Five Reasons Not to Take the Job Just for the Money

This article was published in Law360 on January 31, 2024

In November, BigLaw associates saw welcome news: Milbank had announced an increase raise to the associate salary scale, with starting salaries moving from $215,000 to $225,000.  More welcome news came when Cravath increased the scale even more for mid-level and senior associates.

Although dozens of large firms have already matched the latest increase, many legal industry experts predict the upper echelon of law firms to split into two tiers when it comes to pay either now or in the future: some paying the highest scale (largely the firms at the very top of the prestige ladder, who can most afford it) and others paying albeit high salaries, but a bit below the very highest scale (perhaps slightly less prestigious, but still very prestigious).

Having deviations in base salary among BigLaw firms is not new: there are already many highly ranked firms who pay slightly below the “market scale.”

Salary increases are exciting and generate a lot of buzz, and rightfully so.  But it is important for both law students and current associates to put this in perspective: pay is only one factor of a job.  Whether you are a law student or a potential lateral associate, choosing a firm purely based on the higher salary is not the best idea. 

(Of course, everybody’s financial situation is different and there could be a valid reason for you to seek the highest salary possible as a driving factor, for example, to support a family member or cover medical costs.  This article is written in generalities and may not apply to specific circumstances where even a small increase in salary would be critical for you.)

Here are a few reasons why:

1/ It’s Not that Much More Money

Once you are in BigLaw (or top-tier midsize or boutique firm that competes with BigLaw), the pay deviations are not very significant in the grand scheme of things. 

For example, the incremental annual salary on the new scale is $10,000 for first-year associates and $20,000 for fifth-year associates.  After taxes, this is even less: if you live in NYC (the most popular legal market by a wide margin), you are required to pay both New York State and New York City income tax, on top of U.S. federal income tax.  The total percentage of your salary that you’d be paying in taxes is approximately 40%.  Other popular legal markets, such as Washington, DC and California are also subject to high state and local taxes.  After taxes, the difference in take home pay under the new scale is roughly $6,000 for first-year associates (or, $500 per month) and $12,000 for fifth-year associates (or, $1,000 per month).

There is one caveat here: often, the largest deviation in compensation from one job to another is receiving the end-of-year bonus.  Many firms have an annual billable hours requirement for associates to be eligible for their bonus; if you are considering a firm that pays even the highest salaries in the market, it is important to understand during the interview and offer process from the attorneys in the group how busy the group is, how strong the foundation is for consistent billable work, and if missing hours has been a concern for them.  Firms with active lateral openings in late 2023 and early 2024 generally have a specific need and theoretically should have enough work to meet their annual billable requirement, but it is important to verify this for yourself.  (For many associates, 2023 was the first year they didn’t receive their bonus due to low hours.)  Of course, there are several firms who do not have a billable hours requirement; many of these firms expect associates to meet hours regardless and may come with certain tradeoffs with respect to work-life balance, availability expectations, and others, and/or address severe overstaffing through layoffs.

2/ There Could Be More Value in Non-Salary Benefits

BigLaw firms provide a wide range of employee benefits and choosing a firm purely based on base salary ignores these other factors.  One firm may have a health insurance plan with lower premiums or lower deductibles than another firm’s, or provide a contribution to your pre-tax HSA card of $1,000 or more.  Many firms reimburse employees for fitness-related expenses as much as $500 (sometimes more) per year.  Some firms have a different 401(k) setup that allows an additional amount to be contributed once you are a third- or fourth-year associate. These things add up.  This is even more amplified when it comes to differences in health insurance plans if you have multiple children.

Looking a level deeper into the benefits firms offer their associates is key to understand what your total compensation actually would be.

3/ Money is a Feature, Not a Factor

This is probably the most important reason to not choose a job for the money.

Almost any BigLaw associate can attest that what makes them love or hate their job is not the money.  It is almost always the substance of the job: the team, hours, work, and clients.

