Thursday, May 21, 2015

Brief News Update: There are too many lawyers? Say it ain't so!

As we all know, the lawyer job recovery is right around the corner, if you listen to Freedman, Diamond, Barros, Seto, et al.  

Apparently Bloomberg and several major law firms didn't get the scholarly memo:








http://www.bloomberg.com/news/articles/2015-05-13/there-are-too-many-lawyers-say-law-firms


But what about the 73% of associates that are "busy?"  That's good news, right?  Not so fast.  Of the firms surveyed, 61% are using part-time lawyers and 56% are using contract lawyers.  When asked if this trend was going to continue and be permanent, 73% of firms said "Yes" on both counts.  Outsourcing legal work will be a permanent trend for 52% of surveyed work going forward.  So much for the equity partnership track.

http://www.altmanweil.com/dir_docs/resource/1c789ef2-5cff-463a-863a-2248d23882a7_document.pdf 

As the Law School Cartel continues to bang the table, remember, folks, the scambloggers are disgruntled losers who don't want to work hard for a living, and are Koch-Brothers-backed haters of academic freedom and student-loans-setting-people-free on top of it.  You heard it here first!

45 comments:

  1. I've seen many, many law firms over the years where the structure is an inverted pyramid with many partners and a few associates. This has been the case for at least a good 15+ years now. It's common. You can Google around and check yourselves.

    But yeah (( sigh )) I suppose there's never been a better time to go to law school and become a lawyer.

    Um.. No, on second thought, probably not, especially given the current non-dischargeable debt levels.

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    1. When I started a mid-sized insurance mill, I thought this "inverted pyramid" was just my firm. Oh well, how stupid was I?

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  2. Anyone who thinks that the United States has too many lawyers is paid by the Koch Brothers and is striking at the foundations of the American democracy itself!

    That goes double for anyone who thinks that the employment prospects of Santa Clara Law grads are terrible!

    Fortunately, we can freely discuss this among ourselves, since Diamond is already off on his well-deserved summer vacation, and will not be blogging or reading the comments of the peasantry.

    I remember a year or two ago, Diamond did feel compelled to respond to some comment during the summer, and he spent half of his comment whining that he was on vacation, and shouldn't have to be responding to anyone.

    Be nice to Steve Diamond - please don't make any comments relating to him until he is back at work in September!

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    1. haha, I wonder if Diamond was on a research stipend that summer. If so, then his claim to be on vacation would reveal what a scam the law school "research" business is.

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    2. Give Steve Diamond a break...that aluminum foil hat he wears get real hot in the summer.

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    3. Naw, Diamond is out searching for the real law school "killer" on a golf course (same as the way OJ searched for the real killer on a Fla. golf course for awhile).

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    4. 11:13 a.m. your joke falls flat. The Kochs are libertarians, they only interested in decreasing democracy (anti-gov) and further vesting the one percent, like themselves. I understand you are here to destroy student loans (I'll assume you are not being paid to post here), but your spirit does not belong here.

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    5. Crushing lifelong debt--the lifeblood of our democracy!

      And it just happens to further enrich some lazy law professors, but that's okay...

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  3. Literally every part of the legal food chain is looking for ways to cut labor costs, simply because labor supply is so great that they can. Large firms have finally figured out that you can hire the same idiots you'd hire as 160k associates for 80k contract/staff attorney/temp positions (you can "promote" them if they're partnership material). Corporate legal departments began bill-slashing a decade or more ago, and now areas like ID are driven by (relatively uniform) corporate procedures. Other corporate departments are in-sourcing or using lower-rate counsel.

    They've finally started to figure out that there's no reason to hire a big firm unless you have a matter that simply isn't manageable by a smaller one. If you hire a big firm and pay 500+ otherwise, you're basically donating to inflated overhead and partner profits. Much like the law school model, much of big law is built on an information asymmetry - the client doesn't know how badly they're getting ripped off, but they feel good, so we're going to rip them off.

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    1. If what you're doing isn't manageable by any but a big firm, you can probably hire in-house counsel for less and get better results.

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  4. Notice the firms are losing work to in house department - in other words to other lawyers.

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    1. That would be an assumption on your part, and I think a false one.

      Someone only takes an outsourced function inhouse if they can do it more efficiently inhouse (i.e., cheaper). My guess is that inhouse counsel are seeing the inefficiencies of outside counsel as being mainly profits (taken by the partners) and younger lawyers' billing far more than the value they provide.

