Female lawyers face their own unique personal finance challenges. They call it personal finance because the principles are not universal. If you’re a lawyer, you will likely accrue a lot of debt and no earnings while attending law school. It might still be a good decision because you are pursuing the career you want and are potentially setting yourself up for higher earnings. If you take a pay cut so that you can care for your family, that also might be the right financial decision for you, even though you are not saving.
Personal finance looks different for each individual depending on their circumstances and the stages in their lives. You might ask why this site focuses on women lawyers and it’s because female lawyers have different financial circumstances than male lawyers or women in other professions, due to a variety of systemic problems and societal norms. These differences are not necessarily night and day from other people’s experiences, but it’s different enough to warrant different advice. Below I explain some of these differences.
Financial Challenges for Lawyers
- Crushing Student Loan Debt
- Long Hours at Work
- Chasing Student Loan Forgiveness
- Employment Woes
- Irregular Salary Arc
- Mental Health Woes
- Chasing Prestige
Financial Challenges for Women:
- More Debt
- Less Earnings
- Fewer Working Years
- Pay Off Debt Slower/Invest Later & More Conservatively
- The Glass Ceiling
- Lack of Support at Home
- Outlive Men
- Lack of Financial Confidence
Financial Obstacles for Lawyers
Given that lawyers are stereotyped to have large incomes, what financial obstacles could they possibly have? If you thought student loans – then ding, ding, ding!
To become a lawyer, (almost) every lawyer had to attend both college and law school, and both those institutions can be exorbitantly expensive.
According to the Department of Education, the average undergraduate student loan debt is $33,310 at an average 4.81% interest rate. That’s not chump change, but is pretty insignificant compared to the average law graduate debt of $122,000 at 6.8-7.6% interest rates.
For the average undergraduate, loan payments are $350/month as opposed to the $1,400 month for the average law school student. That means lawyers are paying $16,800 just in student loans every year for 10 years. A quarter of lawyers earn $75,000 or less. After taxes, that means lawyers are living on $38,000/year or less. Median earners making $113,000, would make $64,000 after taxes and minimum loan payments. You have this idea of the fabulous lifestyle you will get to live as a lawyer, but $64,000 or less, won’t get you very far in a major metropolitan area, especially when you’re working the kind of hours that many lawyers do.
Lawyers are well known for having long hours. Typically, personal finance blogs talk about increasing income through raises or side hustles. But law firm salaries tend to be lock-step and one can’t get promoted to “fifth year associate” just by virtue of being a hard worker. In fact, hard work is the minimum to stay in good standing as many law firms require 70-80 hour workweeks in order to meet the minimum billable time. The nature of many jobs in law is that they are all-consuming and oftentimes unpredictable. You don’t get to choose when you go to trial or when your deal will close. This typically negates the availability of many side hustles.
Not everyone chooses to be a lawyer for the big bucks, but public interest attorneys still pay the same high tuition. In order to pay for their student loans, a significant percentage of these lawyers consider public student loan forgiveness. This sounds like a boon rather than an obstacle except that, as you may have heard, the program has had huge problems with only 1% of applicants earning forgiveness. This leaves people in the untenable position of pursuing a purportedly lower-paying job, accruing interest on loans, and never obtaining forgiveness.
Even if the program worked perfectly, it requires people to be employed in the public sector continuously (which can be stressful when the market isn’t good). Applicants must also stay in debt for a decade or more, which leads to them delaying other major purchases and milestones – like buying a house or having children. On top of that, even if their loans get forgiven, then they have to pay taxes on the debt that is forgiven. Public service loan forgiveness is hardly the solution that it is advertised to be. Time will tell if it’s an additional problem for many attorneys.
Legal employment was a huge problem during the Great Recession. Thigs have improved but there are currently still not as many attorney positions as there are attorneys. There are many theories for the mismatch. These include increasing distrust of attorneys, technology and how law schools churn out more attorneys than there are open jobs for. Also attorneys are being squeezed in terms of productivity so that employers won’t need to hire more staff.
