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Is a Law Degree a Good Investment Today?
November 23, 2011 12:38 PM   Subscribe

Professor Herwig Schlunk of Vanderbilt University explores whether a law degree is a good investment today. (SSRN link)

Paul Caron of TaxProfBlog summarizes Schlunk's findings here.
posted by reenum (49 comments total) 9 users marked this as a favorite

 
Learn from me: it is not.
posted by Navelgazer at 12:40 PM on November 23, 2011 [1 favorite]


Yeah, let's just jump straight to the conclusion that anyone who passed the bar within the last 3 years knows: no. No, it's not.
posted by 1adam12 at 12:41 PM on November 23, 2011 [1 favorite]


Summary of summary: probably no.
posted by mightygodking at 12:42 PM on November 23, 2011 [1 favorite]


Response to summary of summary: in the United States it's definitely no.
posted by mightygodking at 12:43 PM on November 23, 2011


That looks like a lot of numbers. And we in the law biz have a saying: "If lawyers could do math, they'd all be doctors."
posted by Capt. Renault at 12:45 PM on November 23, 2011 [10 favorites]


Waaaambulance Chasers
posted by wcfields at 12:47 PM on November 23, 2011 [6 favorites]


Even as someone who finally has a decent legal job, I still interrogate people about their motives and knowledge when they tell me they're thinking about law school.

This makes me a delightful dinner companion, I assure you.
posted by Bulgaroktonos at 12:48 PM on November 23, 2011 [5 favorites]


"Herwig Schlunk" is a fantastic name, is all I want to say.

...and the door is...ah here it is.
posted by everichon at 12:50 PM on November 23, 2011 [10 favorites]


I've said it before, and I'll say it again: I would give almost anything for the chance to convince 25-year-old me not to go to law school.

I'm working again (although not practicing as such) and no longer terrified of my immediate economic prospects, and this has only underscored what a collossial waste of time and money it was for me to go to law school.

Be Ye Not So Stupid.
posted by gauche at 12:53 PM on November 23, 2011 [2 favorites]


The first comment on the blog post is pretty important here:

"A twelve percent discount rate seems very high in an economy where risk free returns pay interest rates of 1-2%, the stock market has broken even over the last decade, and junk bonds have yet to break even this year. The truth is that there is no alternative investment where a recent college graduate can put a quarter million and reliably expect much more than a 3%-4% rate of return.

Also, a law degree has much to be said for it as an asset protected investment. Unlike other assets, no one can take your degree from you by any means (although disbarring you after various due process steps can reduce its economic value).

At a more sensible discount rate, the case of law school looks much better, particuarly given that the returns from a law degree are disproportionately in the later years of one's career."
posted by anotherpanacea at 12:54 PM on November 23, 2011 [3 favorites]


I envision a future where all Americans are required to become business majors, at birth.
posted by Avenger at 12:56 PM on November 23, 2011 [5 favorites]


SOMEONE OUGHT TO SUE THE BASTARD.
posted by quonsar II: smock fishpants and the temple of foon at 12:56 PM on November 23, 2011


The advice I've given my friends is this: to go to law school and have it be a good idea, you must:

a) know that you absolutely have to be a lawyer (that is, someone who tries cases and counsels clients, and not just someone who likes to talk about policy and win arguments);
b) know the geographical region in which you want to practice and spend the rest of your professional life;
c) have already built a professional network in that region such that you will have little trouble finding summer and permanent jobs in that region;
d) can get a full scholarship ride from a school that, although not necessarily nationally known or even first-tier, will help you land the decent job in your region; and
e) have no other job prospects.

