Why do the same firms in Calgary pay so less?

[goonersfc]

This is in continuation of my earlier post. I summered twice with a BigLaw firm at Bay Street, and now asked them to move me to their Calgary office. And I am astonished by the significant cut back in the salary that I would have to take. They tell me I'd be doing a similar amount and kind of work, yet my articling salary would be cut by almost 34K, and first year associate salary by 22k. I don't understand this. I know TO housing has gone berserk, especially during the Pandemic, but surely, that can't be the only factor, given there isn't much difference in Income tax, and cost of living (minus housing). I get CA/NY because it's a whole different country. But such a difference within a country doesn't make sense to me.   

[BlockedQuebecois]

Calgary’s cost of living is significantly lower (especially when you factor in the lack of sales tax), and the Calgary market bears lower billable hour rates than Toronto’s does. Plus lawyers and law students are willing to accept those lower rates.  

I’m not really sure why you’re surprised by this—the pay difference between the cities is public information and pretty widely known.

Also, I would caution you that your post history makes you quite identifiable to your employer. I doubt many students have spoken to their firm about a Toronto to Calgary move during articling, let alone gotten to the stage of discussing salary changes. 

Edited August 8, 2021 by BlockedQuebecois
Softening the language a bit.

[Pantalaimon]

I heard a rumour, I think on discord, that it might offset a bit because western lawyers get their bump to second year associate the January after call, while Toronto waits the ~16 months. But if I'm remembering correctly the source of that was @BlockedQuebecois, and he didn't mention that above. In any case I can confirm the half that we get bumped to second year almost immediately.

But yeah, supply & demand are not in our/your favour. Especially because a lot of that cost of living doesn't evaporate - it goes into Toronto real estate that's appreciating at hilarious rates for our friends out east. If my life allowed for it I'd be looking for a transfer in the other direction.

 

[delije89]

Always an interesting issue. One has to wonder whether the pandemic will have any sort of impact on these discrepancies between Canadian cities. Now that everything is being done remotely, geographical location does not matter as much as it did once upon a time. There is nothing stopping a Toronto client from seeking legal advice from an Ottawa lawyer at a significantly discounted rate. 

[Rashabon]

Maybe at the small firm level, but pay wasn't lockstep or linked at smaller firms. There won't be a change at the big firms really. The location of big law in downtown Toronto in the last decade hasn't been all that relevant to a lot of big law clients already. Geographical location never really mattered in that regard. What's stopping Toronto big law clients from seeking legal advice from Ottawa lawyers is that most big firms don't have substantive offices in Ottawa and the legal advice they want or need is practiced out of Toronto.

It's also a matter of the client base. Toronto is a more mature and sophisticated legal market that will pay the rates and subsidize the salaries for Toronto. Vancouver, Calgary and Montreal are not at the same level, generally speaking, which is part of what drives the discrepancy.

Edited August 10, 2021 by Rashabon

[123]

2 hours ago, delije89 said:

Now that everything is being done remotely, geographical location does not matter as much as it did once upon a time. There is nothing stopping a Toronto client from seeking legal advice from an Ottawa lawyer at a significantly discounted rate

 

1 hour ago, Rashabon said:

Maybe at the small firm level

Maybe. But as a SP in Toronto, I find I have more clients from all over Ontario now. So it might work the other way too. Remote work also increases demand for and access to the Toronto legal market. 

[Eatable Bran]

The real question is why salaries are the same in Vancouver and Calgary, when the cost of living is so much higher in Vancouver. As someone in Calgary, I actually feel the salary is fair considering the much much lower cost of living than Toronto. And also, like posters above have said, lawyers here seem to bill less hours.

[tails]

On 8/8/2021 at 10:46 PM, Pantalaimon said:

I heard a rumour, I think on discord, that it might offset a bit because western lawyers get their bump to second year associate the January after call, while Toronto waits the ~16 months. But if I'm remembering correctly the source of that was @BlockedQuebecois, and he didn't mention that above. In any case I can confirm the half that we get bumped to second year almost immediately.

But yeah, supply & demand are not in our/your favour. Especially because a lot of that cost of living doesn't evaporate - it goes into Toronto real estate that's appreciating at hilarious rates for our friends out east. If my life allowed for it I'd be looking for a transfer in the other direction.

 

Calgary associate! This is true. We make a first year salary for ~6 months  and then get a significant bump in January when we become second years. Functionally you almost double your salary from articling in 6 months. 

[JohnsonWest]

On 8/10/2021 at 1:21 PM, Eatable Bran said:

The real question is why salaries are the same in Vancouver and Calgary, when the cost of living is so much higher in Vancouver. As someone in Calgary, I actually feel the salary is fair considering the much much lower cost of living than Toronto. And also, like posters above have said, lawyers here seem to bill less hours.

salaries are higher in vancouver than calgary i thought

[Eatable Bran]

14 hours ago, JohnsonWest said:

salaries are higher in vancouver than calgary i thought

Not for summer students/articling students at big firms, not sure about the rest of it though!

