Wednesday, September 8, 2010

When Is It Reasonable To Go To Law School? Part 2

In Part 1 of this inquiry, we set forth a determination methodology for figuring out whether it was reasonable to go to law school.  In summary, assuming that you are not independently wealthy, and you definitely know what the practice of law is like and you want to practice law, then perform two calculations depending on your nature. If you are more about personal fulfillment, then determine the minimum amount of income that you need and the amount the 50th percentile makes after law school.  If the post-law school amount exceeds your requirement for your projected working life (including potential family expenses and after loan payments and taxes) then you are free to go.  On the other hand, if you are more about maximizing your personal utility, then determine over your working life the amount you would make at your backup plan vs. the amount the 50th percentile makes after law school (including loan payments and taxes) and go with whatever is greater.

In Part 2, we will take a look at some variables that might influence our calculation one way or another such as; rank of law school, whether you go a scholarship, undergrad degree and more.

First, once you are considering a specific law school, you have at least two factors that help to make your calculations more concrete.  First, you will know the actual tuition and living expenses which help to make your "cost of law school" calculation more accurate.  Second, you should try to get data with regard to the specific hiring outcomes of that specific law school's graduating class - the whole class, not just those with big firm jobs - and then plug that into the post-law school salary information.  Remember, you typically want to use the 50th percentile unless there is an influencing factor as we discuss below.

Second, if you have certain undergraduate degrees, it may be appropriate to use something greater or less than 50th percentile.  For example, students with hard science or solid business/accounting degrees that are going into patent or corporate law typically have outcomes that are better than the class as a whole.  It may be reasonable to use somewhat higher than 50% (but not much), especially for a very in-demand undergrad.  These students typically represent only about 15% of the class.  However, the converse is also true.  Without such a degree, you should consider your outcome to be that of 50% of the remaining 85% of the class - or 42.5% of the class as a whole.  That is, if the graduating class at your potential law school has a 40th percentile where people are hired at a salary of $35K, then calculate that you will make just over that.

Third, did you get a scholarship?  If so, reduce the cost of going to law school when considering a calculation for that specific law school.  This will also reduce your future loan payments.

Fourth, the rank of the law school is loosely tied into a determination of the hiring probability and average starting salary of the law school.  Emphasis on "loosely".  You may also wish to consider the geographic impact of the potential law school vs. where you want to practice.  Most law schools - even those that call themselves "national" - have a varying presence and relative hiring percentage in different parts of the country.  For example, even though the article about "Who should go to law school" references T8 as desirable, and I agree in general, you have to realize that the impact of one school vs. another is going to differ geographically.  For example, in Chicago the list might go something like Harvard - University of Chicago - Northwestern - Stanford - Ann Arbor.  Individual lawyers and firms may vary a little, but most here would probably not put University of California-Berkeley ahead of either University of Chicago or Northwestern, for example.  In fact, most would probably rank (and hire) the University of Illinois-Urbana (#21) ahead of Cal-Berkeley.

This reflects a geographic bias both based on the location of the school and based on what schools the hiring partners went to.  Frankly, you are much more likely to hit a U of C or Northwestern lawyer on the hiring committee than Yale here in Chicago - and they value their schools more.  The same has been true when I discussed this with colleagues in other geographic areas.  Just about every area favors the law schools near it.  Be aware that if you choose to go somewhere like U of California-Berkeley, but are trying to practice in Chicago, you will face increased difficulty and consequently should lower the percentile of compensation that you think that you are going to get.  However, there's no significant bonus if you are going to law school and practicing in the same area because so many others are also doing so.

More generally, I have interviewed and passed on many candidates from T8s and I would not view going to one of the T8s as a lock on a job - especially in this economy.  True, without consideration of other factors, your employment odds from a higher ranked law school are better than a lower ranked law school, but it is by no means a given.

One other thing that I really like about Angel's analysis is that she breaks the consideration into two stages 1) should you go, and 2) should you continue.  This acknowledges that as you gain more information about your first year performance, your equation for future earnings after law school (or even getting a job in the first place) becomes clearer.  I definitely agree with her that there is a time to cut your losses and stop incurring the expense of law school.  Referring back to Part 1, cut your losses when either 1) it no longer appears that the law degree will provide the minimum needed amount, or 2) your projection indicates that you will now make more at your backup plan over time.  Also recall that your backup plan analysis should now take into account the already-acquired debt.  It has to be paid off whether you continue in law school or not.

I also agree with Angel that in this economy, after your first year your future is pretty much decided.  I would put it at about 60% decided after first year.  Further I would put it at about 90% decided after the first semester of your second year.  That is, if you didn't do well your first year and you didn't get picked up during your interviewing during the first semester of second year, then it is pretty much over.  Not to be depressing - just statistical - and saving you from an even worse outcome. 

As a general rule, if you are in the bottom 20% of your class at the end of the first year, you should probably think about limiting your losses.  However, note that the percentage will vary depending on the hiring odds at your school.  Bottom 20% at Harvard?  Maybe try that first semester second year.  Bottom 50% at T4?  Probably time to move on.  After the first semester second year, unless you are in the top 20% at Harvard or the top 3% at T4, then it is probably also time to move on.

In summary, I would respectfully assert that under some conditions, going to law school can be a reasonable decision.  Unfortunately, I think that the majority of people going to law school today are not making a reasonable decision. The primary factors for this are 1) apparently inaccurate representations of post-law school opportunities by the law schools, and 2) massive and unexplainable egotism on the part of potential law students that causes them to think that what happens to everyone before them won't happen the same way to them and that the odds just somehow don't apply to them.

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