If you are anything less than 95% certain of any one of these factors, going to law school is a terrible idea that will cost you a lot of money, stress, and time.
posted by gauche at 1:01 PM on November 23, 2011 [10 favorites]


This seems about right to me. The problem is that it's hard for people to predict how they will do in law school. There is a lot of big fish in a little pond going on and all of a sudden you're competing against people who were also all at or near the top of their class. Most people have never touched a case before going to law school and have no idea if they will catch on fast. English majors struggle with the very technical legal writing. I think the only concrete info you have going in is how well your school is ranked and how much it will cost you. You still might make it at a lower rank school but you have NO guarantees. You can commit to studying day and night, there is no guarantee you'll make it into the top 10% and that's something very hard to grasp before going to law school because most people going to law school were at the top of their classes or easily could have been if they had put in the work. It's easy to say I told you so after the fact, but you're dealing with smart, highly motivated people who probably have always succeeded if they tried hard enough. And most of these people are about 22. I really can't blame them. The stats law schools provide are outright lies. They are set up to fail.
posted by whoaali at 1:01 PM on November 23, 2011 [1 favorite]


It is, if you want to be an attorney. I did.

I didn't go to law school "to get a job." Maybe my perspective was different, coming from a career in jazz where nobody was making any money anyway and the question is always whether you need, in your gut, to be doing this and if not then stop. But I didn't go to law school for "a career" or because it made sense on a financial spreadsheet. I went to law school because I knew that practicing law was the right place for me, and well, that's the hoop I had to jump through to get there.

So maybe I should revise. Maybe it isn't a good "investment." But whether it's a good idea is a different analysis. For me, it was a great idea and I'm happy.
posted by cribcage at 1:06 PM on November 23, 2011 [6 favorites]


That looks like a lot of numbers. And we in the law biz have a saying: "If lawyers could do math, they'd all be doctors."

Which is always weird when I hear it because doctors don't do much math.

Meanwhile, accountants...
posted by OnTheLastCastle at 1:11 PM on November 23, 2011


I find legal issues fascinating, and I'm all about social justice and saving the world and whatnot so when I was adrift in my early 20s, career-wise, I figured I'd go to law school.

Then I sort of fell into a job in a small law office that did Good Guy law. Because it was such a small office, the two of us who did admin-type stuff (there was a law student intern who did research) did a little bit of everything - billing, proofreading documents, typing the handwritten letters of the senior partner (worst. handwriting. ever.), scheduling, and so on.

Despite my strong interest in the kind of law practiced by this firm (civil rights, school desgregation), I had to proofread filings and such while pacing and reading aloud, because I discovered that reading legalese makes some switch in my brain flip to "sleep" almost immediately. And some of the cases had dragged on for more than 20 years.

Thanks to that job, I was saved from three years of hell, and tens of thousands of dollars of debt.

Given the job market and the cost of law school, the only people who go should be the ones who want to be lawyers, and who have a decent basic understanding of what being a lawyer actually entails. And who can carry the kind of debt they're likely to have when they get out of school.
posted by rtha at 1:15 PM on November 23, 2011 [4 favorites]


I never articled, and ended up a legal academic and not a lawyer. After my law degree, I went off and did my graduate work. However, I did so in the ere when law school costs were rather cheap (at least here in Canada). Now that this isn't the case, I always advise my students who are thinking of law school or graduate work do to the graduate degree first.

These days the debt associated with law school is so great that you simply can't afford to do things the way I did. You've got to practice, and given the current market you may not even get the opportunity to do that.

Look at problems in the legal profession, like the extremely poor retention of women in the profession. Problems like that are indicators of a poor work environment in general, not just for women.
posted by sfred at 1:22 PM on November 23, 2011 [2 favorites]


It is, if you want to be an attorney.

Lots of people who want (and wanted) to be attorneys went to law school and cannot find jobs. Wanting to be an attorney has virtually nothing to do with getting a law job. I suppose you can always hang up a shingle and "be an attorney" with no clients, but that's exceedingly cold comfort.
posted by jedicus at 1:23 PM on November 23, 2011 [2 favorites]


Eh. You do need to consider ROI, obviously. But you can make law-money (aside from the top end) doing a number of other things. So do it because you've investigated what actual legal work is like day to day and you're reasonably sure you'll love that. If you do it because of the money, you're either going to be miserable or have a far superior threshold for boredom and ennui than me.

