Banking on a $180k Entry Salary? Check This Out

Not all law jobs were created equal.

The National Association for Law Placement has released new research about entry-level salaries for law school graduates, and it differs vastly depending on the state.

The chart below shows the distributions of entry-level salaries for the states with the largest number of Big Law jobs: California, Florida, Illinois, New York, Texas, and Washington D.C. These states account for more than 95 percent of Big Law jobs that pay New York City market salaries.

[Image “NALP” (src=https://bol.bna.com/wp-content/uploads/2016/07/NALP.jpg)]

Median salary for 2014 was $63,000, according to NALP.

Since 2000, when large firms increased starting salaries to $125,000, salary distribution has been bi-modal. A bi-modal distribution has two peaks, meaning most law school graduates fall into one of two salary classes. The latest national distribution curve from the class of 2014 (pictured below) demonstrates this nicely.

[Image “NALP2" (src=https://bol.bna.com/wp-content/uploads/2016/07/NALP2.jpg)]The left-hand peak accounts for about half of all reported salaries, with a range of $40,000 to $65,000. The right-hand peak reflect the (old) market rate for large firms, which accounted for 17 percent of all reported salaries. In between there’s a wide gulf that, according to NALP’s executive director James Leipold, reflects a market that “is not necessarily healthy.”

Leipold points out that “Classic economics would have us finding talent and income distributed on a bell curve of some sort with just one peak.” Indeed, this is roughly what the market looks like if you lop off biglaw jobs.

By and large legal markets without a high concentration of large law firms are healthier — at least in terms of income distribution. Take Florida as an example below.[Image “NALP Florida” (src=https://bol.bna.com/wp-content/uploads/2016/07/NALP-Florida.jpg)]

Now take a look at New York:

[Image “NALPNY” (src=https://bol.bna.com/wp-content/uploads/2016/07/NALPNY.jpg)]The salary distribution chart for other states would look a lot more like Florida than New York. These charts should reduce the number of law school graduates harboring unrealistic expectations about what their starting salary will be. And that’s a good thing.

With starting salaries increasing to $180,000 at many of the largest law firms, the gap between the haves and have nots will widen. The pay boost will help those graduates repay their loans a little easier.

Meanwhile, the vast majority of law students should plan for a salary less than $65,000. While that’s a solid starting wage, notwithstanding salary stagnation, making payments on six-figure debt at that income level is challenging to say the least.

These distribution curves are a stark reminder of why many potential law school applicants have looked elsewhere for their careers.