If you left biglaw as an associate

[Anonymous]

There’s a reason the phrase “Golden Handcuffs” exists. Big Law salaries are deceptive - it’s more than enough to do some things (pay off loans, fund retirement, buy a $750,000+ house, have kids (daycare or support a SAH spouse), but not all of these things at the same time.

Although I don’t discuss it with my peers that much, my guess is most 5-6th year associates who had law school loans with small kids and a DCUM-worthy house/lifestyle don’t have much of a net worth beyond the equity in their houses.

As a 5-6th year I had half a million in networth - not including any home equity or mortgage. After my 1st year I maxed out my 401k, and put the rest in mutual funds.

Some of this was luck - I had ~$75K in loans for law school, since I had a scholarship for partial tuition and lived off savings from before law school and big law summer salary and I had some savings from my parents (very generous, but not crazy trust fund amounts).

Some of it was waiting to take on the major expenses (wedding, house, child) until after loans were paid off (I think as a 3rd or 4th year) and not being terribly extravagant (visiting family before loans were paid off and low key vacations after loans were paid off, house DCUM would mock, having one child)). Having a spouse who has a low 6-figure income also helps considerably since I’m not supporting anyone but my child, but the net worth is based on my savings, not joint).

So you can exit as a 5-6th year with a decent amount of savings, but not if you’ve bought an expensive house (really the only kind in this area) and have had children.

[Anonymous]

Anonymous wrote: There’s a reason the phrase “Golden Handcuffs” exists. Big Law salaries are deceptive - it’s more than enough to do some things (pay off loans, fund retirement, buy a $750,000+ house, have kids (daycare or support a SAH spouse), but not all of these things at the same time.

Although I don’t discuss it with my peers that much, my guess is most 5-6th year associates who had law school loans with small kids and a DCUM-worthy house/lifestyle don’t have much of a net worth beyond the equity in their houses.

As a 5-6th year I had half a million in networth - not including any home equity or mortgage. After my 1st year I maxed out my 401k, and put the rest in mutual funds.

Some of this was luck - I had ~$75K in loans for law school, since I had a scholarship for partial tuition and lived off savings from before law school and big law summer salary and I had some savings from my parents (very generous, but not crazy trust fund amounts).

Some of it was waiting to take on the major expenses (wedding, house, child) until after loans were paid off (I think as a 3rd or 4th year) and not being terribly extravagant (visiting family before loans were paid off and low key vacations after loans were paid off, house DCUM would mock, having one child)). Having a spouse who has a low 6-figure income also helps considerably since I’m not supporting anyone but my child, but the net worth is based on my savings, not joint).

So you can exit as a 5-6th year with a decent amount of savings, but not if you’ve bought an expensive house (really the only kind in this area) and have had children.

Apparently my penchant for the parenthetical is disastrous when using a iPhone screen, so many open parentheses (yikes!).

[Anonymous]

My husband and I hit a seven figure net worth about 10 years out of law school, him biglaw, me in govt. We also had a kid to pay for (private nanny) and bought a home. It is doable but something has to give. For us, we eloped and drove a crappy car. We spent on the nanny and eventually upgraded where we lived but lived in a less expensive condo for awhile. We also waited to buy a home. We went to cheaper law schools that gave more grant money. A couple of years later we are making more money since I’m not private but we structured our lives so that we could each take a govt job.

[Anonymous]

Anonymous wrote:If you left biglaw as an associate whether bc you didn’t make partner or didn’t want to be a partner or wanted to move away or whatever, when did you leave (how many yrs post law school) and what was your net worth when walking out the door?

Am a junior associate at a firm that has openly announced that it won’t make any partners in my large department for several years. Associates are being kept busy on small cases, but we just aren’t seeing the large cases that used to be staffed with 10 people working 80-100 hour weeks, so I’m thinking there’s a biz gen problem up top somewhere. As I’m seeing the mid levels and seniors scramble to get out bc they feel like they’ll be asked to go before they’ve landed jobs, while some juniors are looking to lateral to other firms while others are seeing if they can wait it out for 1-2 years to see if the firm rights the ship since partnership is a long long way away. I’ve realized the instability of all of this and am trying to plan my financial life so that if I don’t ever make partner/get pushed out somewhere along the line in my career as a mid/senior, I can “downgrade” to a 150k job that’ll pay my daily bills and live happily ever after bc most of my nest egg was already made/invested in my big firm days. Yet looking at the mids/seniors panic, I’m thinking most are not in this situation.

So for those of you who’ve already left biglaw – how much did you leave with and if you took a lower paying job, was that a financial stretch or was it just fine financially? Is it unrealistic to think that you can walk out of biglaw in say 6 years with a significant net worth (significant for a 31 year old, not significant compared to a 50 yr old partner)?