The people I most strenuously talk out of law school want to go because of the glamour. (lol)
posted by Durn Bronzefist at 1:24 PM on November 23, 2011


I'm happy with my law degree, despite the current bleak job outlook. I have no question that what I'm currently doing is more interesting to me than the computer programming job I'd be doing otherwise. My salary is not as high as I'd like but I'm on the verge of something satisfactory. My loans aren't as bad as they could've been (opted for in-state public school at decreased tuition) and I'm not certain they'll be paid off soon, but I'm certainly not alone in that respect. Not sure how much more amazing other options would've been, honestly. But I'm 4 years out of law school; clearly I've had employment opportunities and accumulated experience that newer graduates will likely never see unless they have a decent GPA at a Top 10 school. It's a weird position where law school was right for me, but was a grave mistake for someone even one class below me, and it was just luck which side I ended up on.
posted by naju at 1:24 PM on November 23, 2011


Tax Prof Law doesn't make mention of Income Based Repayment, which kinda shields you from the worst of the debt should you be unable to find a good job after law (or any other type of school). I don't think this makes law school a good idea necessarily, nor do I really think this is the best way to handle the problem of expensive education, but it significantly changes the equation.
posted by skewed at 1:26 PM on November 23, 2011 [1 favorite]


I'm glad I didn't go to law school. Almost everyone I know who has done so hates being a lawyer - some have quit or only write briefs on retainer to pay the rent. The few who like it have strong sociopathic tendencies and if unable to bully people professionally, would have ended up as waterslide lifeguards or serial rapists. I can easily see some normal people enjoying the profession; I just don't know any.
posted by jimmythefish at 1:27 PM on November 23, 2011 [3 favorites]


More on the discount rate: Schlunk's justification for the discount rate is that private loan rates are partially subsidized and so only count part of the cost of funds, plus the uncertainty of the income stream (i.e. the possibility of unemployment or non-Big Law employment) ought to force us to use a higher discount rate, socially. But individuals don't make social decisions: they either pay their loans or they don't, based on their own income.

Given that, I think the contemporary cost of funds ought to be the only deciding factor, so say: 4%. At that rate, you'd only have to make $5k-$7k more as a lawyer than at an ordinary post-collegiate job to justify the expense, and even this ignores what he calls the "option value," i.e. the value of the law degree for non-law jobs and for self-employment.

In other words: this is a bullshit claim based on massaging the numbers to justify everyone's gut feelings and general dismay. Even though the market is bad, a law degree is still a good investment.

That the situation is currently bleak just means that some of the most privileged people in the world (only 8% of the American public has a graduate or professional degree) will have to work a bit harder to maintain a bit smaller a portion of their privilege. This is not really what most people think of as bleak: nobody who compares the job they could have had without a law degree and the jobs they can get with a law degree would consider this a realistic assessment.
posted by anotherpanacea at 1:27 PM on November 23, 2011


Who's worse off:

1) Lawyer who spends 150k in tuition on a law degree, 100k in opportunity costs, and gets a job paying enough to make it back over the course of a few decades

2) Teacher who gets a teaching certificate in college (no extra tuition or opportunity cost), but is giving up $10k a year in salary for their entire career

People often choose to give up income to do things they care about. We don't criticize teachers for making a bad investment to pursue a dream, why criticize lawyers?
posted by miyabo at 1:28 PM on November 23, 2011


We don't criticize teachers for making a bad investment to pursue a dream, why criticize lawyers?

Objection! Asked and answered.
posted by TheWhiteSkull at 1:32 PM on November 23, 2011 [2 favorites]


Miyabo, because if you don't like teaching, it's not too hard to walk away after a year, having given up relatively little. It's pretty hard to walk away from $200k in debt, and the three of law school years that very few people enjoy or find practically useful for anything are unrecoverable.

Also, just about everyone is familiar with what teachers do, we've all watched them do it. We don't see the faculty meetings and the grading of papers, but it's not a profession that's mysterious. Most people don't really understand what lawyers actually do, so it makes the claim "I really want to be a lawyer" suspect.
posted by skewed at 1:32 PM on November 23, 2011 [4 favorites]


This is one of the particular peeves I had about the comments that people were throwing n the early days of Occupy, when the WeAreThe99Percent was almost all about the crushing weight of student loans. Like, "OMG, you have $100K in student loan debt? You probably had an Art History degree, you spoiled idiot LOL!"

