Lawyer salary

Median income of US lawyers has fallen over the past two decades, economists say

  • Falling demand for legal services drives lawyers’ incomes down, newspaper says
  • American workers as a whole have seen their inflation-adjusted median income rise since 2001

(Reuters) – Lawyers are making less money today than they did in 2001 when adjusting for inflation, a new study has found.

The median “real income” of US lawyers fell nearly 2% from $129,389 in 2001 to $126,930 in 2020, according to an article due to appear in an upcoming edition of the Journal of Economics and Finance.

In contrast, the real income of all American workers – which refers to an individual’s purchasing power – increased by almost 4% during this period. The median real income of family doctors increased by 20%, while economists saw their median income increase by nearly 11%, according to the study.

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The study draws on national lawyer earnings data from the US Bureau of Labor Statistics and includes data on different sectors of the profession. Independent practitioners and those working in government and not-for-profit settings tend to earn significantly less than lawyers in larger firms that serve corporate clients.

Across all industries, the median real income for lawyers peaked at $134,005 in 2010 and has been steadily declining since, the data shows.

Authors James Koch and Barbara Blake Gonzalez, who are on the faculty of the Department of Economics at Old Dominion University, analyzed data ranging from lawyers’ compensation and populations to national spending on legal services, including bar pass rates and paralegal ratios over the past two decades to better understand why the real income of lawyers has stagnated while it has increased among other workers.

They concluded that the combination of an oversupply of lawyers and a decline in demand for lawyer services is driving the trend.

“The influences of demand on lawyers’ incomes are significant,” they wrote in the paper, titled “Why Has Median Real Income of Lawyers Decreased?” »

Legal services accounted for 0.58% of US gross domestic product in 2001 and 0.28% in 2019, the authors say, meaning Americans spend proportionately less on legal services today than there were. two decades. They cited the automation of legal tasks, an increase in the number of paralegals and a decline in litigation in some areas as all playing a role in the decline in demand for attorneys’ services. The number of lawsuits filed in federal courts has declined both per capita and per attorney since 2001, according to the newspaper.

“The decline in payments to lawyers for their services that has occurred over the past 15 years has been significant and can alone explain a significant portion of the decline in actual median earnings of lawyers,” he said. .

Koch and Blake Gonzalez did not immediately respond to interview requests.

As demand for legal services has declined, the number of attorneys per 1,000 workers in the United States has fallen from 4.15 in 2001 to 4.4 in 2019, the researchers found. They noted that the law is slow to respond to changes in the labor market, in part because it can take four or more years between someone deciding to pursue a law degree and when they can join the bar.

“The United States may have too many lawyers if the goal is to avoid further declines in real lawyer incomes,” the authors write.

Read more:

New York law firms raise starting salaries to $215,000 as lawyer salary race continues

Starbucks’ top lawyer’s salary topped $5 million last year

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Karen Sloane

Thomson Reuters

Karen Sloan reports on law firms, law schools and legal affairs. Contact her at [email protected]