This is not unique to BigLaw.  Expert Frederick Herzberg famous developed the “motivation-hygiene” theory, distinguishing “hygiene factors” (which only avoid job dissatisfaction) and “motivating factors” (which provide job satisfaction).  Turns out, employees view salary as a “hygiene factor” – in other words, once it is within an acceptable range, salary is just a feature of a job (like the commute  or the office) and is not a driving force into job satisfaction.  Instead, those driving forces are job responsibility, fulfillment, hours, challenging work, and good colleagues.  Salary may be the most measurable, but that doesn’t mean it is the most important.

We see this every day when it comes to BigLaw associates.  Some of the most common lateral associate moves are driven by factors outside of money or prestige.  After choosing the highest-ranked and highest-paying firm possible during 2L recruiting, many associates realize a couple years in that the prestige and pay are not what they are cracked up to be, and look for a firm that provides less evening and weekend work, more pleasant colleagues, and/or more substantive work, even if that means a pay cut to a slightly lower scale.  (My good friend Jason Levin, attorney career coach and author of the popular book on networking and maintaining professional ties, Relationships to Infinity, dubbed this the “prestige-to-people” move.)

4/ You May Be Able to “Make” More Money by Cutting Costs or Investing

Because of income tax, especially in markets with high state and local tax, saving on expenses has an out-sized impact on your personal “net income.” 

For example, taking a $5,000 vacation instead of a $10,000 vacation has the same financial effect of an almost $10,000 salary increase.  If you typically eat out twice per week and spend $100+ as a couple in a HCOL (high cost of living) city each time, then skipping a meal out only once every other week saves a post-tax $200+ per month, equivalent to a pre-tax salary increase of almost $2,400+.  Same goes for luxury purchases, such as an expensive watch, handbag, or car.  If you are hesitant to take an attractive job because of differences in pay, these savings can counteract that.

There is another layer to this.  The irony of choosing a job for the money is that you may be less able to actually enjoy the money, or even worse, end up spending more.  For example, if you are at a firm that has particularly demanding hours and less respect for personal boundaries, you will barely see your nice apartment, might get stuck working on an expensive European vacation, or never get to the Equinox for which you signed up.  (A pleasant job that provides fulfillment and satisfaction may also make you less likely to rely on frequent expensive vacations or luxury purchases as an outlet.)

Taking advantage of easy financial “hacks” can also counteract any incremental difference in pay.  This does not require being an investing guru or spending time looking at stocks.  You can take advantage of low-hanging fruit, such as having your savings in a solid diversified equity portfolio for long-term gain, investing your HSA funds tax-free, investing in low-risk I-bonds, exploring special opportunities to refinance student loans, taking advantage of different types of IRAs to maximize your retirement gains (regular, Roth, and back-door Roth, if applicable), and other items.

5/ Burnout Can Lead to a Less Lucrative Career Long-Term

This reason requires some long-term perspective, but there are tons of examples of it among former BigLaw associates.

There are many BigLaw associates who enter the market out of law school as smart and motivated attorneys.  In the wrong environment, those associates can experience burnout from demanding hours, unpleasant colleagues or clients, or all of the above.  (Making a lot of money doesn’t counteract burnout; see above.)  Often times, after a negative experience at a BigLaw firm, those associates end up choosing to leave the law firm environment or even the legal profession completely, pivoting to a career that is less lucrative.  However, if they had been able to find an environment that provided a better work experience in-line with why they went to law school in the first place, they likely would have stayed and enjoyed a successful and lucrative long-term legal career – perhaps not at the highest salary levels in the market, but at a level higher than what they would have made otherwise and aligned with their career goals.

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As we mentioned above, everybody has a different financial situation.  However, we hope these thoughts provide helpful perspective and actionable tips as you think about choosing a firm as a law student or lateral, especially during this current wave of “salary wars.”

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For Educational Purposes Only — Not to be relied upon as financial, tax, or legal advice