Are lawyers rich? People will automatically bring up lawyers when describing “successful, wealthy people.” But if you look at Forbes wealthiest people list, there are relatively few, if any, lawyers among them. Instead, investors, business leaders, property owners, and oligarchs fill the ranks. Why is this?
Are Lawyers Rich? Will Being a Lawyer Make You Wealthy?
Most lawyers are not rich. But they do make almost three times as much as the average American. The median annual pay of a lawyer is $127,990. So not exactly rich, but comfortable. Lawyers can have a high net worth and many legal professionals make 6-figures a year.
However, it's important to remember that it can also be extremely expensive to become a lawyer. But if you Google “are lawyers rich?” or “how much does a lawyer really make”, you'll find that more often than not, many are average earners or have a smaller net worth. This profession requires a higher education degree, test fees, and so much more to even get your foot in the door.
In fact, the average debt for law school alone is about $180,000. Lawyers can be high earners, especially the farther they get in their careers. But, the majority of them have about the same net worth as the average American, even well into their 50s.
Is The Average Lawyer a Millionaire?
Surprisingly, the average lawyer isn't a millionaire, at least not before their later years. Does this mean that you can't be wealthy as a lawyer? No. It just means that being a lawyer doesn't automatically equal wealth.
Top 10 Richest Lawyers in the World (in 2022)
There are some lawyers who are extremely wealthy, though. Just how rich are the richest lawyers? Here are the top 10 lawyers by net worth this year.
1. Charlie Munger
Net worth: $2.3 billion This Harvard Law graduate worked as a real estate attorney before becoming an investor. He is a vice chairman of Berkshire Hathaway, the chairman of Daily Journal, and a prolific philanthropist. Not only is he the wealthiest lawyer in the world, but at 98 he is also the oldest person on this list.
2. Peter Angelos
Net worth: $2 billion Peter Angelos is a trial lawyer and baseball executive. He represented over 8,000 workers in the asbestos-poisoning suit of 1992, as well as the state of Maryland in the lawsuit against tobacco companies.
3. Wichai Thongtang
Net worth: $2 billion This Thai corporate lawyer turned hospital tycoon and investor is relatively unknown in the US. He is an important figure in Thailand and used to be known as the lawyer of Prime Ministers, having represented seven of those over the course of his career.
4. Jerry Reinsdorf
Net worth: $1.8 billion Jerry Reinsdorf started his career as a tax attorney with IRS before becoming the owner of Chicago Bulls and Chicago White Sox, iconic basketball and baseball teams. Besides sports, he also dabbled in real estate.
5. Richard Scruggs
Net worth: $1.7 billion Even though Richard “Dickie” Scruggs is now disbarred (for judicial bribery), his net worth is still incredibly high. Notable because his wealth comes only from his career in law, he is sometimes considered the richest lawyer in the world. Just like Peter Angelos, Dickie Scruggs became famous after suing the asbestos industry. He also represented a state (in his case his home state of Mississippi) in the tobacco suits of the 90s.
6. William Lerach
Net worth: $900 million Who knew that disbarred attorneys could still be among the richest? Lerach used to specialize in securities fraud class actions before going to prison for bribing clients to represent them. Nevertheless, he was a fierce defender of human rights, defending workers and victims of the Holocaust in numerous litigations.
7. Bill Neukom
Net worth: $850 million The co-founder and CEO of the World Justice Project is a Stanford Law School graduate and a former chief legal officer of Microsoft. Neukom is another sports fan on our list. He was the managing general partner of the San Francisco Giants when they won their first World Series since 1958.
8. Allan Myers
Net worth: $840 million Allan Myers is an Australian barrister and academic who taught Security and Taxation Law at the University of Melbourne and Osgoode Hall Law School, Toronto. He has also taken an interest in the food industry, becoming a board member of a Polish brewery and the owner of a restaurant in Dunkeld, Victoria.
9. Judy Sheindlin
Net worth: $440 million Finally, someone who needs no introduction! The beloved Judge Judy. She used to be a Manhattan family court judge and now she is a reality TV star. She has been the longest-serving judge... on the screen.
10. Felipe Gozon
Net worth: $355 million Gozon is a Filipino lawyer and CEO of GMA Network, the biggest broadcaster in his country. He graduated from Yale and worked primarily as an aviation lawyer. As you can see, it is possible to be a wealthy lawyer.
Note that the youngest person on this list is 74, while the median age of the ten richest lawyers is 80(!). Most people on this list are also in business and other profitable industries. It's good to know you can reach such heights, but you need to be very, very lucky.
What is the correlation between income and wealth?