      What I suspect is happening is that the GC offices at these places bring work back in to be supervised by a smaller staff of attorneys while the grunt work is done by paralegals and non-attorney specialists (you know, the type of job that appears to be JD advantage but is actually designed to have non-JDs compete directly with JDs so the position can be paid significantly less to some idiot who now thinks they know as much as an attorney).

      Another trend prevalent in the insurance defense/wc defense field is companies using "captured" counsel or whatever it's called, an "independent" firm that has one source of business. Again, you may conclude this is a neutral effect, and again you would be wrong.

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  5. It should be no surprise that law firms are getting less busy. Half the law practiced in the country is a total scam, and now everyone is catching on to the scam. This is one of the main reasons the "bubble" is bursting.

    Given how disgusting the profession is, my advice to everyone is to GET OUT if you can.

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  6. At my biglaw firm (v25), there are SHIT TON of partners who are absolutely not pulling their weight. They don't bring in work, and technically they're not as good as senior associates or even associates. They only got their job because of something on their resume and they're failing bad. Have enough such partners and your firm will fail.

    Biglaw needs to start demoting people.

    P.S. the survey above shows that associates are basically pulling their weight.

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  7. Someone needs to inform Sandra Bullock about the law school scam:
    http://midcitymessenger.com/2015/05/20/warren-easton-charter-high-school-board-meeting-live-coverage-2/

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    1. "Warren Easton Charter High School announces new partnership with Loyola College of Law, Sandra Bullock gives $10,000"

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    2. About 15 years ago, my friend and I were considering attending law school together. Even back then, Loyola NO was so bad that I refused to put it on the list of schools we were considering. My friend insisted that I was being devious, that I was holding out on him. Such was the gravitational pull of the black-hole law schools back in those days.

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  8. What a vibrant and thriving "profession," huh?!?!

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  9. If a client wants a prestigious firm to handle their legal matters the only concern seems to be that it was reviewed and approved by the firm even if it bounced around like a pinball from any attorney out there to temps, independent contractors, document review mills, paralegals, the paranormal or even a machine...just as long as the firm is bound by it.

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  10. My big law firm has had few temps, part-timers or independent contractors in my practice area,or in any other area that I know of. Everyone is full-time and permanent, with exceptions for a few women who wanted part-time work.

    The problem is more in the way of the work not growing anymore, and shrinking nationally based on forces that relate to technological innovations and a change in the way of doing business of the clients that saves money.

    The bigger problem relates to the huge number of former lawyers in our group and other groups like it in other law firms, which add to the bloated supply of lawyers in the legal profession.

    You cannot keep putting more and more people into a stagnant area, and forcing them to leave in early or mid-career, without leaving people out of work, whether temporarily or permanently., or simply underemployed. The disconnect is the huge number of leavers competing to make a living in a market that cannot absorb all of them.

    The firm is holding its own, but not everyone who left there is. A significant number of lawyers are suffering, for periods of years.

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  11. I have absolutely no doubt that the legal sector is permanently contracting, that we haven't hit bottom yet, and that margins will never go back to what they were 10 years ago. But the Bloomberg data is not very meaningful without a time series. Just sayin'.

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  12. “'The school of medicine graduates, each will get a job,' he said.
    So will the law school grads and if they don’t 'who cares, they’re lawyers,' he said. 'Teachers, they’ll be working, s----- jobs and lousy pay, but they will be working.'”

    http://www.nydailynews.com/new-york/robert-de-niro-harsh-advice-nyu-art-school-grads-article-1.2232322

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    1. I guess De Niro doesn't know that there is not a residency for each medical school grad, so no, not even all the doctors get jobs as doctors anymore.

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    2. 4:50, I've heard some people around the scamosphere mention what you said about med students not getting doctor jobs. I am not sure I believe it-- can u share where ur getting that info from? It is pretty awful if true.

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    3. The med school scam is very different from the law school scam. Traditionally, med school was the most esoteric, self-flagellating, expensive experience outside of a death-work camp (notice I didn't just say work camp). It still is, but people did get jobs and did get pay-offs after debt pay down and approaching middle-age.
      Over time, boards of medicine have applied more harsh rules and hoops; basically at this point, if a doc gets fired, his career is over, and many docs no longer work in private practice.
      As far as the residency problem. Lack of residencies, frozen by a dearth of medicare funds in 1997, is the main reason doctors are treated with kid's gloves by management. I still say it is very unusual for someone to not get a residency unless his credentials were butchered during 'training'. The main effect of expanding med seats (it's about time, as there is a massive current and projected shortage of doctors) and stagnant residency seats, will primarily push out Hindu foreign trained docs, who would spend years working low-pay research jobs and spend tens of thousands of dollars on test prep, for the prestige and marginally higher standard of living vis-à-vis an urban Indian doctor, lol.

