Lawyers have become quasibankers amid a rise in private equity deals, out-earning their banking peers on Wall Street by multiples, according to an analysis by The Wall Street Journal. Compensation at investment banks hasn’t changed much since the 2008 financial crisis, with managing directors still earning an average $1.9 million a year, amid mounting regulatory pressure. Equity partners at top law firms, meanwhile, can make from $3 million to more than $15 million annually. Another factor in the reversal of fortune: Law firms increasingly prioritize productivity over seniority in determining pay.
By Cate Chapman, Editor at LinkedIn News
The lawyers from the top US law firms are outdoing the leading investment bankers, as reported by The Wall Street Journal. Investment banking had a pretty down year, but that’s relative to an unrealistic comparison to the speculative fever in 2020/21. Still, lawyers are ringing the cash register:
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Managing directors who aren’t in high-ranking leadership roles at banks make an average of between US$1 million and US$2 million most years, including bonuses often paid largely in stock, more or less unchanged from where it was two decades ago.
Equity partners at top law firms, meanwhile, can make around US$3 million or more a year—more than triple what they were pulling in two decades ago.
An elite group of partners who bring in exceptional amounts of business are earning north of US$15 million at a handful of firms, including Wachtell, Lipton, Rosen & Katz; Kirkland & Ellis; and Paul, Weiss, Rifkind, Wharton & Garrison LLP.
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BY JERE WANG JR.
$15 million a Year as a Wall Street lawyer!?
Superstar attorneys can rake in more than $15M / year, while banker pay has hardly budged.
MDs who aren’t in high-ranking leadership roles at banks make an average of between $1-2 M most years, including bonuses often paid largely in stock, more or less unchanged from where it was two decades ago.
Equity partners at top law firms, can make around $3 million or more a vear-more than triple what they were pulling in two decades ago. An elite group of partners who bring in exceptional amounts of business are earning north of $15 million at a handful of firms including Wachtell, Lipton, Rosen & Katz ; Kirkland & Ellis ; and Paul, Weiss, Rifkind, Wharton & Garrison LLP
The law-firm industrv’s compensation structure has been upended, as all but a few of the largest firms abandon the so-called lockstep pay structure in which partner payouts are solely based on seniority, rather than productivity.
That has created a new era of bidding wars for talent, akin to sports teams stretching their wallets to sign star players.
Kirkland has offered potential recruits deals that could be worth $20 million or more annually for the first few years.