What Do College Students Really Want - And Can They Get It From Law School - Part 4

In Part 1 of this series, 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.  In Part 3, we took a look at the Job Security factor and determined that a job as a lawyer is not very secure.  In this post, let's take a look at the Appealing Job factor.

New Associate Hiring - 2010 Survey and 2011 Projection

American Lawyer is now confirming what just about everyone already knew - job offers for summer associates were way down in 2010 as compared to 2009 (about 33%).  American Lawyer bases this on the results reported from the 59 firms that participate in their Summer Hiring Survey. Let's dig into the 2010 numbers and also make a projection of what the 2011 summer associate offer rate will be.

Summer Associates - "Clients" Not "Bosses"

In my previous post, I discussed how summer associates often have internalized a "corporate" paradigm and subconsciously expect that such a model will be followed when they "work at" a law firm.  Instead, a law firm operates very differently - lawyers must take responsibility for themselves and the senior attorneys are really the clients of the younger attorneys.  However, as summer (and new) associates attempt to internally resolve the dissonance between the "corporate" and "law firm" models, they often make wrong or nonsensical moves.  Let's take a look at some actual experiences that I have had or have discussed where summer associate's lack of understanding of the law firm model led them to the wrong move.

Summer Associates - Know Your Client

I sympathize with summer associates - and I remember being one.  You walk through the doors of this strange place called a "law firm" often armed with very little in the way of factual and useful information.  Unless the summer associate has had the opportunity to work in a law firm or maybe has relatives that are lawyers, the information that they have is typically a wacky gestalt of things they have experienced from TV, their law school experience, and their previous jobs.  TV we know (and they know) gives them the wrong idea.  However, often law school and their previous job experience also positions summer associates in a less-than-ideally-productive way.  Let's take a look at how this situation develops and some advice that summer associates should keep in mind in order to maximize their chances.

Recurring Expenses Will Bleed You Dry

A colleague forwarded me this article in the WSJ entitled "ROI: Is the iPad 2 Really Worth $2,000."  In it the author realizes that when he uses his capital to buy the iPod, the capital is no longer available for investing.  Consequently, the cost to him is not only the $500 up front cost, but all of the return that he would have made on the invested $500.

However, far more important is the insidious impact of recurring expenses in in drastically reducing the amount of money that you will have available for retirement.  For example, consider a $100/month cable bill - if the money was instead invested (even at a fairly conservative rate of 8%) then after 35 years you would have $100,000.

A $400/month car lease?  $400K after 35 years.  A $50/month telephone bill? $50K after 35 years. So what do we do about these recurring expenses?

"Stability" And Short Memories

I was talking with a law student recently and they indicated that what they really wanted in their law career was "stability."  Consequently, their plan was that they were only going to consider working at the largest of law firms because the larger law firms "never go out of business".   (Obviously, this was a 1L because you can see that they had no idea of the actual supply/demand of the hiring market and that they would be lucky to get any job whatsoever.)

When I looked skeptical, they said "Seriously, I bet you can't name one large law firm that has gone out of business in the last 10 years."  I responded instantly with "Brobeck."  They said "What?  I never heard of that firm!" (I think that they thought I was misleading them.)  I replied "It was a 900-person firm that went down in the dot com crash."  "Well OK," they said, "but I guess you can't name three!"  To which I replied "Jenkins, Altheimer, Testa, Thelen - and there are a bunch more."

I can understand where the law student was coming from - after the real estate crash and the associate layoffs, I can see how the desire for "stability" has replaced in many instances the desire for "top dollar".  However, the student apparently has a short "memory" for recent events in the law firm world.  Let's take a look at the associate's wrong assumptions and look at some aspects that they can be on the lookout for to help increase the stability of their career.