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  13. The article should quote this add. Craigslist today. $26.00!!! in midtown NYC.Cleaners make $20.00 in NYC!
    Attorneys Wanted for Document Review - Starting Wednesday, May 27th (Midtown)
    compensation: $26/hr plus OT. contract job
    Lexolution's client seeks admitted document review attorneys for a project starting Wednesday, May 27th and running for 6 to 8 weeks.
    45 to 60 hours per week.
    Please note: work location will move to the Financial District starting 6/2.

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    1. Cleaners also don't spend three years and a couple of hundred thousand on training, nor do they need to maintain a costly license in order to ply their trade.

      Delete
  14. Well, allow Don DeLuc to retort:

    http://www.cooley.edu/commentary/lawyer_employment_jumps.html?no_redirect=true


    Avoid the blog fog!!!!

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    1. One wonders how some people sleep at night...

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    2. What a filthy, greedy, predatory animal DeLuc has turned out to be. He could disguise it fairly well before the financial crisis, but now he's just openly licking his lips and waiting to suck your blood.

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  15. The up or out system and age triangular workforce for large law firms that Mr. Harper is trying to defend in his blog, Belly of the Beast, is a big part of the problem of not enough work for law firms.

    Law firms are training their own competition in the form of hiring large numbers of newly graduated lawyers and throwing them out in numbers where they will not be able to make a living long term. 25,000 first year lawyer jobs, 760,000 lawyer jobs in the U.S. overall, an unknown number of which are temp jobs, and close to 1.3 million licensed lawyers tells the story of why your Harvard Law degree with honors, district court clerkship in Manhattan or LA ,and years of big law experience is not landing you a single job when your big law firm and then in house employer drops you after age 45.

    These law firms are training their competition in the form of new lawyers. The big law firms have the upper hand in terms of client connections, so they stay in business. When big or mid-sized corporation hires that 50 year old Harvard Law grad in a temp job rather than giving the work to the law firm, the law firm loses. The due diligence on the deal, the drafts of all SEC filings, the joint venture agreement, it can all be done in house. Sure, the corporation can give the law firm access to the data room and put a partner and associate on it for a few days to make sure that nothing important is missed. But basically, the control of the matter and the hundreds of hours of work is no longer there for the law firm. The 58 year old Harvard lawyer that left the law firm 20 years ago is doing that work for less money than the law firm's first years, because the temp gets no health insurance, which costs a lot. The temp will be out on the street looking for his or her next job after 3 to 6 months, which job won't take 16 months to get if the temp has any luck.

    For a big law firm, up or out, with tons of lawyers streaming in and out and a die-hard age pyramidal lawyer workforce, is shooting yourself in the foot in an extremely oversaturated job market. All those leavers are competition. Weak competition, but competition nonetheless. In an oversaturated market, there is not enough work to go around. Training and throwing out unlimited numbers of lawyers hurts the business of the mother ship.

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    1. Big Law made money off those associates. They make money marking up associate labor astronomically. We see from the survey the worker bees are much more busy than the equity partner bees.

      Was Big Law "training" the associates or draining them? Did Big Law "invest" in associates or did they come out of the net ahead by a long shot churning and burning them?

      Boomers gunna boom. Boomers gunna suck every dime from a going concern and let it crash when they cannot suck the life out of it anymore.

      Labor arbitrage is their game. They chose it, because it means short-term profit but long-term non-viability. In the long-term they're all dead. They know it. They're loving cheap, plentiful associate labor right now. So is every business loving cheap, plentiful labor and falling wages.

      I think Mr. Harper is anti-pyramid and rails against the partner-heavy model, because he cares about long-term viability and assumes that others are running a business for the long-term.

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    2. Up or out was there when boomers arrived at big law. The generational divide was the policy of law firms of the older generation rarely firing any lawyer in a way that the lawyer could not continue his or her career. This meant enough time to look for other work for the lawyer to land on his or feet in a good way after big law.

      The generational divide is now two months notice, or no notice at all for those not making partner . Lawyers being reviewed out of big law, often based on fictional issues, like a fraternity or sorority initiation into never being able to get a job as a lawyer in anything but solo practice.

