How Much Does Your Immigration Lawyer Make? (Part 2)

LAW FIRM

Taking our example from Part 1 one step further, we can show that the more efficient way for an immigration lawyer to generate profits through leverage. Let’s construct a hypothetical law firm. Assume an enterprising immigration lawyer starts his own immigration law firm and he is the sole equity partner in the firm. He hires two non-equity partners at a salary of $90,000/yr. (this is what a solo lawyer would have made in our example from Part 1); four associates at a salary of $55,000/yr. (reasonable amount for a small firm); eight paralegals at a salary of $25,000/yr. (minimum wage); and two secretaries at a salary of $25,000/yr. (also minimum wage). The total salary expense is $650,000/yr. Assume that the non-salary overhead (office rent, IT, supplies, malpractice insurance, etc.) is another $650,000/yr. The total expense is $1,300,000/yr. Now there are 15 fee earners (one equity partner, two non-equity partners, four associates, and eight paralegals supervised by the lawyers). The caseload and fees are still the same as in our above example: each fee earner handles 10 new cases per month for $1,000 each. Now, over the course of a year, the total revenue would be 15 fee earners x 10 cases/mo. x $1,000/case x 12 mo./yr. = $1,800,000/yr. Under these assumptions, the gross profits for the equity partner would be $1,800,000-$1,300,000 = $500,000. That is excellent compensation.

The amazing thing about leverage is that it magnifies any increase in revenue. If this hypothetical immigration law firm increases its fee by just 10% (from $1,000 per case to $1,100 per case), the equity partner’s gross profit increases by not 10%, but 36%. And if the firm increase its fee by 20% (from $1,000 per case to $1,200 per case), then the equity partner’s gross profit increases by not 20%, but 72%. The equity partner’s profit would jump from $500,000/yr. to $860,000/yr. Slight adjustments to caseload and fees can easily bump that figure up to $1 million/yr.

From a business perspective, operating a multi-staff law firm makes financial sense. Even a little bit of leverage can magnify profits considerably, and for an enterprising immigration lawyer it could be the difference between making $90,000 and $1,000,000 per year. The hard part, we suspect, is not setting up the law firm or handling the administrative work, but being able to get clients and generate enough revenue to make the pyramid structure work.

How Much Does Your Immigration Lawyer Make? (Part 1)

We have two friends who are would-be immigrants from India, and they are currently navigating the labyrinthine U.S. immigration system with the help of immigration lawyers. Both of them paid their immigration lawyers a flat-fee of around $1,000 each to prepare and file their respective USCIS petitions. While neither person complained about the amount of fees he was paying his lawyer, they wanted to know much immigration lawyers make in a year. We couldn’t find any immigration lawyers who were willing to share their income tax returns with us, but we will attempt to come up with a rough estimate nonetheless.

SOLO LAWYER

To arrive at our estimate of what a solo immigration lawyer makes, we assume that a solo lawyer works on 10 new cases per month for $1,000 each. Over the course of a year, the total revenue would be 10 cases/mo. x $1,000/case x 12 mo./yr. = $120,000/yr. We further assume that office overhead (office rent, supplies, malpractice insurance, maybe a shared secretary, etc.) is 25% of revenue, or $30,000/yr. Under these assumptions, the gross profits would be $120,000-$30,000 = $90,000. That’s a pittance.

Let’s play around with these numbers and see what we can come up with. If the solo immigration lawyer increases either his fee or his number of cases by 10%, his gross profit increases not by 10%, but by 13.3%. In other words, when overhead remains constant, a 10% increase in revenue translates to a 13.3% increase in profits. Given this, it’s no wonder that immigration lawyers seem to be constantly increasing their fees. But the more interesting scenario is: what happens to profits when an immigration law lawyer builds a multi-lawyer firm and becomes the sole equity partner in his firm? Part 2, next.

LCA Scavenger Hunt

We recently did a series of posts on U.S. employers’ hiring of foreign workers under the H-1B visa program. We have previously discussed the use of H-1B visas in the tech industry, the legal industry, the banking industry and even the fashion modeling industry. You can find the links to these posts in the Ariticles Index. American workers, understandably, may be afraid of losing their jobs to foreigners. If you are an American worker, you may be asking, “How do I find out about my own employer’s hiring of H-1B foreign workers: how many, when hired, what positions, what wages, and so on?” The answer is easy: Just ask your employer.