Getting A Good Deal Buying A New Car - Part 3 of 3

In Part 1 of this series, I revealed that my wife and I decided to get a new car and decided to engage in a competitive bidding process with several local dealers.  In Part 2 of this series, I described how the bidding process worked out in practice.  In this final Part, I'll tell you about something that blew my mind about the purchasing process, as well as some last-minute pressure from dealers and some bottom line thoughts!

One Way To Get A Good Deal Buying A New Car - Part 2 of 3

In Part 1 of this series, I revealed that my wife and I decided to get a new car and that I had sent a request for a quote to nine local dealers using Yahoo Auto - and asked a salesman who worked with us for a quote.  I told everyone that it would be a competitve bidding proceed - and it was!  Here's how it turned out!

One Way To Get A Good Deal Buying A New Car - Part 1 of 3

A few years ago, after 10+ years in practice, I finally bought my first new car.  Previously, I had only driven used cars in order to save money, but this new car was primarily for my wife and she was more concerned with a potential breakdown then I typically am.  She was especially interested in a Honda that was known for reliability.  I agreed to buy the new car, but I wanted to get the best deal that I could in the shortest amount of time - remember! every hour spent on the car purchase is an hour less billing/another hour longer you will have to work.  Also, I didn't feel too badly about buying this model new because this model of Honda typically holds its value well - as I checked on Kelley Blue Book.  I'll relate my experience below as one way a busy lawyer can try to get a good price with a minimal investment of time.

Tiny Green Shoots In Legal Hiring

First let me say that I still think that the supply of new law grads is far too great for the number of available jobs.  There was already somewhat of an issue with that in 2007, but the economic crisis of 2008 really brought it to a head.  Law firms cut hiring by 80-90% while the number of students attending law school shot up about 30-40% - the classic recipe for disaster of fewer jobs and more people looking for them.  Stop-gap provisions that firms implemented such as "deferrals" only pushed the problem down the road.  I'll make no bones about it - for current law students the situation is pretty grim.

Life Insurance - Do You Need It?

I have had a couple of people ask me about life insurance lately.  One thing that new attorneys sometimes don't realize is that once your bio and contact number go up on the firm website, you become target #1 for salespeople - after all, they "know you make a lot of money because you are a lawyer," right?  One of the areas that seems to be aggressively sold to lawyers is life insurance.  Lately, insurance salespersons are also approaching young lawyers under somewhat false pretenses by emphasizing their "certification" as a financial planner or something similar.  They say that they want to give the young lawyer a "free financial planning checkup" or something similar.  The attorney goes to a meeting with the insurance salesperson and "lo and behold!" it turns out that what the young attorney needs more than anything else (in the eyes of the salesperson) is insurance - typically life insurance.  The fat commission to the salesperson is not mentioned.

On the other hand, life insurance is not all bad - and can be something that you should have in some cases.  However, there are a whole host of confusing questions to consider.  I'll provide some answers below.

PawnStars and Pawnshops

OK, I admit it, I am addicted to PawnStars.  In case people don't know, PawnStars on the History Channel is a reality show that follows the owners of an upscale pawnshop.  People bring very diverse merchandise to the shop - including fine art paintings and museum-quality civil war relics - and the owners price it and negotiate with the sellers.  The negotiations are fascinating - as are the refurbishment the owners do on many of the purchases. PawnStars got me interested in pawnshops and there are a couple things that I learned that I will discuss below.

Love and Taxes - Part 4 - Upcoming Tax Changes

This is the final part of a 4-part series on taxes for lawyers considering getting married.  We discovered that for two lawyers getting married, filing as married-joint vs. married-seperate does not provide much in the way of impact (Part 1), but that declining to get married so that they can continue to file as single saves them about $9,300/year - and could save them $60,000 if they are willing to delay the wedding 5 years (Part 2).  We also found in Part 3 that having a child does not impact their taxes much - it only lowers their taxes about $1,000/year - but that switching from filing as single to filing as married-joint costs them an additional $10,000+/year in taxes - if both spouses continue to work.  On the other hand, if one spouse stops working, the total tax liability for the couple will be $10,000+ less than it would have been if the worker was filing as single.