      Also there are almost no third year jobs now for those who do not get offers from their summer jobs. In the earlier generation, there were third year jobs in good numbers even when the summer job did not result in a permanent job offer.

      No question, the baby boomers created a much harsher legal profession that they did not have to endure in their youth.

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    3. These 2 posts nail it. Right now, it's situational leverage and labor arbitrage. The firms screw all sides. Got a doc review project? Great! No benes. We'll bill the doc reviewer to the firm at $300 / hr. and pay, maybe, $30, no benefits and no promises as to project length or employment. Then, on the other side, we'll hire temps and call them "of counsel" (to make them at least feel important..) No promises. No partnership track. Permanent employee-at-will. And we'll pay him, maybe, $70-90K for as long as he's employed and still bill him out at Associate-level rates. Gotta maintain dat PPP!!

      And yes, finally, it's every business out there. They all have the philosophy of why pay more? Turn an entire generation into temporary, migrant workers with no future aside from today.

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    4. Your obsessive focus on the mythical entity you call "the baby boomers" diverts your attention from the very real dangers facing millennials and GenY in the present, in the real world. It could also mislead any prospective law student who slogs through your uninformed comments. You see, the boomer and post-boomer deans are clever enough to hire younger people to entice any students who fall for the "evil baby boomer" mythology.

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    5. Baby boomer lawyers have been severely damaged by these unethical employment practices of law firms. The only ones who benefit are the law firms and the law schools.

      It is the leadership that took over the law schools and law firms that are unethical, and not all baby boomers.

      The compensation in big law tends to be okay or even good, but the jobs are fleeting, even for partners in some cases.

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    6. @ 4:21 What are you prattling on about? Labor arbitrage IS simply the business model of every law firm. It's the time-honored roll of the associate to be paid less than what he bills. If the lemmings are turned away from the law because they are horrified by its ubiquitous business model, well then the lemming was saved.

      The Boomer Deans and Boomer Law Partners are simply part of the Boomer Way. That way is to run a business to extract the most profit one can from it for oneself, and time the demise of the business for the day the Boomer has his retirement party - god willing, and the pensions aren't underfunded.

      It is the very essence of the Boomer to Boom and Bust.

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    7. http://www.seattletimes.com/seattle-news/yes-summer-job-paid-tuition-back-in-rsquo81-but-then-we-got-cheap/

      Here's the money quote:

      "We weren’t Horatio Algers. We were socialists."

      Socialists then and socialists now. The Me Generation is trying to pull off yet another scam and rebrand itself as compassionate, wizened, socially responsible individuals - what their parents were - and trying to wipe the Slate of the 1960's clean and push all memory of their deeds under the rug. My goodness.. they wouldn't harm a gadfly, these souls. Not a one..

      Sorry, I'm not buying it. Like the poster said above, the Associates are more than carrying their weight but the Partners aren't going to be the ones churned and pushed out the door after - I guess now it's 1-2 years instead of 3-5?

      In the competition for resources, if it comes down to continuing the Game, the Associate will go, not the Boomer Partner despite being the "excess overhead" that they claim is the problem they are seeking to eliminate.

      However, since some of these people wind up in-house, they carry the memory of how they were treated along with the knowledge of how Biglaw firms bill and operate. Thus, the client side has gotten a lot tougher towards the firms.

      Again, the above poster is right. The churn and burn will eventually kill the model. It's dying a slow death and the labor arbitrage game can only go on for so long.

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    8. Finally, Partners are made in boom times but remain in down times. These firms will thus bloat until they collapse. For an interesting study on that see Leboeuf. They couldn't pay out the compensation promised to the Partners and retired Partners. It was half the firm's NOI. So, like I say, and the poster above was again right, these firms will not 'get lean'. Every business model seems to be Bloat until you are bought out and then the new entity does the head-slashing or Implode. Leboeuf sought a suitor but failed. Thus, it imploded.

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  16. Just to take this further, if that Harvard temp lawyer has been out of work for 15 months, the big corporation can get him or her at $60 an hour, no employee benefits, in New York or LA. That compares with more than $100 an hour on average for a first year associate from Harvard hired by the big law firm that would have employed the same Harvard lawyer earlier in his or her career.

    It makes sense economically to use the Harvard Law educated temps rather the the Harvard Law associates and counsel and partners from the big law firm. There are big matters that cannot be staffed by temps and certain types of work that need outside counsel, but the law firms are losing out.

