Monday, October 5, 2009

How Much Will You Make As a Lawyer? Part 1

Since we are going to examine personal finance for lawyers, and lawyers start as law students, it makes sense to take a look at what going to law school means as a personal finance decison.

If you are thinking of going to law school, you know that you will most likely have to spend huge money (in some cases upward of $200K these days) to get your law degree.  If you are paying the bill yourself, then it would be height of insanity not to consider what you will be making once you get into practice - you are going to have to pay for those loans somehow!

So you go to the law schools that you are considering for enrollment and review their salary information.  It seems like all of the law schools, regardless of ranking, seem to be suggesting that their graduates on average earn upwards of $135K/year - and in many cases much higher.  For example:
You note that most law schools use "qualifying words" in their materials like their reported numbers are based on "reported incomes" or that the numbers are based on "those graduates working for large firms," but you kind of gloss over them because you don't really know what they mean.  UCLA's text is pretty typical in this regard:
"According to USNews 94.9% of UCLA graduates have already secured employment by the time they graduate. That number rises to 97.8% nine months after graduation. And the salaries for these graduates are quite high, especially in the private sector, where almost 60% of UCLA grads end up. The median starting salary in this field is a more-than-comfortable $135,000." 
An average reader (such as an undergrad considering law school) who reads the above paragraph may come away with the impression that 90+% if UCLA grads earn more than $135K.  Conversely, a trained lawyer can parse the phrases and omissions that the above paragraph includes in order to create a favorable impression.  Three aspects stick out:
  1. First, although the paragraph says that 60% of UCLA grads end up in the private sector, and that the median starting salary in that section is $135K, the paragraph never actually says what the UCLA grads actually make - just what the average is for the field. 
  2. Second, although the paragraph says that 97.8% have found emplyment, that's not necessarily employment for which a JD is necessary.  For example, that paragraph does not say that 97.8% are employed as lawyers.
  3. The sentence order and structure may also be misleading to a casual reader.  More specifically, although the first sentence talks about 97% of the class, the second sentence opens with "And the salaries for these graduates are quite high...".  Consequently, the reader's first impression of the sentence is that the author is stating that the salaries for the 97% are quite high.  Further, although the sentence does add the qualifier of "the private sector, where almost 60% of UCLA grads end up," by putting the actual salary data in a further sentence, it makes it more difficult for the reader to ascertain that the $135K average number only applies to 60% of the class, not the 97% of the class that the paragraph appears to be talking about.
  4. The recitation of "more-than-comfortable" in referring to the salary of $135, it also a little troubling.  Unless the reader is reading closely enough to key off the the "field" limitation in the sentence and recognize that the $135K number does not apply to all grads, then the reader is left with the impression that they will be "more-than-comfortable" if they attend law school.
  5. Although it is not really present in this quote, one additional possibly misleading aspect about the way employment numbers are reported is that they are reported on the presumption that those who choose to go into private practice do so and those who choose to go into public interest also do so.  Conversely, the numbers don't reflect the experience of a candidate who has been turned down for all his firm interviews (which he wanted because of the higher salary), so he ends up taking any public interest job he can, even at the lower salary.  That candidate's inclusion in the public interest numbers was not voluntary.  Consequently, his omission from the statistics concerning private employment may create an inaccurate impression in a reader.
  6. Finally, for those who may be doubting that the above paragraph may be misleading to the average person, I offer this test - Take the paragraph above, reproduced exactly as it is, and give it to an average person to read -  someone who is not involved in law or contracts.  After they have a chance to read it, ask them "So, on the basis of this paragraph, what is the average starting salary for a UCLA law school graduate."  My bet is that the overwhelming majority of average people will reply with $135K.
We are looking at the above paragraph not to pick on UCLA or any of the other law schools that we mention.  In fact, virtually every law school that I am aware of has "well-written" marketing materials that are provided to law students to "sell" them on the idea of going to law school. 

OK, so you are thinking of going to law school and you read materials like those above.  Consequently, you are left with the impression that you will be making about $135K/year.  Based on that assumption, you estimate that you would be able to go to law school and pay off your loans in a few short years (you don't take into account the impact of taxes on your take home pay, but that will be the subject of another post.)

So you go to law school, work hard, and do about average for your law school class (most people do).  You figure that doing about average in your class should lead you to a job that pays about average for a law school grad from your school - which you believe is the $135K/year that you read in the law school materials.

However, you are in for quite a nasty shock!

In Part 2, we will take a look at some more accurate data about starting salaries

1 comment:

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