U.S. Department of Labor regulations require that any U.S. employer who seeks to sponsor an H-1B foreign worker must provide a notice of the filing of the Labor Condition Application (LCA) to all existing workers at the workplace. You can read the rules at 20 CFR 655.734 or on the DOL website. The notice may be given to the workers’ union rep if there is one. Where there is no union, the employer must provide notice of the LCAs to workers by hardcopy or electronically.

If done by hardcopy, the employer must post the notice in “at least two conspicuous locations” at the workplace where workers can “easily see and read” the notice.

If done electronically, the employer may post the notice “by any means it ordinarily uses to communicate with its workers about job vacancies or promotion opportunities, including through its ‘home page’ or ‘electronic bulletin board’ to employees who have, as a practical matter, direct access to these resources; or through e-mail or an actively circulated electronic message such as the employer's newsletter.”

Are all U.S. employers following these rules? We seriously doubt it. We informally surveyed a number of workers at a few companies known to have hired H-1B foreign workers. We asked the workers if they’ve ever seen the LCA notices. The response we received was a near-universal “Huh?” None of those surveyed has ever seen any hardcopy LCA notices in any conspicuous place. Nor has anyone ever seen any electronic LCA notices through emails or postings on the company website or intranet.

What about your company? If you know your company has been hiring H-1B foreign workers at your workplace, grab a few of your co-workers and play a little game we call the “LCA Scavenger Hunt.” Have a scavenger hunt to find the hardcopy LCAs at your workplace. If your employer isn’t breaking the law, you should be able to find the LCAs posted in at least two “conspicuous” places where you can easily see and read them. Perhaps the reception area, or the staff lounge, or the cafeteria, or your boss’s behind. Or you might be able to find e-copies on your company’s intranet. If there are no LCAs to be found, then ask your HR manager for an explanation, and if the answer isn’t satisfactory, you could file a complaint with the DOL who may then audit your company for possible LCA notice violations. That's one way to make your HR manager quake in his or her boots.

One U.S. company who has set itself apart from the crowd by doing things correctly and openly is Ernst & Young. E&Y provides electronic notice of its LCA filings on its public website’s careers section in accordance with the DOL regulations. For readers who have never seen LCAs, check out E&Y’s careers webpage to see what LCAs look like and the information they contain.

We can only wish that all companies are as diligent as E&Y in complying with the law. We challenge all U.S. companies to follow E&Y’s lead and give full disclosure of LCA filings to all workers. For doing things right, we tip our hats to E&Y, our honorary U.S. employer of the day.

U.S. Tech Firms’ Use of Foreign Workers – Microsoft, Google, Yahoo (Part 3 of 3)

In our previous post (Part 1, click here), we discussed the ongoing labor shortage in the U.S. high tech sector and introduced this study on the use of foreign workers by Microsoft, Google and Yahoo in the U.S. under the H-1B visa program. Here is Part 3 of 3.

Average Wages of LCAs Filed:

The chart above shows the average wages of the LCAs filed by Microsoft, Google and Yahoo at their respective headquarters in 2007 to sponsor foreign workers under the H-1B program. Google clearly has the highest average wages. Google’s median wage of $98,000 for its H-1B foreign workers is 17% higher than Microsoft’s median wage of $84,000, and a whopping 25% higher than Yahoo’s median wage of $78,300. In fact, on every measure of average wage – mean, median or mode – Google blows away the competition. The men and women at the Googleplex must be grinning from ear to ear. Highest median wages plus free food? Can’t beat that. If Microsoft and Yahoo want to remain competitive in the tech sector, they should take a look at Google’s wages and match or exceed those wages. Maybe Microsoft can pay a lower wage on account of the fact that Washington state has no state income taxes, but we’ll ignore that to keep things simple. All U.S. technology companies must reveal and attest to their foreign worker wages in the LCAs. It’s not hard to see what other U.S. tech companies are paying. Assuming similar tech positions are being filled, there should not be a gaping 25% difference between Google and Yahoo.

Let’s check one point that Bill Gates made in his testimony before the House Committee on Science and Technology on March 12, 2008. He said: “In terms of the H1B visa issue, the key focus that Microsoft has here is on highly skilled people. And we're talking about jobs that, you know, starting salary is if you include benefits over $100,000 a year.” Does the H-1B data back up this statement? Sort of. Our data shows that the Microsoft median salary for the 2007 LCAs is $84,000. If you’re talking about median salaries and you add the monetary value of health and other benefits, the compensation number would most likely be over $100,000 a year as Gates indicated.

