What’s a Lawyer Worth?

full frame shot of eye
Photo by Vladislav Reshetnyak on Pexels.com

Alexander Foxx, Blog Designer/Editor, University of Cincinnati Law Review

Introduction

How much should an attorney get paid? The answer will likely depend on if the answerer has a vested interest in seeing attorneys paid more or less. A client, a lawyer seeking employment, and a hiring lawyer, will all have different answers. The answer will also depend on a multitude of other factors, such as the quality of the attorney and the type of representation the attorney undertakes.

For the sake of simplicity, assume that the attorney is a new attorney seeking employment and will undertake whatever kind of representation funneled to them by their senior partner. How much should this attorney be paid? The answer still depends. The size of the firm, the quality of the job candidate, and the city of employment will all vary the answer. Lawyers are in an especially fickle profession when it comes to pay; the lower tenth percentile of attorneys may make $56,910 per year, while the upper twenty-fifth percentile may make $176,580.[1] This is over a 3 to 1 difference. Comparatively, the salary spread for civil engineers is 2 to 1.[2] By this measure, the practice of law seems an especially volatile field to determine pay.

Appropriately, the question of how much an attorney should be paid is a difficult one. This article seeks to elucidate the answer in an effort to provide a baseline set of knowledge for discussing how much an attorney should get paid. There are some notable constraints to answering this question. These include:

  • The quality of available data. Predictions made on this article will likely be based on data that is dated or that may be imperfect in another way.
  • Variability of individuals. A danger in estimating a wage is that readers may be inclined generalize that wage to all individuals in that profession. This cannot be done accurately—different individuals will clearly be paid different amount due to varied circumstances.
  • Expectation differences. Individuals and markets have different pay expectations. An attorney in New York City may well demand a higher salary than an attorney in rural Kentucky, even though the two have similar credentials.
  • Resource constraint. It should be noted that data driven research is extremely time and labor intensive. The author is constrained by these factors and therefore encourages the reader to use the footnotes of this article to pursue a deeper research of their own. Hopefully, this article will provide a baseline to that research.

These constraints notwithstanding, this article will provide a basis for evaluating attorney pay. First, this article will look at nationwide data on attorney pay. Second, this article will explore variations between regions. Third, this article will look at variations between industries. Fourth, this article will look at more specific examples of attorney pay, especially for new attorneys. Fifth, this article will address how to use the information presented and briefly comment on the future of attorney pay and conclude. This article will pay special attention to the interests of an attorney seeking a new position as a recent law school graduate.

The answer “How much should an attorney get paid?” gives attorneys—both hiring attorneys and attorneys seeking to be hired—a starting point for negotiations. While attorney pay may vary widely depending on factors, having equal information on both sides of a salary negotiation increases the equity of the outcome. And equitable pay outcome bodes well for business, as well as employee and employer happiness.

Pay for Attorneys in the Nation

In order to determine a starting point for attorney salary negotiations, it could be helpful to look at a national average. Below is the chart from the Bureau of Labor Statistics (BLS) estimating wages for attorneys in May of 2016.[3]

Percentile 10% 25% 50% (Median) 75% 90%
Hourly Wage $27.36 $37.30 $56.81 $84.89 This wage is equal to or greater than $100.00 per hour or $208,000 per year.
Annual Wage[4] $56,910 $77,580 $118,160 $176,580 This wage is equal to or greater than $100.00 per hour or $208,000 per year.

This provides a possible answer to the following question: “[h]ow much should an attorney get paid?” The answer could be: “[b]ased on national data from May of 2016, the median annual wage for an attorney was $118,160.” Of course, this is not very helpful in any practical sense because a new attorney is likely not “median” and the median is not a metric of an attorney’s quality, but a statistical measurement of where data points lie. Therefore, $118,160 will not be an appropriate salary negotiation starting point for many hirers and job-seekers.

A more accurate estimate of the starting salaries for new attorneys is $65,000.[5] This paints an interesting picture. The average starting salaries for new attorneys is better than the lower tenth percentile of all attorneys ($65,000>$56,910). This demonstrates there are presumably some new attorneys paid more than experienced attorneys. Presumably, some new attorneys are worth more than more experienced attorneys and hence are paid higher salaries. This could be useful information to a new law school graduate. While they might be the newest members of the legal profession this does not make them the least valuable. It does, however, mean they are probably not as valuable as their more experienced colleagues. This is because while the starting salaries of some attorneys may be higher than those of more experienced attorneys, this is likely more the exception than the norm.[6]

A starting point for salary negotiation for new attorneys seeking employment may therefore be reasonably estimated at $65,000.

Pay Between Geographic Areas

Unsurprisingly, there appears to be significant variation in lawyer pay across geographic area and starting negotiations should reflect this. For example, the median wage for an attorney in the New York-Newark-Jersey City Metropolitan Statistical Area (MSA) was $149,820, but in Cincinnati, OH area was $98,230.[7] An argument for this disparity could be that, due to its larger size, the New York MSA has a much higher need for attorneys than the Cincinnati MSA.

