How Starting Salaries of Attorneys Have Changed Over the Years

Bill Henderson with an intriguing post on how the "Cravath System" has created a bi-modal distribution in starting salaries for lawyers:

At the height of the Internet boom, a remarkable 14% of all entry level lawyers took jobs at the $125K level. According to NALP, "never before had a single salary so dominated the landscape." Under the 2006 bimodal distribution (see chart above), 44% of graduates received entry-level salaries in the $40K to $60K range; yet, the second mode moved further to the right ($135K to $145K) and grew to 17% of all graduate.

What are the market forces that have created this peculiar salary structure? In my working paper, "Are We Selling Results or Résumés?: The Underexplored Linkage Between Human Resource Systems and Firm-Specific Capital," I posit that the runaway $160K mode is a confluence of two factors: (1) the continued growth in the corporate legal services market, primarily due to the growing scale and scope of transnational corporate activity; and (2) law firms' nearly universal adherence to the "Cravath system," which purports to hire the best graduates from the best law schools and provide them with the best training.

Much more after the link.

As Henderson notes in another post:

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.

For law students. Let's face it: $40K to $55K per year is just not enough to pay down the avg. $85,000 debt (especially as interest rates climb) and still enjoy any kind of lifestyle that a professional degree is presumed to confer. The national median starting salary for a 2 to 10 lawyer firm is $50,000. There are a lot of struggling alumni out there. And do we really need more law schools? For many, getting a JD is a very risky financial proposition, especially when you factor in bar passage.

Below are charts showing how salary distributions have changed over the years. Contrast the 2006 average salary ($62,000) with what various undergraduate degrees will likely pay five years out. Factor in 3 years of lost wages, plus incredibly high levels of debt and law school starts to not look like such a good deal.









See my previous posts:

• A Lawyer's Life: Crushing Debt and Miserable Jobs?
• Which Law School Grads Get Big Firm Jobs?
• Law School Ranking by Starting Salaries
• Law School: Too Much Debt, Not Enough Good Jobs?
• Why You Shouldn't Go to Law School
• Does It Pay To Work for Biglaw?
• Job Market Wanes For U.S. Lawyers
• Starting Salaries for Class of 2006 Law School