Lawyers represent people and entities involved in legal proceedings. Being highly specialized professions, their services typically command higher fees than many other roles.
First-year associates at large firms now earn over $160,000, thanks to competition for talent and firms needing to attract top candidates.
1. Base Salary
The average lawyer salary depends heavily on the type of law practiced and where you work. Firm size and market factors also play a part, with major cities typically paying higher salaries due to more competition for talent. But just because you don’t work in one of those major cities doesn’t mean that being a lawyer won’t provide an income; particularly if your specialty lies within Intellectual Property (IP), Healthcare, Tax or Corporate law.
New lawyers begin at different wages depending on their entry-level job and location; as they gain more experience their salaries can increase significantly. NALP estimates that junior associates at top firms could expect to make roughly $160,000 by 2023 while partners in mid-sized firms could see that number rise to as much as $215,000.
Law graduates pursuing public interest jobs or clerkships tend to earn less than those starting their legal careers at large firms, as evidenced by NALP’s 2015 data showing median wages below $100,000 among new lawyers in public interest jobs and judicial clerkships.
A lawyer’s salary largely depends on what area of law they specialize in. Lawyers experienced in medical, tax and intellectual property law may command higher fees from clients due to their expertise.
Lawyer salaries will also differ depending on the time of year. For example, many firms pay higher salaries during holiday seasons as they require additional help with client work.
Other factors affecting average lawyer salaries include whether or not you are male or female, your years of experience and type of work you perform. Clio recently conducted an analysis on billions paid out by in-house clients to attorneys analyzed by them; gender, experience level and nature of work played an influenceful part. For more details, check out our legal trends report.
2. Bonuses
As a law firm owner, you may wish to reward your lawyers with bonuses tied to profitability. Doing this fosters teamwork among attorneys during busy periods and motivates all attorneys to work together more closely than they otherwise might. But it is essential that all parties involved understand exactly what constitutes profit – many firms make the mistake of only considering billable hours when calculating profits; this doesn’t consider overhead and can give an inaccurate picture of a lawyer’s profitability and compensation expectations.
Big Law firms typically awarded bonuses based on an attorney’s contribution to firm profitability; however, smaller and mid-size firms don’t always have that luxury and must consider how they will structure bonuses going forward. If profit-based bonuses are chosen instead, ensure seniority considerations are included within this process as any senior associate could feel disrespected by being given equal bonuses as newly hired junior associates.
Some Big Law firms have recently instituted origination bonuses for associates at their firm. Although these incentives are usually reserved for partners, origination bonuses are an effective way to encourage young associates to take risks early and become engaged with client interactions early in their careers. It should be kept in mind, however, that these bonuses could potentially have negative ramifications on your law firm culture; hence it should be given careful consideration before being implemented.
Smaller firms that specialize in certain practice areas, such as high-stakes litigation, can afford to offer associates more generous bonuses. As a result, these boutiques often outshone larger rivals in terms of year-end bonus payouts; Selendy Gay Elsberg in New York offered associates bonuses up to $126,500 this year – significantly higher than big law counterparts! It is essential for firms of all kinds to evaluate their bonus structures to strike an ideal balance between rewarding individual performance and building cohesive teams.
3. Perks
Lawyers can expect various perks depending on their firm and industry, such as life and medical insurance policies, dental coverage plans, flexible work hours with paid time off and costs of bar association membership fees covered. Professional development opportunities also are common.
As legal industry employers have come under scrutiny over work-life balance issues, many firms have taken measures to provide attorneys with benefits that encourage them to remain at their firm, such as remote working options and flexible work schedules. Such benefits allow attorneys to achieve better work-life balance that benefits both their clients and the firm itself.
Attorneys frequently must handle difficult cases or deal with difficult clients. Though this can be challenging, these experiences are necessary in an industry with long hours and demanding billable quotas. These conditions can create excessive stress for attorneys that can have negative repercussions for both health and well-being.
As such, it is crucial that a compensation structure provides incentives for lawyers to deliver an excellent client experience and foster healthy work-life balance. To do so effectively may involve offering telecommuting options, alternative work schedules or tiered pay scales within their law firms’ work environments.
Implement a profit sharing system to motivate your attorneys by giving them a share of the firm’s financial success and reward them as it expands and thrives. This type of model can give them extra motivation to maintain high performance levels by giving them more money as the firm expands.
Finally, some attorneys may find themselves forced to work on difficult cases or clients due to how their law firm operates. Some firms utilize an “eat what you kill” model where an attorney receives credit for winning matters but must cover overhead costs and salaries of their assistants as well as buy back junior associate time at predetermined billing rates.
Although this system provides the owner of the firm with ample opportunity to make significant profits, it doesn’t offer your attorneys much in terms of treatment or incentive. Establishing dynamic, transparent models which incentivize their participation can keep talented attorneys within your law firm and prevent talent leaving for other firms.
4. Other Compensation
Compensation processes can often be fraught with emotional and personal complications for lawyers. They may feel competitive or jealousy when other attorneys receive promotions more rapidly or higher bonuses even though their work quality grades and client service metrics are similar. When firms take into account success factors recaps, market forces, strategic considerations, and economic capabilities when designing compensation models, this should reduce these concerns and ensure all lawyers are fairly rewarded.
Most lawyers receive annual target bonuses that are calculated based on both company and personal performance. Although the size may differ depending on their employer, most typically provide 20-30% of an employee’s base salary as annual target bonuses for legal roles. This structure has become common among employees across multiple industries – not only legal ones.
Many attorneys are moving away from billable hour models and opting for alternative compensation arrangements. This trend can be explained by changing client expectations of more cost-effective and efficient legal services as well as an increasing desire for value-driven billing practices.
Some attorneys are adopting a hybrid strategy which incorporates both an hourly rate and fixed fees based on the outcome of a case, in order to provide more predictable income streams while still meeting clients’ needs and ensuring their satisfaction.
Non-attorney staff play an indispensable role in law firm success, yet their contributions often go unrecognized. From organizing legal documents for court appearances and invoicing clients for payments to scheduling client calls and calendars – non-attorney staff are an indispensable component of lawyer work life – especially when compensated in line with their firm’s values and goals for greater productivity, engagement and workforce satisfaction.
Overall, most legal professionals report being very or somewhat satisfied with their current compensation packages. Though the details vary by state and metropolitan area, this data shows a consistent trend. Whatever their specific details of compensation package might look like, most legal professionals find their work rewarding, with compensation levels in line with market value.