This will not be a lecture.
In the course of navigating published analysis and coverage of our beloved industry, I can rely on regularly coming across pat assertions displaying such frightful ignorance of basic economics that I’m forced to conclude the speakers’ only encounter with Economics 101 was seeing it listed in a course catalog and hastily moving on. These assertions also tend to be advanced with a degree of certitude and self-confidence directly correlated with the violence they do to the simplest of economic principles.
For today’s purposes, Exhibit A in this ghastly parade comes from The American Lawyer‘s story on BigLaw’s associate bonus season, which kicked off earlier this week with Cravath’s announcement that it would be matching last year’s scale (a base scale of from $15,000 to $100,000, depending on seniority). The usual peer group of firms immediately followed suit; it would only be news had one deviated substantially.
The reporter does a workmanlike job of putting BigLaw associate pay in context over time, noting that today’s $160,000 starting salary has been in place since 2007, meaning it’s only worth $139,500 in 2007 buying power. I might have added a few other contextual benchmarks, such as
- Compared to median household income in the US, first-year associates are comfortably in the top 5%—the threshold for which last year was $167,728;
- And senior associates are pushing close to the top 1% of median household income, which starts at $388,905.
The article also notes that 30 years ago annual tuition at Harvard Law School was about $10,000 and the Cravath starting salary $53,000. In 2007 the average private law school cost $32,367 in tuition annually and in 2013 it had risen to $41,985; at top-tier schools (Harvard and NYU are cited) it’s north of $57,000 these days.
Fair enough; now comes the invitation for Econ 101 malpractice.