How Much Will You Make As a Lawyer? Part 3

In Part 1 of this series we took a look at average starting salary numbers as reported by law schools, and how they might create a misleading impression as to the average starting salary that a law student might expect upon graduation.

In Part 2, we reviewed the NALP curve of actual starting salary information for around 23 thousand lawyers that graduated in 2008.  We found that contrary to many law student's expectations of an average starting salary of around $135K, the actual average starting salary was only $72K.

Here, in Part 3, we will explore some reasons why an average starting salary of $72K may still be unrealistically high.
First, let's take a look at some statistics with regard to the bar exam in 2008.  We find that about 80 thousand people sat for the bar exam in 2008.  Further, about 56 thousand passed, which yields an overall pass rate of about 71%.  However, excluding those taking the bar exam for the second or later time, the pass rate for first time takers is about 82% - that is, about 60 thousand sat for the bar and about 49 thousand passed.

From this we note two things:

1. If you were one of the 18% that did not pass the bar exam, you are less likely to have reported your income (if any) to NALP.  Further, it is likely that your income (if any) is less than the $72K average reported by NALP.  Consequently, your omission from the NALP curve probably biases the NALP numbers so that they are higher than the true average of all law school graduates
2. We note that of the 60 thousand people sitting for the bar, only 23 thousand reported their salary information to NALP.  Admittedly, for an average survey, a 38% response rate is incredibly good.  However, I will submit that if you have obtained a job with a lower salary, then you are less likely to report your salary information to NALP than someone who has obtained a higher salary.  Consequently, again the NALP numbers are biased higher than the true average of all law school graduates.

Thus, we note that even NALP's reported average salary of $72K may be higher than the true avarage of all law school graduates.  However, it is likely much more accuate than the numbers reported by law schools.

Second, let's take a further look at some of NALP's data:

• We note that although NALP reports that about 90% of reporting law school grads were employed, of those 6.5% were only employed part-time and 16% were looking for another job less than one year later!
  
• Further, of the reporting law school grads, only 74.7% obtained a job for which bar passage was required.
  

 So what does that tell us?

1. About 26% of graduates are unemployed or underemployed.  This is really a powerful and frightening statistic.  If someone is considering law school and perhaps reading a law school's numbers about 95% "reported" employment, it creates an impression of plentiful and wanted job openings.  Conversely, the NALP data paints a much more stark picture wherein 26% of law school graduates are still unemployed or underemployed a year after graduation.  
2. Also, we note that only about 75% of reporting people obtained a job for which bar passage was required - that is, a job as a lawyer.  Another way to express this statistic to someone considering law school is "Even if you go to law school, there is about a 1 in 4 chance that you won't get a job as a lawyer."
   
3. Also, as discussed above, the NALP numbers may be impacted by reporting bias.  That is, it may be the case that only the more successful law students are reporting their information.  Consequently, the situation may actually be even worse.
   

In general, the information above meshes with my experiences as a law student and with law schools over the past ten years.  In my experience, about 25-30% of law students are unemployed or underemployed.  The number can be over 50% at very low ranked law schools, but it still fairly high even at highly ranked law schools, say around 15%.

Further, for those that do obtain employment as a lawyer, the overall average seems to be about $60K.  The number can be quite a bit higher for many students and the average is higher at more highly ranked law schools.  However, if the number includes all those working in private practice as well as those who attempted to work in private practice, got rejected, and ended up taking a public interest job to pay the bills, then I would say that even at a highly ranked law school the average os only aroung $80K.  Conversely, at a low ranked law school, the true average may be in the 40s.

OK, so our hypothetical law student has now taken a big drink of reality.  The student returns to the NALP data and refocuses on the high-earners.  The student recognizes that the high-earners comprise 23% of the graduate salaries.  Consequently, the law student thinks, "OK, I'll just make sure that I am in the top 25% and then everything should be fine."

However, in Part 4, we will discuss why the student may again be in for a disappointment.