Biglaw partner net worth?

[Anonymous]

Anonymous wrote:Early Retired Biglaw partner here. I made equity in a well known DC firm 20 years ago in my early 40s and retired a decade later in my early 50s. My net worth when I made partner was probably in the mid six figures and consistently entirely of home equity and my 401k. My pay started at about 1/5 of what the average partner at my firm makes today and was about 1/3 of what they make today when I left. I never made $1 million in a year but came close near the end. And, yes, I was a partner in 2008 -- my 401k dropped far more than my compensation did that year.

During my ten years as an equity partner I paid lots and lots of college tuition and for very nice weddings and family vacations out of cash flow (no 529s, etc). Other than that we were not extravagant. We did not upsize on houses or cars, for example. And kids went to public schools.

I had a net worth of about 4 million when I quit, and a decade later (not working at all), we're more than double that at 8 million plus. Our standard of living has actually gone up as well, since the college and wedding expenses -- and retirement contributions -- are behind us.

If I was at 4 million a decade ago making less than half what partners are mking now and have $8 million now just from index fund investing and not earning any money at all from a job I cannot even imagine how much biglaw partners at 50 have today. But it is a LOT.

Oh, I paid my capital over time when working and it was all returned to me when I left. That's how I funded the first several years of my early retirement, in fact.

I knew you would post. You happened to retire prior to a huge stock market runup that may or may not be the case for current or future retirees. If I recall correctly, you also have maintained access to health insurance at your firm, which is not typical and a huge savings for you. You got very very lucky, which you don't like you acknowledge.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It depends. If they're an equity partner their NW may fluctuate with the value of the firm, and they may have a second mortgage or other debt to fund their buy-in.

If a non-equity partner and have been a partner or at least senior associate for a while, and they have a reasonable number of kids and no divorce, their NW is probably pretty high. May dip a little during the college tuition years.

You don’t understand what an equity partner is.

DP. Why? The value of the firm reflects its earnings, and equity partners get a percentage share of the earnings that vary from year to year. Some firms require new equity partners to contribute a lump sum upon becoming partners; others just require equity partners to start contributing to a capital account.

A lot of equity partners at major law firms easily have net worths over $20 million by the time they are in their mid-50s.

Equity partners get their share of the firm profits at the end of each year. Yes, the firm profit will vary each year, but it is virtually guaranteed to be very large in big law.

Equity partners do have to “buy in“ to the firm, but in most instances the buy in —while a substantial amount for most people — is small compared to what the equity partner makes in profits each year.

On top of that, in most instances when an equity partner leaves the firm or retires the “buy in” — otherwise known as his or her capital contribution — is returned to them. That makes the buy in an asset when it comes to calculating net worth, not a liability.

There is a persistent myth on this website that equity partners are crippled buy in requirements. That is not the case at all. Any non-equity partner or associate would happily buy in to big law to become an equity partner.

Agree. Also the buy in is cash in/cash out. Sme firms pay interest on capital along the way, but that is really just money that otherwise would have been paid in comp. The value of the capital contribution does not grow beyond the cash contributed (which is after tax cash).

[Anonymous]

Anonymous wrote:

Anonymous wrote:Early Retired Biglaw partner here. I made equity in a well known DC firm 20 years ago in my early 40s and retired a decade later in my early 50s. My net worth when I made partner was probably in the mid six figures and consistently entirely of home equity and my 401k. My pay started at about 1/5 of what the average partner at my firm makes today and was about 1/3 of what they make today when I left. I never made $1 million in a year but came close near the end. And, yes, I was a partner in 2008 -- my 401k dropped far more than my compensation did that year.

During my ten years as an equity partner I paid lots and lots of college tuition and for very nice weddings and family vacations out of cash flow (no 529s, etc). Other than that we were not extravagant. We did not upsize on houses or cars, for example. And kids went to public schools.

I had a net worth of about 4 million when I quit, and a decade later (not working at all), we're more than double that at 8 million plus. Our standard of living has actually gone up as well, since the college and wedding expenses -- and retirement contributions -- are behind us.