    The Affordable Care Act's definition of what you have and don't have to do in terms of health insurance will hurt law firms even more by accelerating the use of temps in the legal profession.

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    1. Some of the temp firms do offer health insurance - they are supposed to if the job is going to be full-time for more than 90 days. Some even pay for a portion of health insurance. However, when the temp job ends, the lawyer has to pay for COBRA after tax, if he or she is unemployed. COBRA is astronomically expensive, especially for family coverage.

      The exchanges offer very low level coverage - not the best hospitals generally- and huge out of pocket after tax costs if one actually gets sick, not to mention that if you had a job for a portion of the year you will not get a subsidy to buy the coverage and will pay the premium for it after tax -a very expensive proposition. The one exchange in NY that offered Sloan Kettering for cancer patients was forced to drop the coverage during 2015, with 250 NY exchange patients possibly left in limbo. Apparently, this top ranked cancer center that gives cancer patients the highest chance of a cure vs. other hospitals that do not specialize in cancer is not "affordable" enough.

      Anyway, a lawyer is probably not going to be getting employer subsidized health coverage for much of his or her career. If the job ends, many lawyers will be forced to buy unsubsidized lower quality coverage on an exchange, paying an arm and a leg while those who have really low declared incomes and are working "off-the-books" or simply staying home (because it now costs more to work with the Affordable Care Act) will get a subsidy from the federal government to buy the same insurance.

      It is a disaster to be a lawyer because you probably will have trouble paying for quality health insurance throughout your life. Join a union - you get the health insurance. No opportunities for lawyers to unionize though because of the nature of the profession and the really poor level of demand for lawyers by most employers.

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    2. Just to clarify - the good temp firms that large corporations use pay maybe a second or third year salary to that Harvard Law 20+ year temp. The health insurance though is less good than at a big firm, and that can eat up $5,000 to more than $25,000 a year for a family with heavy medical expenses in a year (e.g. having a baby or having surgery) so the high temp salary is a lower than it would be at a big firm with the same nominal salary.

      The big problem with the temp jobs is that the employer only needs the lawyer for a limited period of time. The time looking for the next job can be measured in years, not months. In a recession, the temp employers, even the top temp employers, have nothing - that is, they have few jobs to offer anyone because the big corporations are not hiring temp lawyers. They do without in a recession.

      If you want to be able to pay a mortgage, pay rent on a home, or pay for a car, being in the legal temp market is not the way to go. Too many former big law lawyers seeking too few jobs. The number of full-time permanent job openings for experienced lawyers over age 35 who graduated law school at age 26 or so - well under 3,000 a year. The number of unemployed or underemployed former big law associates/ partners looking for those jobs - many times the 3,000 number. So temp jobs become very desirable, even for Harvard cum laude JDs who had prestigious clerkships and other T8 law school grads who may have worked for years in big law or big in house find themselves out of work or almost out of work.

      It didn't used to be this way, but today, law is a disaster, even with the top degrees.

      By the way, the ABA 509 reports for 2015 are out and even Harvard is not admitting 51 transfers if I counted right, to add to their first year class of about 560. Every law school is taking advantage, and the result will be that some first year grads from Harvard will be unemployed. For the older grads, streaming out 50 plus lawyers from lower tier schools and calling them Harvard Law grads makes the whole law game laughable.

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  17. I wouldn't broadcast the Koch angle. There are likely paid PR hacks on here posting. One guy only talks about federal loans, as if they weren't a Friedman-Reagan counter-reform and there aren't alternatives in other countries that avoided this over production via loan program.

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  18. TEMP JOB MATH - The math of a high level temp job- they pay just over $200,000 a year. It is really $180,000 taking into account the less generous health insurance package offered by the temp agency when you compare it to a big law associate job.

    The job lasts for 6 months. Pay is $90,000 for those 6 months. However, it takes the lawyer 12 months of looking after the temp job ends to find work. So annualized pay for the 18 months is $60,000. The lawyer is working to 11 hour days to earn the $60,000 and is looking high and low to find the next job.

    The pay for the temp job is actually much lower than $60,000 because the lawyer has to pay $25,000 after tax for family COBRA to keep up health insurance in the year out of work. Brings the pay for the "high paying" temp gig down to $40,000 a year or so.

    Of course, the BLS will annualize the pay on the temp job and treat it as a $200,000 job.

    The $40,000 real paycheck is for a T8 grad with years of big law and big in house experience.

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