Having a high income, like being a lawyer, is great. It means that you can save money faster and possibly retire earlier. However, income and wealth are two entirely different things. When you ask, “Are lawyers rich?”, sure, they might have a high income, but they also may have no money saved or invested!
Here are two truths that lawyers need to understand:
You can have an enormous income and still be poor.
Wealth is a much more potent generator of money than work.
If you’re an average lawyer, you'll make about $148,000 per year. For most people, that’s a fantastic salary. It puts you in the top five percent of earners in the US. It means that you’re able to buy a property in a good area, get full medical coverage and drive an expensive car.
But income is only one side of the equation. The other side is your expenses.
That luxury car could cost you $20,000 a year. You might also have other expenses as well, such as…
food,
a mortgage,
kids,
and vacations.
At the end of the year, you might not have any surplus cash at all, forcing you to continue working.
Wealth is a much more potent generator of money than work.
As a lawyer, you might be able to generate $300,000 per year. Some even earn more than $500,000. Again, these are exceptionally good incomes. However, they pale in comparison to what wealth can achieve.
Let’s say, for instance, that you sell a business for $10,000,000 and have that money sitting in the bank. Then suppose that you use it to buy assets, such as stocks, private equity and property that returns 10 percent per year.
All of a sudden, you have an income of $1,000,000 per year, which is likely many times what you could earn working a regular professional job. What’s more, you didn’t even have to work for it. Instead, it came to you in the form of profits and rent.
Compare that to relying on income alone. If you never invest, you will never generate more money than what you can earn. Instead, you will always have to sell your time for cash. And, ultimately, that could affect anyone, including a legal professional.
So, Can Lawyers Become Wealthy?
There is no reason why lawyers couldn’t build their wealth. However, it all depends fully on their financial literacy. It turns out that lawyers are actually in a very good position to increase their wealth. That’s because they can easily generate surplus income — income over and above their basic requirements.
Let’s go back to our lawyer earning $120,000 per year after tax. They decide to live a simple life.
So, they move to a small apartment
Ride their bicycle to work
They no longer take expensive vacations
And go to a cheap gym instead of an expensive golf club.
Their expenses are now $20,000 a year, implying a savings of $120,000. Now suppose they invest these savings in property and the stock market and earn 10 percent per year.
Assuming they start from zero, their net worth after five years is $610,500. If they continue for 10 years, their net worth is $1,594,000.
Furthermore, by year ten their annual interest payments from their investments are running at $135,000 - higher than their lawyer salary!
So... are lawyers rich? They certainly can be! They just need to get their money working for them and not against them!
The Power Of Compound Interest
What’s interesting about this calculation, is how interest affects returns. Let’s say that you have a regular worker on $50,000 per year. The worker sets aside $30,000 per year — much less than the $100,000 per year our frugal lawyer friend puts away.
That frugal regular worker winds up with $478,000 after ten years under the same arrangement, only slightly less than what the lawyer gets after five years. But why?
It’s all to do with the power of compounding. Even though the regular worker only invested 30% of the amount, interest payments added to their principle over time, helping them build their wealth faster.
Does Earning More Money Help Build Wealth?
Today, there are many resources on the internet geared towards helping lawyers improve their careers and, by extension, their incomes. Practical Law from Thomson Reuters, for instance, provides information that professionals can use to specialize in particular areas.
But does investing in your career make much of a difference?
Well, it all depends on how much wealth you have right now. Why isn't Elon Musk going back to university to finish his PhD? Because doing so probably wouldn’t make much of a difference in his wealth.
However, suppose our $120,000-a-year lawyer doesn’t have any investments and they are fresh out of law school. Now, the value of education goes up.
With the right training, they could potentially double their pay to $240,000 after tax - and that would dramatically change their wealth trajectory. Earning more money can make a difference.
But overall, you will build wealth faster if you invest more than you spend, no matter your income.
So what does all this mean to people on high incomes, such as lawyers?
Essentially, it means that lawyers can join the ranks of the super-wealthy (particularly if they keep saving and investing for decades). But they need to understand how savings and investments work — and many don’t.
When it comes to wealth, it’s not about how much money you make, it’s about how much you keep. If you have no wealth, earning a salary of $120,000 feels like a lot of money.
However, it ceases to matter as much when you earn the same amount or more in interest. In fact, if you knew you could reliably earn $120,000 per year from your investments, you might decide to retire.
Are Lawyers Rich?
So, are lawyers rich? Lawyers can become wealthy, but it all depends on their mindset. If they are willing to put away money for the long-term then, yes, they can build tremendous wealth like anyone else.
However, if they don’t do that, then they are essentially stuck on the same wage treadmill as everyone else. Again, it's not about how much money you make, but how much you can save.
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