[t3ctonics]

On 8/10/2021 at 2:21 PM, Eatable Bran said:

The real question is why salaries are the same in Vancouver and Calgary, when the cost of living is so much higher in Vancouver. As someone in Calgary, I actually feel the salary is fair considering the much much lower cost of living than Toronto. And also, like posters above have said, lawyers here seem to bill less hours.

When I've looked into it in the past (most recently 4 years ago), salaries at large firms in Vancouver were less than salaries at regional firms here in Saskatchewan. It has nothing to do with the cost of living, but supply and demand. So many people want to work in Vancouver that employers don't need to pay as much to attract people. I guess enough people have intergenerational wealth - or are willing to live in a shoebox - that they can survive with such a high cost of living.

Looking at the most recent ZSA Salary Guide, Vancouver salaries for comparably sized firms are just slightly higher (5-10k more) now than what they were in Saskatchewan when I left private practice 4 years ago. 

[tails]

Vancouver salaries aren't high enough to offset the cost of living, for sure. Though, I think it makes a difference that is generally is just a nice place to be. Calgary you are at least an hour from the mountains, you don’t have the ocean and you miss out on the milder winters. Doesn’t take a lot to see Van to younger people. 

Edited August 27, 2021 by tails

[JohnsonWest]

On 8/26/2021 at 9:07 AM, Eatable Bran said:

Not for summer students/articling students at big firms, not sure about the rest of it though!

according to NALP vancouver salaries are higher for associates. no idea about summers and articling but no one cares about that anyway after awhile. 

 

 

 

[spacecadet]

On 8/9/2021 at 10:16 AM, Pantalaimon said:

But yeah, supply & demand are not in our/your favour. Especially because a lot of that cost of living doesn't evaporate - it goes into Toronto real estate that's appreciating at hilarious rates for our friends out east. If my life allowed for it I'd be looking for a transfer in the other direction.

 

Could you please elaborate? I didn't quite understand how the cost of living doesn't evaporate. Also, why would you be looking to move back East? I'm an ITL trying to figure out if I could save more by working at Big Law in Calgary or Edmonton versus Toronto. I'd appreciate your input! I should probably add that my interest is in technology law. Toronto seemed to be an obvious choice, but the tech sector appears to be picking up in Calgary.

Edited September 7, 2021 by spacecadet

[Pantalaimon]

A substantial part of the difference in cost of living between Calgary and Toronto is housing, and most people at some point will own real estate. My point is that servicing a mortgage contributes to your net worth, so comparing salaries net of cost of living doesn't paint the full picture.

Consider two simplified examples with made up numbers:

Connie Cowboy makes $100k net in Calgary and spends $20k on their mortgage

Sophie 6ix makes $140k net in Toronto and spends $60k on their mortgage

Both have 80k left to spend on good times after accounting for their housing. Let's say that 60% of their mortgage payments go to principal, and 40% to interest. The Calgary lawyer is gaining $12k in equity a year while the Toronto lawyer is gaining $36k a year - or 24k more.

So in my view, although Toronto and Calgary may make equivalent salaries net of cost of living, a Toronto lawyer will make significantly more in terms of growing one's net worth. And we're not even getting into the difference in real estate appreciation between the two cities (spoiler alert: Calgary real estate is not a particularly good investment at the moment).

[spacecadet]

On 9/8/2021 at 12:12 AM, Pantalaimon said:

A substantial part of the difference in cost of living between Calgary and Toronto is housing, and most people at some point will own real estate. My point is that servicing a mortgage contributes to your net worth, so comparing salaries net of cost of living doesn't paint the full picture.

Consider two simplified examples with made up numbers:

Connie Cowboy makes $100k net in Calgary and spends $20k on their mortgage

Sophie 6ix makes $140k net in Toronto and spends $60k on their mortgage

Both have 80k left to spend on good times after accounting for their housing. Let's say that 60% of their mortgage payments go to principal, and 40% to interest. The Calgary lawyer is gaining $12k in equity a year while the Toronto lawyer is gaining $36k a year - or 24k more.

So in my view, although Toronto and Calgary may make equivalent salaries net of cost of living, a Toronto lawyer will make significantly more in terms of growing one's net worth. And we're not even getting into the difference in real estate appreciation between the two cities (spoiler alert: Calgary real estate is not a particularly good investment at the moment).

Sorry for the late reply, and thanks for the explanation. I guess that point is moot for me since I doubt I'll have enough for a downpayment anytime soon.