However, the saturation of the attorney market, based on location quotient, in New York appears to be much higher than Cincinnati. Location quotient is “the ratio of an occupation’s share of employment in a given area to that occupation’s share of employment in the U.S. as a whole. [8] For example, an occupation that makes up 10% of employment in a specific metropolitan area compared with 2% of U.S. employment would have a location quotient of 5 for the area in question.”[9] New York has a location quotient of 1.87 and Cincinnati of 0.84.[10] This means there are more attorneys per capita than average in New York and less in Cincinnati.

The pay disparity may be due to other factors then. To speculate, cost of living may drive the pay scale to higher in New York. Or perhaps expectations drive the pay difference. Because attorneys expect a higher salary in New York this may become a self-fulfilling prophecy in salary negotiations. Whatever, the reason for the pay difference, Cincinnati attorneys take heart—you are more unique than your New York brethren.[11]

Specific Examples

While knowing averages and medians is helpful in determining salary, it is not what a prospective attorney cares about. The prospective attorney cares about how much a law firm offered the person who sits next to them in their bar prep class, following a summer associateship. Specific examples are incredibly useful because they provide concrete examples for starting negotiations.

The National Association of Law Placement (NALP) helps tremendously with providing specific examples; it publishes a directory of professional legal entities, of which many entries contain salary information for that specific entity.[12]Before we examine these examples, special attention should be given to the data in this directory. The data in it appear to be self-reported by the legal entities themselves.[13] While the data is most likely accurate, there are strategic advantages to be gained in publicly reporting it. It could perhaps, be used to induce more applicants to a firm. Or it could be used to deflate public perception of lawyer play. Most likely, the data and its reporters serve the NALP’s belief that “all law students and lawyers should benefit from a fair and ethical hiring process.”[14] It should, however, be viewed with caution due to the self-reporting risks mentioned above. With that being notated, some specific reports bear examining.

This directory does an excellent job of demonstrating that medians and averages mean absolutely nothing when faced with specific examples. For example, a large law firm with an office in New York, New York and Charlotte, North Carolina had equal compensation for its New York City and Charlotte hires.[15] This is in spite of the fact that New York has a hire median annual wage than Charlotte.[16] This firm also pays a higher starting salary than the median wage.[17] One search has destroyed any delusion that averages and medians reflect reality.

Uncomfortable realities also emerge, even if they are not surprises. For example, the lowest 10% of attorney pay in Toledo is $56,530, but a specific non-profit reflects a starting attorney salary $39,000.[18] Salary cannot reflect everything—like the benefit of helping people who truly need help.

Like medians and averages, specific examples do not reflect the realities of individuals.[19] They do provide a way for individuals to make informed decisions, however. For this alone, the NALP should be commended. While it may not eliminate inequitable salary disparity, it does provide access to information to ensure parties are more fully informed. The information from the NALP, as well as the information from the BLS, provide a starting point for salary negotiation for attorneys, from both the hiring and job-seeker perspective.

How to Use This Information

“How much should a lawyer be paid?” The answer: it depends.[20] It depends on (1) the quality of the candidate, (2) the monetary resources of employer, (3) the economy broadly, (4) geography, (5) the firm, and (6) negotiation. However, this article provides some resources to attorneys looking for jobs and for hiring attorneys. These resources include:

  • the NALP Directory;
  • the Bureau of Labor Statistics; and
  • specific school websites.[21]

These can provide a starting point for negotiation. If individuals enter salary negotiations without an understanding of the economic market for attorneys, inequity may be reached for an attorney on one side. Inequity of compensation may create a toxic environment in workplaces and lead to high turnover. It can lead to the failure to train attorneys in an amount commensurate with their worth; namely, an attorney will rise to the benefits provided to them.

Further, if attorney compensation is more widely known, it allows the public, in the form of clients, to become comfortable with how much they pay attorneys. It allows the public to bargain down unreasonably high attorney fees or to realize when they have received a good value from an attorney. Efficient markets function only if the demand and supply side have equal knowledge. This article attempts to equalize that knowledge and strives to grow closer to equilibrium.

A Brief Note on the Future

The information presented in this article is not static—it will change. The legal market may experience significant shifts in its composition, as it has been experiencing since 2008.[22] Big law firms may shrink, equity partnerships will become more unstable, and rote contracted law work will increase.[23] Near the date of this article’s writing a periodical reported GE, a large legal employer in the author’s community had signed a deal with a “enterprise legal services company.”[24] Changes like this will likely continue. Changes in the legal market will drive changes in how much lawyers are paid. Thus, it would behoove the reader to be constantly aware of the legal market and its implications on the pay of lawyers.

Conclusion

Lawyers should have an expectation of what they will get paid and hirers should have an expectation of how much they will pay their lawyers. The difficulty lies in creating expectations that can be used as a reasonable basis for productive negotiation. This article provides that reasonable basis. The answer to “How much should an attorney get paid?” can now be answered with: “It depends, but let me give you a starting point based on an article. We can negotiate from there.”

