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.


Job Security
When most college students consider going to law school, the visualize themselves working as a lawyer for their entire careers to retirement.  In their minds, they may become a senior partner or a respected judge - or maybe even an in-house counsel.  Additionally, when they determine the payback time for the costs of their degree, they typically use 40 years or so - which is an implicit assumption of job security.

Some savvy potential law students are able to pierce the law school smokescreen with regard to employment rate and realize that the employment rate at graduation is really only about 50%.  However, these students sometimes still decide to go to law school thinking that they will be in the top half of the class and will thus get a job.  However, these potential law students typically make the assumption that once they have a legal job it will be theirs for as long as they want it - for all 40 years.  Unfortunately, that's just not the case for the overwhelming majority of legal jobs.

First, let's take a look at working at a law firm.  How much job security would you say there is in a job where 78% of those hired are no longer with the firm in 5 years?  That's even worse than the 50% odds of getting a job in law school.  Of course, some of those transfer to other firms (voluntarily or involuntarily) and a small number go in-house.  However, a sizable percentage are not able to transfer to another firm or in-house.  I can't find good statistics on this, but based on my experiences in practice I would estimate that of those who are no longer working at their firms, at least a third (33%) are out of the game.  Of the remainder, maybe 30%-ish go in-house and 40%-ish go to another law firm.  Of course, it may not work out at the next law firm (or in-house) either.

What does "out of the game" mean?  Well, it varies.  It could be no job at all or it could be leaving the legal field entirely, or it could be being forced to find some sort of piecemeal work that barely keeps your head above water, like being a temporary lawyer or a document review lawyer.  Unfortunately, very few associates have the experience, connections, financial backing, clients and reputation to make a successful transition to a solo practice.

How about once you are a partner?  You are part of the lucky 22% who worked for 8-10 years, managed to get some business, and then got "invited" (required) to "buy into the firm" (cough up a lot of money).  Well, just being named a partner does not really get you any job security.  It's not tenure and its not a guarantee.  The other partners can toss you at any time and the political situation in a firm can be tense.  Additionally, the buy-in can cost hundreds of thousands to $1M plus.  (How would you like to have paid off your loans just to start having to put money aside or take out a loan again?  "When do you get to spend it?" you may ask.  "That's a good question!"  I might say.)

Additionally, the firm can fold at any time, and the longer you are in the practice the more firms that you will see folding.  The biggest example of this for me was Brobeck, a 900-person CA firm that went from the tops of the charts in compensation to out of business in about 2 years over the dot com crash.  This is just one example, but there are lengthy lists of all the large firms that have gone belly up in the last few years.  When the firm goes, some lawyers can transition to a new firm, or in house, and some are not able to do so.  Percentages vary by type of firm, type of law, location, and economy.

To be fair, portable clients do represent some job security - clients that are loyal to you and will follow you if you need to set up shop somewhere else or on your own.  These are clients that have ongoing legal issues and are going to need continuing representation - and they often don't care about the name of the "firm" that you work for as much as they care about the cost of the bills and their personal trust in you.  However, its the clients, not the title or the firm that give you this security.  Unfortunately, corporate clients now move their work with regularity these days, especially when a new General Counsel or CEO get hired - and the new guy often has lawyers that he prefers to work with.  Your ability to keep that client is really at risk.  As an average, I would say that a new CEO or General Counsel - even a new sub-general counsel if the client delegates work in your area - gives you about a 50% chance to keep the business.  In this regard I have seen people go from sub-$1M to over $10M - and then back down again - over the course of a few years.  When they were hot they got paid a lot, but it is not consistent or secure. 

Second, let's take a look at working for a company.  Be aware that usually companies are not looking for people just out of law school, but start looking at about year 3+ associates.  Companies widely vary about how they view their legal staff - and consequently there is a variance in job security.  However, because the firm lawyer usually represents many clients, the loss of one client to the firm lawyer may mean a reduction of income, but typically not complete loss of job.  Conversely, the in-house lawyer has only one client - the company - and the loss of that one client means the loss of job.

Your job would also be at risk during any hierarchy change.  New CEO or other top executive?  They may have other counsel that they prefer to work with, often from their previous place.  You will be told that you should retire or move on.  If you are a junior lawyer, the change of CEO is less likely to impact you, but a change in your immediate superior or one above that may still cost you your job.  Additionally, a new general counsel may decide to "restructure your department to cut cost to deliver greater value for legal dollars spent."  Considering that salaries and legal spend are the main drivers, it's likely someone is going to get the axe.  Unfortunately, in the modern "next quarter" world, decisions that save a little money now (even if creating additional cost in the future) are praised.  Conversely, something like implementing a company-wide audit of practices to look for and solve legal problems before they become costly does not win praise - even if the long-term benefit to the company would likely be greater.  That comes from many companies viewing legal as a cost center instead of a loss prevention center, which is unfortunate - but I digress.

