing useless courses (my 2nd and
3rd year of law school were absolutely useless, while the first year was
essential. These courses can be incorporated into undergraduate. _Everyone_
else does it this way and they have high quality lawyers, probably better than
ours.

This way if you decide you hate being a lawyer (like many do) or you don't get
a job at a firm, your legal education is still valuable for other careers in
business, strategy, etc. You're still young and don't have to worry about the
three extra years and $200k you spent going to law school.

~~~
nhstanley
I wont disagree that perhaps the US system could use reform/overhaul, but it's
a bit more complicated than you describe. When you compare how medical schools
and medical school admissions are handled in the US versus how law schools are
organized, it's no surprise why law school has a glut of graduates who can't
find jobs. I know this because I have enough friend who went on either of
those tracks (as well as others). The med school kids all have jobs that pay
well-enough, and the law school kids all became disilusioned and moved to
other fields (except for the one that went to NYU).

The number of Medical school admissions and future residency positions is
pretty well controlled, so this kind of problem doesn't really arise (well,
it's complicated but more or less).

On the other hand, any school can spin up a law program and start charging
admission, no matter how qualified it is to actually do that. But it's only
worthwhile going to law school if you can get into the first tier (Harvard,
Yale, Columbia, NYU) or second tier schools. Third and fourth tier are
basically a joke. You're throwing your money away. Of course, many people
ignore that thinking they'll be different or lucky. And we end up with the
kind of issues we see here today.

It's still more complicated, though, because a lot of what people from third
and fourth tier schools used to do (sit in giant rooms and review case law for
big cases), they are no longer needed for thanks to technology. So the 2000's
onward was an awful time to want to be shove yourself through law school hail-
mary hoping that just because you're a "lawyer" you'll be OK.

Law schools students got squeezed on both sides, and the pain is real. A
profession that used to be much like medicine, where you would do "OK" in life
at the very worst is now a commodity product thanks to forces from all sides.

~~~
ghaff
>A profession that used to be much like medicine, where you would do "OK" in
life at the very worst is now a commodity product thanks to forces from all
sides.

I went to graduate school at a college that had a primarily liberal-arts
oriented undergraduate curriculum and I knew a lot of people who graduated
with their liberal arts degree and ended up going to law school after finding
that their degree wasn't really setting them on the path to a successful
career. Not universally of course and a number of my friends did quite well
for themselves with just their undergrad degrees but those who did didn't
really follow particularly conventional career paths.

So for a reasonable number of people I knew, law school functioned as this
sort of default career path for liberal arts undergrads--though a fair number
of them didn't stay in the profession long-term.

------
nabraham
The story gets more interesting - the legal field is one of the few where
salary information is totally transparent. If you know the law firm name and
how long a person has worked there you can look up their salary. [1] Partner
salary is also published, but only the average for all partners. In 1998 a
group of lawyers started posting salaries in a Yahoo Group called Greedy
Associates. [2] Many firms, upon seeing competitor salary information, felt
the need to move in lock-step for fear of losing out top talent because of
salary. This created a faster increase in lawyer salaries in the last 10 years
then in any other time in history. In 1998 the firms that were paying $90K are
now paying $165k. [3] Today, firms publish the data themselves so they can
control the message.

Similar to lawyers, it would be interesting if instead of relying on
Wealthfront and AngelList, engineers at Google, Facebook, Apple, etc started
openly contributing their salary information to increase wages to 2-3x that of
engineers at less selective employers and create this bi-modal distribution in
tech.

[1] [http://www.lawfirmstats.com/firms/](http://www.lawfirmstats.com/firms/)
[2]
[https://books.google.com/books?id=IY4ieeVyer4C&pg=PA18&lpg=P...](https://books.google.com/books?id=IY4ieeVyer4C&pg=PA18&lpg=PA18)
[3]
[http://www.bizjournals.com/phoenix/stories/1998/10/05/newsco...](http://www.bizjournals.com/phoenix/stories/1998/10/05/newscolumn5.html?page=all)

~~~
ghaff
You seem to be postulating a pretty massive market failure if some incremental
transparency around salaries at a few Silicon Valley firms would increase
salaries to that degree.

It's a very different environment from law firms. Big, prestigious firms can
pay first-year associates so much because they can bill them out to corporate
clients in a way that the small-town lawyer who handles personal real estate
transactions can't. I did some work for one of the well-known NY law firms a
while back and the cost of the part of the project I was associated with must
have been staggering. I know what I was paid and it was a lot and that was a
tiny slice of the entire project.

By contrast, it's not clear to me why more salary transparency at Apple,
Google, and Facebook would trigger this bidding war that would cause them to
pay so much more than everyone else in the industry. After all, they're
already considered desirable employers even with wages that are (I assume)
somewhat above market but not ridiculously so.

