Tuesday, December 17, 2013

NALP Salary Data for 2012 Law Grads

The Bell Curve 
The Spike

First, forgive the look of this blog posting.  I have reproduced the chart from the NALP website, and this blogging platform makes me keep the original formatting (in this instance).

Now, I saw this chart for the first time at the conference of the Midwest Association of Pre-Law Advisors (MAPLA).  LSAC General Counsel, Joan Van Tol, included it in her slides along with data on applications to law school. 

She explained that the chart showed two salary patterns.  The bell curve on the left hand side of the chart shows the starting salary for most (reportng) law school graduates 9-months after graduation.  Most of the jobs held by new grads pay $40,000 to $65,000.  

The second pattern appears on the right side of the chart and reflects starting salaries of graduates who land jobs with BigLaw.  Van Toll called this part of the chart "the spike."  The spike moved away from the bell curve during the dot.com era (as I recall her saying) and has been durable even through the recession, even if fewer graduates landed jobs in BigLaw.  The webpage shows charts for salary data going back to 2006.  

The Adjusted Mean and Mean tell another story.  Yes, they represent the average of all salaries for new law grads (who reported salaries to NALP), but relatively few jobs actually pay these salaries.   Instead, "the spike" pulls the average away from the bell curve towards the salary level represented by the spike.

Salary Distribution Curve
Class of 2012
For more information on the Class of 2012 salary distribution curve, see The NALP Salary Curve for the Class of 2012
Distribution of Reported Full-Time Salaries — Class of 2012

[NALP] Note: Graph is based on 20,709 salaries reported for full-time jobs lasting a year or more. A few salaries above $205,000 are excluded from the graph for clarity, but not from the percentage calculations. The left-hand peaks of the graph reflect salaries of $40,000 to $65,000, which collectively accounted for about 51% of reported salaries. The right-hand peak shows that salaries of $160,000 accounted for about 16% of reported salaries. However, more complete salary coverage for jobs at large law firms heightens this peak and diminishes the left-hand peaks — and shows that the unadjusted mean overstates the average starting salary by about 7%. Nonetheless, as both the arithmetic mean and the adjusted mean show, relatively few salaries are close to either mean. For purposes of this graph, all reported salaries were rounded to the nearest $5,000.
The scambloggers are correct in criticizing marketing that suggests that most new law graduates will earn six-figure salaries straight out of law school.  Only the very large law firms pay this premium salary.

NALP reported that BigLaw firms (500 plus) hired 3,600 new associates in 2012, down from 5,100 in 2009, but up from hirings in 2011. Employment opportunities at BigLaw rose 27 percent over the last two years.   

Here is the employment trend at these BigLaw firms. For a graphic depiction of the partner to associate ratio in BigLaw, see here

In pre-recession 2007:
  • 4,745 (23%) of new law grads joined BigLaw (501+).
In 2008, 
  • 5,193 (25.3%) joined BigLaw (501+).
In 2009:
  • 5,156 (25.6%) joined BigLaw (501+).
In 2010:
  • 3,750 (20%) joined BigLaw (501+). 
In 2011:
  • 2,856 (16.2%) joined BigLaw (501+). 
In 2012 (based on preliminary data):
  • 3,600 (19.1%) joined BigLaw (501+).  
So, prospective law students must keep this possible salary range in mind as they choose law schools, negotiate tuition and scholarship packages, and consider published employment data for each school to which they plan to apply.

Dec. 19 Update:  Just found this on the ABA webpage.  It's an excerpt from the November 2013 report from NALP:

NALP Issues Press Release on Associate Salary Findings 
Starting associate salaries at large law firms have remained essentially flat since 2007, despite some erosion of the prevalence of $160,000 as the norm. "The story is really one of no change, or at least not much change," noted James Leipold, NALP's Executive Director, in a press release issued recently by NALP on the findings of the 2013 Associate Salary Survey. "Compared to the period of 2006 through 2009, when associate salaries were rising year on year at a steady clip, in the period since the recession we have seen associate salaries remain more or less static," he added. "At the largest firms in the largest markets, a starting salary of $160,000 remains the norm, though its prevalence has ebbed and flowed a bit over the last several years." Read the full press release at http://www.nalp.org/associate_salaries_sept2013.
Interesting that NALP talks about the spike, even suggesting it is the norm, without talking about the bell curve.   

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