The Wall Street Journal’s Amir Efrati has an interesting article yesterday on the job prospects for recent law grads as a whole Hard Case: Job Market Wanes for U.S. Lawyers
For graduates of elite law schools, prospects have never been better. Big law firms this year boosted their starting salaries to as high as $160,000. But the majority of law-school graduates are suffering from a supply-and-demand imbalance that’s suppressing pay and job growth. The result: Graduates who don’t score at the top of their class are struggling to find well-paying jobs to make payments on law-school debts that can exceed $100,000. Some are taking temporary contract work, reviewing documents for as little as $20 an hour, without benefits. And many are blaming their law schools for failing to warn them about the dark side of the job market.
I’ve blogged about this issue before in Avoiding the Debt Trap, Starting Salaries for Law Grads Not What Youâ€™ve Been Led to Believe. I think the obvious question from most non-lawyers would be this – so you’re not making $160,000 a year in your first year out of school? and this is shocking to you? this is somehow unfair? Only in bizarro-world law-school-land does not making six figures your first year at a new job qualify as newsworthy. So why does this make the front page of the Wall Street Journal?
Unrealistic Salary Expectations, Falling into Debt Trap
The U.S. World and News Reports (cue Darth Vader music) publishes an annual law school rankings issue with an unfortunately disproportionate influence on the perception of the legal market. One of the metrics they publish for each of the schools is the “average starting salary and bonus” for each of the schools it purports to evaluate. You have to subscribe to the service in order to view this precious little nugget of information, but it generally breaks down into something like “Private-Sector $135,000, Public-Sector, $50,000.” (I’m not about to fund USWNR’s by paying the subscription fee to find out what the number actually is for places like UHLC, but the numbers are suspiciously uniform across a range of institutions from what I’ve seen in the past) This of course provokes endless debate about the validity or application of these salary numbers. No matter how many qualifiers they hear, no matter how many guys they pass on the street corner with signs saying ‘will document review for food,’ that $135,000 number is burned into law students minds as a light at the end of the tunnel for 3 years of misery and sacrifice.
In the meantime, law school has become increasingly expensive. According to the ABA’s numbers on law school tuition, tuition increases at public law schools are increasing by leaps and bounds. In the last ten years average tuition and fees for a state school has more than doubled from $6,521 to $14,245. The annual increases don’t appear to be leveling off. Of course the real cost, in economic terms, is more than that. Factoring in opportunity costs means that for the three years law students are in school they are foregoing gainful employment in other areas. Since law students tend to be smart, capable, high-achieving folks in general, that opportunity cost is substantial. Even if the salary foregone is modest, say $35,000 a year, it increases the overall price-tag of law school substantially. Over three years that’s $105,000 (less taxes, etc.) that you would have made but didn’t because you were in law school. According to the ABA (.pdf), the average level of indebtedness for a public school law grad is $54,509, and for private school law grad is $83,181. Efrati’s article profiles several recent law grads with an excess of $100,000 in student loan debt, one clipping $200,000. A quick loan payment calculation would estimate repaying $100,000 in student loans over 30 years would at 6.8% interest would mean a monthly payment of $651.93 and accrued interest of over $134,000.
There are easier ways to make a living…
This notion that law school is a prestigious and lucrative default option for bright young people with no idea what they want to do with their lives is a dangerous misconception – dangerous to the law students making career decisions and taking out hefty loans, dangerous to the employers that hire them, and dangerous to the clients that will come to rely on their representation and advice. The bizarre plight of law students stems from their willing suspension of disbelief that the laws of economics somehow don’t apply to the practice of law, the legal market supporting premium salaries for endless stream of grads into a career that most won’t even like much less become good at.
Competitive Advantage, Performance v. Elite-ness
The only contention I have with the article is that it seems to indicate that the difference in employment prospects is based solely on the prestige of the law school rather than a students performance in that law school. This is only part of the ‘two-americas’ story. Employers look not only at institutions but at the comparative performance of those students in those institutions. I would much rather be in the top 5% at a regional school than anywhere below 50% at an elite school, any elite school. The reality of forced curves makes even non-elite law schools are inherently competitive places, full of talented people who have done well where ever they come from. Emerging at the top of this heap indicates to hiring firms not only that you’re smart but that you’re able and willing to compete.
The Wall Street Journal article ends with this quote, which has been making the rounds at UHLC -
Some new lawyers try to hang their own shingle. Matthew Fox Curl graduated in 2004 from second-tier University of Houston in the bottom quarter of his class. After months of job hunting, he took his first job working for a sole practitioner focused on personal injury in the Houston area and made $32,000 in his first year. He quickly found that tort-reform legislation has been “brutal” to Texas plaintiffs’ lawyers and last year left the firm to open up his own criminal-defense private practice.
He’s making less money than at his last job and has thought about moving back to his parents’ house. “I didn’t think three years out I’d be uninsured, thinking it’s a great day when a crackhead brings me $500.”
The problem with law school is that it’s a lottery. I also attend the University of Houston Law School and happen know Fox Curl (aka ‘the crackhead’s lawyer’) as well. We both know plenty of folks from our alma mater who make big money in the Biglaw meatgrinder, for better or for worse. It’s not so much a matter of where you go, but how well you do once you get there.
Salary Debate Masking Bigger Problems
There is a lot of legal work out there and it’s the people who can’t afford it who need it the most. No lawyer with $100,000 plus in student loans can afford to serve those people. As the costs of legal education rise the gap is only getting wider. Our system of legal education is exacerbating the problem by perpetuating the salary myth (explicitly or implicitly) and by failing to equip its students to practice in any other area than a big firm environment. While we may have “too many lawyers” in the minds of some, we don’t have nearly enough to provide quality legal representation and advice to anyone but the wealthy. That’s a far bigger problem in my mind than law students making less than they thought they would.