~~~
davidgerard
> You seem to be postulating a pretty massive market failure if some
> incremental transparency around salaries at a few Silicon Valley firms would
> increase salaries to that degree.

We know for a fact there was massive market distortion by deliberate employer
action; that would arguably have an effect similar to that of massive market
failure.

~~~
ghaff
We know there was a lawsuit related to employer collusion that supposedly
depressed salaries. How much is a matter of debate given that the salaries in
question are pretty high by any measure. So I question whether there was a
"massive" market distortion.

The parent argument was that a different form of what some might also call
collusion--publishing salaries in the context of setting the going rate as
large law firms apparently do--would instead massively (2-3x) increase
salaries at those same firms.

~~~
nabraham
I'm not sure openly publishing salaries is collusion, which usually is a
(secret) attempt by a few players to set prices for everyone. Like in the law
firm example, all this affects only the top companies. Also, different
structures can create economics outcomes that vary by 2-3x, no market failure
needed. Take a look at a small example like Hired.com - firms openly bidding
on engineers has resulted in salaries that seem to be 50-100% higher than
those achieved absent such a structure.

------
madcaptenor
I used to teach statistics. I'd often use this distribution to illustrate that
one shouldn't blindly use summary statistics of a distribution - that mean
around 80K doesn't mean that all that many people make near 80K. But what I
was secretly hoping was that I could talk someone out of going to law school.

~~~
tsotha
I'm guessing you didn't have much success. Everyone thinks they'll be on the
right side.

~~~
madcaptenor
That's true. The same argument wouldn't have worked on me-as-an-undergrad to
keep me from getting a PhD.

------
jasode
Question... could a big cause of the bimodal distribution come from the big
divide between graduating from a top school and getting recruited by a
prestigious law firm vs the other lower paying jobs such as public defender,
private practice ambulance chaser, etc?

Peter Thiel once said that a diploma is a dunce hat if you don't go to a top
school.[1] I'd translate that further and say that if you don't get into one
of the top-20 law schools (Phoenix Law instead of Harvard Law), you will most
likely end up on the lower paying bimodal hump instead of the higher one.

The "dunce" characterization comes into play because those lower tier law
schools are still _very expensive_ and even the unranked schools[2] will still
require _massive loans_ to finish.

[1][http://money.cnn.com/2014/09/16/investing/peter-thiel-
apple-...](http://money.cnn.com/2014/09/16/investing/peter-thiel-apple-
innovation/)

[2][http://www.azsummitlaw.edu/admissions/tuition-and-
financial-...](http://www.azsummitlaw.edu/admissions/tuition-and-financial-
aid/cost-attendance)

~~~
freyr
Yes, of course. Top law offices hire heavily from top-tier schools, and
they're largely responsible for the upper mode.

> _" Peter Thiel once said that a diploma is a dunce hat if you don't go to a
> top school."_

This is the perfect example of someone who lives in separate reality from most
people, and extrapolates his rare experiences to the world at large.

Are there entrepreneurial wunderkinds who can extract more value from real
world experience than classroom experience? Some, not many (though most of
Thiel's cohorts probably fall in this category). And are there majors and
degrees and programs that are more likely to result in underemployment or a
poor debt-to-earnings ratio? Sure, some.

But the _vast majority_ of people earn significantly more and enjoy a higher
standard of living simply by virtue of having a degree. In addition to the
financial benefit, many people value the experience of their time spent in
college.

Thiel seems entirely disconnected from the reality of most people. That's ok,
it's understandable. But calling people dunces for making rational choices
given their personal circumstances makes him come off like a total asshat.

