Why The ABA Accreditation Committee Won't Lead - Part 1 - The Problem

There's a great article on AboveTheLaw with regard to the bi-partisan heat that is currently being put on the ABA's law school accreditation committee with regard to their failure to regulate legal education in a meaningful way.  The ATL article exposes as bunk much of the ABA's response to Senator Grassley's questions and raises a couple of pointed issues.

However, the author and many commentators that have entered the practice of law more recently might be able to more readily understand the accreditation committee's response with the benefit of a little context. In this post, we will take a look at the context of the problem - and then look at some aspects for fixing it in the next post.

Everything Sunny All The Time Always

In my most recent post, I referenced an editorial from the National Jurist - and something from that editorial has really stuck in my craw, especially in light of their recent "everything sunny all the time always" article about how law students today enjoy a better standard of living than 10 years ago.

More specifically, the most recent editorial states:

It’s almost as if the big firms grew fat on the wild speculation and frenzy of the housing market and financial markets. And then when things came to a halt in 2008, the party was over for the big firms.  Sadly, many law students were hoping to cash in on that party, but arrived too late. That then led to a lot of negativity about law school over the past few years – especially from the so-called scam bloggers.

Initially, I agree with the perception that large law firms expanded along with the housing and financial bubbles - and then crashed in 2008 when the work went away.  However, the rest of the quote seems to adopt a tone that is particularly offensive in light of the seemingly constant pro-go-to-law school message that National Jurist appears to espouse.

Law Graduates Today Vs. 10 Years Ago

There's an somewhat misleading article and accompanying editor commentary at the National Jurist.  In the article, they assert that recent law grads enjoy a better standard of living than 10 years ago.  More specifically, they assert that graduates employed by law firms have seen their "standard of living" rise by 59% since 1999, while those in public interest have seen their "standard of living" rise by 6%.  They also assert that the impact of the recent income-based repayment options is to further increase this advantage.  While the editor commentary appears to temper that assertion a great deal (although why they did not include the commentary in the article for fairless' sake, I don't know) it still doesn't paint an accurate picture of the changes in standard of living for a person contemplating law school.  Let's take a tough look at the numbers below.

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?

"Right-Sizing" Law School Admissions

As reported in the Wall Street Journal, and on the ABA site, applications to law school have dropped 11.5% - to the lowest level since 2001. There's also a post over at Jobless Juris Doctor.  But what does this mean for the future?

"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.

Increasing Return on Education Dollars

Paul Krugman's article in Sunday's New York Times is generating a lot of talk.  Krugman points out that a lot of jobs considered "white collar" are subject to automation and are currently being outsourced.  From this point he extrapolates that "education is not the answer", but instead the answer is to give more bargaining power to unions.  

Over at Restoring Dignity To The Law, J-Dog emphasizes that although increasing education may have led to a better life 40 years ago, the same may not hold true now.  He also mentions that education has shrinking economic returns.  Over at Law School Tuition Bubble, Matt also references the article.

Is Krugman right?  Should we just encourage our kids to be janitor with strong unions instead of going to college?  More below.

Law School Song

On the lighter side, someone recently sent me a link to this hilarious video.  Could this be good, cost-effective advice to provide an alternative for potential law students? Heh Heh.  Woof!

Stop Exploiting Foreign LLM Students

As we all know, law schools are reporting misleading statistics (especially regarding employment) in order to convince students to spend hundreds of thousands of dollars obtaining a law degree.  This leaves many students with hundreds of thousands of dollars in debt and no job or any other realistic way of paying off the loan.  For those that do get a job, they can look forward to a lifetime of crushing debt - for example, if they owe $200K at an average interest rate of 8% (which is pretty realistic for a law school with a $40K/year tuition) then the first $16K/year that they pay goes to only pay interest - if they are in the 28% bracket, that means that the first $22K they earn goes to loans.

That's bad - but it could be even worse.  Imagine that the promises were even higher - this misleading statistics even worse - and the debt even more insurmountable.  That's the reality for most foreign LLM students. 

Public Unions And Competition

Most people are aware that the Wisconsin Governor has taken on the Wisconsin public unions.  The Governor wants to take away the rights of unions representing government employees to ask for more than the rate of inflation as an increase in salary.  Also, they would have to pay more for their health insurance and more toward their pensions.  Finally, government jobs would no longer be able to force anyone who gets hired to automatically join the union and pay union dues.  The Wisconsin situation raises a whole host of issues and there is a lot of misinformation on both sides.  Let's take a closer look below.

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.

"Restoring" The Middle Class - Promise or Threat?

It's pretty well known that the middle class is shrinking in this country.  Usually, when politicians cite the shrinking middle class, they are implying that most people are getting poorer - possibly that the "elite" are somehow actively campaigning to drain the middle class to turn more Americans into wage slaves.  Both parties seem to use this rhetoric - Democrats use the shrinking middle class to justify additional spending on social programs.  Republicans use the shrinking middle class to justify stances on taxes and immigration.

The issue has become intensely politicized, but let's take a look at some fundamental data and we may see something really interesting going on!

Year End Planning - Make $300K with Charitable Donations

Here's another short post with a financial aspect that you may want to look into before the end of the year.  Our previous tip was to give yourself an immediate raise by adjusting your withholding - the extra money can even go toward your 401K or an IRA. 

Converting To A Roth IRA? - Part 2

This is a continuation of Part 1 with regard to Converting to Roth IRA.

Converting To A Roth IRA? - Part 1

As many of you know, in 2010 the AGI limitation for converting a traditional IRA to a Roth IRA has been removed.  For many lawyers, this means 1) a great of questioning as to whether the lawyer should be converting a traditional IRA into a Roth IRA, or 2) that the lawyer may have their first crack at actually putting any money into a Roth since the program began - due to the income limitations for contributing directly to a Roth that previously existed.

But does it make sense for you to convert to a Roth?  The question is actually best answered in the context of your total IRA and 401K situation.  I'll outline a methodology for determining whether you may want to convert to a Roth IRA below, and then address some concerns about the conversion.  This post got kind of long, so I have broken it into two Parts.