[1] 23-1011 Lawyers, U.S. Bureau of Labor Statistics(2017), https://www.bls.gov/oes/current/oes231011.htm (last visited Mar 21, 2018). May 2016 estimates.

[2] 17-2051 Civil Engineers, U.S. Bureau of Labor Statistics(2017), https://www.bls.gov/oes/current/oes172051.htm (last visited Mar 21, 2018). May 2016 estimates.

[3] 23-1011 Lawyers, U.S. Bureau of Labor Statistics(2017), https://www.bls.gov/oes/current/oes231011.htm (last visited Mar 21, 2018). May 2016 estimates. It should be noted that the BLS reports statistic for “lawyers” and not “attorneys.” For this article, I use the terms synonymously.

[4] “Annual wages have been calculated by multiplying the hourly mean wage by a “year-round, full-time” hours figure of 2,080 hours; for those occupations where there is not an hourly wage published, the annual wage has been directly calculated from the reported survey data.” (23-1011 Lawyers, U.S. Bureau of Labor Statistics(2017), https://www.bls.gov/oes/current/oes231011.htm (last visited Mar 21, 2018).)

[5] Employment for the Class of 2016 – Selected Findings, The National Association of Law Placement, https://www.nalp.org/uploads/SelectedFindingsClassof2016.pdf (last visited March 21,2018). Data from the graduating law class of 2016. This is median measurement.

[6] It bears repeating that these numbers are averages and median—they are not universally applicable. A fresh law school graduates who attempts to argue a salary based on solely these statistics and not their merits, will fair poorly.

[7]Occupational Employment Statistics Query System, Bureau of Labor Statistics, https://data.bls.gov/oes/#/home (last accessed March 22, 2018). May 2016 data.

[8] Id.

[9] Occupational Employment Statistics, Bureau of Labor Statistics, https://www.bls.gov/help/def/oes.htm#, (last accessed March 22, 2018).

[10] Occupational Employment Statistics Query System, Bureau of Labor Statistics, https://data.bls.gov/oes/#/home (last accessed March 22, 2018). May 2016 data.

[11] If you are an attorney in Washington D.C. you seem to be less unique than a cockroach—the location quotient there is 10.16. (Occupational Employment Statistics Query System, Bureau of Labor Statistics, https://data.bls.gov/oes/#/home (last accessed March 22, 2018). May 2016 data.)

[12]NALP Directory of Legal Employers, National Association of Law Placement, https://www.nalpdirectory.com/ (last accessed March 23, 2018).

[13] See, e.g., Stites & Harbison PLLC – Lexington, Kentucky, NALP Directory, https://www.nalpdirectory.com/employer_profile?FormID=8624&QuestionTabID=36&SearchCondJSON=%7B%22SearchCity%22%3A%22Lexington%22%2C%22SearchCountry%22%3A%22840%22%2C%22SearchState%22%3A%2221%22%7D, (last accessed March 23, 2018). Reporting year 2017.

[14] About Us, NALP, https://www.nalpdirectory.com/about_us, (last accessed March 23, 2018).

[15] NALP Legal Directory of Legal Employers, NALP, https://www.nalpdirectory.com/index.cfm (search for the firm Cadwalader, Wickersham & Taft LLP)(last accessed March 23, 2018). Reporting year 2017.

[16] Occupational Employment Statistics Query System, BLS, https://data.bls.gov/oes/#/home (last accessed March 23, 2018). 2016 data.

[17] See NALP Legal Directory; Occupational Employment Statistics Query System.

[18] Occupational Employment Statistics Query System, https://data.bls.gov/oes/#/home (last accessed March 23, 2018); Legal Aid of Western Ohio, Inc. (LAWO) – Toledo, Ohio, NALP Directory of Legal Employers (search in the State of Ohio), https://www.nalpdirectory.com/employer_profile?FormID=8306&QuestionTabID=54&SearchCondJSON=%7B%22SearchCountry%22%3A%22840%22%2C%22SearchState%22%3A%2239%22%2C%22SearchOrgTypeID%22%3A%222%2C3%2C4%22%7D (last accessed March 23, 2018.).

[19] For example, an individual may be able to negotiate one of the mentioned salaries.

[20] This answer is a proud tradition of the legal profession.

[21]See, e.g., Univ. Cincinnati Law Employment Statistics, https://www.law.uc.edu/employment-statistics (last accessed March 26, 2018).

[22] See, Bernard A. Burk and David McGowan, Big But Brittle: Economic Perspectives on the Future of the Law Firm in the New Economy, 2011 Colum. Bus. Law Review 1, 93 (2011).

[23] See id at 93-102.

[24] Miriam Rozen, The American Lawyer, https://www.law.com/americanlawyer/sites/americanlawyer/2018/03/22/ge-inks-legal-outsourcing-deal-with-unitedlex-eying-big-savings/, (last accessed March 27, 2018).