Mass Black Judge

As a lawyer, your earnings depend on various factors. Firm size, industry sector and state can all play a factor in how much money is made from practicing law.

As shown by the chart, salaries vary considerably among lawyers working in large firms in major cities; others work in industries like medical, tech and tax law.

1. Salary

The amount of money lawyers make depends on a range of variables. Their field, employer size and legal specialization all play an integral part.

Attorneys are available for hire by private companies, nonprofit organizations, government agencies or on their own. Some areas such as employment law or personal injury typically pay lower wages.

New York lawyers typically earn more than their counterparts elsewhere due to the Cravath scale – a system used by large law firms to attract first-year associates – which provides compensation.

Of course, other factors also contribute to a difference between New York salary levels and those in other cities. Client counts play an important part – particularly those clients that demand legal expertise more.

2. Bonuses

Lawyers working at large firms typically receive bonuses that exceed their base salaries, as well as collaborative networking and technological resources that would not otherwise be accessible to solo or small firm lawyers.

Bonus structures at Big Law firms may differ depending on their profitability and an associate’s seniority; however, bonuses typically tend to be higher for associates who work at larger firms as these bonuses tend to reflect increased billable hours worked.

Davis Polk & Wardwell, Sidley Austin and Simpson Thacher & Bartlett are three Wall Street firms which recently announced they may reduce associate bonuses if they do not meet performance targets and office attendance requirements. This marks a dramatic change from previous years. Certainly these changes reflect an increasing emphasis on profitability while simultaneously keeping associates committed and satisfied within their firms; consequently some may feel their bonuses do not represent fair compensation for their performance.

3. Other income

The amount of money a lawyer earns can depend on various factors. Your field of law practice and length of experience both play an integral part in how much they’ll make; someone with zero to five years can expect significantly less income compared to someone with 15 or more years under their belts.

Size can also affect how much money you make; larger firms tend to offer their associates higher salaries, while smaller law firms and public interest organizations usually provide lower compensation packages.

Industry can have a major effect on your salary as well. Lawyers who specialize in healthcare, corporate law and intellectual property law typically earn the highest wages; Above the Law reports that 8 percent of media and entertainment lawyers report earning over $400,000. Finance and banking lawyers make second highest earnings with 4 percent reporting earning more than this sum; lowest payed sectors for lawyers include nonscheduled air transportation services, computer peripheral equipment manufacturing and office administrative services.

4. Retirement

Many lawyers find it challenging to save enough for retirement, a common struggle among workers across industries; however, their specific set of circumstances makes saving even harder.

As opposed to other businesses, law firms tend not to provide employees with a traditional 401K that offers significant employer matches on employee contributions. Instead, many attorneys establish an Individual Retirement Account Plan (IRAP), similar to what many corporations provide their workers as profit sharing plans.

No matter how hard we try, leaving a career you have spent so many years building can be difficult – which explains why many lawyers postpone retirement.

If you are planning to retire from your practice, having an effective savings strategy that takes into account tax bracket, desired annual contribution levels and your expected retirement date is essential. Consulting a team of financial advisors to create this strategy and setup your retirement accounts correctly will give you confidence that there will be enough funds available to ensure a comfortable lifestyle after retirement.