Friday, January 6, 2017

Check out "The BigLaw Investor" Site For Great Personal Finance Insights

As any practicing attorney knows, being "too busy" is a double-sided coin.  On one side, it means that things are going well, but on the other side it means that you don't have time to do the fun, extra things that you like to do - like write posts for a blog about personal finance for lawyers!

Fortunately, although I have been far too busy over the last several months to advance the ball, another blog has stepped up and it is really delivering the goods.  I am talking about The BigLaw Investor !   I recently found out about them and I have read a bunch of the posts - and I really recommend that you check them out.  The financial insights for young, practicing attorneys are very good.  I have also added them to the blogroll at the right.

All the best to you on your financial journey and I hope to be able to get back to posting later this year.

Friday, May 27, 2016

2015 Chicago-Area Law School Placement Data

Hi All!  I haven't posted for a while  - mostly because it seemed like other voices were pretty much saying everything that needed to be said!  (In fact, it has been so long that Google has completely changed the posting user interface, so this is kind of a learning experience!)

However, the 2015 law school employment data is coming out and I have started to get inquiries from young people thinking about going to law school as to whether I think it is a good idea to do so - and asking whether one law school is a better bet than another.  In that regard, one of the most important items to consider when thinking about law school is whether you will be able to get a job as a lawyer - and more specifically a full-time, non-short-term, JD-required job not created by the law school itself.

Overall, I note that legal employment remains bad and is actually getting worse in real number terms - but slightly better in percentage terms because fewer people are attending law school.  As mentioned in this article, the actual number of law school graduates in the class of 2015 declined by 8 percent - while the number of jobs only declined by about 7 percent, which means that on a percentage basis a slightly higher percentage of graduates found jobs, but in real numbers there were far fewer jobs overall.

The ABA's 2015 actual data is here - the table is a mess, but you are going to want to divide column B (EmployedBarPassageRequiredFTLT) by column AK (TotalGraduatesNumber) to get the percentage you are looking for.  Because I usually get questions from people deciding between Chicago-area-ish law schools, I wanted to focus your attention on the odds of actually getting a job as a lawyer after attending those schools.  Here are the stats:

CHICAGO, UNIVERSITY OF                                90.82%
MICHIGAN, UNIVERSITY OF                              85.03%
NORTHWESTERN UNIVERSITY                         81.25%
NOTRE DAME, UNIVERSITY OF                        73.74%
ILLINOIS, UNIVERSITY OF                                 65.19%
WISCONSIN, UNIVERSITY OF                            64.84%
MARQUETTE UNIVERSITY                                 62.45%
WAYNE STATE UNIVERSITY                              60.00%
DEPAUL UNIVERSITY                                          54.86%
LOYOLA UNIVERSITY-CHICAGO                     50.96%
JOHN MARSHALL LAW SCHOOL                      50.92%
MICHIGAN STATE UNIVERSITY                        49.48%
VALPARAISO UNIVERSITY                                41.98%

Some comments:
1) My personal metric is that it does not make sense to attend a law school which has less than an 80% chance to land you a job as a lawyer. How big of a risk do you want to take with your future? Even if a law school is going to offer you a complete scholarship, it does no good to waste 3 years of your life obtaining a degree for which you can not find a job.  In this regard, I note that only a few law schools in the Chicago area make the grade - U of C, U of M, and Northwestern.

2)  One surprise was the performance of John Marshall relative to DePaul, Kent, and Loyola.  All of DePaul, Kent, and Loyola have a better reputation, but it is not translating into significantly increased job prospects. Additionally, DePaul has only a very slight placement advantage over the other two schools.

3) It is sad to see how far the U of Illinois has fallen.  If now offers pretty much the same placement as U of Indiana-Bloomington, which has a much lesser reputation.

4) Marquette has held pretty steady - and is at a significant advantage over Loyola and DePaul.  These schools seem to be admitting candidates at about the same quality, so consequently, if you are looking for a catholic- based law school among these three then look to Marquette.  Of course, if your scores are high enough and you can pay the extra $10K/year, then go to Notre Dame.

5) Another surprise - Wayne State and Northern Illinois have significantly better placement results than DePaul, Kent, and Loyola.  You would not expect that based on reputation.

