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Author Topic: Is it worth it to practice biglaw in Philly over NYC, LA, SF, and SD?  (Read 4740 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!

MCD

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Re: Is it worth it to practice biglaw in Philly over NYC, LA, SF, and SD?
« Reply #1 on: August 17, 2008, 02:04:31 AM »
you really want to spend more than a couple years billing 2200 hours...? You know you only have so much living you can do before you die right?

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 17, 2008, 02:08:48 AM »
you really want to spend more than a couple years billing 2200 hours...? You know you only have so much living you can do before you die right?


Yes, I am already considering my exit strategy, but I thought I'd save that for another thread at a later time. ;D

I know that I can transfer to a different city at a later time, although I think it would be difficult to do, and I also know that I may not be practicing law a few years down the road.  However, in the event that I do remain in the legal industry, I would like to be compensated at a competitive rate.

Also, I think the big bonuses come at 2400 hours. 8)

deedeeleigh

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Re: Is it worth it to practice biglaw in Philly over NYC, LA, SF, and SD?
« Reply #3 on: August 17, 2008, 06:58:33 PM »
Does Philly generally have lower minimum billables than NYC? I think COL should also be a factor, and Philly is cheaper than NYC.  Not sure about the CA cities.

offer

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Re: Is it worth it to practice biglaw in Philly over NYC, LA, SF, and SD?
« Reply #4 on: August 17, 2008, 07:37:19 PM »
Does Philly generally have lower minimum billables than NYC? I think COL should also be a factor, and Philly is cheaper than NYC.  Not sure about the CA cities.

Minimum billable hour requirements seem to be the same across all offices of the same firm.  As for the biglaw firms that have their main presence in Philadelphia, their stated minimum billable hour requirements are generally the same as in other cities.  However, I get the impression that the actual number of hours billed is less in Philly than in some other cities (such as New York).  Also, if you take a look at the bonus requirements, at least one Philly biglaw firm pays a maximum non-discretionary bonus when 2,200 billable hours are met, while at least one New York biglaw firm pays a maximum non-discretionary bonus when 2,400 billables are met.

How much cheaper would you say Philly is than NYC?  I've used the CNN Cost of Living calculator, but it provides very generalized figures.

deedeeleigh

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Re: Is it worth it to practice biglaw in Philly over NYC, LA, SF, and SD?
« Reply #5 on: August 17, 2008, 08:47:09 PM »
I think COL in Philly is cheaper than NYC, but it'll depend on where you live. In NYC, if you live in walking distance to your office (in the city) a studio will probably be about 2500 (maybe 2k on the UES).  But if you live in Bklyn, you can find for much cheaper and have about a 1/2 hour to 45 minute commute. Also, if you live in Jersey (Hoboken or Jersey City are close) there is no city tax, and only have to pay NJ state tax.

Not sure about apartments in Philly but when I was considering Penn, I saw quite a few on craigslist in the 1k-1200 range. By now, maybe 1500? So, Philly COL is probably cheaper by a decent amount.

I'm surprised the city tax is higher than NY's though.

offer

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Re: Is it worth it to practice biglaw in Philly over NYC, LA, SF, and SD?
« Reply #6 on: August 17, 2008, 10:12:53 PM »
Is it any wonder why Philadelphia has a hard time attracting businesses and workers in light of the city's expensive business privilege tax (on top of the other occupancy and use taxes) and a wage tax that is higher than the state income tax?

uh huh.

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Re: Is it worth it to practice biglaw in Philly over NYC, LA, SF, and SD?
« Reply #7 on: August 18, 2008, 09:07:12 AM »
Dear god, for all of your salary calculations, tax considerations, and bonus forecasts, nowhere do you discuss which city you LIKE. Dude, life is about WAY more than money. Have you spent any time in any of the cities you have opportunities to work in?

Having lived and worked in both NYC and Philly, I preferred Philly because it just a hint slower than NYC in terms of pace. Unfortunately, I am kind of stuck in NYC; but such is life. At least I work for lifestyle firm.

offer

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Re: Is it worth it to practice biglaw in Philly over NYC, LA, SF, and SD?
« Reply #8 on: August 18, 2008, 02:45:13 PM »
I didn't know lifestyle firms existed in NYC.   8)

uh huh.

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Re: Is it worth it to practice biglaw in Philly over NYC, LA, SF, and SD?
« Reply #9 on: August 18, 2008, 03:53:36 PM »
They sure do - you just gotta look for them, and accept the fact that if you're gonna work less, you're gonna be paid less. Less for my firm = not that far off of market rate.