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Author Topic: Is it worth it to practice biglaw in Philly over NYC, LA, SF and SD?  (Read 785 times)

offer

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Is it worth it to practice biglaw in Philly over NYC, LA, SF, and SD?

Philly firms pay first-years a salary of 145k, while the other aforementioned cities pay 160k.  This 15k difference may seem minor until one reviews:

1. Base salaries for second- through eighth-year associates
2. Annual bonuses
3. City and state income tax rates


At its best (some of the top Philly biglaw firms pay less), Philly pays the following base salaries...

1st Year: $145k
2nd Year:  $152k
3rd Year: $160k
4th Year: $170k
5th Year: $180k
6th Year: $190k
7th Year: $200k
8th Year: $210k

...while New York, Los Angeles, San Francisco, and San Diego pay the following:

1st Year: $160k
2nd Year: $170k
3rd Year: $185k
4th Year: $210k
5th Year: $230k
6th Year: $250k
7th Year: $265k
8th Year: $280k

And those are just the base salaries.  In terms of bonuses, New York firms seem to pay $15k-$60k per year more than do Philly firms.

As for tax rates...

Philadelphia City Wage Tax: 4.5% (3.9127% if you live outside the city)
Pennsylvania State Income Tax: 3.07% (flat rate regardless of income)

New York City Income Tax: 3.648% (on income in excess of $50,000) + $1,706 [single filing status]
New York State Income Tax: 6.85% (if your income is more than $150,000)

Los Angeles/San Francisco/San Diego: No city income tax
California State Income Tax: 9.3% (maximum rate)

Without any deductions, credits, or pre-tax contributions, and without any local/state tax credits for federal taxes paid, the following is one's take-home pay (based on BASE SALARIES ONLY) after paying federal income tax, social security tax (6.2% on a maximum of $102,000), Medicare Tax (1.45%, no limit), state income tax, and city income/wage tax as a city resident [single filing status, where applicable, for all taxes]:

*** BASED ON BASE SALARIES ONLY ***

PHILADELPHIA
1st Year: $91k
2nd Year: $95k
3rd Year: $100k
4th Year: $106k
5th Year: $112k
6th Year: $118k
7th Year: $124k
8th Year: $130k

NEW YORK
1st Year: $96k
2nd Year: $102k
3rd Year: $110k
4th Year: $124k
5th Year: $135k
6th Year: $146k
7th Year: $154k
8th Year: $162k

LOS ANGELES/SAN FRANCISCO/SAN DIEGO:
1st Year: $100k
2nd Year: $106k
3rd Year: $114k
4th Year: $128k
5th Year: $139k
6th Year: $151k
7th Year: $159k
8th Year: $168k

Remember that these calculations are based on base salaries only and do not include annual bonuses.

Now that you see the figures, do you think it's worth it to practice in Philadelphia over NY/LA/SF/SD based on...

- cost of living
- hours worked (I think it's safe to say that New York attorneys work more hours than their counterparts in other cities, but I am not sure how the other cities compare)

...assuming that a person is okay with living in any of the aforementioned cities?

I have been pondering this question myself, as I am a 3L and need to decide between two offers (one in Philly, and one in another aforementioned city) for a post-graduate associate position next year.

For anyone else weighing job offers between cities, and even within the same city, please remember to consider the following two factors:

1. The base salary for first- through eighth-year associates (not just the first-year pay!)
2. The annual bonus for first- through eighth-year associates (which can vary greatly among firms!)

I would love to hear everyone's comments on this issue.  Thanks!

brooklyn

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Re: Is it worth it to practice biglaw in Philly over NYC, LA, SF and SD?
« Reply #1 on: August 18, 2008, 12:11:45 AM »
In NYC & SF, cost of living changes your entire equation.  $70 grand more eight years in is nothing when you're spending it all on rent and still can't afford to buy.  planning where salaries will be nearly a decade in based on today's income tax rates seems suspect, too.  if you're choosing b/t two firms, maybe they should be weighed against each other, too- where are you most comfortable?  which has the more promising partnership track?  how do hours worked compare at those two particular firms?  where are you more likely to have the level of client/court/partner interaction you want?  these are all fun cities, but it's basically the same salary when you average it all out.  maybe a slightly better deal if you're really making $100k post-tax in san diego, but not by enough that the money is much of a deciding factor.

if you really want to do this objectively based only on money, you're also going to need to look at sales tax, mortgage rates, insurance rates, quality of infrastructure, cost of food & schools, how much it'll run you to visit your mom on the holidays... lot of effort to figure out that they're all pretty equal.

offer

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Re: Is it worth it to practice biglaw in Philly over NYC, LA, SF and SD?
« Reply #2 on: August 18, 2008, 12:38:55 AM »
In NYC & SF, cost of living changes your entire equation.  $70 grand more eight years in is nothing when you're spending it all on rent and still can't afford to buy.  planning where salaries will be nearly a decade in based on today's income tax rates seems suspect, too.  if you're choosing b/t two firms, maybe they should be weighed against each other, too- where are you most comfortable?  which has the more promising partnership track?  how do hours worked compare at those two particular firms?  where are you more likely to have the level of client/court/partner interaction you want?  these are all fun cities, but it's basically the same salary when you average it all out.  maybe a slightly better deal if you're really making $100k post-tax in san diego, but not by enough that the money is much of a deciding factor.

if you really want to do this objectively based only on money, you're also going to need to look at sales tax, mortgage rates, insurance rates, quality of infrastructure, cost of food & schools, how much it'll run you to visit your mom on the holidays... lot of effort to figure out that they're all pretty equal.

Thanks so much for your response and insight.  All of the qualitative factors you mentioned are important to me, and my decision will not be based solely on a financial analysis.  Even with the bonus premium in certain cities, your point struck home with me when you said that the monetary difference is not enough to be a deciding factor.

Luziana

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Re: Is it worth it to practice biglaw in Philly over NYC, LA, SF and SD?
« Reply #3 on: August 19, 2008, 05:00:51 PM »
While it appears that money is a big consideration for you, I'd urge you to consider other aspects of each offer.  Money is not everything.

Consider the firm structure, the work you'd be doing at each place, and the people you'd be working with.  These are *very* important factors that can't be quantified very easily.

Also consider the character of each city you mentioned.  Each is a fun city when you are young and single, but each has a very different feel to it -- a different personality, if you will.  (E.g., for myself, NYC is great to visit but it would be too big for me to live there.  But I could handle Philly.)  And don't forget climate... If you love sun and heat and like to surf in your free time, the Northeast probably won't be your cup of tea, for example.

Also, even though you may be single now, you should also look to the future.  Would you want to live in X City in 10 years when you are married and have two kids?  You might decide that some cities would be a good fit for you long-term, but others would only fit you while you are single.

xferlawstudent

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Re: Is it worth it to practice biglaw in Philly over NYC, LA, SF and SD?
« Reply #4 on: August 19, 2008, 05:07:35 PM »
With NYC's cost of living, I would say you would get the same or more disposable income in Philly.

StevePirates

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Re: Is it worth it to practice biglaw in Philly over NYC, LA, SF and SD?
« Reply #5 on: August 20, 2008, 12:24:23 AM »
San Diego is ridiculously expensive as well.  Your cost of living here will be much higher.  Our State income tax is pretty high, and while we don't have a city income tax, we have high taxes on everything else, gas, energy, cars, sales-tax.  It's expensive out here.

Good ol' sunshine tax.