I know people who've pursued law, biology and computer science degrees and amassed close to or more than $100k in tuition debt and it's rather hard to look at any of those educational choices and say that it's the equivalent of pissing away your future.
posted by bl1nk at 1:35 PM on November 23, 2011 [1 favorite]


Also, just about everyone is familiar with what teachers do, we've all watched them do it.

Tell that to every conservative who's argued that teachers should get less pay because they get summers off.
posted by mightygodking at 1:41 PM on November 23, 2011 [3 favorites]


Schlunk.

That is all.
posted by ooga_booga at 1:42 PM on November 23, 2011


Tell that to every conservative who's argued that teachers should get less pay because they get summers off.

I'm sorry, I don't understand what this has to do with anything I said. Conservatives have an irrational anger toward unionized public employees and public education in general?
posted by skewed at 1:47 PM on November 23, 2011


I took it as "conservatives aren't really familiar with what teachers do, because they think teachers have the entire summer off"
posted by desjardins at 1:53 PM on November 23, 2011


Hmm. I've known a number of people who thought they would like teaching and didn't, or did but then got burned out. True, though, they went in with the expectation that they would be up in front of a class, teaching something, and that was part of the job, whereas a good number of people still seem to think lawyer = litigator which is far from necessarily being the case.

I guess I'll offer the little-heard view that I'm surrounded by lawyers who like their jobs a whole lot. I'm so-so on mine. I love court. LOVE IT. And that's not what I'm doing anymore, so it's hard for me to feel fully engaged, but I also enjoy not walking around like I have a hornet's nest in my belly, so there is that.
posted by Durn Bronzefist at 1:54 PM on November 23, 2011


Conservatives have an irrational anger toward unionized public employees and public education in general?

You just noticed?

I think it is a big mistake to look at any "profession" in terms of lifetime earnings at this juncture in history. Very few who manage to find any kind of employment after getting an advanced degree in the next few years will not be doing the same thing in ten years, let alone twenty.
posted by carping demon at 1:56 PM on November 23, 2011


jimmythefish: Those who enjoy practicing law have sociopathic tendencies, and would've been serial rapists otherwise? Really dude? What about those who work tirelessly for the public interest? Or those who work privately but work toward positive change? Or are doing transactional work and aren't hurting anyone more than a typical accountant would? Or those who stand up for the rights of unpopular/oppressed individuals? etc.
posted by naju at 2:03 PM on November 23, 2011


I think it is a big mistake to look at any "profession" in terms of lifetime earnings at this juncture in history.

I was really just coming in here to say this. As a dude who spent 10+ years in school after high school to end up with a PhD in mathematics, can I say it was something that I knew I wanted to do, lo those many years ago? Now that I know what it is that I do, I can say "no, I didn't think it would be this".

However, I really, really like what it is I do. I get pissed off sometimes when trying to teach people who obviously don't care about what I'm talking about but expect to get an A anyway, but overall my job is pretty rewarding. When I'm not teaching, I spend a lot of my time playing around with and thinking about complex ideas that I wager something like .01% of the population of the planet have even heard of. I think that's kind of cool.

I don't make a lot of money. I have a lot of student loans from my undergraduate days (I went to a sort of expensive school with no scholarships for some reason), but I'm single and have no one to take care of but myself. As long as I have a job, my bills will be taken care of, for the most part. I don't live large and lavish, but I have a pretty nice apartment and some cool things in it.

I'm fine with it.

Would I suggest someone take this path? Absolutely not. It has irrevocably put me on some track where I pretty much have to keep up this particular lifestyle (not spartan, as I said, but definitely leaving me wanting for a few things). I can't afford to start family now, and probably not at least for 10 years. I don't think I could find a partner who'd be down for that right now. That means, essentially, I'm going to be a bachelor for a while. That's fine with me.