6) Valpo - I have talked with at least two people in the past year that were being offered a full scholarship by Valpo, but my feel is that their placement statistics are so low it is not worth the three years of your working life.  Just to emphasize this again - on average, you will have to stop working by about age 63.  Most young people live in a blissful world where they will always be offered a job regardless of age and they will always be healthy enough to work - the statistics seem to indicate that they are mistaken.  If you blow 7.5% (3 years of 40) of your working life getting a degree you can't use, then that's going to be an issue.  I will probably talk about this more in a future post because young people don't seem to be easily able to grasp this reality.

What do you think?  Were you surprised by any statistics in the list?  Any recommendations for potential law students?

Sunday, February 12, 2012

The University Of Chicago and Yale Law Schools Do What All Law Schools Should Be Doing

I haven't been able to post for a while and I wanted my first post back to be up-beat and focus on something positive.  In that regard, I want to give some props to the University of Chicago Law School and here is why:

First, the U of C actually tracks the employment information for each and every graduate at 9 months after graduation - and even makes the information publicly available.  Check out the data provided at the link.  Every single one of the graduates of each of the years of 2008, 2009, and 2009 has been individually tracked and is represented in the chart.  For each year, the "employment status unknown" entry is zero.  This means that the U of C's statistics are really representative - unlike most other schools that only report hiring statistics for the 30% or so of the class that actually reports them.

Additionally, the breakdown shows whether the job required bar passage - another frequently cited area where law schools play games.

They even provide real salary information that can be depended on to be accurate because of the complete student response.  That is in great opposition to what seems to be the practice at many law schools where the career services office only wants to hear from the employed, high-salary law students because they can then pass on that information as representative of the graduates as a whole.  Additionally, although the U of C declines to provide certain numbers when less than 5 graduates fall in a certain category, that seems understandable to preserve confidentiality - I would maybe prefer the cut off to be 3 graduates, but 5 seems close enough.

However, the biggest take-away that I have is that the U of C has been quietly doing for several years what many law schools claim is impossible - to track the employment information of all of their graduates. Props to the U of C.  (Props also to Yale, who is also publishing its stats and following up with almost every student.)

The second thing that I take away from the U of C statistics is that the hiring situation at U of C is actually pretty good - although it has taken a hit lately.  To take a look at this, check out their chart of "Full-time Salaries of Employed Graduates" where you can see that the mean of all employed graduates in 2010 was about $123K.  That's really not bad at all.  However, also note the steep decline from 2008 and 2009's means of $142K and $145K - that's a decrease of about $20K (or about 14%).  This decrease would seem to indicate that even graduates at a school as illustrious as U of C are coming under pressure in the current rotten job market, but they are still overwhelmingly able to obtain jobs - albeit significantly lower paying jobs than just  last year.  Also look at the huge decrease in the 25th percentile numbers - from $160K in 2008 and 2009 to a mere $63K in 2010.  Ouch.  That's a $100K decrease in just one year.

Third, just to be clear that I have not flipped my wig and become a rabid shill of going to law school, one thing to mention here is the stark disparity between the U of C's statistics and the statistics of lower ranked schools. That is, although the hiring picture at U of C looks rosy, it looks pretty terrible before you even get out of the top 50 law schools (the top quarter).  For example, the University of Colorado Law School is ranked 47, but as mentioned in this article, only 93 of 183 (50%) graduates had a full time long-term position requiring a law degree nine months after graduation.  Additionally, they "were able to identify" only 36 (20%) of those graduates who had a salary of $56,000 or more.  

Considering that $56K is not a sufficient salary to justify the financial investment of law school - but even then only one in five graduates was able to make $56K.  A number that I would really like to see would be a calculation of a starting salary that would be sufficient to justify the investment in law school - and then see how many students made this "break-even" number.  In one example, considering a Solid Performer would have to start out making $138K/year in order for law school to be a financial success, I would estimate that only about 5% of the University of Colorado grads make the grade. 

So where does that leave us?  Well, if you can graduate from the University of Chicago Law School, then your situation is actually looking pretty good.  A median of $160K in private practice and mean of $122K for all law students should represent positive outcomes for the majority of law students.  However, the fall-off is very quick.  By the time you get to the 50th ranked law school, the odds have decreased drastically. 

Where to draw the line?  Well, as a ball park determination, if a law school is tracking every student and providing the information like U of C and the mean of all of its graduates exceeds $100K, then it would seem like a student would have a pretty decent chance of landing a job what would let them pay off their loans.  (The selection of $100K here is a little arbitrary, but we go into more detail on other pages on this site).   What law school ranking does this represent?  I'm not quite sure, but the fall-off is really quick.  I am familiar with law school numbers for law schools in the 20-30 range and they are not making this number.  My gut feel is that the cutoff is really inside the top 10 - and maybe not even all of the top 10.

