The Beginning - Prospective Law Students: Part 1

Here at The Legal Dollar I want to give financial advice for anyone working in or considering the legal field - from prospective law students pondering the financial rammifications of law school all the way to retired attorneys endlessly re-telling their most cherished war stories.

My goal is not to let any one age or period of a lawyer's life overwhelm the content of the blog so that lawyers of all ages can find something that is useful to them.  That being said, there are a few periods of a lawyer's life that just cry out for more attention and coverage because the decisions made at that time are so drastically life-altering.  One of those times is when a prospective law student is deciding whether to go to law school.  This time is especially important to discuss because the prospective law students typically don't have that much life experience and they are bombarded with very concerted advertising compaigns that distort the truth of the opportunity.

I don't want the "deciding whether to go to law school" time frame to dominate The Legal Dollar, but it is certainly a legitimate topic for discussion - and it also provided the final kick-in-the-pants to get me writing this blog.  I'll tell you a little about my posterior-booting and some advice for those considering law school after the jump.


I have long helped fellow attorneys deal with their financial issues on a one-on-one basis and had considered setting up some sort of blog because it seemed like I was encountering the same problems and lack of knowledge about 80% of the time.  However, the real impetus for starting this blog a few months ago were some interactions that I had with several prospective law students.

Now, a little background may be in order here, I should mention that I have been talking to prospective law students for several years.  I also work with many law students that are recent graduates and write recommendation letters and help them find jobs, especially in my specific area of practice.

Historically, I thought going to law school was generally a good thing for most applicants.  This would be in the mid 1990s time frame.  It seemed like law school was certainly not cheap, but the debt was pretty manageable in most cases.  Further, it seemed like the overwhelming majority of people found jobs - and not just part-time jobs - decent jobs.  Frankly, I did not know a single person that graduated from my law school class that did not have a job lined up after graduation.  I am sure that there were some, but there were very few.  The job might not have earned as much as they would have hoped, but they had something.

It was true that tuition was rapidly rising - tuition at my law school literally rose about 50% from the year before I enrolled to my last year in law school.  This shot all of my pre-law school budgets all to hell and created significant hardship and caused a significant increase in the amount of loans that I had to take out.  I try to warn prospective law students of this aspect in this post.

It was also true that the employment numbers and pay rates advertised by the law school did not appear to be quite reflective of the actual experience of the law students.  However, the numbers were generally pretty close.

Also, although US News had started publishing law school rankings in 1989.  They really were not all that important and were not central to most people's consideration of where to go for law school.   They were also not relied on much in the industry.  For example, if a lawyer interviewing at a law firm described his law school as "Tier 1", then the lawyer would be met with blank stares.  The specific school mattered and had a reputation - not the school's "Tier" as determined by some arbitrary ranking body.

However, while I think that the practice of law has worked out for me and the overwhelming majority of people that I went to law school with (and I felt very comfortable recommending it in the 1990s), there has been a very gradual yet fundamental change in the law school value proposition over approximately the last 10 years.

1. Tuition rates have risen - at rates that would embarrass the most greedy robber baron - and far, far in excess of inflation.  (Also discussed here).  This means that the average graduate has substantially more debt than before.  (Also, don't think that the law school's reported numbers for average debt at graduation are going to apply to you - there are a significant percentage of law students that are independently wealthy and their parents or trust pays tuition.  These students graduate with zero debt and consequently lower the "average debt" number.  Law schools should be reporting the average debt of those who had to pay for law school on their own - that would be a more realistic (and much higher) number.
2. Salaries -even top salaries - have stayed flat in real dollar terms for the last 10 years - and the average salaries are now DECLINING while the cost of law school keep rising
3. Employment odds have been declining gradually for the past 10 years and fell off a cliff in 2008.  Nor is there any recovery in sight - certainly not back to 1990s levels - as we also discuss here.  As widely reported, currently, 45,000 law students will be graduating, but there are only 30,000 legal jobs for them to fill.  Even worse, a record 60,000 people sat for the LSAT this year, but there is no increase in the number of jobs in sight.
   

Unfortunately for potential law student's ability to evaluate the impact of these changes, these changes have taken place gradually over the last 10 years.  In this regard, I am reminded of the story of boiling a frog - if you heat the water to boiling before you put the frog in, the frog will jump out.  However, if you put the frog in room temperature water and then heat the water, the frog does not notice the increasing temperature because it takes place gradually.  Consequently, the frog does not jump out and ends up getting cooked.

Consequently, when the value proposition of going to law school is reconsidered in light of these new realities, it can be easily seen that there has been a fundamental change in whether law school is a "good investment" for a prospective law student.  Going to law school was not a "slam dunk" in the 1990s, but it was generally a good move.  Now however, it is a very expensive, very risky gamble that has a fairly substantial probability of not paying off for you land leaving you considerably worse off than you were before.  As a prospective law student, you can really "get cooked" like the frog.

Potential law students always want to argue that they have some angle that will make things easier for them - and for those that will be practicing in a speciality like intellectual property or corporate law, the hiring odds and salaries have historically been greater than the average.  However, even in those specialties, the odds are no longer as good as they were and the payoff from going to law school has become increasingly difficult to obtain.

This is not to say that everyone that attends law school is doomed.  There are still people making a first year salary of $160K.  However, there are fewer and fewer of those jobs to go around, and for every person making the big bucks, there are more and more people that end up with no job at all.  In this regard, at some point paying for law school goes from becoming a reasonable investment in your future to buying a very expensive lottery ticket - or like playing a very expensive game of Russian Roulette - with an ever increasing number of bullets in the cylinder.  Win and wealth will be yours!  (or at least the appearance of wealth - it is going to take years and years to pay off those loans and many, many attorneys get fired before they pay them off).  Lose and you incur more debt than you can ever repay - debt that is NOT dischargable in bankruptcy.  Debt that will ride you like a monkey on your back for the rest of your life.

So with this background in mind, in Part 2 I will tell you about a conversation that I had with several prospective law students that served as the final impetus to get me to start writing this blog - and we will address several of their mis-understandings for the benefit of prospecitve law students that might be reading this.