I gave up a lot of things, but I got a lot of things in return.
posted by King Bee at 2:04 PM on November 23, 2011 [1 favorite]


I stopped teaching high school to become an attorney. I was not a burn-out, and I loved and love teaching and would do it again in a heart-beat. I left for two reasons: (1) better money and (2) the lock-step bureaucratic silliness of a Texas school district meant no incentive to keep teaching my ass off instead of showing videos and handing out worksheets, since we'd get the same salary if we started at the same time.

(1) has proven to be a good reason. Teaching pay wasn't bad and my frugal wife and I could certainly make do (especially since the investment to become a teacher was minimal, or at least the "baseline" costs of a bachelor's degree), but I make more than that now for the three years of sacrifice to have been worth it. My wife and I saved the money we made while teaching and then she worked while I went to school, so we got by with minimal debt at a Catholic, fourth-tier, regional law school. I clerked for courts for two years afterward and then got a great job. I know others' mileage varies, but that investment has definitely been worth it for us. So if those are the investment terms we're talking about, I would say it has been a good investment for us.

(2) is sort of still percolating. While I don't know if there ever was a golden age, the legal profession has changed. A lot. Not for the better.

I tell almost everyone I meet not to go to law school unless they have money saved up and are married or have someone to support them. Financing the whole thing is really risky unless you're a stud at a stud school, and even then...
posted by resurrexit at 2:04 PM on November 23, 2011


I liked law school, and I like being a lawyer, and I work with people who like being lawyers. Of course, I graduated in '04 when things were better, and I work at a public interest place with good hours and decent wages. Too many people go to law school with dollar signs in their eyes. Those jobs are not only hard to get, but they're absolutely dreadful. The hours, the tedious work, ugh. I know there are biglaw people who enjoy it, but they seem pretty rare.

I feel so terribly sorry, though, for the interns we've had the last couple of years. I wonder how many of them knew what they were getting into. And we just interviewed for two open positions and I felt sad for the smart, committed folks that we couldn't hire. The market is so bad.
posted by Mavri at 2:09 PM on November 23, 2011 [2 favorites]


I don't regret doing mine, although I've never used it for legal work - other than about a year of unpaid refugee advice, which I mainly did as karmic payback for being born in Australia because of a refugee resettlement programme.

It helps that when I did my degree Australia was still on the tail end of a policy of free tertiary education, so it only cost me a nominal $13K with a B.A. thrown in, at a school that at the time was regarded as the country's best.
posted by UbuRoivas at 2:34 PM on November 23, 2011


I think the more appropriate question is what is the utility of law school itself. This article simply assumes that it must cost 150k and three years of schooling to become a lawyer. Whether or not it's "worth it" to become a lawyer is a logically different question than whether or not it's worth it to go to law school. If the legal education industry did not operate as a cartel subsidized luxuriously by the federal taxpayer it might find a more efficient way (or more accurately a way at all) to train young college douches living off their parents' teet to become trained legal professionals capable of adding actual value and supporting themselves. As the system currently functions law graduates are spit out by the truckload having the slightest clue of how to contribute value to any legal machination and are castrated financially for life. The absurdity of having a net worth of negative $150k+ at age 25 and nothing but a piece of paper to show for it is one of the great bemusements of modern American culture. One of the telltale signs a country is on the "right path" is when it has taken to outright exploitation of its young people. Although to be fair it's probably a better deal than joining the army.
posted by norabarnacl3 at 2:47 PM on November 23, 2011 [3 favorites]


If the legal education industry did not operate as a cartel subsidized luxuriously by the federal taxpayer it might find a more efficient way (or more accurately a way at all) to train young college douches living off their parents' teet to become trained legal professionals capable of adding actual value and supporting themselves.

As a law student, I am tempted to agree with the thrust of your argument, but as a non-teet-suckling douche, I feel conflicted.
posted by dixiecupdrinking at 3:44 PM on November 23, 2011 [1 favorite]


Anyway, I've skimmed the article and while it's nice to see someone within legal academia looking at this problem, it's really not much more sophisticated than the sort of back-of-the-envelope calculation that anyone can and should do before enrolling in any grad program.

I continue to think that a sliding scale of bad idea-ness applies to law school. No matter what school you go to, there is some residual risk associated with the sheer expense of tuition, the opportunity cost, and the chance that you'll just hate being a lawyer. If you have to borrow $200,000 to attend, even if you can get a big firm job, it will probably take you around six to eight years from the day you enter law school to break even. This is what I would stress to people.