In this Part, we will take a look at the potential impact of some of the proposed tax raises - and see if they help the young lawyer and her spouse live the American dream.

Love and Taxes - Part 3 - What About The Baby?

In Part 1 of this series, we met a young lawyer who is concerned about the tax implications of marrying her boyfriend.  Although we found in Part 1 that there is not much difference between them filing as married-joint as opposed to married-separate, we discovered in Part 2 that there is a very significant difference in taxes owed if they each file as single instead of as married - $9,300/year.  Further, if they delayed the wedding for a few years, they could save $60,000 on their taxes.

In her original e-mail, the young attorney mentioned that she was thinking about filing as single until she had her first child - and then switching to married-joint.  Below we will take a look at what impact having a child has on her taxes.

Love and Taxes - Part 2 - Filing Married vs. Single As A Lawyer

In Part 1 of this series, we met a young lawyer who is thinking of marrying her boyfriend, but is concerned about taxes. In Part 1, we compared filing as married-joint with filing as married-separate and found that there is really not much difference, but married-separate may be slightly worse.  However, what if the young couple decides to delay getting married?  Would you be surprised to find out that by delaying their wedding they could spare themselves paying $60,000 in taxes?  (Yeah, you read that right - $60,000!).  Read on below.

Love and Taxes - Part 1

Ahhh ... Young love - and taxes?  We all acknowledge our responsibility to chip in and pay for our society - although there is a lot of disagreement about who pays how much and what gets bought with the tax dollars.  In terms of personal finance, taxes are especially important as a practicing attorney because you pay so darn much of your income in taxes.  Additionally, tax considerations can impact your other life decisions as a lawyer - like whether or not to get married - like the young lawyers in this recent e-mail that was sent to me:

Not Rich at $250K - It's How You Live, Not What You Make

There has been a lot of talk lately about a recent post from a University of Chicago professor wherein the Professor mentioned that he made more than $250K, but did not feel "rich".  Here's Above The Law's take on it - as well as the take from Sweet Hot Justice and the ABA.  Some commentators have been critical of the Professor, but let's take a look at his situation as a way for young associates and those considering law school to gain insight into what their life will be like if they are lucky enough to win the law school lottery and earn top dollar.  I previously talked about why 145K/year does not go as far as new law grads think it will, but now we can get an example of what life is like for a lawyer more than 10 years out of law school.

The Lost Generation?

In response to the recent series of posts with regard to supply and demand (Part 1, Part 2, Part 3, Part 4), Coder E asked whether law students that were squeezed out today due to supply and demand would be part of a "Lost Generation" that will never get a job, or would they be re-considered if and when more lawyers are needed.  Once again Coder E has posed a great question - but a question that includes several competing concerns.  We will address the "Lost Generation" issue below.

The 4 Ways That New Associates Can Free Up The Most Cash To Pay Down Loans

Around this time every year, a new crop of associates starts at law firms around the country.  This year's crop is much smaller in the past and has had to fight a lot harder to get in.  Also, the recent layoffs have forced associates to confront the possibility that their employment may be eliminated quickly at any time - and that a new job in another law firm may not be available.  This new reality has made the new associates a lot more conservative in their financial consumption choices on average - which is probably good for their long term futures.  However, here are the five areas where associates could still free up a bundle of cash that could go toward loan payments.  More after the break.

Buying Vs. Renting - Followup

In our recent four-part series (Part 1, Part 2, Part 3, Part 4) we discussed calculating the total cost of buying vs. renting in order to determine which was the better financial decision.

I have had several great comments and suggestions both on the site and via e-mail.  These comments focused on 1) clarifying the tax deductibility of real estate taxes and mortgage interest, 2) including rental increases, and 3) identifying the ultimate online calculator for the buying vs. renting comparison.  We will discuss these further below: