A few weeks ago, I ran into a colleague of mine from my old law firm. After exchanging the normal pleasantries, we got to talking about who from our class was still working there. It wasn’t many. I graduated law school back in 2013 and started my first biglaw gig soon after. Just four years later, only a handful of people from my class still remain.
This is pretty common in the biglaw world. Talk to any biglaw attorney four or five years out of law school and you’ll probably find that many – if not most of them – have either left biglaw or know a lot of people that have made that leap.
Indeed, I made the decision to jump ship just three years into my biglaw career. It wasn’t the right fit for me, but I stuck it out because I needed the paycheck in order to pay back my student loans. You hear people complaining about the biglaw work environment all the time. With so much complaining, I can only imagine that a lot of people working in biglaw must be in the same position that I was in. They stick it out because they need the money, not because they like the job.
This high attrition rate isn’t just supported anecdotally – the stats bear out this high attrition rate too. According to this American Lawyer article, 46 percent of associates leave their firm within the first three years and 81% leave within the first five. That’s even higher than I expected. In essence, there’s a good chance you’ll be done with your firm in the first three years of your career, and you’re extremely likely to be gone by year five. You might end up going to a new firm that pays the big bucks. But, maybe not. If you’re like me, you might value other things instead of earning the most money you can at a job you might not like that much. Maybe you want work-life balance. Or you want to try something more meaningful. Or maybe you just get tired of practicing law.
Whatever the reason, the high rate of biglaw attrition means you need to make those first few years in practice count.
Your Biglaw Salary Is Unique – Use It Wisely
It’s important to remember just how unique a biglaw salary really is. Lawyers sometimes lose sight of this fact. Your typical young lawyer might graduate law school at 25 years old and start making a $180k salary with no real work experience. Outside of something like Silicon Valley engineer people, I don’t think there are a lot of jobs that pay that much to folks who could literally have never worked a real job in their life.
This is a lot different compared to other high paying careers like medicine, where you might not start making a significant sum of money until you’re in your 30s. My wife, after 4 years of dental school and 4 years of post-dental school training, won’t start making her first real income until she’s 32 years old! As a point of comparison, last year, at 30 years old, my wife made a grand total of $4,000 for the year.
That’s why I always tell new lawyers to treasure that salary. Not only is it ridiculously high, it might not be very long lasting. If you waste it now, you might never get that chance again. One of the best things you can do with that salary is to remove as many of your fixed expenses as possible. For most of you just starting out your legal career, student loans are going to be the big monkey on your back. If you’re starting out in biglaw, you’re in a unique position to possibly pay for all of your legal training in just a few years. But you can’t dawdle if you want to do that. You need to make it a conscious goal as soon as possible.
Flexibility Is King
Law is a field with a pretty high dissatisfaction rate. You can see why. It’s tedious. It’s often pretty boring. The very nature of being a lawyer – at least a litigator, anyway – means that we only really deal with people at their worst times.
I’ve actually been pretty dissatisfied with my own career as a lawyer – I think I don’t have the personality for it. But, because of how I used my biglaw salary, I’m in a position where I can try different legal career paths and look for a gig that is the best fit for me. A lot of people don’t put themselves in that position.
Getting rid of fixed expenses like your student loans means you give yourself many more choices. And there’s no easier time to hustle to pay off your student loans than right at the beginning of your career. My friend, Biglaw Investor, wrote a sample budget for a first year associate in NYC. Even with a not particularly frugal lifestyle, it looks like any lawyer starting out in biglaw should be able to pay off $200k of student loans in just a few years. Removing a huge fixed cost, like student loans, gives you untold flexibility.
The key is to remember that your biglaw salary isn’t going to last forever. You might start off making $180k now, but five years from now, you might be making much less. Indeed, I took a $50k paycut when I left my biglaw gig last year. In the legal world, there aren’t a lot of jobs out there that pay the way a biglaw gig pays. If you live like the biglaw gravy train will never end, you’ll make things much harder for yourself.
Make Yourself Feel Rich
I don’t make a biglaw salary anymore. In fact, due to another career change I’ve got coming up, my income is going to decrease again, but with the tradeoff of a much healthier work-life balance. (Don’t worry, I’ll share more about what’s going on with my own legal career in a future post).
What’s amazing to me is that, even without my biglaw salary, I still feel pretty darn rich. Maybe it’s because I’ve got a fully paid for legal education. Or maybe it’s because I don’t really have a lot of bills that I have to pay, no matter what. Instead, a lot of the money I earn comes right back to me to do with as I please.
Most people I know aren’t even halfway through paying their student loans. I couldn’t imagine a decade or more of paying my loans back. And I don’t know what they do when they leave biglaw. I guess they either figure out how to make do with less at that point and just keep dragging those loans out for decades. That’s not something that I’d want to do.
Kevin is an attorney and the blogger behind Financial Panther, a blog about personal finance, travel hacking, and side hustling using the sharing economy. He paid off $87,000 worth of student loans in just 2.5 years by choosing not to live like a big shot lawyer.
Kevin is passionate about earning money using the sharing economy and you can see all the ways he makes extra income every month in his side hustle reports.
Kevin is also big on using the latest fintech apps to improve his finances. Some of Kevin's favorite fintech apps include:
- Personal Capital. One of best apps to monitor your portfolio and track your net worth. Plus, it's free to use and you get $20 for creating an account.
- SoFi Money. A really good high-interest checking account with absolutely no fees. Even better, you'll get $25 if you open an account and fund it with $100.
- Dobot. This is a great microsaving app that monitors the cashflow in your bank account and saves away small amounts for you each week. It's free and you'll get $5 when you use it.
Feel free to send Kevin a message here.
Good advice. I have seen similar story in high tech world where I worked for 20 years as an engineer. I used to watch new kids out of college with no work experience, start making 100k+ salaries while not understanding how quickly the time will go and before they know it, it could be all gone. They could become obsolete in just a few years, replaced by younger generation, or worst burnout. Yet they waste money on expensive cars and other unnecessary things rather than saving and investing for the future.
It’s crazy how fast things can change. I imagine the burnout rate isn’t quite as bad with silicon valley people – or they probably have more ways to keep the good times rolling. Still important to take care of business early on, just in case.
Great article! A lot of people have the mindset that they’ll always make as much, or more, as they currently do. That’s a fallacy and I like the fact that you recommend that people pay off debt like it’s about to catch their house on fire. I was talking to an attorney friend of mine recently, and she was telling me that her husband (a partner at a big law firm) has been working 100 hour weeks on a big project. I gently asked when he expected to quit that crazy life that might kill him and she said, “Oh, I don’t really expect him ever to retire.” I realized that our family’s priorities are vastly different. Because we have an “enough” number in our head. But making money just for the sake of making money? I think that’s part of the problem with lawyers. I read a great article in the NYT, don’t know if you’ve seen it:
https://www.nytimes.com/2017/07/15/business/lawyers-addiction-mental-health.html
Reminded me of my friend. It shows it’s very difficult to sustain those crazy work hours over about five years without some kind of chemical help. Ugh.
Biglaw is an interesting thing – it’s like a pie eating contest where the prize is more pie. There are definitely people who enjoy the work, and if you can last it out and keep making the big bucks, then great! But it’s still better to put yourself in the position where you’ll at least have options if you can’t make it.
Thanks for sharing that NY Times article. Lawyers have a higher than normal substance abuse rate from what I’ve read. Really important to keep an eye out for our friends and family.
Amen. Even if you think you’ll stick around in biglaw, having the option to make a different life change is a pretty big deal. If you have to cover a monthly student loan payment of $1500, it WILL influence your future career choices. I liked how you phrased using your time in biglaw to remove fixed expenses because things change dramatically when your fixed expenses disappear.
Looking forward and intrigued to hear about this new career change. I thought you had found the perfect work/life balance!
I’ll definitely be sharing what’s going on with my career. I’m still a JD, but won’t be representing clients anymore.
A few of my law school classmates who graduated a year before I did, live and work in NYC, and live similar somewhat frugal lifestyles (spending less than Biglaw Investor’s hypothetical budget, which still allows a lot of eating out, a nice apartment, and a international vacation a year) have found that it’s taken roughly two years, four months in biglaw to hit “net worth zero” on loan balances of roughly $170k at the time of graduation. They now have enough cash savings to finish paying down their loans at any time, and they’ve generally been saving for retirement as well (though kind of aimlessly and usually not that close to the 401K maximum amount per year).
I myself am not on the schedule, alas, thanks to doing a federal clerkship after about a year at my biglaw firm. I should be getting back on track pretty quick after, though, with my clerkship bonus.
Hey Xin! That’s pretty interesting how fast folks from your class are hitting net worth zero. I feel like that’s a real minority position to be in for most young lawyers. The clerkship you did will put you behind, but since you’re used to living on less, you’ll probably get back on track very quickly. And clerking – another good example of how that income can drop, especially if you opted not to go back to the biglaw life and instead hit up government or something.
Great analysis, Panther! Pay for cops starts low and blossoms over time, but for lawyers that big injection of income after a decade of school debt is a heady brew to overcome. I’m fascinated to hear about your upcoming career shift, too. Neat cliffhanger.
Haha, didn’t mean to make it a cliffhanger. I was just too lazy to get a post written up about it yet.
Very interesting. That sounds similar to my career where some surveys show that approximately half of nurses plan on changing careers within five years of entering the nursing field.
Nursing definitely seems like a high burnout field. The question is, if nurses do leave the profession, I imagine many of them go on to higher paying careers. Biglaw is a weird beast because it’s possible, and even pretty likely, that you end up making less immediately after leaving the biglaw world.