I was having a chat the other day with some folks about Biglaw, and the subject of the Yale Numbers came up. We got to wondering what the typical first-year associate makes, hourly, based on those numbers. So here it is:
Based on what seems to be the industry average for starting Biglaw Associates, $125k per year.
Target: 1800 Billable.
Reality: 2434 Hours at work.
Hourly Rate: ~$50/hr.
Target: 2200 Billable.
Reality: 3058 Hours at work.
Hourly Rate: ~$40/hr.
Now, granted, many firms offer yearly bonuses, so that can push the hourly rate up… except that you don’t get bonuses for being a low biller…
…in fact, I did a little digging, and (granted, this is old data) but at one Biglaw firm, first-year associates got a bonus based on–you guessed it–hours billed. The bonus for 2200 hours at this firm was $15,500. Raising the hourly rate to $46/hr.
It’s not hard math to do, but I wonder how many law students ever bother to do it.
I think most prefer to remain ignorant. They want to think of the big $ amount and not really work out what it boils down to. A friend recently pointed out that one of our classmates got a job starting at ~ $125K at a Chicago firm (we’re in Indy). My immediate response was “what’s her starting cost of living?” Many don’t take that into account, either.
I think you’re right, most people: don’t think of it. Some know there’s a dif, but in their head say it’s a wash on their balance sheet because of a valued improvement in the environment. They fail to consider often that valuation is based on the assumption that they’ll be able to go out to eat as often, hit the bars, clubs and shows as often, etc. And if you’re paying 35% more than you’re used to for your digs… that may not happen.
Some things are strange unknown you won’t find until you dig around a bit. A friend of mine moved to Elmira, NY (just next door to BFE) and found her electricity costs almost quadruple. That one surprised me.
I’m not spamming – I just happen to address the issue you raise in my blog. Its too long to retype here. Take a look at “Costanza Method Part IV”
Breakdown
Preaching to the Perverted breaks down the starting associate salary based on the Yale Numbers. Turns out based on billable hours and salary starting associates make between $40/hr and $50/hr.
Dave! then says “It’s not hard math to do, but I wonder…