The shrinking of the legal industry means that attorneys may have long stretches without gainful employment, missing out salary, experience, healthcare, and connections. Further, with so much supply, it’s hard to raise salaries.
Many people think that saving a lot of money during one’s law firm years is super easy. And it’s true that a quick glance at the salaries make it seem like there should be plenty of money to fund a nice lifestyle and save. But many twenty-somethings make a lot of financial mistakes. See, e.g. almost everyone. This doesn’t improve, if the first salaries are large. See, e.g., the countless athletes who stumble into riches in their early twenties and blow it. Many people have the benefit of making their financial mistakes when they have the least to lose – i.e., their lowest earning years. So they might blow through their money young, but they can improve when they hit their peak earning years.
Some lawyers start out at law firms and then transition to lower paying jobs in the government or at nonprofits. The salary arc for these lawyers is inverted, meaning lawyers really need to get their lives together while they’re making the highest salaries, which for many is when they’re young.
Depression, anxiety and mental health disproportionately affect lawyers leading to drinking problems and sometimes even suicide. Managing mental health conditions costs money and time. There’s also a lot of stigma in the legal community to admitting these problems (for fear of being disbarred for not being mentally fit).
Golden handcuffs are a real problem in the legal world. It can be very misleading to see some of your coworkers live a much more extravagant lifestyle on the same salary. In every workplace, people come from disparate socioeconomic backgrounds. High debt burdens may be highlighted against others’ affluence making the disparity stark.
Lawyers are not only chasing prestige in their lifestyles, but also in their occupations. I heard this joke: Lawyers feed the need for therapists, because what makes lawyers depressed [i.e., practicing law], is the very thing they are unwilling to give up. (I never said it was a funny joke).
Not all legal jobs pay big bucks, and some pay less than nonlegal jobs. If lawyers were thinking rationally, they would choose the higher paying nonlegal job over the lower paying legal one. That’s often not the case. Despite propaganda about the transferability of a law degree, career success means success in a legal job, no matter how low-paying or miserable.
This is why contract attorney positions can pay minimum wage and still have JD applicants. Even if a barista made more money, we want that law job. This obviously isn’t the best financial decision but the prestige of a lawyer job may make us all fools.
Specific Financial Obstacles for Women
According to a report from the American Association of University Women (AAUW), in a given academic year, roughly 44% of female students take out loans, compared to just 39% of male students.
According to the AAUW report, women represent about 56 percent of college students, but they hold 65 percent of education debt. Women graduate with $2,700 more student loan debt than men, on average.
There are many possible reasons for this discrepancy. Some of these include:
Families tend to save and spend more on sons’ educations, than for their daughters. A T. Rowe Price survey found that in 75% of boy-only households, parents placed saving for kids’ college at a higher priority than saving for retirement. In girl-only homes, that figure was just 60%.
Barely 35% of households with only girls had money saved for college, compared to 50% of only boy households. And parents of all boys were more than twice as likely to be willing to foot the whole bill.
Lower-Paying Undergraduate Work
Though male and female students are equally likely to work during their undergraduate studies, women earn about $1,500 less per year than men during that time.
Lack of Financial Knowledge
Further, women are less likely to understand the financing options available to them. A recent study by Laurel Road found that millennial women were more than three times as likely to say they did not completely understand their financing choices during the application process.
Women thus get less aid from their families and jobs during college and spend more during college. Women thus end up with more debt when they graduate. This gives women a clear disadvantage when both men and women start their careers.
The fact that women graduate with higher students loans is especially troubling because women also earn 27% less than their male counterparts after school. There’s a lot of discussion about what the exact reasons for this pay gap are. It could be sexism, social constructs, or individual choice. For purposes of this article, it’s only important to note that the gap exists. Women tend to make lower salaries than men. This fact makes getting one’s financial life in order more difficult.
According to one study, a decade after earning their M.B.A.’s at the University of Chicago, women were 22% more likely than men to have experienced at least one career interruption. These interruptions could be raising a child or helping to care for aging parents. Even if women don’t take complete breaks, women are more likely to make flexible schedule arrangements in order to care for their families.
