FINANCE On Wall Street, Lawyers Make More Than Bankers Now Superstar attorneys can rake in more than $15 million a year, while banker pay has hardly budged ILLUSTRATION BY ALEXANDRA CITRIN-SAFADI/THE WALL STREET JOURNAL; PHOTOS: ISTOCK By Cara Lombardo June 22, 2023 12:01 am ET 15 Over the past few years, as the Manhattan real-estate broker Lisa Lippman took her well-heeled clients through $7 million-plus apartments with Central Park views and amenities including squash courts and lap pools, she noticed a change: It was no longer bankers making a lot of the offers. It was lawyers. “It used to be you’d say someone is an investment banker, and that was a big deal. Now it’s like meh,” Lippman, a former lawyer, said. “If I had to pick my favorite buyers, it would be big-time lawyers.” While bankers used to make multiples of what lawyers did, the lawyers have been zooming ahead, thanks to stagnant banker pay for all but the very top performers and changing dynamics at law firms. The trend took hold well before the recent slowdown in deal making dented banker pay. The Wall Street Journal spoke to more than 30 compensation experts, bankers and lawyers and reviewed pay data over more than 15 years. Managing directors who aren’t in high-ranking leadership roles at banks make an average of between $1 million and $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 $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 $15 million at a handful of firms including Wachtell, Lipton, Rosen & Katz; Kirkland & Ellis; and Paul, Weiss, Rifkind, Wharton & Garrison. “Things have changed,” said Mark Rosen, a longtime legal recruiter. “Lawyer compensation has grown unbelievably.” Advertisement - Scroll to Continue In 2000, when Rob Kindler, an established deals lawyer, left the white-shoe law firm Cravath, Swaine & Moore to get into banking, a Journal story said he could make around five times as much money at an investment bank. Earlier this month Kindler, 69, left Morgan Stanley to join the law firm Paul Weiss. There, he stands to make upward of $10 million a year, depending on performance, likely more than he was earning at Morgan Stanley. Lawyers and bankers are the linchpins of Wall Street, working in tandem to facilitate all manner of maneuvers for the world’s biggest companies. Specialists in both professions help clients raise money, do deals and ward off unwanted suitors or investors. Kirkland & Ellis has hired partners from other law firms to bolster its business. PHOTO: MICHAEL BUCHER/THE WALL STREET JOURNAL The reasons for the shifting fortunes between the two groups are varied. No longer relegated to simply marking up contracts, today’s corporate lawyers are quasibankers, serving as sounding boards for corporate executives as they clash with regulators or wrestle with thorny issues such as succession planning. They have also received an outsize amount of work from the rise of private equity, a client base that was nowhere near as active 20 years ago. At the same time, the law-firm industry’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, in particular, put competition in overdrive over the past 15 years as it poached partners from other firms to jump-start its business. Kirkland has offered potential recruits deals that could be worth $20 million or more annually for the first few years, significantly more than most could make elsewhere. Most big law firms raise their prices by around 4% each year, usually more than topping inflation, according to Owen Burman, a Wells Fargo senior consultant who tracks the industry. Banker deal fees, while large, are relatively static. Top lawyers currently charge more than $2,000 an hour for their time. Some high performers at top firms earn more than $15 million, and an elite few get well over $20 million. Paul Weiss’s Scott Barshay and Kirkland’s James Sprayregen are often singled out as among the highest-paid lawyers on Wall Street. (JPMorgan Chase Chief Executive Jamie Dimon, by comparison, made $34.5 million last year, with most of it paid in company stock.) While standout law firm partners might bring in around $20 million in annual revenue, superstars can bring in $100 million or more, said Rosen, the legal recruiter. The riches can come at a price. Advising companies at their most critical moments means the work is 24/7. Rosen said it isn’t uncommon for his clients to work 18-hour days, on weekends. One lawyer recalled being on a client call while posing for family photos at his son’s bar mitzvah. Bankers’ work can be similarly nonstop, but compensation for most hasn’t continued the trajectory it was on before the 2008 financial crisis, according to survey data from the recruiting firm Bay Street Advisors. Bay Street’s analysis shows that the average managing director at a top-20 investment bank not leading a group made $1.9 million a year over the past three years (which included a standout 2021), compared with $1.9 million in 2007. And that is without accounting for inflation. Lower-level bankers are making even less on average than they were precrisis. SHARE YOUR THOUGHTS What will the stagnation in banker pay mean for Wall Street? Join the conversation below. Pressure from regulators, increasing expenses and a move toward selling big banks’ brand names rather than individuals have all hurt pay. While it was typical before the financial crisis for so-called bulge-bracket banks such as Goldman Sachs Group and Morgan Stanley to spend well over 40% of revenue on pay, that figure is now much lower. “Every time the banks get wind in their sails, we hit a hiccup and get set back a few years again,” said Kevin Mahoney, a senior partner at Bay Street who runs its investment-banking practice. It used to be common for bankers to retire in their 50s, having amassed sizable fortunes. That is less often seen now. But don’t start shedding tears for them just yet. Their pay still dwarfs the median U.S. household income of around $70,000 a year. And star bankers—especially at independent advisory firms such as Centerview Partners—can still haul in a healthy eight-figure payday or more in a good year.
Despite the "millions" numbers in this article, individual traders hardly make money. And not many of profitable traders can make more than $50K/year. We have customers who are pro traders, but their profits are still far from being 7 figures. So, if you would like to make millions, chances are that you should learn law. From our experience, those who don't have enough characteristics of a good trader can hardly become a good trader. But the same characteristics may help you become a good lawyer (or other professions). Don't be addicted to trading, because it's just a career like any other careers. Choose one that best fits your characteristics.
one of the reasons I left the industry 12 years ago was that I was afraid the pay would deflate in real terms overtime. It look like that’s happening.
%% Both those are good field to make a millionaire; small business also..................................................... SPY benchmark[investment] is already having a better than average years almost 14% this year
everyone can be a banker, only if you passed the bar to become a lawyer, hence the banker is overrated.
Great article, now that lawyers are earning in the millions; publicly anyway, maybe now bankers can get wealthy in peace