Monday, October 5, 2009

How Much Will You Make As a Lawyer? Part 2

In Part 1 of this series, we took a look at what Law Schools were actually reporting as their average starting salaries.  Further, we took a closer look at one Law School's "sales" material and reviewed what impressions it might engender in a reader, and why those impressions might not be accurate.

In Part 2, we take a look at starting salary information as reported by NALP, the National Association for Law Placement - salary information that paints a very different picture from that shown in law school sales material.
Here's the chart of 2008 starting salaries based on self-reported data to NALP (the National Association of Law Placement).

For a student who went to law school expecting an average starting salary of $135K, the NALP chart is a nasty surprise.  Instead of $135K, the chart shows that the median starting salary is only $72K
.  We also note that 42% of the starting salaries are between $40K and $65K, while only 23% of the starting salaries were at $160K.  NALP's chart is based on a total of 22,305 reported salaries across many law schools.

Consequently, the student realizes that the "average starting salary number" that they had in mind from reading the law school's sales materials was way off.  Further, NALP actually recognizes that the recitation of median starting salaries by law schools may give students the wrong impression!  In this regard NALP includes the following statement with their chart:

"The new reality is that very few law school graduates actually make either the median or mean starting salaries, and so it is neither helpful nor accurate to describe starting lawyer salaries using those modalities."
So why do law schools still use it?  Because they need to sell - not because they are accurate or realistic.

One thought that might occur to a student is that the spike over at the right may represent the graduates from top law schools and that the rest of the curve may represent everyone else.  Although that might have some initial attraction, I note that even very low-ranked law schools still often report "private, large-firm" salary numbers that are similar to those reported by the top law schools.  Further, according to Harvard's own website, even a Harvard Law School grad may earn as little at $30K/year.

I would propose that the curve above is substantially repeated at just about every law school.  Sure, the top law schools may have a greater percentage in the high-salary spike, and lower ranked law schools may have less.  For example, if on average 23% of law students are in the high salary spike, then at a top law school the percentage might be as high as 50%, while at a bottom tier law school, the percentage might be 10% or less.

This makes more sense when you consider that a hiring decision may be based on both the specific law school rank and the GPA that the student earned while in law school.  For example, the number one student at UCLA would probably be a more attractive hire than the bottom of the class at Harvard.  To be less hyperbolic, a UCLA grad with a 3.9 would probably be more attractive to most firms than a Harvard grad with a 3.0.

Thus, our hypothetical average law student with average grades at an average law school resigns themselves to making $72K rather than the $135K that they may feel they were told to expect.

However, the student's expectations of $72K/year may still be too high! - as we will explore in Part 3.

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