~~~
peteretep

        > This is the perfect example of someone who lives in
        > separate reality from most people, and extrapolates his
        > rare experiences to the world at large.
    

As someone who reads CVs/resumes for a living in the UK, all that putting a
low-tier university on your CV tells me - unless you got a first, or an
academic prize - is that you fucked up your A-Levels, and then got pushed in
to doing a degree because everyone else does them.

~~~
freyr
Again, your personal experience does not extrapolate well to the world at
large. This is demonstrated by the fact that it doesn't correlate with
statistical evidence. I don't know why this is so difficult for people (even
smart people) to see.

You're comparing a desirable degree vs. a low-tier degree in the context of
your company and hiring process. That might mean the world to you, but it's
irrelevant to determining whether a low-tier degree has value.

Compare low-tier graduates to non-graduates in the economy at large. People
holding no degree are vastly more likely to be unemployed or hold a minimum
wage, manual labor job. People holding a degree (even a lower tier degree),
are much more likely than the no-degree group to have a more desirable job
that pays relatively well.

There may be many factors explaining why this disparity exists. But certainly
one reason is that _many_ companies currently require an applicant have a
college degree even for non-desirable entry-level jobs. If you don't have a
degree, you're not even getting your foot in the door. This practice probably
makes little sense, but it's the way things currently are, and why holding a
low-tier degree is much better than the alternative of holding no degree for
most people.

------
chubot
How much total compensation are the people making $160K getting? I ask because
for many software jobs, salary is only a part of total compensation. I assume
that's also true for law, which may make the distribution even more skewed.

~~~
pyrrhotech
at top firms, 40k+ bonus expected. by year 3, total comp should be > $300k. By
partner (if you make it, at least 8 years) $1MM+

~~~
lagugun
This isn't quite true. The current market bonus scale is 15k - 25k - 50k - 65k
- 80k - 90k - 100k for years 1-7 ([http://abovethelaw.com/2014/11/associate-
bonus-watch-davis-p...](http://abovethelaw.com/2014/11/associate-bonus-watch-
davis-polk-beats-simpson/)). Market salary scale is 160k - 170k - 185k - 210k
- 230k - 250k - 265k ([http://abovethelaw.com/2007/01/breaking-simpson-
thacher-rais...](http://abovethelaw.com/2007/01/breaking-simpson-thacher-
raises-associate-base-salaries/), market hasn't changed since 2007). So total
compensation looks like 175k - 195k - 235k - 275k - 310k - 340k - 365k for
years 1-7. (Most biglaw firms don't offer any 401k matching.)

There are a handful of firms that beat the market scale, but even more firms
that pay less than market (mostly through below-market bonuses, rather than
through below-market salaries).

First-year partners aren't likely to make 1MM+, but rather something in the
range of 300k-700k ([http://www.quora.com/What-does-the-average-junior-
partner-at...](http://www.quora.com/What-does-the-average-junior-partner-at-a-
Big-Law-firm-make)). Average compensation of _all_ partners in 2012 was 681k
([http://abovethelaw.com/2012/09/new-data-on-law-firm-
partner-...](http://abovethelaw.com/2012/09/new-data-on-law-firm-partner-
compensation/)).

~~~
pyrrhotech
fair enough--your numbers are well documented and are a better representation
of the "average" big law firm. I was more pointing to the best of the best. I
believe the top firms produce about 6MM profits per partner, though the
profits aren't equally distributed among the partners

------
rayiner
More on topic for HN: is there now a bi-modal salary distribution for software
engineers as a result of Facebook/Google/etc?

~~~
krschultz
I don't think so. The higher tier of lawyers is making 2-3x what the lower
tier of lawyers is making. I think top end engineers are making 50-100% more
than lower tier engineers, but not 200-300% more.

------
crystaln
So why is it so expensive to hire a lawyer? Shouldn't I be able to get a
decent lawyer for $50-$80 per hour at these salaries?

