What is the point of working in biglaw?

Welcome to the second post of The Invested Counsel—thoughts about financial planning for young lawyers.

What is the point of working in biglaw?

To make a lot of money when you are young.

There are lots of other reasons to work at a big firm. There are career-related reasons (i.e., I can stay in biglaw, or go to another job that I like more). There are psychic reasons (i.e., I feel important, I’ve accomplished a goal, people see me as smart or successful), work-based reasons (i.e., I enjoy my work, I like the people I work with, I like working for my clients), etc. And those are all fine reasons.

But the main reason—the ultimate point—is to make a lot of money when you are young.

It’s a lot of money. Assuming you are getting (or will get) the new Milbank-set scale, the salary ranges from $235,000 to $455,000, plus bonus. That is a lot of money.

There are lots of people that make a lot more money. And there are many, many more people that make a lot less. But that shouldn’t matter to you. You should focus on you, and for you, this is a lot of money.

You are young. For most people, they start working in biglaw when they are in their mid- to late-20s. That is young. If you are starting off as a lawyer, it is entirely possible that you could live to be 100. That is more than 70 years of life ahead of you. That is a long time.

This is an incredible opportunity.

No matter how smart you are, and no matter how hard you worked, the ability to start in biglaw is an incredible piece of fortune that has fallen your way. If you handle it right, you can put yourself in a position of strength for the rest of your life. Do not take it for granted, and do not waste it, because the sacrifices that you make for working in biglaw are immense. For that money, you give up enormous control over your life. You work a lot. You do not get to choose what you work on. You do not get to choose when you work on it. And when you are not working, the looming presence of work is inescapable, laying a thin layer of stress over every moment. It’s rough.

But working in biglaw is not unique. Lots of people have difficult jobs, too. And many of them do not get to make a lot of money when they are young.

You need to know this in your heart.

I know that you “know” this. But knowing it intellectually is not enough.

You need to know it in your heart. You need to appreciate what it means to be young and make a lot of money, because is a precious opportunity that very, very few people get. One of my dearest hopes for this newsletter is to get more people to internalize this lesson, because it is important.

Why are lawyers especially bad at this?

Taking this lesson (and indeed any lesson about money) to heart is difficult for everyone. But in some ways, it’s uniquely more difficult for lawyers who start out in biglaw. I think that’s true for at least three reasons.

Lockstep. Lockstep compensation means that young lawyers who start in biglaw think about money less. The compensation is clear, the same at many firms, and largely non-negotiable. As a result, firms do not compete on money, and young lawyers generally do not choose firms based on money. Instead, the focus is on other things, like prestige, practice group, color scheme, etc.

Likewise, because of how lawyers are paid, there is a separation between performance and pay. Once you hit your hours requirement, your pay is pretty much set. There are of course differences at the margin (i.e., missing your hours requirement, or getting a supplemental bonus for billing more), but those are exceptions to how pay at biglaw firms normally works.

Of course, lockstep compensation ends for pretty much everyone nowadays after a set period of years. But the early money habits of lawyers are set during the lockstep years.

Lawyers do not like numbers. People who are smart but don’t like numbers become lawyers. In turn, lawyers avoid thinking about money more than other professionals because money inherently involves numbers.

Thankfully, being good with your money doesn’t require complicated math. But planning your finances does require a sense of some important mathematical ideas. Through this newsletter, I’ll explain the math that you really need to know, and leave out the math that isn’t that important.

Law school teaches you to analyze everything, and biglaw teaches you to be perfect. The skills that make you successful in biglaw are not the same skills that make you successful in managing your own money. When you are being billed at $1000 an hour, good enough is not good enough. You need to review everything, analyze everything, consider everything, and then do your work in as perfect a way as possible. If you are not doing that, then you cannot justify the billing rate. But for your own money, good enough is often the best. That’s because to enjoy real success in your money, you need to do good enough for a very long time—decades and decades. Insisting on perfection at every moment is not sustainable, and sustainability is what matters when managing your own personal finances.

How to avoid squandering this opportunity.

Once you recognize that you have this opportunity, the next step is to make sure that you don’t squander it. And to do that, you need to understand the money you are actually making. We’ll do that next week by understanding your paycheck.

The Invested Counsel is now on Substack. If you would like to subscribe and get an emailed version of each post sent to you, go to https://substack.com/@theinvestedcounsel and sign up. That’s all for now. Have a wonderful week.