Understanding the 2023 big law salary scale & how to correctly read and understand your pay stub is crucial to managing your finances as a Big Law Associate. While “Big-Law” has no official definition, it typically refers to many of the nation’s largest law firms (AM 100 Firms).
Big Law Salary Scale
The pay scale is generally considered to be that of the Cravath scale & how the law firm pays their own associates. In general, the compensation is tied to the number of years out of law school and years working in BL, along with hitting certain billable hour benchmarks. Not only are all lawyers on this pay scale paid the same, they can generally expect to receive the same market bonus each year. Cravath has long been considered the trendsetter and leader when it comes to announcing associate salaries, however in recent years firms such as Milbank, have been the leaders in announcing. Given that many of the largest law firms are consistently competing for the best talent out there and best law school student applicants, many firms tend to follow this scale closely. Typically the scale is updated in Feb/March of every year.
Let's take a closer look at the 2023 scale provided from our friends over at BigLawInvestor.com
The Pay Stub
Now that we have a good sense of the salary scale, let’s take a closer look at a few pay stubs and how to identify your compensation along with deductions & taxes. While every paystub from different firms may all look different, generally speaking they’re all quite similar and broken down into different sub-sections. Before I jump into an actual paystub, it’s important to understand that from my experience most law firms will pay either bi-weekly or bi-monthly. For associates earning W2 income, very few firms I’ve come across will pay monthly.
- The top right GREEN box shows your pay period. Typically most firms will pay bi-weekly (every other week) or bi-monthly (twice a month).
- The BLUE box highlights your gross earnings with the number of hours per the pay period cycle along with your gross earnings per period and year to date to earning as well. Very important to understand for those that don’t, gross income IS NOT what you will receive in your bank account. Gross pay is what employees earn before taxes, benefits and other payroll deductions are withheld from their wages. The amount remaining after all withholdings are accounted for is net pay or take-home pay.
- Section three, the RED box, are your deductions. This section will always include taxes (federal, state and city), employee benefits such as 401k, dental, health etc. (all of which we will cover in depth on a future post) and any other pre-tax deductions. Pre-tax means that it will get deducted off your gross income (such as 401k contributions, health care, etc.)
- Lastly, and most importantly, we get to your Net Pay in the YELLOW box. Net pay is what you will receive in your bank account with is net of taxes and other deductions. You will have already setup you paycheck with an active bank account (savings or checking) with your firm prior to your first paycheck so it will get deposited automatically on your pay date. Note that in our example, this client has set up direct deposit right to her Checking Account (she didn't make $0..)