Left after 10 years. After three years my student loans and my husband's student loans were paid. After six years, we sold our house and bought a bigger one (but still under $1MM), and we have decent equity. I still have my 401(k) from my prior position, and I also have retirement from current position. We have no recurring bills other than mortgage and utilities. I stepped away and took a position that pays me much less than what I was making, but the job satisfaction and balance is much greater than I had there. My husband makes about equal to what I make now, and we have a comfortable lifestyle - not extravagant, but comfortable. Our net worth is about $1.5MM.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you left biglaw as an associate whether bc you didn’t make partner or didn’t want to be a partner or wanted to move away or whatever, when did you leave (how many yrs post law school) and what was your net worth when walking out the door?

Am a junior associate at a firm that has openly announced that it won’t make any partners in my large department for several years. Associates are being kept busy on small cases, but we just aren’t seeing the large cases that used to be staffed with 10 people working 80-100 hour weeks, so I’m thinking there’s a biz gen problem up top somewhere. As I’m seeing the mid levels and seniors scramble to get out bc they feel like they’ll be asked to go before they’ve landed jobs, while some juniors are looking to lateral to other firms while others are seeing if they can wait it out for 1-2 years to see if the firm rights the ship since partnership is a long long way away. I’ve realized the instability of all of this and am trying to plan my financial life so that if I don’t ever make partner/get pushed out somewhere along the line in my career as a mid/senior, I can “downgrade” to a 150k job that’ll pay my daily bills and live happily ever after bc most of my nest egg was already made/invested in my big firm days. Yet looking at the mids/seniors panic, I’m thinking most are not in this situation.

So for those of you who’ve already left biglaw – how much did you leave with and if you took a lower paying job, was that a financial stretch or was it just fine financially? Is it unrealistic to think that you can walk out of biglaw in say 6 years with a significant net worth (significant for a 31 year old, not significant compared to a 50 yr old partner)?

Left after 10 years. After three years my student loans and my husband's student loans were paid. After six years, we sold our house and bought a bigger one (but still under $1MM), and we have decent equity. I still have my 401(k) from my prior position, and I also have retirement from current position. We have no recurring bills other than mortgage and utilities. I stepped away and took a position that pays me much less than what I was making, but the job satisfaction and balance is much greater than I had there. My husband makes about equal to what I make now, and we have a comfortable lifestyle - not extravagant, but comfortable. Our net worth is about $1.5MM.

Oh, and we had two kids for which we paid for high-quality daycare (not nanny), and we did not go the private school route after daycare.

[Anonymous]

I'm a 5th year and my net worth (household) is around $400k, but most of that is retirement. I'm hoping to last until 7th year and make at least one bonus, and have around $100-150k in a taxable brokerage by the time I jump ship. Have paid off pretty much all the student loans I care to pay ahead of schedule at this point, so with the switch from debt paydown to investing the growth rate on our net worth should go up. But also expecting our first kid now, so it probably won't go up as much as hoped.

[Anonymous]

Personally, I'd focus less on your net worth as a benchmark and more on your budget and ability to continue to save going forward. Someone in your shoes still has 25-30+ years of working life ahead of you -- your net worth matters less right now than your ability to land on your feet with a decent paying job that supports your lifestyle and allows you to save 15% towards retirement.

For some perspective, I left biglaw after 5 years, and joined DOJ. I've been at DOJ for about 4 years now. When I graduated law school (2008) I had about $175k in student loans and relatively minimal assets. When I left biglaw in early 2014, we (I got married in the interim) had NW of about $350k, and I still carried student loan balance of $130k (my wife, not a lawyer, thankfully had no student loans).

Leaving for DOJ meant our combined salary dropped from about $350k to $250k. But we kept our living expenses at about $90k after taxes). So, we were still able to save and invest and grow our wealth.

Since then, our living expenses have gone up (we have had kids), but also our salaries have increased. My DOJ salary has increased from $125k when I first started to over $150k now. And my wife's salary (marketing) has increased from $110k when I left biglaw to about $135k now. So we're up to $300k salary again.

NW has continued to grow, and we're at about $900k. I still carry about $50k in student loans, because they have a low interest rate (3.5% currently).

YMMV

[Anonymous]

I managed to pay off $130k of law school loans during my 2 year federal clerkship + clerkship bonus, so I started in Biglaw with zero loans. My husband (making about 100k) paid our mortgage and most of our living expenses during that time so most of my salary went to loans.

I stayed in Biglaw for almost 3 years, leaving as an almost 6th year. I maxed out my 401k every year plus saved about 400k for a down payment for a bigger house. I worked a ton and didn't spend anything, including taking zero vacations. We were, however, paying for a nanny during that time to make the hours work.