With career interruptions, there are more years when women are not taking a salary, or taking a lower salary due to flexible arrangements. Women do not get the same experience or work as their male counterparts. Consequently these women will be passed over for promotions or be more likely to be on the chopping block if layoffs happen. These effects compound the problem of higher debt and lower starting salaries.
The logical consequence of the salary gap and having more debt is that women can’t pay their debt down as quickly.
While men pay off 13% of their debt a year, women are able to chip in just 10 percent. Three years after graduating, women have paid off less than a third of their debt, while men have wiped away around 40 percent of it.
Of course, the more time it takes women to pay off debt, the more interest they have to pay. The more money they pay on debt, the less money they have to invest. Women also are far less confident in investing and tend to invest more conservatively. The reduced funds, delay in investing, and conservative portfolios mean that, women could accumulate as much as $1 million less in funds than comparable men at retirement age.
Similar to women in other professional settings, women in law are underrepresented in leadership and lag behind their male colleagues in salary. As noted above, the career interruptions and flexible work arrangements may impact their advancement. It could also be that women are dropping out of the legal industry before they had the potential to advance.
The long hours, boring work, and lack of advancement are typically used as reasons. Still, there may be additional reasons that might make the environment less hospitable for female lawyers. Consider the following chart:
Source: Consumer Attorneys of California
65% of women lawyers in this study experienced some form of harassment in the office. Being a lawyer is stressful enough without the toxic work environments. But these factors add up to women not being well represented in upper legal management. Thus, women are underrepresented in some of the most lucrative legal positions.
A majority of women lawyers interviewed for a Project for Attorney Retention (PAR) 2012 study, said their “commitment to personal and family responsibilities” was the top barrier to advancing their careers. It appears that women lawyers still suffer from the burden of home responsibilities .
Women lawyers generally don’t have the support at home that male lawyers enjoy. First, female professionals are up to three times more likely to remain unmarried than men. But marriage doesn’t provide female lawyers as much as support as it does for their male counterparts. While nearly half of married male lawyers had wives who didn’t work outside the home, 93 percent of married heterosexual women lawyers had husbands who worked full-time.
Additionally, professional women are more likely to sacrifice their careers to advance their husbands’. A study of Harvard Business School graduates found that female HBS graduates were not as satisfied with their own careers because they had downshifted their ambitions in order to support their husbands.
Some research has shown that men, even those who are highly educated and successful, typically preferred female romantic partners who were less successful and ambitious than they are. Thus, single professional women downplay their ambition around men in hypothetical situations. It’s also then likely that women downplay their ambition in real life.
It seems disrespectful to say that living longer is a problem – but it can be when you need your money to last longer. Compounding all of these problems, women tend to outlive men by five years. Women thus will need more money to retire.
Millennial women were more than three times as likely to say they did not understand their financing choices during the college application process. A study from Laurel Road shows that millennial men were far more likely to take a personal or business finance class while in college (88% of men compared to 54% of women). It should be no surprise then that 64% of millennial women are significantly stressed about their careers, as compared to 47% of men.
Conclusion: 15 Financial Challenges for Women Attorneys
The joke response to why women or lawyers are bad with money is because they are both stereotyped as being bad at math. That’s too simplistic an explanation. The struggles that female attorneys face are systemic (huge student loans, lack of jobs, pay gap), health-related (stress and mental health), logistical (time constraints), and social (relationships, caregiving, ambition).
I’m not in a position to fix the systemic problems. What I can do is offer advice and support on the logistical, emotional, and practical challenges. And a whole lot of cheerleading.
When I look at personal finance advice, I resonate most with stories that resemble my circumstances. The reality of working as a lawyer and being a woman is complicated. There are so many nuances and obstacles that one couldn’t relate to in a general personal finance article. My hope is to bring some of my own experience and the experiences of other female attorneys so that we can conquer personal finance obstacles together.