The Big Law Dilemma- A Dangerous Income

Written by Chris DeVito

It’s no secret that BIG Law pays, handsomely. From first year associates banking over $200,000 to Senior Equity Partners making over $5,000,000 per year, BIG Law salaries have been on an uptrend with no sign of slowing down.

This level of income, while fantastic, can sometimes be dangerous and lead to problems if not managed properly. You may be thinking, “Chris, what the %4&# are you talking about, do you realize how much money that is, how could anyone have problems making that much money!?” I’ll explain. From my experience in working with AM 100 Lawyers for over a decade, these levels of income can often provide a short-term false sense of security with the cost of future pain. You’re making enough money to be “comfortable”, go on vacations, and buy nice things, and often people do all those things without feeling much urgency to plan for their future.

And what happens then? Two, three, five, and TEN years go by following the same pattern. The lifestyle creep is now a permanent lifestyle, and you’ve spent no actual time or put any real thought into building real meaningful wealth for yourself. The long short of it, people simply are not saving enough of their income.

Why AM Law 100 Lawyers Need to Save More Than Their 401(k), PSP, and Cash Balance Plan

Attorneys at AM Law 100 firms operate in the upper echelons of professional achievement—earning income that places them among the top 1% of U.S. households. With access to robust retirement benefits like 401(k)s, profit sharing, and even cash balance pension plans, it’s easy to assume they’re well on track for retirement.

But here’s the hard truth: even these plans often aren’t enough.

Despite high income and generous firm-sponsored benefits, many BIG Law attorneys will fall short of what’s needed to maintain their lifestyle in retirement—unless they proactively save beyond the default options.

Why Traditional Retirement Plans Aren’t Enough

Let’s look at the math.

• 401(k) Limit (2025): $23,000 (plus $7,500 catch-up over age 50)
• Profit Sharing Plan (PSP): Typically brings total defined contribution plan limits to $69,000–$76,500 annually
• Cash Balance Plan: Adds another defined benefit layer, but is often structured more for tax deferral and firm retention than long-term wealth building

Even assuming a partner maxes out all the above annually, and does so for 20–30 years, that may still leave a shortfall. Why?

Because the income replacement target for someone used to earning $500K–$1M+ annually is massive. Maintaining a similar standard of living in retirement may require $6–10 million or more in investable assets—particularly if one retires before age 65 or wants flexibility beyond firm distributions and capital accounts.

And let’s not forget: many high earners retire before full Social Security benefits kick in and may face 20–30+ years of portfolio drawdown.

What’s Holding Them Back?

Even with the means to save more, many lawyers don't. Why?

1. Deferred Gratification Burnout

Years of saying “no” to vacations, hobbies, and family time while billing 2,000+ hours a year can build up an intense urge to finally enjoy it now. After all, what’s the point of all that hard work if not to enjoy your income?

But lifestyle inflation—second homes, private schools, cars, club memberships—can quickly devour cash flow and delay long-term savings.

2. Over-Reliance on Firm Retirement Plans

It’s easy to assume that if you’re maxing out all available firm plans, you’re “doing enough.” But that sense of security can be misleading. These plans were designed with compliance in mind—not necessarily your personal financial future.

3. Financial Complexity & Time Scarcity

Many AM Law attorneys are brilliant in their field but simply don’t have the bandwidth to master tax optimization, investment strategy, or advanced planning vehicles like backdoor Roths, private placements, cash-value insurance, or tax-efficient drawdown strategies.

4. Student Loans and Catch-Up Delays

Even for high earners, student loan debt and delayed earning power in early years of practice can push meaningful retirement saving until one’s late 30s or 40s—leaving less time for compounding.

The Emotional Roadblocks

High earners aren’t immune to the emotional hangups around money. In fact, their challenges are often more hidden.

• Status Pressure: When peers are buying second homes or sending kids to elite schools, it’s hard to feel like you can or should divert more to savings. Keeping up with the Joneses if you will
• Denial and Avoidance: Many assume they’ll “figure it out later,” even as their earnings window starts to close.
• Identity Tied to Career: For many lawyers, work is identity. Planning for retirement can feel like planning to lose part of yourself.
• Fear of Missing Out: The sense that you’re not enjoying life enough now often overrides long-term thinking.

The Consequences of Not Saving Enough

Under-saving at this level doesn’t just mean retiring on less. It means:

• Having to downsize your lifestyle dramatically—perhaps selling a home or delaying retirement altogether
• Outliving your money, especially if you retire early or face health care shocks
• Becoming dependent on firm distributions, which may be uncertain or tied to ongoing firm performance
• Limiting your freedom to take sabbaticals, fund charitable goals, or support family the way you'd like
• Experiencing stress and regret in retirement—precisely when you should feel free

What You Can Do Now

Here’s how AM Law 100 attorneys can take control:

1. Max Out the Basics—Then Go Further
   Use taxable brokerage accounts, real estate, and alternative investments to build wealth outside of qualified plans.
2. Invest Tax-Efficiently
    Asset location, tax-loss harvesting, and capital gains strategies can significantly extend the life of your portfolio.
3. Model Your Retirement Needs Early
    Don’t wait until age 60 to ask if you’re on track. Run simulations now. Be aggressive with assumptions.
4. Work With a Planner Who Gets BIG Law
    Your situation is more complex than most—your planner should understand capital account structures, K-1s, and advanced tax planning strategies tailored for high-income professionals.

Final Thought: The ability to retire well is about more than just income, it’s about intention. For AM Law attorneys, the stakes are higher, but so is the opportunity. The earlier you recognize that your firm’s retirement plans are just the starting point—not the solution, the better your odds of financial freedom on your terms.

8285555RG_Aug27