~~~
nirmel
It's mostly because for them it's so expensive to get a steady flow of
clients. Kind of like how freelance programmers can charge $150/hr for dev
work, but times two because it's much harder for a lawyer to get ongoing work
from new clients. I started a whole company around this problem (Lawdingo.com
- yc w13) and we're trying to get the rates down to the level you mentioned by
handing all the logistics of getting lawyers a consistent flow of new clients.

~~~
dqdo
They also have very high overhead costs. Most law firms have very nice offices
in very prominent parts of the city. This is not cheap so they need to charge
a very high price to just remain in business.

From an economic perspective, you can imagine that a lawyer can typically bill
2000 hours per year. If the lawyer's salary + benefits + retirement
contribution is 150k per year, they would need $75 per hour to cover this
cost. Since the lawyer is working for a big firm which has high overhead costs
and a goal of returning profit to their partners, the amount that they bill
typically 3X their hourly salary (3X $75 = $225). This is why it is so
expensive to hire an attorney. For large corporations, this fee is reasonable
since they have millions of dollars at stake in an M&A transaction, IPO deal,
or patent litigation. For regular working folks, this is often unaffordable.
Due to the bifurcation of the potential clients (big business vs. everyone
else), there is also a bifurcation on attorney salaries.

------
warbaker
Anyone have insight as to why the upper mode is so unnaturally spikey? Is this
somehow a result of law salaries/bonuses being well-publicized in the law
community? Maybe collusion between top law firms?

~~~
jforman
The major law firms all benchmark law school graduate salaries against each
other. When one firm deviates it's a huge to-do.

~~~
golemotron
Isn't that called collusion?

~~~
nkoren
Yes, but who are you going to get to prosecute it?

~~~
JDiculous
The lawyers who can't get jobs at the Big Law firms?

------
exelius
You see this same distribution for business school graduates, and I suspect it
has a similar cause.

You can either go to law school (or business school) immediately after
finishing your bachelor's degree, or you can go back to school after 5 or so
years in the work force. If you have no professional full-time experience,
nobody is going to pay you more than $60k or $70k because it will take a few
years for you to become a moderately productive employee. You're really no
more useful than someone right out of undergrad. But if you have an advanced
degree and a few years of proven job experience, you can hit the ground
running and as such, employers often pay $150k+.

I bet if you were able to plot salaries and full-time experience on a graph,
this would become obvious. That's my hypothesis, anyway.

~~~
ghaff
The situation with MBAs and law degrees is quite a bit different. With law,
it's not so much about the experience but about the fact that there are too
many lawyers chasing too few jobs with the result that hitting it big with a
prestigious big-city law firm pays the big bucks and everything else not so
much (assuming you can even find a job as a lawyer). And those big-city law
firm jobs go disproportionately to top graduates at a handful of top schools
and/or to those with connections. The market for MBAs is a lot more diffuse
and work experience is much more sought after by the top MBA programs than is
the case with law.

~~~
storgendibal
Agree in general. However, with MBA programs skewing younger every year, you
find people with 2-3 years work experience getting offers from management
consulting firms and investment banks at the same salary levels as MBA grads
with 5-6 years pre-MBA experience. I think it diverges later on though,
especially in consulting. The person with 5-6 years pre-MBA experience tends
to climb the rung faster because they have more credibility with clients.

~~~
exelius
Yeah, that's absolutely the case with consulting. Young kids just don't have
the experience or maturity to be a manager at a consulting firm within a year
or two, and so it does take them longer to make promotions. I personally don't
think an MBA is particularly valuable if you don't have at least some work
experience - you'll still make the same dumb mistakes that everyone makes
their first few years working, only there will be a lot more attention on you.

Investment banks are a different world; they're basically an apprenticeship
business where no amount of experience doing anything else can teach you how
to do the job. They have been taking far fewer MBAs in recent year.

~~~
storgendibal
That's good to know. I was deciding between PM at a big tech firm and
consulting at a couple of MBBs. Went with the PM route, but sometimes consider
going back to consulting, although I'd enter at the same, post-MBA associate
level.

I agree that 3-4 years of work experience really helps during the MBA. 6 is
too much though (my case) because partying till 5am becomes a lot harder when
you're 30 and all your classmates are 26.

------
brotoss
This is partially why I dropped out after my first year