That said, the risk is minimal at the top. Get into Yale, Harvard, or Stanford? You'll be able to service your loans and they will keep you living comfortably if you want to do public interest work. Columbia, Chicago, NYU? The rest of the top ten or so schools? It helps if you have some scholarship money, and that small percentage chance of financial ruin starts to creep upward, but it's still not a terrible bet.

Still, only a very small percentage of law school applicants even have these options. When the choices available to the top 5-10% of applicants are just "not terrible," that does not speak highly of the profession's prospects.

It is just too damn expensive, that is really the bottom line. At least it's not incoherent for schools to charge $45,000 a year when most of their students are making $160,000 in their first year out, but local schools that place their graduates into jobs paying $50-60,000 charge essentially the same tuition, which is borderline unconscionable.

St. Johns charges $1,935 per credit, which works out to around $48,000 a year. Cardozo charges $47,800. Brooklyn Law charges $48,416 (I love how they pick such a precise number to make it look as if the tuition is actually related to some specific bundle of expenses). Hofstra charges $44,974. Seton Hall charges $46,000. Pace charges $40,730.

On a normal ten-year repayment, a graduate of any of these schools who borrowed full tuition (even putting aside living costs) is going to owe in the neighborhood of $1,700 a month, conservatively. Each of these schools graduates maybe a dozen people every year who can reasonably afford those kind of payments. I don't know how anyone involved in the administration of these schools can sleep at night knowing the financial ruin they've imposed on most of their students.
posted by dixiecupdrinking at 4:17 PM on November 23, 2011 [4 favorites]


(And you get doubly-squeezed: Not only are the salaries lower out of lower-ranked schools, but it is also significantly harder to find one of those low-paying jobs. I don't want to make it sound like $50-60,000 is the average salary you can expect; that's actually probably on the high end of what the average employed graduate might make, let alone those who can't find anything at all.)
posted by dixiecupdrinking at 4:20 PM on November 23, 2011


jimmythefish: Those who enjoy practicing law have sociopathic tendencies, and would've been serial rapists otherwise? Really dude?

Maybe you should try reading what I wrote.
posted by jimmythefish at 9:04 PM on November 23, 2011 [1 favorite]


A few years ago, I felt lost in my life, and I briefly considered Law School and becoming a Lawyer.

I'm still grateful every day that the unanimous reaction to this was "FOR THE LOVE OF GOD, DON'T DO IT" I didn't, and am boning up on my math to take Computer Science classes instead.
posted by spinifex23 at 10:11 PM on November 23, 2011


While I certainly found this interesting.. What degree out there is any better of a choice? Be it undergrad or masters. You know how few people I know that actually do what their degree specializes in? The most important about this is the note about the unique factors to the student being the real guiding principle. I personally think the most successful people I know could probably be successful at whatever they tried to do.
posted by straight_razor at 11:28 PM on November 23, 2011


What degree out there is any better of a choice? Be it undergrad or masters. You know how few people I know that actually do what their degree specializes in?

Almost all the engineering majors I know are actually doing engineering.
posted by desjardins at 8:11 AM on November 24, 2011


While I certainly found this interesting.. What degree out there is any better of a choice?

One that doesn't cost $150,000.
posted by dixiecupdrinking at 9:48 AM on November 24, 2011


I absolutely loved law school, but it is total garbage. Maybe 25% of law school was remotely relevant to the practice of law. It's insane that I owe over $200,000 for mostly nothing. If there were another path to becoming a lawyer (bring back apprenticeships!), that would go a very long way to improving things. I'm pretty much in the best possible position coming out of law school (I love my biglaw job! Guess I must be a sociopath) and it's completely obvious to me that the system is nonsense. If the bar didn't have a stranglehold on entry to the profession none of this would be a problem. These kinds of inflated rents are the reason we don't like monopolies. The law needs a strong dose of competitive capitalism.
posted by prefpara at 4:39 AM on November 25, 2011


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