Why entry-level lawyers are now making over $200,000

Entry-level lawyers are making over $200,000 for the first time, according to a report in the Wall Street Journal, and they have COVID-19 to thank, at least in part.

Legal careers were one of the few industries that weren’t totally derailed by the pandemic last year. Many of the biggest corporations were able to maintain profits while cutting expenses associated with in-office operations such as rent, utility bills, interior decoration, property maintenance, commercial mortgage, and travel expenses.

“Legal firms used to hold seminars and meetings in premium hotels,” according to financial expert, Stacy B. Miller. “However, now lawyers are conducting meetings online through various platforms. This is not only saving money but also time.”

The Thomson Reuters Peer Monitor Index found that legal fee rates increased by 4.7% in 2020, while overhead costs decreased by as much as 37.2% in the same time frame.

The reasons behind the trend

Although the current average salary offered to first-year associates marks a record high, lawyer salaries have actually been trending upward in recent years.

The average annual salary for lawyers working in the US was $144,230 in 2019. This inched closer to $190,000 in 2020.

And savvy companies are reinvesting in themselves: New York-based firm Milbank LLP, for example, experienced a 15.6% profit increase last year, pushing its revenue to roughly $1.2 billion. Now it’s taking on more young associates (roughly 765 lawyers) and offering them a $200,000 starting salary.

Generally speaking, corporate, criminal, and personal injury lawyers secure the highest salaries starting out.

Higher earnings may signal an overworked industry

There may be a downside to the new situation, too. The NALP report suggests that lawyers operating remotely may be experiencing mental health issues as a result of being overworked. A significant number of young law associates featured in the report put in more than 2,000 hours a year which means many are working more than 40 hours a week.

“Industry-wide, ultra-competitive professional cultures and excessive hours are leading to overworked lawyers and widespread wellness and mental health struggles,” career analyst Sharon Miki said.

A mental health and substance-abuse survey published by the business-news company ALM  last year said that 31.2% of over 3,800 lawyers polled feel depressed, 64% had anxiety, 10.1% felt they had an alcohol problem and 2.8% had a drug problem.

A similar report found that over 70% of lawyers more often than not commit to extensive overtime, with the average putting in roughly 140 unplanned hours a year.

“Successful lawyering doesn’t mean pulling all-nighters non-stop. In fact, by not working to the point of burnout, you can be more productive and effective during your working hours — and enjoy your life more outside of work,” Miki said.