If I was at 4 million a decade ago making less than half what partners are mking now and have $8 million now just from index fund investing and not earning any money at all from a job I cannot even imagine how much biglaw partners at 50 have today. But it is a LOT.

Oh, I paid my capital over time when working and it was all returned to me when I left. That's how I funded the first several years of my early retirement, in fact.

I knew you would post. You happened to retire prior to a huge stock market runup that may or may not be the case for current or future retirees. If I recall correctly, you also have maintained access to health insurance at your firm, which is not typical and a huge savings for you. You got very very lucky, which you don't like you acknowledge.

Excuse me? 2008 happened right smack in the middle of my tenure as an equity partner and my retirement accounts dropped in value by 50 percent — and as I said that and some home equity was literally all I had. So when someone says “remember 2008” I can say yes, I sure do.

As for health insurance, yes my firm covered it and still does, with me paying the full premium, but anyone who thinks that someone with millions of dollars in net worth — which most Biglaw equity partners in the 50s should be — can’t afford health insurance not provided by their employer is mistaken. It’s little more than a drop in the bucket for folks at that level even if it’s $5000 a month, which it isn’t.

But ok. I came from nothing, went to a non-elite law school, worked hard for a long time, took forever to make partner, made less than virtually anyone else at my firm, was careful with my money, and managed to retire early and still do well. All because I was “lucky.” 2008 didn’t happen to me.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It depends. If they're an equity partner their NW may fluctuate with the value of the firm, and they may have a second mortgage or other debt to fund their buy-in.

If a non-equity partner and have been a partner or at least senior associate for a while, and they have a reasonable number of kids and no divorce, their NW is probably pretty high. May dip a little during the college tuition years.

You don’t understand what an equity partner is.

DP. Why? The value of the firm reflects its earnings, and equity partners get a percentage share of the earnings that vary from year to year. Some firms require new equity partners to contribute a lump sum upon becoming partners; others just require equity partners to start contributing to a capital account.

A lot of equity partners at major law firms easily have net worths over $20 million by the time they are in their mid-50s.

Equity partners get their share of the firm profits at the end of each year. Yes, the firm profit will vary each year, but it is virtually guaranteed to be very large in big law.

Equity partners do have to “buy in“ to the firm, but in most instances the buy in —while a substantial amount for most people — is small compared to what the equity partner makes in profits each year.

On top of that, in most instances when an equity partner leaves the firm or retires the “buy in” — otherwise known as his or her capital contribution — is returned to them. That makes the buy in an asset when it comes to calculating net worth, not a liability.

There is a persistent myth on this website that equity partners are crippled buy in requirements. That is not the case at all. Any non-equity partner or associate would happily buy in to big law to become an equity partner.

Agree. Also the buy in is cash in/cash out. Sme firms pay interest on capital along the way, but that is really just money that otherwise would have been paid in comp. The value of the capital contribution does not grow beyond the cash contributed (which is after tax cash).

Early Retired here again. Yes this is exactly right. I viewed my buy in as forced savings. I knew I’d be getting it back and took that into account in my early retirement planning. And as you note you pay taxes on the buy in the year that the money is earned, so when you get it back it’s tax “free.” My capital contribution basically funded the first four years or so of my retirement.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Early Retired Biglaw partner here. I made equity in a well known DC firm 20 years ago in my early 40s and retired a decade later in my early 50s. My net worth when I made partner was probably in the mid six figures and consistently entirely of home equity and my 401k. My pay started at about 1/5 of what the average partner at my firm makes today and was about 1/3 of what they make today when I left. I never made $1 million in a year but came close near the end. And, yes, I was a partner in 2008 -- my 401k dropped far more than my compensation did that year.

During my ten years as an equity partner I paid lots and lots of college tuition and for very nice weddings and family vacations out of cash flow (no 529s, etc). Other than that we were not extravagant. We did not upsize on houses or cars, for example. And kids went to public schools.

I had a net worth of about 4 million when I quit, and a decade later (not working at all), we're more than double that at 8 million plus. Our standard of living has actually gone up as well, since the college and wedding expenses -- and retirement contributions -- are behind us.

