Monday, October 11, 2010

Is Earning A LLM Worth It?

I have occasionally been asked by law students whether they should go for an LLM.  Earning the LLM is quite expensive and there have been a number of posts lately (ATL, WSJ, Law) debating its relative merit.  If you are a law student considering an LLM - or a foreign student considering an LLM, please read below.



First, let's look at the cost of the LLM.  You would be paying another full year of law school tuition and would need to support your living expenses.  Consequently, this typically means another year of loans.  Your first thought might be that this additional year will only increase your indebtedness by a third (three previous years of law school plus one more for LLM.)  However, you would be neglecting the cost of an additional year's worth of interest for the three previous year's loans.

For example, assuming for the sake of simplicity that 1) you have a total of $180K in loans from your previous years, 2) assuming that $150K of them are not paid for by the government while you remain in school, 3) the average interest rate on the $150K is 8% - then that's an additional $12K in interest.  Consequently, assuming that you would have to take out $60K in loans to pay for the LLM, be aware that your total indebtedness is actually going in increase by $72K.

This means that at the end of your LLM, you will likely be about $250-$300K in debt.  At an average interest rate of 8%, that's a loan payment of $24K/year.  Also, even if you win the big-firm lottery and get the high-paying job, recognize that you will be taxed at a top rate of about 45% (after federal, state, and FICA), so that $24K really represents about $37K/year of your earnings.

Additionally, if you are comparing the cost of the LLM to how much money you would have made over your working career otherwise, then here's another year of lost income.

Consequently, you can see that the LLM degree is quite expensive, especially after law school.  However, it might be worth it if it helps you get a job, right?  Especially in today's extremely competitive market.

Unfortunately, as noted in the articles that I cite above, law schools are resisting the collection of statistics with regard to the return on the LLM degree.  That alone should tell you something.  Also, if you get to your 3L year and realize that the law schools have lied to you about the opportunities available for law graduates - buy hey, they have this great new LLM program that will help you get a job - maybe you should really pause and think about the source.

Here are my experiences with the LLM degree:

First, if you are going to work at a law firm, the LLM is really only has value (and maybe not that much value) if you are going to work in tax - and possibly bankruptcy - which are extremely regulation-heavy.  In these fields, the LLM can be desirable precisely because the fields are so regulation-heavy - that is, the LLM in these areas is actually helping the student to accumulate knowledge and familiarity with the regulations that are desired by employers.  Consequently, LLM students may have an advantage in these areas.  However, the advantage may not be significant.  It's not going to overcome poor law school grades - and it is probably not needed if there are high law school grades.

I have not seen any advantage provided by an LLM in any other area - including intellectual property.  Most other areas are more case-driven than regulation-driven.  Consequently, the education provided by one year of actually working in the field is far better than that provided by getting an LLM.

Second, to be a little clearer about the recruiting, outside of tax, law firms are somewhat strange about how they handle LLM recruiting.  For some firms, they consider LLMs as laterals and compare them to other second year associates that they might be hiring.  Of course, the LLM is not as good as firm experience (although it it better than nothing), so the LLM grad is typically at a disadvantage as compared to a lateral.  To understand why many firms do this, recognize that LLMs don't really fit in the law firm recruiting model that well.  For example, many law firms will interview 2Ls, have the 2Ls work there for the summer and then make offers based on the extended interview of the summer.  However, for an LLM, there is no comparable program.  The LLM will not have the opportunity to work at the firm before the hiring decision has to be made.  This is one reason that the LLMs are often considered my like laterals than law students.

For firms that consider LLMs as compared to 3Ls, recall that many law schools have career services offices that may not be on the ball with regard to providing interviewing opportunities to LLMs.  Often LLMs complain that they have not been informed of opportunities going to 2Ls or that the Career Services Office is not able to help them.

Third, LLMs are being marketed to foreign law students and lawyers as a way to crack into the US legal market - I think that this is one of the factors behind the 65% rise in LLMs as cited in the articles.  Unfortunately, the LLM is typically not useful this way.

If you are a foreign lawyer (and from reviewing the site traffic, I am surprised how many people are viewing this blog from a foreign country), do not think that you can take a one-year LLM program and compete directly with 3Ls.  I don't know any firm that will regard your foreign law experience plus one-year LLM as the equal of the 3-year JD degree.  You may be able to market yourself to a firm that does specific cross-boarder work with your country, but that's a pretty small target to sell to.

