Paul L. Caron

Thursday, July 12, 2012

NALP: Starting Salary for Law Grads Plunges 35% in Two Years

NALP logoNALP today released a four-page report, Median Private Practice Starting Salaries for the Class of 2011 Plunge as Private Practice Jobs Continue to Erode:

The median starting salary for new law school graduates from the Class of 2011 fell 5% from that for 2010 and has fallen nearly 17% just since 2009. The mean salary fell 6.5% compared with 2010, and since 2009 the mean has plunged almost 16% according to new research released today from NALP. The research also reveals that the median starting private practice salary fell over 18% from 2010 and since 2009 has fallen an astonishing 35%. These are among the most dramatic findings that were released this week from NALP’s Employment Report and Salary Survey for the Class of 2011. “This drop in starting salaries, while expected, is surprising in its scope” according to NALP’s Executive Director James Leipold. “Nearly all of the drop can be attributed to the continued erosion of private practice opportunities at the largest law firms.”

Starting Salaries: Classes of 2009, 2010, and 2011

  2009 2010 2011 Decrease 2009-11
Median Salary: $72,000 $63,000 $60,000 17%
Mean Salary: $93,454 $84,111 $78,653 15%
Median Firm Salary: $130,000 $104,000 $85,000 35%
Mean Firm Salary: $115,254 $106,444 $97,821 15%

The adjusted mean for all full-time jobs reported was $73,984 (in contrast to the unadjusted national mean of $78,653), and the adjusted mean for full-time law firm jobs was $87,241 (in contrast to the unadjusted mean of $97,821). ... The median salary for government jobs has remained unchanged since 2009, at $52,000. In a bit of good news, the median salary at public interest organizations, which includes legal services providers and public defenders, rose to $45,000, after being at just under $43,000 for two years. The median salary for judicial clerkships was $52,000, virtually unchanged from 2010, but up from $50,000 in 2009. ...

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"Yes. 160K is starting salary at big law firms in New York, and in a few large firms in other cities."

Less than 10% of jobs are big law jobs that pay that much. It seems law school only returns that much if you gget into a top 15 school and graduate near the top of the job class

Posted by: JOe | Jul 13, 2012 8:24:49 AM

** “This drop in starting salaries, while expected, is surprising in its scope” according to NALP’s Executive Director James Leipold.**

He meant to say, as has been said often in history, "We knew it was bad, but not this bad."

And usually after that cliche has appeared, in a little while the problem is revealed as much worse, maybe four times worse, truly catastrophic.

Posted by: Lowellguy | Jul 13, 2012 6:01:10 AM

I have a lot of attorneys as clients. So here's four reasons why the legal services market has changed:

1. Criminal Law: The public understands that there are no trials anymore. Everything is about getting the deal. In their mind, a public defender is no worse than a private attorney at getting a deal. Also, because of horrible economy, nearly everyone qualifiers for public defender. Competition for these public defender jobs is incredibly keen because the states get a ton of impressive resumes. Attorneys would rather work for peanuts than for no peanuts at all. Of course, there means that there are few even low-paying jobs available for inexperienced attorneys.

2. Family Law: Many divorcing couples are going pro se because of fees.

3. Personal Injury. 20 years ago if no one hired you, with some exaggeration, all you needed to do was hang a shingle and PI clients would walk in. Insurance companies would routinely, quickly settle soft tissue claims. Which would provide the cash flow necessary to take larger claims to trial for bigger pay days. Now, insurance companies fight even legitimate hard injuries all the way. Even when damages are proven well beyond cap, even when liability is clear beyond any doubt, it takes a great attorney to get that case to settle within three years.

4. Real Estate: there is rarely any actual law in doing real estate closing and refinancing. The over-compliance busy work of adhesion fine print ensures this. Closings are looks as the commodity that they have become. So thin margins and high volume are the only way to make money. Obvious a significant barrier to entry.

As it is now, everything is a law, everything is regulated. One would think that would create a bigger need for attorneys. But the opposite is true. The over-regulation has destroyed personal wealth making it difficult to pay an attorney, even if one was so inclined. The over-regulation has made people more comfortable with being personally non-compliant, more comfortable with reneging on their end of the bargain, and completed disconnected from laws that were made supposedly with their consent and for their benefit.

Posted by: Offshore Attorney | Jul 13, 2012 5:12:24 AM

Anon, if you are the person I think you are, then you've been making a similar mistake time and time again on this and other forums.

You continue to present information about what "lawyers" are doing and making. Lawyers and law school graduates are not the same set of people. Lawyers are the successful sub-set of the larger group. There are a huge number of law school graduates who do not work as lawyers (and not by choice). These people are not factored into any of the statistics you cite, but they absolutely must be if you want to argue that law school is a smart investment.

Posted by: Steven | Jul 12, 2012 5:14:05 PM

Remember that these statistics only reflect reported salaries. The number of law school graduates who do not report a salary is huge, especially in recent years. At my own school (Ohio State), the most recent salary information excludes a full 50% of the class. The salary distribution after you factor in the 50% who are not reporting is going to look a lot worse than this.

Posted by: Steven | Jul 12, 2012 5:04:45 PM

Ah, the pro-law school troll is back. The "average" law school grad is lucky to have a job at all. ABA data for the class of 2011: only 55% have full-time, permanent legal positions. Only 8% have "big law firm" jobs. Why don't you go work at a used car lot or something?

Posted by: Ugh - | Jul 12, 2012 4:01:50 PM

If you look at the profession as a whole and take a longer view, the drop in 2011 is really very modest. You can see the data here:

Real median wages for lawyers dropped from $121K in 2009 to $115K in 2011. Real average wages dropped from $137K in 2009 to $133K in 2011.

The unemployment rate fell from 2.3 to 2.1 percent, and employment increased from 0.41 percent of the workforce to 0.45 percent of the workforce.

In other words, the legal market was able to absorb a lot more lawyers with a relatively minimal overall drop in wages.

Young lawyers took a hit, but starting wages are always the most volatile and will bounce back quickly in a few years, when there's a shortage of lawyers--standard cob web cycle.

Posted by: Anon | Jul 12, 2012 2:33:29 PM

Yes. 160K is starting salary at big law firms in New York, and in a few large firms in other cities.

Total compensation is actually higher in the first year--the 160K is just the salary. The bonus ranges from around $7.5K (in very bad years) to around $30K (in very good years), typically around $15 to $20K.

So at the big firms, total starting comp is generally around $180K, and goes up to $200K by year 3, and $250K or so by year 6.

I think the take away from this isn't so much that starting salaries have plunged, but that they are still so very high.

The average liberal arts major makes $30K at graduation. The average law school graduate (basically a liberal arts major with 3 more years of education) makes $80K, and this is supposedly a calamity.

Perspective, people, perspective.

3 years of schooling and an English or History or Poli. Sci. major can more than double his or her starting salary.

That's one heck of solid investment.

Presumably the handful engineering and science majors who choose to go to law school end up doing even better, since they can become patent lawyers and make serious bank.

Posted by: Anon | Jul 12, 2012 2:27:41 PM

Yes. The amazing thing is that they manage to do that with collusion...

Posted by: Anonymous | Jul 12, 2012 2:21:55 PM

Being someone untainted by a law degree, can someone explain to me the spike around $160,000? Is that just some sort of standard starting salary at big firms?

Posted by: Jeremy LaMrouex | Jul 12, 2012 12:58:21 PM