21 July 2008

The New Lawyer Pay Divide

Some newly minted lawyers are paid very well. Another cluster are paid rather poorly. There is a dearth of new lawyers in the middle (annual pay from about $65,000 to $125,000 a year):

Half of the graduates make less than the $62,000 per year median--but remarkably, there is no clustering there. Over a quarter (27.5%) make between $40k-$55k per year, and another quarter (27.8%) have an annual salary of $100K plus.

If the chart were a flipbook of the last twenty years, the first mode would be relatively stationary, barely tracking inflation, while the second mode would be moving quickly to the right--i.e., the salary wars. In fact, because of the recent jump to $160K in the major markets, the second mode has already moved even more to the right.


A well done graphic displays the situation.

The law blogger posting this analysis notes that:

There is a lot of commodity corporate legal work on there; why not bow out of the salary wars, ratchet down the hours to 1800, take work on a flat fee arrangement, focus on better/faster service (thus increasing margins on the flat fees), and literally feast on the human capital willing to take a job in the "death valley" range (i.e., ~$80,000 per year), especially if the hours are sane. The client gets quality and cost predictability, and the well-managed firm can make a lot of money. This is a great opportunity for a firm willing to rethink its business model.


I couldn't bear to work in a law factory like that, but I can see how many people would enjoy it.

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