Fourth, sometimes the LLM is marketed as potentially attractive to law schools if you are thinking about being a professor.  There may be some small advantage here, but not a lot.  In this regard, the advantage is probably less about anything that you learn with the degree, but the prestige of having the degree.  Also, in this regard, recognize that you may be able to leverage your school position based on where you get your LLM.  For example, a JD from Iowa, but an LLM from Harvard may open some professorial recruiting doors because of the Harvard name on the resume.  However, there is no need to take the LLM immediately after the JD - even in this situation - because there will be less advantage to an inexperienced practitioner in "trading up" this way.  It would be more advantageous to practice for 5 years or so and then get the LLM.

Finally, in terms of how many practicing lawyers have LLMs (outside of tax and bankruptcy), the number is extremely small - maybe 3%.  Nor have I seen any advantage inside a firm to anyone having an LLM degree.  Similarly, I have not seen any client make a hiring decision based on a lawyer having an LLM degree - other endorsements seem a lot more important in client eyes.

In summary, if you are going into tax and bankruptcy, then interview during your 2L year.  If you are unsuccessful and your grades are pretty good, then consider the LLM.  If your grades are terrible, the LLM is not going to help.  If your grades are great, then there may be some other aspect of your persona that you should think about working on.

Conversely, if you are outside of tax or bankruptcy, don't bother.  The LLM will cost you far more than you will get back out of it.

21 comments:

  1. "
    Third, LLMs are being marketed to foreign law students and lawyers as a way to crack into the US legal market - I think that this is one of the factors behind the 65% rise in LLMs as cited in the articles. Unfortunately, the LLM (end paragraph)"

    I'm in suspense...

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  2. 11:17 - Let me relieve your suspense! It's good to know that people are reading the post thoroughly!
    Thanks for pointing that out.

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  3. LLMs are also marketed to students at lower ranked schools. Students who get through a lower ranked schools often feel that if they get an LLM from Harvard, they will have better job prospects and greater prestige among their colleagues.

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    1. Will they have better prospects? I am from a lower ranked law school and was unable to get a legal job in national security, and just got into GWU's national security LLM program

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  4. keep in mind the value of an llm for someone pursuing an academic career.

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  5. 1:44 - That's an intriguing comment. Can you flesh that out? I have occasionally heard LLM programs marketing themselves this way, but I have not seen a successful transition based on an LLM. It seems like a clerkship with prestige is useful and many publications are useful. Most of the professors that I had and that I interact with do not have the LLM, but it may have become useful more recently. Can you expound?

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  6. I am a J.D./LL.M. (tax) student in my final semester at Miami Law. Because Miami has a joint J.D./LL.M. in Taxation program, I will graduate with both degrees in three years. In order to do so, however, I took the maximum course load each semester (17 credits) and two additional summer courses. Because it did not cost extra to take the maximum course load each semester, my only out-of-pocket expense related to the LL.M. was $8,000 for the two summer courses. Therefore, with proper planning, an LL.M. can be obtained for little extra cost.

    That said, I have a few words of advice regarding LL.M. degrees in general:

    1. Do not get an LL.M. in anything but taxation or some other VERY specialized and heavily-regulated area. Securities regulation, for which Georgetown offers an LL.M., is an example of one of those areas. I say this because some of my peers have chosen to pursue LL.M. degrees in Real Property Development and International Human Rights and their courses are, quite frankly, a joke. Anything besides tax can be learned in practice and a mushy-minded LL.M. will only suck more money from your pocket, take another year of your life from you, and likely HURT your job prospects big time.

    2. Do not get an LL.M. in tax from anywhere but NYU, Georgetown, Northwestern, University of Florida, or, as a last resort, Miami. Those are the top tax 5 schools. Each of those schools (as far as I know) offers a visiting-student dual-degree program which allows students to leave their home institution after their 2L year, attend for a 1-year tax LL.M. program, and then return to their home institution for one additional semester to complete their J.D. This is, of course, with the consent of the student's home institution. This will allow students to obtain an LL.M. degree from a top 5 tax program in only one additional semester. Or, if you're like me, you may be able to graduate in three years if you take the maximum course load each semester and bang out some summer courses before heading off to NYU.

    GOOD LUCK!!!

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    1. I'm interested in Miami's Estate Planning LLM. What do you know about that? I known estate planning involves a lot of taxation. I'd like to hear from someone other than a person representing the school.

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  7. 11:22 - Thanks for the great comments!

