On Wall Street, Lawyers Make More Than Bankers Now
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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

By Cara Lombardo
Thu, Jun 22, 2023 4:33pmGrey Clock 4 min

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 favourite 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.”

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.

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.

Dana Cimilluca and Alexander Saeedy contributed to this article.


Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts

Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’

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The Embarrassment of Having to Explain Your ‘Monster’ Diamond Ring

Couples find that lab-grown diamonds make it cheaper to get engaged or upgrade to a bigger ring. But there are rocky moments.

Mon, Dec 11, 2023 4 min

Wedding planner Sterling Boulet has some advice for brides-to-be regarding lab-grown diamonds, which cost a fraction of the natural ones.

“If you’re trying to get your man to propose, they’ll propose faster if you offer this as an option,” says Boulet, of Raleigh, N.C. Recently, she adds, a friend’s fiancé “thanked me the next three times I saw him” for telling him about the cheaper lab-made option.

Man-made diamonds are catching on, despite some lingering stigma. This year was the first time that sales of lab-made and natural mined loose diamonds, primarily used as center stones in engagement rings, were split evenly, according to data from Tenoris, a jewellery and diamond trend-analytics company.

The rise of lab-made stones, however, is bringing up quirks alongside the perks. Now that blingier engagement rings—above two or three carats—are more affordable, more people are dealing with the peculiarities of wearing rather large rocks.

An engagement ring made with a lab-grown diamond at Ada Diamonds in New York City. PHOTO: CAM POLLACK/THE WALL STREET JOURNAL

Esther Hare, a 5-foot-11-inch former triathlete, sought out a 4.5-carat lab-made oval-shaped diamond to fit her larger hands as a part of her vow renewal in Hawaii last year. It was a far cry from the half-carat ring her husband proposed with more than 25 years ago and the 1.5-carat upgrade they purchased 10 years ago. Hare, 50, who lives in San Jose, Calif., and works in high tech, chose a $40,000 lab-made diamond because “it’s nuts” to have to spend $100,000 on a natural stone. “It had to be big—that was my vision,” she says.

But the size of the ring has made it less practical at times. She doesn’t wear it for athletic training and swaps in her wedding band instead. And she is careful to leave it at home when traveling. “A lot of times I won’t take it on vacation because it’s just a monster,” she says.

The average retail price for a one-carat lab-made loose diamond decreased to $1,426 this year from $3,039 in 2020, according to the Tenoris data. Similar-sized loose natural diamonds cost $5,426 this year, compared with $4,943 in 2020.

Lab-made diamonds have essentially the same chemical makeup as natural ones, and look the same, unless viewed through sophisticated equipment that gauges the characteristics of emitted light.

At Ritani, an online jewellery retailer, lab-made diamond sales make up about 70% of the diamonds sold, up from roughly 30% two years ago, says Juliet Gomes, head of customer service at the company, based in White Plains, N.Y.

Ritani sometimes records videos of the lab-diamonds pinging when exposed to a “diamond tester,” a tool that judges authenticity, to show customers that the man-made rocks behave the same as natural ones. We definitely have some deep conversations with them,” Gomes says.

Not all gem dealers are rolling with these stones.

Philadelphia jeweller Steven Singer only stocks the natural stuff in his store and is planning a February campaign to give about 1,000 one-carat lab-made diamonds away free to prove they are “worthless.” Anyone can sign up online and get one in the mail; even shipping is free. “I’m not selling Frankensteins that were built in a lab,” Singer says.

Some brides are turned off by the larger bling now allowed by the lower prices.When her now-husband proposed with a two-carat lab-grown engagement ring, Tiffany Buchert, 40, was excited about the prospect of marriage—but not about the size of the diamond, which she says struck her as “costume jewellery-ish.”

“I said yes in the moment, of course, I didn’t want it to be weird,” says the physician assistant from West Chester, Pa.

But within weeks, she says, she fessed up, telling her fiancé: “I think I hate this ring.”

The couple returned it and then bought a one-carat natural diamond for more than double the price.

Couples find that lab-grown diamonds have made it more affordable to get engaged. PHOTO: CAM POLLACK/THE WALL STREET JOURNAL

When Boulet, the wedding planner in Raleigh, got engaged herself, she was over the moon when her fiancé proposed with a 2.3 carat lab-made diamond ring. “It’s very shiny, we were almost worried it was too shiny and was going to look fake,” she says.

It doesn’t, which presents another issue—looking like someone who really shelled out for jewellery. Boulet will occasionally volunteer that her diamond ring came from a lab.

“I don’t want people to think I’m putting on airs, or trying to be flashier than I am,” she says.

For Daniel Teoh, a 36-year-old software engineer outside of Detroit, buying a cheaper lab-made diamond for his fiancée meant extra room in his $30,000 ring budget.

Instead of a bigger ring, he got her something they could both enjoy. During a walk while on an annual ski trip to South Lake Tahoe, Calif., Teoh popped the question and handed his now-wife a handmade wooden box that included a 2.5-carat lab-made diamond ring—and a car key.

She put on the ring, celebrated with both of their sisters and a friend, who was the unofficial photographer of the happy event, and then they drove back to the house. There, she saw a 1965 Mustang GT coupe in Wimbledon white with red stripes and a bow on top.

Looking back, Teoh says, it was still the diamond that made the big first impression.

“It wasn’t until like 15 minutes later she was like ‘so, what’s with this key?’” he adds.


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