Wage Range of LCAs Filed:

In terms of the entire range of wages, Microsoft paid wages between $40,000-262,500; Google paid wages between $39,100-200,000; and Yahoo paid wages between $44,000-153,000 or 261,000. The chart below shows the top 5 wages of the LCAs filed by each of Microsoft, Google and Yahoo:

At the top end of the wage chart, we see more diverse types of occupations, not just the typical software engineering positions. We have no complaint about these top wages, but we do question the need for foreigners to fill some of these top positions. Many of these positions do not appear to be directly related to computer or software engineering. For example, we see positions in Legal, Marketing, Human Resources and Public Health. Is there really a shortage of U.S. workers for these kinds of non-computer related positions? Maybe Legal, Marketing, HR and other Admin positions in the tech sector require such specialized tech knowledge that there is a shortage of qualified U.S. workers to fill these positions too. Whatever the case is with these adminitrative positions, we make this point now as we have done so many times before: American companies should hire Americans first if there are qualified Americans workers for the particular position.

Nonetheless, we are generally satisfied with the overall LCA picture presented by these three companies. We estimate that over 90% of the foreign-worker jobs being sponsored by Microsoft, Google and Yahoo are related to computer or software engineering, areas where there is a real shortage of U.S. tech workers. Our tech analysts reviewing the LCA wage data also concludes that the wages paid by Microsoft, Google and Yahoo to foreign workers are appropriate for the positions being filled and do not undercut American wages.

Looking at the big picture, how much of the U.S. tech industry wages is going to foreigners? The aggregate value of wages represented by these 5,583 LCAs in 2007 is $496,103,674. That is a very big number for three tech companies in one fiscal year. (Compare this to our study of the U.S. legal industry, where the value of the H-1B wages is $481,777,000, but that's forty law firms over seven fiscal years. The tech industry's use of H-1B labor simply overwhelms all other occupational categories.) It is a huge transfer of tech wealth to foreign workers, but with a chronic lack of qualified U.S. tech workers, it is a necessary cost for American technology companies to conduct business and maintain their global competitive edge. There's nothing to do about it.

U.S. Tech Firms’ Use of Foreign Workers – Microsoft, Google, Yahoo (Part 2 of 3)

In our previous post (Part 1, click here), we discussed the ongoing labor shortage in the U.S. high tech sector and introduced this study on the use of foreign workers by Microsoft, Google and Yahoo in the U.S. under the H-1B visa program. Here is Part 2 of 3.

Number of LCAs Filed:

The chart above shows the number of LCAs filed by Microsoft, Google and Yahoo at their respective headquarters in 2007 to sponsor foreign workers under the H-1B program. There were a total of 5,583 LCAs filed by the three companies in 2007 alone. That is quite a high number for just three companies, considering that only 65,000 H-1B visas are available annually worldwide to all U.S. employers in all industries. Microsoft, not surprisingly, is the biggest user of foreign labor among the three companies. With 4,405 LCAs filed, Microsoft accounts for almost 79% of the 5,583 LCAs, almost seven times more than Google and over eight times more than Yahoo. (Note: In our survey, we excluded 6 out of 4,413 LCAs from Microsoft that either had non-annual wages or potentially erroneous wage entries, and so 4,405 LCAs from Microsoft were counted).

Microsoft Chairman Bill Gates has made an impassioned plea to Congress to significantly increase the number of H-1Bs available (see excerpts in our previous post). Currently, Microsoft has a seven-to-eight fold lead over Google and Yahoo in the number of LCAs. Should Microsoft be unable to continue to maintain its dominant position in the sponsorship of H-1B foreign workers (e.g., losing allotment of H-1B visas to Google, Yahoo and other tech companies), Microsoft may have a difficult road ahead in regaining its technological supremacy it once held over the industry.

Among the three companies, software engineers account for the overwhelming majority of the foreign workers sponsored, while a small percentage of foreign workers fill administrative positions. In the case of the high tech sector, we believe Microsoft and other tech companies are fully justified in seeking to hire more foreign workers, because it is beyond dispute that there is a real shortage of U.S. tech workers. How many H-1Bs are needed? The number is difficult to pin down. We think the annual H-1B visa quota should be increased from 65,000 to roughly 200,000, with a large percentage of available visas specifically allocated to high tech workers and computer-related occupations.