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  8. Has anyone looked into the online/off campus LLM programs offered by University of Alabama? Alabama has Taxation and Concentration in Business Transactions. Are they worth it? How would employers view the online course study?

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  9. 11:16 - I have not specifically looked at the programs, but the advice above that even a tax LLM is only valuable from a few places seems relevant. Personally, tax is not my area, but if it were I would only consider getting the tax LLM from Northwestern, NYU, and Georgetown.

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  10. I am Erukilede Julius a Nigerian and I am willing to come to US for my LLM in fall 2013. I have been following debates online about the viability of such route and I have get more confuse each time I read another debate or blogs. I however find this blog educating and enlightening.

    I am interested in llm energy law and LLM in tax but the question is how will NYU tax be useful to someone from Nigeria? I also consider the cost involved and I must confess it is beyond the sky.

    I also intend to take on traineeship instead of the LLM option but I am not sure if it will be easier to get a traineeship in US. I need international exposure and I really don't know which way to go at the moment. I will need your advice on the strengths and weaknesses of my plans. Hope to hear from you guys. Pls kindly contact me with the following addresses because I just stumbled on this blog and I might not be able to locate my way for you guys reply. Many thanks

    Julius
    +2348028701028, juliusdudu@yahoo.com

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  11. The LLM is tempting, but not for the reasons that it should be.

    For me it strikes me as a way to avoid the real world for another year (or two if I go part time) and then possibly even more if I get a PhD in a legal related field.


    The real world is scary looking dawg

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  12. The cost of avoiding the real world by obtaining an LLM is staggering - both in outlay and lost opportunity cost. Plus, the solution only makes sense if there is going to be a substantial increase in legal hiring next year and the degree will make you more attractive. However, it should be plain that there will not be a significant increase in legal hiring for several years.

    Additionally, realize that every year you delay becoming employed, you lessen the ability to realize a positive return on your degree (even without accruing any additional debt). Why? Because you are only going to live so long. You can delay the start of earning, but you really can't delay the ending - and practicing law tends to physically burn people out at a higher rate. (I note the articles linking higher rates of cancer and other disease conditions to physical inflammation brought on by long term stress). 25 to 65 is 40 years - each year being 2.5% of your working life. If you delay starting work until age 30, you have lost 12.5% of your workin life - which can be significant, especially considering compound interest (both for loan payback and for investment growth).

    In short, there are conditions where delaying entry for a year or two may result in a significant improvement (such as when an economy is temporarily depressed by a natural disaster, for example, or there is some other transitory effect). However, that's not the case today.

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  13. I am a twenty year business developer, who was working at a very young age, (pre-teen) and owned my first business right out of high school. I have since acquired and/or built a half a dozen small businesses including retail, service, manufacturing, importing, and real estate holding and management company. My piers say that I have definitely learned from the school of hard knocks.
    I started my undergrad ten years after I graduated high school, and achieved a BSBA from the University of Phoenix (night school). I know that this is not a prestigious school, and probably does not begin to rival an Ivy League education but it worked for me and allowed me to continue the “school of hard knocks”.
    4 years ago I began Law School at Concord Law School (on-line). This is probably even less prestigious than my undergraduate degree. I read these blogs and frequently the author(s) are very disrespectful to lower tier schools and the students attending them.
    I wonder why? It seems to me that I have been studying the same Horn books and case books that a Harvard grad would study. We learn to write in the same IRAC or CREAC or whatever kind of...AC you prefer. We study the same MPC, memorize the same rule statements and at the end of the day, we are all sitting for the same bar. And if either of us don’t pass it, then I guess it won’t matter much where we studied.
    My point is this, I am not disrespecting those of you who had the opportunity to earn a JD from an ABA School or better yet, I’m certainly not disrespecting those of you with an Ivy League Education… I am a bit jealous, but I also know that many people like me who went to night school, online schools, etc., did so because it was the best option available to them. That in itself does not make them less capable of anything.
    I have been seriously considering an LLM, and I appreciate reading all the comments about which school to attend. Fortunately the TAX LLM is what I have considered so at least I will only get slammed a little bit instead of being called a complete moron for choosing this path.
    My point is one needs to be very careful when telling complete strangers what education they should or should not get.
    One point I have learned in my 20 years of business management/ownership/sales… What is more important? Perception or reality?
    Most/all lawyers I know agree that the school of choice matters little. So who gets impressed with a big name diploma?
    Your clients do… Why? Because they don’t know better… They assume that a big name JD or for this conversation an LLM from a big name school can be flaunted to your “prospected clients” as why you are a better lawyer than the next guy. Is this total bullshit? Usually yes, but it’s the perception that you are better. And who knows, hopefully you are better.
    My point is, take a guy like me with an online JD, who will sit for the bar in a few months, and then throw an LLM from blah-blah-blah ABA accredited big name school behind my name and what will my clients see. Exactly, and if the firm that gives me my big break has any business sense, they will also market the crap out of the fact that I have an LLM (ooh-aah) from big name Blah-blah-blah and … oh-by-the-way, Mr. Client, didn’t you know that an LLM is an advanced Law Degree?
    I hope you all see my point. Its perception that you market to your clients, not reality that you market to them. And hopefully, the tax LLM will actually teach me something worth knowing.
    (p.s., if any real lawyers want a street-smart intern, email me. michaelpongs@yahoo.com) (so-cal only)