How many hierarchy changes will you go through in your career?  It depends on the company, but once every 5 years seems to be about the average.  So, if you go in-house after 5 years as an associate, you are looking at about six serious hurdles to your continued employment assuming your desired 40 year career.  What are the odds that you will make it all 40 years?  Again it depends on the company and the specific people involved.  However, I have seen a new GC come in and fire and replace literally 90% of the legal department in 6 months.  It seemed like he was doing it mostly to change the dynamics and make sure people were loyal to him as the boss rather than allowing himself to be vulnerable to previously established dynamics - he wanted things done "his way."  It's really pretty common that there will be a significant change.  However, even if there is only a 33% chance that you will lose your job with a hierarchy change, you still have to "make that roll" six times to have a 40 year career.  What are the odds that you can do it six times?  My calculator says that is is about 8%.  Even if there were only a 20% chance of getting fired each time, it's still only about 26% chance of you making it to year 40.

Now, you may not be completely dead if you get fired - you may be able to jump to another in-house position.  (Typically, you can't jump to a law firm because you have no clients - and the place that just got rid of you is probably not going to send you work.)  However, there are a significant number of in-house counsel that experience unemployment - or are unemployed for a long time - after leaving a position, and it usually gets worse the higher up the chain you go.  For example, for a high-ranking lawyer, spending a year or two out of work would not be uncommon.  This would certainly impact your savings and would also impact the "payback math" for earning the law degree.

Now, let's take a look at government work.  The stability of government work seems to vary by the type of work.  Just like different companies may provide different stability opportunities, different government positions may also.   On one end, you could be working for the civil justice system in San Francisco that will be down to 280 workers of its 591 authorized positions after layoffs (53% gone).  On the other end, you could be a federal judge who can't be fired or have a salary reduction during good behavior.  Of course, in terms of numbers, there are very, very few federal judges (only about 3,500 - compare with about 1.75M people completing law school in the last 30 years).  Additionally, a federal judgeship today often seems to require extensive experience at a good law firm as well as substantial fundraising activity for whatever party you think will agree to have their President nominate you for a judgeship (often there may be a personal fundraising expectation).  State judges may be appointed or may be elected.  If elected, note that fundraising and that re-elections will take place.  If appointed, note fundraising.

How about working for a government agency?  Well, now you are kind of like an in-house attorney.  Two big thing that impacts your job security are 1) whether you are covered by a union, and 2) how your agency is funded.  Obviously, if you are covered by a union and pay your union dues (an additional expense - view it as "job insurance"), then your job security is greater.  However, there aren't that many legal positions that are union-eligible.  Second, the funding source for the agency is important - Federal is usually the best, followed by state and city, but some cities are better funded and run than some states. 

Overall, in the absence of a serious financial shortfall like San Francisco, government work on average probably provides the most job security of the three options that we are looking at.  However, it is also typically the lowest paid.  Consequently, the payback math for the value of the law degree may be questionable.

Job Security In Law As Compared To Other Fields
As I was writing this, I realized that I should clarify that it's not a binary determination as to whether a career has "Job Stability" or not.  Instead Job Stability is a continuum and the stability of a job in law should be viewed as compared to other careers.  However, one of the main points that I want to deliver is that the law student fantasy of lifetime job stability by getting a law degree is pretty much a complete fabrication.

What's the job security like in law as compared to other jobs?  Well, I don't have hard data, but it's pretty clear that it's less than the average for cops (strong union), less than nurses and doctors (high demand, maybe union), less than elementary and high school teachers (union again), less than engineers, etc.  Conversely, the job security in law is probably greater than that of the average entrepreneur or salespeople (keep in mind that as a partner in a law firm you actually ARE an entrepreneur and salesperson).

Another thing to consider in your personal calculus if you are determining whether to go to law school is that depending on your previous education or career, the law degree may raise or lower your job security.  For example, if you are a cop considering going to law school because you see high lawyer salaries, consider that you will be losing a very significant amount of job security - the consideration also should take place for the other careers named above.

Bottom line, the level of Job Stability that most law or pre-law students think will be theirs with the earning of the law degree is typically not in accordance with reality.  (Whether law students get this inaccurate impression from law school marketing and whether it is morally and/or legally ethical to market in that way, I leave to another post).  Finally, if I am in conversation with a law student and the subject of job stability is raised and the law student responds with "Hey, we will always need lawyers, right?" I reserve the right to a resigned sigh and just shaking my head.

