Why Do Young Lawyers at Law Firms Make So Much Money?

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Topic: Law Firms, Law Jobs, Lawyers 

We know that new associates make big salaries at top notch big chip law firms.

But why is this so? Is it possible that large law firms have so much money that they don’t mind attracting junior law associates by giving them big salaries?

Well, the big firms do make tons of money. Top 100 law firms in the United States made a gross total of $41.7 billion (USD) in 2004. The top 4 law firms brought in more than 1,000,000,000 ($1 billion) each.

But thinking that they pay junior associates big money just because they have tons of cash misses the big picture. They pay young lawyers big money because it’s a necessity. They have to put up the cash to attract these novice attorneys. Law is a business. Supply, demand, and market forces are in effect. If market rates are high for the top young lawyers coming out of law school and the bar exam, then the demand will demand that they pay big money – or the other law firm will pay that big money.

But isn’t law one of the few professions where only a lawyer can do the intense legal activites? Doesn’t that mean since they have a kind of monopoly on the whole business, they can set high rates across the board?

The practice of law is a monopoly. A monopoly granted by the state. But you don’t need a law license to do everything under the legal sun. Many contracts don’t need a lawyer to be signed or drafted. Corporate and commercial transactions don’t necessarily need to have an attorney present. In real estate, almost everything up to the closing can be done without a lawyer. The advantage that law firms have is that they give the best service. The best law firms in the country get the difficult work – and that difficult work needs big money to get done. Again, we go back to supply and demand. Perhaps if other professions could handle such work, prices would go down. But since supply is in short amounts, prices are high to handle complex endeavors and cases.

Don’t those young associates make the law firms they work for big money?

Young attorneys at law firms do a lot of work. Long hours, long work. But they don’t really make their firm too much money. Law school is three years.  Are most law students really ready for the complexities of real life legal work? Most professions are getting more and more specialized while law students only get to learn the very basic in law school, with very little practical application. Salaries for starting law associates are around $150,000. But they often cost their firm around $250,000 in miscellaneous expenses (like office rent and overhead). It typically takes an associate three years to get their bearings and actually break even for their firm. It’s like in most sports. Do most rookies make an immediate impact for their sports teams? No, they get drafted to play in the big leagues on potential. These young associates are brought in because they are expected to help out the law firm in the coming years once they get the hang of things.


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6 Responses to “Why Do Young Lawyers at Law Firms Make So Much Money?”
  1. marie says:
    January 15, 2008 at 2:24 pm

    i am going to try to be a lawyer when i grow up i am 143 now but i am interested in learning now contact me please

  2. marie says:
    January 15, 2008 at 2:25 pm

    i also would like to say i would love to work and hard and earn my way through being a lawyer defintley

  3. Jbowens says:
    April 14, 2008 at 4:54 pm

    3Ls and First year lawyers need to learn as much about application of rules as possible. I recommend a tool to assist in your rules research. Many first years have a tough time figuring out deadlines in cases. A missed deadline could mean a lost case due to technicality.

  4. njabulo mazibuko says:
    November 17, 2008 at 12:15 pm

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  5. njabulo mazibuko says:
    December 26, 2008 at 4:20 pm

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  6. GEORGE says:
    December 28, 2009 at 9:32 pm

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