So what's the take-away?  First, props to the U of C and Yale and any other law school that rejects the "We can't do it" excuse and rises the highest of ethical standards by following up with all of its graduates and making the information freely available.  Second, if you can get into the U of C (which is pretty darn tough), then it is highly likely that you can get a job justifying the expense of law school.  Third, as you go down the ranking tree from U of C, your chances get worse and worse -  by the 20s, you are looking at probably a 1 in 5 chance of making the 100K/year "break-even" salary - and by 47 you are looking at probably 1 in 20.  Consequently, don't bother going if you are admitted to a law school ranked worse than 30 - and those ranked 10-30 should be thoroughly scrutinized.  Fourth, if a law school will not make information available to you on a student-by-student basis like the U of C does, then it would seem legitimate to ignore their protests of "they can't do it" and assume that the information is so bad that they don't want to provide it.  In other words, if a law school won't give out student-by-student information, then you may want to reconsider going there. 

Thursday, October 27, 2011

Allowing Non-Doctors To Perform Surgery

When I see articles about allowing non-lawyers to practice law (like this one) it really frosts me.  The reasons that they cite for their proposition include lowering cost for "legal services" and increasing the number of jobs because more people would be "legal providers".  The article also mentions that Clarence Darrow and Abraham Lincoln did not go to law school - seeming in support of law school being irrelevant. 

It seems to me that the reasoning that the article advocates could be applied equally well to other regulated professions such as medicine and engineering.  For example, why require surgeons to have gone to medical school or be licensed doctors?  It would be cheaper if anyone could just perform surgery without going to medical school - it would also create more jobs because more people would be "medical providers", right?  Also, why require engineering school for people designing bridges?  It would be a lot cheaper if anyone was allowed to do it, right?  The medical and engineering fields have also be "operated as a monopoly" like the legal field, right?

Wednesday, October 26, 2011

Inching In The Right Direction

It's been a few weeks since I last posted - but that's actually good news for the younger set.  Frankly, the busier practicing lawyers are, the more likely they are to hire younger lawyers to take some of the load off - and it seems like the majority (although not all) of law firms are continuing to inch back from the recent decline in business.  (Note -  it is "inching", not "leaps and bounds".)

Don't get me wrong, going to law school is still not a good idea right now due to the mismatch in terms of number of graduating lawyers and number of jobs available (even the WSJ admits that the legal field is the MOST difficult for placement of any field - with fewer than one job opening per 100 people employed in the field).  However, job placement odds for those graduating in spring 2012 are likely to be slightly better than 2011.

Sunday, August 28, 2011

What Do College Students Really Want - And Can They Get It From Law School - Part 4

In Part 1 of this series, we discussed how most college students really deep down want a personal balance of four things - 1) Money, 2) Job Security, 3) Appealing Job, and 4) Free Time.  But can working as a lawyer really provide these things?  In Part 2, we took a look at the Money factor and determined that it was unlikely that working as a lawyer would be able to provide the amount of money that most law students expect at this time.  In Part 3, we took a look at the Job Security factor and determined that a job as a lawyer is not very secure.  In this post, let's take a look at the Appealing Job factor.

Thursday, August 18, 2011

When Is A Default Not A Default?

AboveTheLaw (ATL) had a post today entitled "The Student Loan Bubble: Only Stupid People Will Be Surprised When It Bursts".  The post derives from this Huffington Post article that details the massive and sudden increase in student loan debt from from 440 B to 550 B since 2008 - a 25% increase over three years.  I would also be really remiss if I did not point out that LawSchoolTuitionBubble (LSTB) has been calling attention to this for some time and his most recent post on it suggests that the total numbers may be even greater.

Wednesday, August 17, 2011

Overvaluing a Law Degree

Matt over at The Law School Tuition Bubble does a good job with research and analysis.  In a recent post entitled "Another Day, Another Study Overvaluing A Law Degree" he reviews a publication entitled "The College Payoff" from Georgetown University's Center on Education and Workforce.  Georgetown suggests that with a law degree your lifetime earnings will be 4,032,000 - far in excess of the lifetime earnings of those with a bachelor's degree (2,268,000) and an associate's degree (1,727,000).