5 comments:

  1. I've found law to be one of the most unstable professions I've ever encountered. I came from a science background with multiple science degrees. Overall, I felt that the job stability was pretty good in the science field, but the pay was on the lower end of the spectrum. Nevertheless, when you experience chronic unemployment/underemployment when you are out looking for a new job every other year (if not sooner), then it makes having a stable job much more significant - even if the pay isn't top dollar.

    Currently, I'm an unemployed attorney. Been out for close to 10 years. I was doing patent work at a firm for 3 years after law school, got laid off and have been doing document review/contract work for the past 5-6 years. My latest assignment, which lasted a whopping three years, finally ended. So now I'm back to square one, my wife is reading me the riot act about not contributing to the household and I need to find a job that will allow me to pay back the remaining $120,000 of debt I currently owe. Yes, after paying the bitches at Sallie Mae et al. for 10 years, I still owe that amount of money. New grads will undoubtedly have it much worse than me unless they were able to maintain a scholarship or their parents paid the tuition bill.

    Now I am faced with the possibility of trying to go back to a company where I hope to do quasi-legal work in compliance. But I've been out of the science game for nearly 10 years now and I've been doing contract work for the past 5-6 years. In essence, my career trajectory is not looking good, particularly now when the companies are dinging people that, although qualified, are currently unemployed. The thing that gets me is how picky the companies have become over the past 10-20 years. Now they want every single qualification or else they don't even want to interview you. It's a sad state of affairs. I'm glad I'm not going to law school right now. As it is, I'm just trying to move on with my life, but there's that little problem of having $120,000 debt hanging over your head monthly. Anyone that attends law school in this climate that is not in a top-14 school is taking a major chance with their future livelihood, which includes the ability to get married, have children, buy a house, etc. The only way I will get back in the "game" is to go out on my own. But to do that, once again, I need to pay off debt. No one tells you how expensive it is to go out on your own when you're in law school. Let me tell you, it ain't cheap. Yes, there are some that practice out of their parent's basement, but is that realistic in the long run? Nope.

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  2. 12:31 - Thanks for your comment. I really sympathize with your situation. Your comments with regard to the greater stability in the science profession agree with my experience. People should realize that 50K/year for two years beats out 100K for one year and then a year of enemployment. Taxes are just going to take more of the 100K and the lifestyles adjustment will be a killer.

    With regard to your loans, I can only imagine the frustration of starting to pay them down for he first three years and then not being able to make payments and seeing them go back up. That's terrible.

    I also have the same feeling about corporate employment over the last couple of decades that you have. Frankly, it used to be easier to get a job - even comparing 1990 to 2005. I get the feeling that this represents some kind of stealth employment metric that we don't have a good handle on, especially because the labor market is so elastic. Something like "corporate selectivity" as a precursor to change in unemployment. As corporate selectivity increases it will become harder and harder to get a job until the increased difficulty blossoms into increase in unemployment - which is then trackable. Seems like it would be useful to track the selectivity metric before people start losing their jobs.

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  3. May I just ask what options are there for young people who have gotten a law degree if they cannot find a legal job. Is there a level of debt that they can possibly pay off with a non-legal job and survive. I only ask this because I am a young attorney who cannot find a job. Unfortunately, everyone I talk to believes that law is very stable and very lucrative. I owe around $75K in school loans that all comes from law school and I just want to pay it off and be free.

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  4. 3:24 - You have my sympathies for your unfortunate experience - I really wish it had worked out for you. On the plus side, you only owe $75K and although that's a lot of money, it's a lot better than $200K. $75K is recoverable. Very uncomfortable, but recoverable. As for what you can do, it's time to take stock of your skills and what you have that might be marketable. What is your undergrad in? Is it a marketable degree? Also, don't be afraid to try and market yourself to different jobs at the same time. You can try to market yourself for legal stuff while trying to market your undergrad at the same time. What are your skills? Can you be a cop or a teacher? Do you have some entry into the business world? Can you network with your undergrad with regard to potential business opportunities? What are people hiring for in your area? Do you know anyone/can connect with anyone who works at a company that might take you?

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  5. $75,000 in debt is manageable depending on the interest rate and whether that rate is fixed or variable. Be happy that you only have that amount of debt. My feeling is that people graduating from law school today are looking at somewhere in the vicinity of $180,000 - 200,000 for law school (not including undergraduate loans). You should be able to get a regular job, i.e., one that pays on the order of $40,000 - $65,000, and make ends meet without too much difficulty.

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