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How much do solo lawyers make? More than IRS data suggests, law profs assert

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How much do solo lawyers make? According to a University of Tennessee law professor who examined IRS data, the answer was an average of about $49,000 a year in 2012. But can the IRS data be trusted?

The question is being debated by two blogging law professors who are challenging the figure by University of Tennessee law professor and book author Benjamin Barton. In an article published by Business Insider last year, Barton said the average income for all solos fell 34 percent since 1967, when figures adjusted for inflation showed solos earned a little less than $74,000.

Two law professors who think the $49,000 is too low are Seton Hall University law professor Michael Simkovic, writing at Brian Leiter’s Law School Reports, and Santa Clara University law professor Stephen Diamond, writing at his own blog. They both rely on Census data that suggests the number could be higher.

Simkovic suggests the actual average earnings of solos could be closer to $100,000.

Barton relies on Schedule C data for solo proprietorships in the legal services category for his figures, Simkovic says. That data doesn’t take into account that some solos are moonlighting on the side, earning money in other jobs.

There is another problem with relying on the IRS figures, Simkovic says. “Small business owners dramatically underreport their revenue and overstate their business expenses to reduce their tax liability,” he says.

Simkovic gets his estimate of about $100,000 from the U.S. Census Bureau’s American Community Survey for lawyers who are “self employed, not incorporated.” Simkovic views that category as an imperfect proxy for a small legal practice. When part-time workers in this category are excluded, the earnings average is $160,000 to $165,000.

Barton answers the criticism in the comments at Diamond’s blog. He believes the Census data may reflect gross revenue, while the IRS data reflects income after deductions. “Income is the relevant question, not gross receipts,” he says.

Barton also says the ABA’s count of solo practitioners is relatively close to the IRS count. And he says IRS data on shrinking income matches the After the JD survey and other bar surveys.

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