Monday, August 15, 2011

What Do College Students Really Want - And Can They Get It From Law School? - Part 3

In Part 1 and Part 2, we discussed how most college students really deep down want a personal balance of four things - 1) Money, 2) Job Security, 3) Appealing Job, and 4) Free Time.  But can working as a lawyer really provide these things?  In Part 2, we took a look at the Money factor and determined that it was unlikely that working as a lawyer would be able to provide the amount of money that most law students expect at this time.  But what about the rest of the factors?  Let's take a look at Job Security.

Friday, August 12, 2011

A Tier 1 Law Professor Admits Law Schools Are Scamming Students

As reported by AboveTheLaw and appearing on InsideTheLawSchoolScam a Tier 1 Law Professor has decided to rise to the highest of ethical standards (you know, the kind that law schools are supposed to teach and abide by) and A Tier 1 Law Professor Admits Law Schools Are Scamming Students.

The Professor has about eight posts so far - and man are they good.  He really comes out swinging.  Let's look at them below.

The New Data That The ABA Is Asking For Is Good, But Not Great.

I previously discussed this here. Also, here's a new and even more in-depth article outlining some of the loopholes to watch out for/additional data that should be required from law schools.

NALP Objects To The New ABA Employment Data Rules, But Then Makes Up

First, the NALP was riled by the ABA plan to collect better employment date for law students because it seemed to be cutting NALP out of the loop - NALP even threatened to sue the ABA.  NALP obviously felt threatened because the ABA now wanted employment data reported directly to the ABA rather than to NALP - effectively cutting NALP out of the loop.  However, they then agreed to work together.

Cooley and NYLS Get Sued

Cooley and NYLS got sued
This brings the total number of law schools that have been sued to three including Thomas Jefferson School of Law.  At issue is whether the law schools concealed or misrepresented their employment numbers in order to induce students to pay them tuition.  I am not involved in the cases, but the contentions echo those I have heard repeated often.  Regardless of whether the allegations are true, the fact that a law school can now be sued over such matters must now be impacting on the consciousness of many law school Deans and Professors.
More coverage.  Even more coverage.

Also - there have been a lot of developments lately, so I am going to do a bunch of little posts.

Monday, August 8, 2011

What Do College Students Really Want - And Can They Get It From Law School? - Part 2

In the previous post, we discussed how most college students really deep down want a personal balance of four things - 1) Money, 2) Job Security, 3) Appealing Job, and 4) Free Time.  College students often become potential law students when they come to the belief that "working as a lawyer" is a way to achieve these four factors - and law school is the modality to obtain the state of "working as a lawyer."  However, the potential law student's evaluation of the balance of the four factors is often flawed because they are typically only able to get solid data with regard to the Money factor and the students often fill in self-serving "soft data" for the rest of the factors to justify the hard data Money analysis.  We are going to take a look at each of the four factors that students really want and then compare them to what law school and a career as a lawyer can actually provide at this time.  In this post, we will look at the Money factor.

Thursday, August 4, 2011

What Do College Students Really Want - And Can They Get It From Law School? - Part 1

When I talk to people considering going to law school, I usually try to figure out what they really want from it.  Not the BS, surface reasons like - "law is my passion" (really?  REALLY?) or "I like to help people" (you don't need to spend $200K to do that - get any job at a charity, you will probably be better off than going to law school) - but the real reasons.  The deep down reasons.  The reasons that aren't so nice or so PC.  The reasons that they don't even want to admit to themselves - because it is only through the filter of their conscious minds that they can rectify their unconscious need for that they really want with what they have been told (or told themselves) is appropriate.  The reasons that they have been taught that (although true and accurate in the purest sense) will bring condemnation from society if spoken frankly.

In short, I try to get a glimpse of who they really are and what they really want.  For a few, they are a good match for law school - but most of the others often want something that law school - or even a law career - can't provide.  Let's take a look at the most common things that the people that I meet really want - and whether they can get it from law school.

Tuesday, August 2, 2011

No More Subsidized Stafford Loans - Debt Bill

I just wanted to call attention to this aspect that was part of the Debt Ceiling Bill that has now been signed into law - and as reported by AboveTheLaw - no more subsidized interest for grad student loans after July 2012.
For law students, the big one here is probably the Subsidized Stafford Loan - which usually makes up $8,500/year of the typical loan package.  You used to have the interest subsidized while you were in school - and for 6 months afterword.  Now the interest subsidization is gone, gone gone.