I moved in house and within a year had an income (not just salary) almost equal to what I was making in Biglaw, around 300k. Our net worth isn't particularly relevant because it's for two incomes. It's actually growing faster now than when I was in Biglaw because of corporate stock grants, 401k matching and cheaper childcare.

Despite healthy incomes, we've always lived below our means. No family money.

[Anonymous]

Anonymous wrote:Personally, I'd focus less on your net worth as a benchmark and more on your budget and ability to continue to save going forward. Someone in your shoes still has 25-30+ years of working life ahead of you -- your net worth matters less right now than your ability to land on your feet with a decent paying job that supports your lifestyle and allows you to save 15% towards retirement.

For some perspective, I left biglaw after 5 years, and joined DOJ. I've been at DOJ for about 4 years now. When I graduated law school (2008) I had about $175k in student loans and relatively minimal assets. When I left biglaw in early 2014, we (I got married in the interim) had NW of about $350k, and I still carried student loan balance of $130k (my wife, not a lawyer, thankfully had no student loans).

Leaving for DOJ meant our combined salary dropped from about $350k to $250k. But we kept our living expenses at about $90k after taxes). So, we were still able to save and invest and grow our wealth.

Since then, our living expenses have gone up (we have had kids), but also our salaries have increased. My DOJ salary has increased from $125k when I first started to over $150k now. And my wife's salary (marketing) has increased from $110k when I left biglaw to about $135k now. So we're up to $300k salary again.

NW has continued to grow, and we're at about $900k. I still carry about $50k in student loans, because they have a low interest rate (3.5% currently).

YMMV

NP. Glad to hear from someone that hasn't paid off their law school loans yet. I haven't been aggressively paying them off because of the low interest rate; instead DH and I bought a house, have been maxing out our 401k's and putting the rest of our savings into the market.

[Anonymous]

PP, I'm one of the ones that paid mine off quickly, but they were at 5.6 to 8.5 percent. Sofi and other refinancing options entered the picture after I was well on the way to paying them off. Basically, the only reasonable strategy was to pay them off as quickly as possible.

[Anonymous]

So many factors here...mainly: are you married or in a committed relationship where you share finances (and what does your SO do), do you plan to live in DC or in a cheaper suburb or other city, and what are your loans? The answers to these three questions will pretty much determine the outcome to your question.

For example, two DINK's with no kids, both in big law, who are willing to live in Virginia and got some scholarship money/parents pay for law school could have enormous net worths when they leave. By contrast, an individual associate without a spouse working, with kids in daycare or nanny, living in DC, who has loans, would likely have very little net worth when leaving.

[Anonymous]

Anonymous wrote:So many factors here...mainly: are you married or in a committed relationship where you share finances (and what does your SO do), do you plan to live in DC or in a cheaper suburb or other city, and what are your loans? The answers to these three questions will pretty much determine the outcome to your question.

For example, two DINK's with no kids, both in big law, who are willing to live in Virginia and got some scholarship money/parents pay for law school could have enormous net worths when they leave. By contrast, an individual associate without a spouse working, with kids in daycare or nanny, living in DC, who has loans, would likely have very little net worth when leaving.

+1. We both spent considerable time in Biglaw (8 yrs for me, 13 and counting for spouse) and kept our housing expenses very reasonable, especially early on. That enabled us to have a good bit socked away at the time I left. Didn't necessarily expect my spouse to stay this long and a move could happen in the coming years, but we've set ourselves up with a good cushion.

[Anonymous]

I left after three years and had a net worth of about $160K. I paid off about $80K in student loans. I did not have a hard time adjusting to my next job where I was paid about $120K.

[Anonymous]

Totally doable if you set your life up that way. Was a biglaw associate in NYC. I lived in NYC for 8 yrs for roughly 60-70k/yr. That still meant living in midtown in a doorman/elevator building in a studio, but not a luxury new construction apartment that would've cost 4000+/month. Other than that it all went to expenses -- double payments on loans (75k - didn't rush to pay them off as they were sub 3% but didn't want to drag them out for 30 yrs either); utilities/cell; lots of eating out (almost exclusively actually); a few vacations but none that were lavish or international.

When you're making a comp of say 250k+ and living on 60-70k -- that's 60k-ish/yr of savings/investments AFTER maxing out a 401k. It adds up fast. And all of this was done single, so no partner/DH income to help. What you're looking to do is totally plausible and it's good that you're thinking of it early on. I personally didn't crack a 7 figure NW in my 8 yrs in biglaw but got it a few yrs later on a gov't salary due to the framework I had set up in biglaw.

[Anonymous]

Np here -Very interesting thread. So those of you who worked in big law, knowing what you now know - would you make the same choice as to this particularly life path/trajectory again?