Wednesday, November 14, 2007

Math time

Lots of prelaw students are seduced by the belief that they will be in the top X% of the class necessary to get the $160,000 biglaw job. And then in law school we learn that the people not in the top X% will wind up working in smaller firms without the same prestige as biglaw and without the same biglaw paycheck. And for the people who can't get jobs at smaller firms, we are told that they wind up as contract attorneys who are paid by the hour to do document review for large litigation cases at large firms.

There recently was a very interesting article written about contract attorneys. The article also links to the online gathering place for contract attorneys. Also interesting is a review of the per-hour salaries of these contract attorneys at various firms.

Even though I am decidedly bad at math (hence law school), I decided to crunch some numbers to see how these contract attorneys come out.

First off...biglaw
-Students often forget to calculate non-billable hours when taking into account the total number of hours. Assume that at the average firm, billable hours are 2,000 (for ease of math purposes). Non-billable hours (going to the bathroom, lunch, internal firm work, waiting for faxes, goofing around reading AboveTheLaw, etc.) I've been told come out to around 500. So, $160,000/2,500 total hours = $64/hour. 2,500/50 weeks a year (2 weeks of vacation) = 50 hours/week. Total salary per week ($160,000/50 weeks)=$3,200.

Next...contract attorney
If a contract attorney works 50 hours a week, and assume he/she gets paid at the top of the market at Quinn, (s)he will earn $55/hour for the first 40 hours, and then overtime of $82.50 for the next 10 hours. Total salary per week ($2,200 + $825 overtime): $3,025. If (s)he works more than 53 hours a week, (s)he would actually get paid more than biglaw.

I know that my math is skewed because I'm comparing total biglaw hours (which includes lunch, etc.) with only "billable" contract hours. I am doing so only because I understand that a significant amount of the 500 extra hours are working on internal firm matters or working on client matters that do not count as billable hours (I believe the legal term is "realization rate"), whereas a contract attorney would get paid for all hours spent working. Another response is that my 50 hours is underestimating hours at biglaw. Average per week at biglaw seems to be around 55-57 hours, which only adds to contract attorney pay.

Additional caveats: I know, contract attorneys don't get health or retirement benefits. They don't get the standard year-end bonus. There's no chance of advancement (to senior document reviewer I guess). There is no guarantee that they will have work every day. Or that they will work at the high-paying firms year-round, since they move on to another firm when the current doc review assignment ends. And they don't get the prestige, training, or exit options that biglaw provides. And I'm assuming that the contract employer pays overtime and abides by all labor laws.

But even if we do not use Quinn's $55 but use the average wage provided in the data of $35.82 + OT in NYC, 50 hours a week would pay ($1,432.80 + 537.30): $1,970.10/week, or close to $100,000/year.

But, still, not bad in my opinion, and aside from doing extraordinarily boring and routine work, I don't see it as being as poorly compensated as many make it out to be. If anyone has any comments about my math, please let me know.

1 Comments:

Blogger Strange Bird said...

I kept hearing that contract attorneys are making $20 per hour. Considering I never had a job that paid less than that after undergrad, and they all had a lot of benefits including health insurance, matching retirement contributions, etc., AND they were easy and mostly not stressful at all...if you have to go to law school and give up three years of income to come out worse off than you did before the JD, then that would be kind of shitty.

10:06 PM  

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