How to make a Million Dollars as a Lawyer
Written by Thomas Eckardt on 18th August, 2017
“Work hard in school, do well at university, work really hard throughout your career and you’ll be set for life” is the old mantra that many hear from parents and teachers about a career in law. This is still as true today as it ever was. In the grand scheme of things, being a lawyer is a sure way to guarantee a secure financial future. However, how can you make a million as a lawyer, what is the time frame, what are the challenges?
Starting point – Review of current salaries and salary progression
Associate lawyers, those between 1 year post admission and 4/5 years post admission would be paid anywhere between $70K – $150K depending on the firm, company, performance etc. Junior lawyers within most companies receive relatively similar salaries. It is as you get more senior that you start to see a real differentiation between the top tier law firms, and the financial institutions.
Senior Lawyers within Private Practice
After about 5 years, you can be expected to get promoted to Senior. This is either a Senior Associate in a law firm, or a Senior Legal Counsel in-house.
Senior Associate salaries start from about $150K and go up to about $240K. On top of this, a lot of law firms have a bonus structure for Senior Associates. This bonus is generally negligible within law firms but on average could be about 10%.
What this means is that for a top end Senior Associate, after about 10 years of practice, you could be looking at a total take home salary package of $265,000. An exceptionally good salary.
Senior Lawyers within companies (financial Services companies specifically)
Typically, it takes longer to get promoted to a Senior Legal Counsel in-house. After about 6/7 years you can look to start on a salary of about $165K as a SLC. The banding here runs up to about $220K for a top end SLC before the yearly increases plateau.
What does make a big difference, particularly within finance companies, is the bonus component. It is often significantly higher. Bonuses for Senior Associates, again dependent on team and company performance, range from about 20% up to 100% of salary.
What this means is that a top end Senior Legal Counsel within a financial services company, who has achieved maximum bonus, could be on a yearly take home salary of about $440K. Again, not a bad salary.
The step up where salaries really make a jump is into Partnership. This is where you start getting paid equity for the firms overall performance and your specific team performance. Partner salaries vary hugely depending on firm, individual and year performance. However, it is safe to say that a partner at the top end of the salary spectrum is on over a Million Dollars.
The same can be said for General Counsels based on a bonus component as opposed to a profit share arrangement.
Finally, let’s talk pyramids
Firstly, law firm – Lets say that there are 100 law students starting their graduate rotations. After 5 years maybe 50% will still be there for Senior Associate promotion. After a further 5 years maybe 50% of the remainder will be there and going for partnership. From that maybe 10% will go into partnership. About 2 out of every 100 starters will make it to the partnership level at the very top.
In-House – The attrition is greater for in-house. There are a lot less roles for very senior people in-house so the competition is fierce and you tend to get a lot of people at the Senior Legal Counsel level looking to make that move up. The statistic is probably about extremely low for those who make it to General Counsel level at the very top.
What else can I do to make a Million?
Generally, a solid, stable, career will not pay you Million Dollars. You need to break the mould and innovate to break into that bracket.
Senior Business heads will break into the Millionaire club. However, the percentage of individuals who make it there are lower than lawyers. Lawyers can obviously break into this leadership role after a few years working as a General Counsel.
Do you want/need to make a Million Dollars? Is that what is really important to you? Are you just looking for a role that you love? Do you want to work unbelievably hard for 20 years before making it into that Millionaire lawyer club? Or would you rather do a job that you love and the money is a side bonus.
We all have bills to pay, we all have a lifestyle to maintain. The ideal situation is to get yourself in a position where you are happy. Where you can do the things that you like doing outside of work, and you enjoy your weeks as much as the weekends.