Saturday, July 21, 2007

Math time!

I've never been very good at math--which I guess is the reason I went to law school.

But in the spirit of the upcoming 2L recruiting season, where law firms sell to law students the idea that you can earn a lot of money working for a law firm, I felt it was compelling to share a little math lesson with other mathematically-challenged law students that a 1st year associate recently shared with me. After all, most of us decided to go to law school because we thought that law was the best paying profession we could enter with our worthless English degrees [I'm not knocking English majors here--I was one too].

So, we all know that the pay for 1st years at the top firms in the top legal markets is $160,000. Let's take the example of New York, the largest legal market in the country by far. I was pointed to the following site, where one can check how much a salary translates to take-home pay after taxes. [FYI: $160K nets you $100,335.70 in LA/SF, $108,470.25 in Chicago, and $100,970.25 in D.C.]

$160,000 in New York City ends up netting only $96,511.71 after taxes (New York City has its own city taxes on top of federal and state ones). Still--pretty good money, right?

I'm not that familiar with the NYC housing market, but a quick look for a 1BR on Craigslist in Manhattan averages around $2,500/month (and we're talking really basic stuff--a hotshot biglaw lawyer would probably want something better). 12 months of rent leaves our pockets $30,000 lighter. So we're left with $66,511.71. Still doable.

Now, let's figure in food. Groceries and eating out I estimate averages out to $200/week. 52 weeks of groceries leaves our pockets $10,400 lighter. We're left with $56,111.71.

Now let's figure in the yuppie entertainment (to compensate for the billable hours): alcohol/ match.com membership/ waxing/ porn/ coke habit/ yoga class/etc.: we'll say another $200/week. That's another $10,400. So, we're left with $45,711.71.

Now, let's throw in an annual vacation to the tune of $5,711.71 (the dollar is dropping more and more against the Euro now, making European vacations more and more expensive): So, we're left with $40,000 flat.

Now, we've still got to make our monthly student loan payments. Plus the car payments. Plus insurance. Or saving up to make that down payment on that white picket fence house in the suburbs (we can't be sending our precious kids to NYC public school after all!). And after all that, basically we'll be left with nothing.

[read with sarcasm]--Not trying to denigrate the law profession here--I hear that, believe it or not, entire families of 4 in the majority of the U.S. sometimes live on under $50,000 a year. I admit--law allows us to live comfortable yuppie lives.

For the critics out here of my math--I understand I am leaving out the average $10K $30K bonus. And that salaries rise about $15K on average for every year you put in the firm. But realize that the big money doesn't come until partnership, a very uncertain proposition that most associates will, based on sheer numbers and probability, not experience.

Anyway, that was the math lesson a 1st year at the evil legal enterprise gave me over lunch recently. Lessons to draw from all this: (1) I should have gone to business school instead (Dooh! I'm in law school precisely because I suck at math) (2) Move to Texas, where there is no state income tax.

Hopefully this has been a cheerful, upbeat lesson for all us 2Ls in preparation for OCI. This lesson rings true in any of the other major legal markets as well. I'm off now to update my resume and prepare more cover letters. And figure out this bidding mess on symplicity.

Thank you, come again!

3 Comments:

Blogger divine angst said...

I will correct you in only one respect: firms paying $160K in NY give bonuses in the $30K range, not the $10K range.

That's not to say that your math lesson isn't valuable, as an illustration. But also remember that many law students don't go work in NYC and, so, as as example of the "extravagances" touted by law firms, your post has a fairly limited application.

BigLaw only exists in a very few markets, mostly on the coasts, where this math lesson will ring pretty much true--for those who really want to live in Manhattan, in the higher-end neighborhoods in LA and San Francisco, downtown in Chicago, etc. But for students looking either at so-called secondary firms in those markets or in so-called secondary markets, the math lesson is quite different. Salaries may be lower, but housing is cheaper; eating out happens less, but you might pay more for a car and gas because you don't have a good public transit system.

I guess my point is, these generalizations based on the NYC market are really only worth so much when you're not looking at NYC--and a lot of people aren't. I think the better thing to point at is the almost market-wide assumption that young associates will work a lot of hours on really mind-numbing tasks, all for a salary that is good--and in some places great--but probably not good enough to offset the feeling that you're just doing busywork.

10:42 PM  
Blogger paragon2pieces said...

eh, i suck at math and i'm going to b-school. i think it will turn out alright.

and, yeah, the first texas paycheck sans state income tax was totally sweet.

1:16 AM  
Blogger Keep Coke said...

good points. two things:

1) You don't have car payments in NYC. If you do, you are doing something seriously wrong.

2) No state income tax in Texas? Who cares? It's Texas. Florida doesn't have state income tax, though, and that's something to care about.

1:13 PM  

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