Big Law, Big Money, Potential for Big Mistakes

I have been writing for The Jewish Press for five years and have never written a column specifically for lawyers. In our community, that is an oversight. My father is a lawyer. My brother‑in‑law is a lawyer. Half of the members of my shul are lawyers, and so are many of my clients.

Business has rarely been better for attorneys at large firms. The 2026 Am Law 100 showed average profits per equity partner of $3.59 million, up 14% in one year. First‑year associates at top firms now start at $235,000. While those are impressive numbers, a big paycheck does not make you wealthy. What you keep, protect, and invest does. Plenty of attorneys still live paycheck to paycheck due to avoidable mistakes.

Below are thoughts on how frum Big Law attorneys can handle their finances more intentionally.

Income Is Not Wealth: That $3.59 million figure is firm profit divided among equity partners, not what every partner takes home. Non‑equity partners now make up more than half of Am Law 100 partners, and equity partners are paid unevenly. Monthly draws are relatively modest, followed by large distributions months after year-end.

Build your core budget on the reliable part of your pay. Treat distributions and bonuses as capital to save, invest, or give. Associates should do the same. Live on base salary and save the bonus. Prevent temporary income from becoming permanent expenses.

Do Not Turn Temporary Income into Permanent Expenses: Rich and financially independent are not the same. Yeshiva tuition, a summer home, simchas, and generous tzedakah can create a frightening burn rate. Every raise becomes the new normal.

The most dangerous upgrade is the house. A partner who goes from $500,000 to $1.5 million can convince himself that a far more expensive home is affordable. However, property taxes, insurance, maintenance, and renovations permanently raise spending.

Philanthropic expectations also matter. Organizations may still come to you for significant donations even when expenses rise or income dips.

The real question is what your lifestyle will cost once partnership income stops. Using a 4% withdrawal rate, a family spending $600,000 a year needs about $15 million of investable assets before taxes. These numbers may be sobering to many.

The Big Law Liquidity Trap: A partner can be worth millions and still be cash‑poor. In an emergency, only liquid money counts. Home equity cannot pay a tax bill. Retirement accounts are costly to tap early, and partnership capital is locked up.

Every partner needs two reserves:

A tax reserve: Partnership distributions have little withholding. For a New York City partner, combined taxes can approach half. Move estimated taxes into a separate account the day a distribution arrives.

A capital‑call reserve: Becoming equity partner usually requires contributing capital, often financed with a loan. Keep enough cash to meet obligations without selling investments in a downturn.

Use the Firm’s Retirement Plans Fully: Many attorneys contribute $24,500 to their 401(k) and stop. That leaves money on the table. If your firm offers a cash balance or defined benefit plan, contributions for partners in their fifties and sixties can reach six figures. These plans function like pensions with annual credits based on age and income.

If your 401(k) allows after‑tax contributions with Roth conversions, the “mega backdoor Roth” can push total contributions toward $72,000. This strategy uses after‑tax contributions that are immediately converted to Roth for tax‑free growth. Maxing out retirement accounts is often the minimum required to maintain your lifestyle in retirement.

Beware of Smoke and Mirrors: High income does not give you access to better investments. It does make you a target for people selling them. Private deals, boutique funds, complex insurance, and exclusive banking programs often sound impressive but rarely improve outcomes.

Fees compound just like returns. Many alternative products cost multiples of plain‑vanilla investments. The likelihood of outperforming public equities is slim, and risk is higher. I have seen many attorneys lose money on deals pitched by a college roommate or a former chavrusa.

Your career is already your biggest investment. Do not let your portfolio mirror the same risks. The best portfolios I see are boring, diversified, low cost, tax efficient, and rebalanced with discipline.

Insure the Golden Goose: For a 45-year-old partner earning $1.5 million annually, twenty more years of work represents tens of millions of future income. Group disability coverage is usually capped far below a partner’s earnings. An individual own‑occupation policy belongs in nearly every partner’s plan. You insure your house and car. Your ability to earn millions is worth far more than either.

Make Sure Your Spouse Understands the Plan: In many affluent families, one spouse knows every detail of the finances while the other knows nothing. For a Big Law family, that is dangerous.

Both spouses should know what the family owns and owes, how much cash is available, what insurance exists and what happens to compensation upon death, disability, retirement or leaving the firm. Create a simple family financial binder or digital folder with account information, contacts and key documents. It is one of the most practical steps you can take.

Plan for Career Risk: Lawyers rarely acknowledge the fragility of their own industry. The truth is that deal flow slows, firms merge, and practice groups shrink. Artificial intelligence is also changing staffing and pricing.

Searching for a comparable job in your fifties is difficult. I always suggest evolving your skill set and planning accordingly. Learn your firm’s retirement and buyout terms long before you need them.

What Successful Big Law Families Do Right: The biggest mistakes I see among high‑earning attorneys are simple: treating distributions as guaranteed income, skipping a tax reserve, keeping too little liquidity, letting lifestyle creep take over, paying a steep financial price for boutique investments, and failing to plan for the day partnership income stops. These are all easily avoidable.

The attorneys who build lasting wealth treat income as temporary, savings as permanent, and lifestyle as a deliberate choice. They save aggressively during peak earning years, often 30 to 40% of income. They use the right accounts for the right purposes, placing tax‑efficient assets in taxable accounts and higher‑growth assets in retirement accounts. They maintain meaningful exposure to equities for long‑term growth, rebalance when needed, and stay conscious of taxes. They also have a team of advisors who ensure they are making the right decisions and minimize mistakes.

Financial success for these attorneys is not luck. It is based on discipline. The goal is not to look rich. It is to build a life resilient enough that one bad year remains exactly that: a bad year, not a breaking point. Financial resilience is not only a personal achievement. It is one of the greatest gifts you can give your family.