What's the impact going to be on law students?  Well, the Stafford Loan rate is currently 6.8%, and loan disbursements take place at the start of the year.  Consequently, by the September after graduation, the accumulated principal and interest would be: 8.5K *(1.068)^3 + 8.5K *(1.068)^2 + 8.5K *(1.068) = 10355+9695+9078= $29,128.  Subtracting out the $25,500 in principle, we get $3,628

Consequently, for almost all students, law school just got $3,628 more expensive.

Here's another thing that is interesting and illustrates the declining support for education in the U.S. (before the subsidized interest loan was eliminated) the $8,500 limit had remained unchanged since at least 1995 - I still remember $8,500 being my subsidized amount at that time.  This is in spite of the cost of going to law school literally TRIPLING (taking inflation into account) over that time period.  Thus, the subsidized part has become a lesser and lesser percentage of the loan burden over that time.

If it wasn't already apparent, going to law school AT THIS TIME is a truly rotten deal for almost all law studentsOnly about 1 in 20 really make it work.  It used to be a pretty decent deal, but the economics of the situation have truly changed.  It may change back some day, but it won't for at least several years.

Monday, August 1, 2011

New Associate Hiring - 2010 Survey and 2011 Projection

American Lawyer is now confirming what just about everyone already knew - job offers for summer associates were way down in 2010 as compared to 2009 (about 33%).  American Lawyer bases this on the results reported from the 59 firms that participate in their Summer Hiring Survey. Let's dig into the 2010 numbers and also make a projection of what the 2011 summer associate offer rate will be.

Best and Worst States To Make A Living

MoneyRates has a pair of interesting articles - the 10 best states to make a living - and - the 10 worst states to make a living. To calculate the lists, they took into account the following and then calculated an adjusted-average income for each state:
  • Average state wages
  • State unemployment rate
  • State tax rate
  • State cost of living
Guess which state is the best to make a living?

Friday, July 29, 2011

Deans Have Limits, Too

I wanted to draw attention to this article on ATL about the outgoing Dean of the University of Baltimore Law School.  Here's a guy who took a law school from 170 (out of about 200) to 117 and seems to be getting the boot because he is daring to complain when the University "re-appropriates" 45% of the of the tuition paid by law students and diverts it to other University programs.  It's also surprising that the Dean provided actual, precise numbers - and that they are stunning.  As stated by the Dean, the most recent "tuition increase generated $1,455,650 in additional revenue. Of that amount, the School of Law budget increased by only $80,774."  That is, in addition to diverting 45% overall, of the recent increase in tuition, the University diverted about 96% of it.

I want to draw attention to this because lots of angry recent law grads complain about their tuition going up so drastically over the last few years.  However, they usually point to the Dean's salary or the salary of the professors as responsible for the increase.  Now, there is certainly an element of truth there, but a very significant (and often overlooked) driver of increased tuition is that the law school tuition dollars are "stolen" by the University.

If I were paying law school tuition right now, I would be very pissed to learn that 45% of what I am paying does not even go to the law school.  I would really question the value of the tuition that I was paying.  I would be even more pissed when I learned that 96% of the most recent tuition increase did not even go to the law school.

Similarly, I think that this raises some real concerns for lenders (especially the federal government).  When you stop and think about it, the government is lending a student say $20,000/year for law school - but the University is diverting $9,000 to other purposes.  If this were a government contract (which a school loan effectively is) having a government contractor divert 45% of the contract price to pay for something other than the contract can be known by a very clear term - "Contract fraud".

Why The ABA Accreditation Committee Won't Lead - Part 2 - The Fix

Hmmm.  In this previous post, I commented on the internal conflict in the ABA Accreditation Committee.  The Committee has traditionally had a very law school-friendly membership and has previously seemed to act in the best interests of the law schools, rather than the students.  Although I was aware that some changes to improve transparency had been proposed to the Committee, the previous response of the Committee to such efforts led me to believe that they would be mostly ignored - to the detriment of students attempting to rationally evaluate the value proposition for going to law school.

However, I have to give credit where credit is due.  Perhaps due to one or more of: 1) a growing realization of the issue, 2) increased coverage in the popular press and "scamblogs", 3) a growing realization that students lives were being crushed, 4) a desire to avoid conflict, or a combination of one or more of these, the Committee announced in a press release on Wednesday that they have improved many important changes in their law school questionnaire.  Read on to see some of the changes and the potential impact.