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    1. An online JD? Sorry, statistically you are highly unlikely to pass the bar exam. Even if you did (that would probably be a miracle), chances are slim that you would be accepted into any reputable LLM program. It sounds like you made a horrible decision to waste your money on an online JD.

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  14. Mr. Pongs, you make a good point regarding a client's perception. Client's are impressed with credentials including education. It usually makes no difference to them what that credential is (JD, MBA, PhD, MD, LLM, CPA, etc.).

    Here are my thoughts. I have just obtained my JD from SMU down here in Dallas and will be sitting for the bar exam this summer. I am beginning my LLM in Corporate Finance Law at SMU this fall after the bar exam. However, I am not doing this out of desperation. I worked for a small law firm my 1L summer and then worked for a mid-size company's in-house counsel my 2L summer. Both jobs were in Dallas. I will be working for that same company as an in-house attorney starting in September this year.

    Many of my fellow graduates ask "Why the heck would you go get an LLM (not even in tax and not even at a different school) if you have a job?" My answer is that down the road in my career having an extra degree may be one extra thing I have that another prospect does not, thus giving me an edge however so slight it may be. It also allows me to specialize further in corporate finance law. Luckily I will be able to take law related business school courses during this degree. If I were to do a tax LLM, I would possibly be pigeon-holed into estate planning or possibly the "tax controversy" guy at the firm. That is not exactly exciting to me, so I didn't pursue that degree.

    30-35 years ago very few business people were obtaining an MBA. Now, you can barely get a job without having one. Those who obtained an MBA 30-35 years ago gained an advantage financially throughout their careers (despite up and down economic climates). Law is simply behind the times. Look at the medical field. Many doctors obtain the MD, take the medical boards, then go on to specialize with another degree in say neuroradiology, etc. My college roommate has done just that. He says it's pretty much the norm in the medical field now. Law is becoming more and more specialized, just not at the same rate that business or the medical field has progressed. I could be completely wrong on this, but my guess is that eventually specializing in a certain legal area via an advanced degree could be the norm in 20-30 years. If I am right, then in the future people will say "Man that was a good idea! How did you know to do that?" If I am wrong, then I'll just have an extra degree and I can't imagine that hurting my future career. Very rarely does higher education hurt a career.

    Furthermore, I plan on making the jump from the legal field into a business setting at some point in my career. As you may have experienced Mr. Pongs, the business world respects and is impressed with where you went to school and your higher education, unlike a law firm who is concerned only with where you went to law school and whether your GPA is top 25%. Thus, it makes sense not to obtain higher education in law if you plan on being a career attorney. Obtaining an LLM would do you no good according to law firms' hiring criteria. Also, law firms' business models are becoming somewhat dated and hiring a law student after their 1L year is becoming more and more difficult for firms to do. What we are seeing more of now is large mid-sized firms and small firms waiting for JDs to graduate and pass the bar. Then they snatch them up. Even some large law firms cut back their summer programs significantly. Many large firms in Dallas only hired 2-3 summers this past year.

    Whatever may happen with the economy, one thing is for sure: those with higher education end up better off than those without it. Of course it looks financially ignorant in the short term to get an LLM since there is no cost-benefit analysis being done by law schools. However, it is important to consider what long term benefits such an education may provide.

    Just my two cents.

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  17. Estate planning can be used to eliminate uncertainties over the administration of a probate and to maximize the value of the estate by reducing taxes and other expenses.estate planning

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  18. What is a better llm to get? An estate planning llm or a tax llm?

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