If I was at 4 million a decade ago making less than half what partners are mking now and have $8 million now just from index fund investing and not earning any money at all from a job I cannot even imagine how much biglaw partners at 50 have today. But it is a LOT.

Oh, I paid my capital over time when working and it was all returned to me when I left. That's how I funded the first several years of my early retirement, in fact.

I knew you would post. You happened to retire prior to a huge stock market runup that may or may not be the case for current or future retirees. If I recall correctly, you also have maintained access to health insurance at your firm, which is not typical and a huge savings for you. You got very very lucky, which you don't like you acknowledge.

Excuse me? 2008 happened right smack in the middle of my tenure as an equity partner and my retirement accounts dropped in value by 50 percent — and as I said that and some home equity was literally all I had. So when someone says “remember 2008” I can say yes, I sure do.

As for health insurance, yes my firm covered it and still does, with me paying the full premium, but anyone who thinks that someone with millions of dollars in net worth — which most Biglaw equity partners in the 50s should be — can’t afford health insurance not provided by their employer is mistaken. It’s little more than a drop in the bucket for folks at that level even if it’s $5000 a month, which it isn’t.

But ok. I came from nothing, went to a non-elite law school, worked hard for a long time, took forever to make partner, made less than virtually anyone else at my firm, was careful with my money, and managed to retire early and still do well. All because I was “lucky.” 2008 didn’t happen to me.

NP here. Retired Partner, and I always enjoy your posts and perspective.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Early Retired Biglaw partner here. I made equity in a well known DC firm 20 years ago in my early 40s and retired a decade later in my early 50s. My net worth when I made partner was probably in the mid six figures and consistently entirely of home equity and my 401k. My pay started at about 1/5 of what the average partner at my firm makes today and was about 1/3 of what they make today when I left. I never made $1 million in a year but came close near the end. And, yes, I was a partner in 2008 -- my 401k dropped far more than my compensation did that year.

During my ten years as an equity partner I paid lots and lots of college tuition and for very nice weddings and family vacations out of cash flow (no 529s, etc). Other than that we were not extravagant. We did not upsize on houses or cars, for example. And kids went to public schools.

I had a net worth of about 4 million when I quit, and a decade later (not working at all), we're more than double that at 8 million plus. Our standard of living has actually gone up as well, since the college and wedding expenses -- and retirement contributions -- are behind us.

If I was at 4 million a decade ago making less than half what partners are mking now and have $8 million now just from index fund investing and not earning any money at all from a job I cannot even imagine how much biglaw partners at 50 have today. But it is a LOT.

Oh, I paid my capital over time when working and it was all returned to me when I left. That's how I funded the first several years of my early retirement, in fact.

I knew you would post. You happened to retire prior to a huge stock market runup that may or may not be the case for current or future retirees. If I recall correctly, you also have maintained access to health insurance at your firm, which is not typical and a huge savings for you. You got very very lucky, which you don't like you acknowledge.

Excuse me? 2008 happened right smack in the middle of my tenure as an equity partner and my retirement accounts dropped in value by 50 percent — and as I said that and some home equity was literally all I had. So when someone says “remember 2008” I can say yes, I sure do.

As for health insurance, yes my firm covered it and still does, with me paying the full premium, but anyone who thinks that someone with millions of dollars in net worth — which most Biglaw equity partners in the 50s should be — can’t afford health insurance not provided by their employer is mistaken. It’s little more than a drop in the bucket for folks at that level even if it’s $5000 a month, which it isn’t.

But ok. I came from nothing, went to a non-elite law school, worked hard for a long time, took forever to make partner, made less than virtually anyone else at my firm, was careful with my money, and managed to retire early and still do well. All because I was “lucky.” 2008 didn’t happen to me.

NP here. Retired Partner, and I always enjoy your posts and perspective.

Thank you. I appreciate that and shouldn’t have snapped back like that. It’s not often I’m called “lucky” ha ha.

[Anonymous]

How much is a typical partner capital contribution?

