Yes, tiny violin - did anyone else struggle first years of law partnership?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is an equity partnership at top 50. All partners start at $800k. Retirement is around $70k, overhead around $130k. Monthly payout is around $20k. Draws about 55k, three times a year. Then end payout. Tax bills for quarterly payments about $80k, fed and state. That’s the gist of it.

So you can’t live on 280k/yr? Sounds like a you problem.

I hate responses like this. I'm not in law but no, I could not live comfortably on $280k/year or even double that with my spouse and three kids. Everyone has different levels of income they've structured their lives around. You might think it's outrageous, but too bad.

Of course you could. It might not be your current inflated lifestyle, but you could be very comfortable.

[Anonymous]

Big law spouse here and yep, we are "struggling." The years prior to partnership we thought we were going to be so on the ball and save up so that we wouldn't have to take out a loan from the firm but that did not happen. It's all fine though.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why would anyone want to be an equity partner?

Money.

But based on all of these responses, there is very little money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why would anyone want to be an equity partner?

Money.

But based on all of these responses, there is very little money.

Sigh.

Early retired DC Biglaw partner here. I was first an associate for 7 years, then counsel for a a similar amount of time, then made equity partner in the early 2000s more ot less 20 years ago.

Once I made equity, the money began rolling in almost right away. My first year I made $450k, which in today’s dollars would be well over 700. Within 5 years my pay doubled.

Yes, there were added expenses (no subsidized benefits anymore, for example) and some short-term cash flow issues. There was the “buy in,” of course, which I elected to pay in yearly installments with after tax dollars rather than take out a loan and pay up front. And like most firms my had a mandatory retirement plan where a pretty big chunk of my pre-tax pay went straight to a 401k/IRA. Still, and I can’t remember the numbers exactly, even if 3/4 of what I was earning was going to taxes, retirement, benefits and capital I was still bringing home $10k a month in Year One 20 years ago. And that’s being super conservative because I’m sure it was more, and again it was Year One and quickly went up from there.

And, again, it’s not like I never saw any of the money that I paid out over my years as a partner was never to be seen again. The mandatory retirement contributions that were forced upon me increased my retirement account by millions, and my capital payments led to a capital balance of over $700k, all of which I got back when I retired early, had already been taxed in the years I made each installment so wasn’t subject to any additional taxes - creating a nice bridge for supporting myself and my spouse because we were too young to access my retirement accounts without penalty when I retired.

The bottom line is that I never would have been able to retire as early as I did - and walk away completely from the law and any other form of work, honestly - had I not been made an equity partner.

Other firms may not manage the transition as well as mine did, and other lawyers may not have managed their money as well as we did before I made partner, but please: don’t shed any tears for the equity partners at any well run Biglaw firm. They’re doing very, very well.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is an equity partnership at top 50. All partners start at $800k. Retirement is around $70k, overhead around $130k. Monthly payout is around $20k. Draws about 55k, three times a year. Then end payout. Tax bills for quarterly payments about $80k, fed and state. That’s the gist of it.

So you can’t live on 280k/yr? Sounds like a you problem.

I hate responses like this. I'm not in law but no, I could not live comfortably on $280k/year or even double that with my spouse and three kids. Everyone has different levels of income they've structured their lives around. You might think it's outrageous, but too bad.

Of course you could. It might not be your current inflated lifestyle, but you could be very comfortable.

I could also "live" on $50k. It would be a in a one bedroom in NE DC with my wife and three kids. We would survive.

Could PP "live" if half their income was cut?

[Anonymous]

fascinating thread with some really thoughtful replies

have learned plenty

question: do capital contributions continue throughout the professional lifespan of an equity partner or are they extinguished after a certain monetary threshold is crossed? or is it firm dependent?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is an equity partnership at top 50. All partners start at $800k. Retirement is around $70k, overhead around $130k. Monthly payout is around $20k. Draws about 55k, three times a year. Then end payout. Tax bills for quarterly payments about $80k, fed and state. That’s the gist of it.

So you can’t live on 280k/yr? Sounds like a you problem.

I hate responses like this. I'm not in law but no, I could not live comfortably on $280k/year or even double that with my spouse and three kids. Everyone has different levels of income they've structured their lives around. You might think it's outrageous, but too bad.

Of course you could. It might not be your current inflated lifestyle, but you could be very comfortable.

I could also "live" on $50k. It would be a in a one bedroom in NE DC with my wife and three kids. We would survive.

Could PP "live" if half their income was cut?

Sometimes folks here are so clueless. We're talking about $280K. Of course cuts from a much higher level would be painful but this is by any measure a very nice upper middle class income.

[Anonymous]

Anonymous wrote:fascinating thread with some really thoughtful replies

have learned plenty

question: do capital contributions continue throughout the professional lifespan of an equity partner or are they extinguished after a certain monetary threshold is crossed? or is it firm dependent?

Depends but usually capital contribution requirements are tagged to your expected income level. So as you make more, you contribute more.

[Anonymous]

Anonymous wrote:

Anonymous wrote:fascinating thread with some really thoughtful replies

have learned plenty

question: do capital contributions continue throughout the professional lifespan of an equity partner or are they extinguished after a certain monetary threshold is crossed? or is it firm dependent?

Depends but usually capital contribution requirements are tagged to your expected income level. So as you make more, you contribute more.

Hmm, I’d say “not exactly.” Many firms base capital payments on the number of shares assigned to the partner. While in most firms the number of shares a partner has sets the floor for compensation, it doesn’t set the ceiling. In other words, your income can be substantially higher than another lawyer with the same number of shares but your capital payments will be equal.

[Anonymous]

Man, big law straight up sounds like a pyramid scheme.

[Anonymous]

Anonymous wrote:Man, big law straight up sounds like a pyramid scheme.

It is. You make money off every hour your underlings work for your clients, like a down line.

[Anonymous]

Here’s something no one talks about: because restaurant prices have gone up 20%, a 15-20% tip is already 20% more money than it was with a lower bill. Now, the tip RATE is supposed to go up too?! No.