[Anonymous]

I think it’s $30-35M NW at 50 for Kirkland tier equity partners.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Early Retired Biglaw partner here. I made equity in a well known DC firm 20 years ago in my early 40s and retired a decade later in my early 50s. My net worth when I made partner was probably in the mid six figures and consistently entirely of home equity and my 401k. My pay started at about 1/5 of what the average partner at my firm makes today and was about 1/3 of what they make today when I left. I never made $1 million in a year but came close near the end. And, yes, I was a partner in 2008 -- my 401k dropped far more than my compensation did that year.

During my ten years as an equity partner I paid lots and lots of college tuition and for very nice weddings and family vacations out of cash flow (no 529s, etc). Other than that we were not extravagant. We did not upsize on houses or cars, for example. And kids went to public schools.

I had a net worth of about 4 million when I quit, and a decade later (not working at all), we're more than double that at 8 million plus. Our standard of living has actually gone up as well, since the college and wedding expenses -- and retirement contributions -- are behind us.

If I was at 4 million a decade ago making less than half what partners are mking now and have $8 million now just from index fund investing and not earning any money at all from a job I cannot even imagine how much biglaw partners at 50 have today. But it is a LOT.

Oh, I paid my capital over time when working and it was all returned to me when I left. That's how I funded the first several years of my early retirement, in fact.

I knew you would post. You happened to retire prior to a huge stock market runup that may or may not be the case for current or future retirees. If I recall correctly, you also have maintained access to health insurance at your firm, which is not typical and a huge savings for you. You got very very lucky, which you don't like you acknowledge.

Excuse me? 2008 happened right smack in the middle of my tenure as an equity partner and my retirement accounts dropped in value by 50 percent — and as I said that and some home equity was literally all I had. So when someone says “remember 2008” I can say yes, I sure do.

As for health insurance, yes my firm covered it and still does, with me paying the full premium, but anyone who thinks that someone with millions of dollars in net worth — which most Biglaw equity partners in the 50s should be — can’t afford health insurance not provided by their employer is mistaken. It’s little more than a drop in the bucket for folks at that level even if it’s $5000 a month, which it isn’t.

But ok. I came from nothing, went to a non-elite law school, worked hard for a long time, took forever to make partner, made less than virtually anyone else at my firm, was careful with my money, and managed to retire early and still do well. All because I was “lucky.” 2008 didn’t happen to me.

NP here. Retired Partner, and I always enjoy your posts and perspective.

Thank you. I appreciate that and shouldn’t have snapped back like that. It’s not often I’m called “lucky” ha ha.

DP

I'm not a lawyer and I hear you. Decades of responsible decisions and hard work and some plonker calls you "lucky". I'm the same - scientist from No Name U who went to grad school without parental support. I saved, sent my kids to good private schools, put money in 529s, and am set to retire with $5M, plus health insurance if I choose to do so at 50 in a couple years. Honestly, I'm just going to put my hand up when the timing is right with layoff packages, so I can package out. I'm sure they will call that luck too - I call it planning.

[Anonymous]

Anonymous wrote:How much is a typical partner capital contribution?

It depends.

[Anonymous]

Anonymous wrote:I think it’s $30-35M NW at 50 for Kirkland tier equity partners.

Kirkland has the biggest disparity among equity partners of the top firms, so this will be very dependent on whether the partner is a big hitter or not. You have some folks in the 3-5 million per year range, so I doubt they have $30-35mm at 50. But then you have a few folks at 20 million per year so they're well above $35mm at 50.

[Anonymous]

Anonymous wrote:Because they don’t know anything else. They are addicted to working and will die when they retire.

Lawyers never stop working. Take it from the daughter and grand daughter of two judges who died on the bench.

[Anonymous]

I think the other big law compensation thread is a lot closer than these outliers making $4m for decades.

[Anonymous]

Oops, closer to reality.,

[Anonymous]

Anonymous wrote:I think the other big law compensation thread is a lot closer than these outliers making $4m for decades.

Didn't the other one say equity partners were making $3-4 million as only 4th year partners??? Or are you referring to even a different thread than that?