Is Law School a Losing Game?

Discussion in 'Wall St. News' started by hoffmanw, Jan 17, 2011.

  1. Is Law School a Losing Game?
    Published: January 8, 2011

    IF there is ever a class in how to remain calm while trapped beneath $250,000 in loans, Michael Wallerstein ought to teach it.

    Here he is, sitting one afternoon at a restaurant on the Upper East Side of Manhattan, a tall, sandy-haired, 27-year-old radiating a kind of surfer-dude serenity. His secret, if that’s the right word, is to pretty much ignore all the calls and letters that he receives every day from the dozen or so creditors now hounding him for cash.

    “And I don’t open the e-mail alerts with my credit score,” he adds. “I can’t look at my credit score any more.”

    Mr. Wallerstein, who can’t afford to pay down interest and thus watches the outstanding loan balance grow, is in roughly the same financial hell as people who bought more home than they could afford during the real estate boom. But creditors can’t foreclose on him because he didn’t spend the money on a house.

    He spent it on a law degree. And from every angle, this now looks like a catastrophic investment.

    Well, every angle except one: the view from law schools. To judge from data that law schools collect, and which is published in the closely parsed U.S. News and World Report annual rankings, the prospects of young doctors of jurisprudence are downright rosy.

    In reality, and based on every other source of information, Mr. Wallerstein and a generation of J.D.’s face the grimmest job market in decades. Since 2008, some 15,000 attorney and legal-staff jobs at large firms have vanished, according to a Northwestern Law study. Associates have been laid off, partners nudged out the door and recruitment programs have been scaled back or eliminated.

    And with corporations scrutinizing their legal expenses as never before, more entry-level legal work is now outsourced to contract temporary employees, both in the United States and in countries like India. It’s common to hear lawyers fret about the sort of tectonic shift that crushed the domestic steel industry decades ago.

    But improbably enough, law schools have concluded that life for newly minted grads is getting sweeter, at least by one crucial measure. In 1997, when U.S. News first published a statistic called “graduates known to be employed nine months after graduation,” law schools reported an average employment rate of 84 percent. In the most recent U.S. News rankings, 93 percent of grads were working — nearly a 10-point jump.

    In the Wonderland of these statistics, a remarkable number of law school grads are not just busy — they are raking it in. Many schools, even those that have failed to break into the U.S. News top 40, state that the median starting salary of graduates in the private sector is $160,000. That seems highly unlikely, given that Harvard and Yale, at the top of the pile, list the exact same figure.

    How do law schools depict a feast amid so much famine?

    “Enron-type accounting standards have become the norm,” says William Henderson of Indiana University, one of many exasperated law professors who are asking the American Bar Association to overhaul the way law schools assess themselves. “Every time I look at this data, I feel dirty.”

    IT is an open secret, Professor Henderson and others say, that schools finesse survey information in dozens of ways. And the survey’s guidelines, which are established not by U.S. News but by the American Bar Association, in conjunction with an organization called the National Association for Law Placement, all but invite trimming.

    A law grad, for instance, counts as “employed after nine months” even if he or she has a job that doesn’t require a law degree. Waiting tables at Applebee’s? You’re employed. Stocking aisles at Home Depot? You’re working, too.

    Number-fudging games are endemic, professors and deans say, because the fortunes of law schools rise and fall on rankings, with reputations and huge sums of money hanging in the balance. You may think of law schools as training grounds for new lawyers, but that is just part of it.

    They are also cash cows.

    Tuition at even mediocre law schools can cost up to $43,000 a year. Those huge lecture-hall classes — remember “The Paper Chase”? — keep teaching costs down. There are no labs or expensive equipment to maintain. So much money flows into law schools that law professors are among the highest paid in academia, and law schools that are part of universities often subsidize the money-losing fields of higher education.

    “If you’re a law school and you add 25 kids to your class, that’s a million dollars, and you don’t even have to hire another teacher,” says Allen Tanenbaum, a lawyer in Atlanta who led the American Bar Association’s commission on the impact of the economic crisis on the profession and legal needs. “That additional income goes straight to the bottom line.”

    There were fewer complaints about fudging and subsidizing when legal jobs were plentiful. But student loans have always been the financial equivalent of chronic illnesses because there is no legal way to shake them. So the glut of diplomas, the dearth of jobs and those candy-coated employment statistics have now yielded a crop of furious young lawyers who say they mortgaged their future under false pretenses. You can sample their rage, and their admonitions, on what are known as law school scam blogs, with names like Shilling Me Softly, Subprime JD and Rose Colored Glasses....
  2. jem


    91- 93 or 95... was similar but tuition was lower. 92 and 93 got hammered.
  3. My nephew graduated from Stanford 3 years ago.
    He busted his butt to stay at the top of his class.
    Did it pay off?
    He works for one of the top law firms in CA and while the other attorneys in the firm play video games he is still busting his butt.


    He is now a partner.
    Makes a very high 6 figure income.
    One of most respected young attorneys in CA.
    And he paid off all of his school loans this year . . . WAY early.

    Law school is a losing game if one feels the world owes them a living just for attending.
  4. I agree, few want to put in the effort to stay at the top of heap.
  5. your relative should rightly be applauded for his hard work.

    However, thinking that:

    1. Getting into Stanford Law school
    2. Being near the top of the class
    3. Getting a job at a top law firm

    Is simply a matter of hard work is just as silly as thinking that being a starting player in the NBA is open to anyone who, "works hard".

    In both cases such success is not in most people's DNA.

    Being at the top of a field requires more than "hard work" and to chastise those who can't get there is silly.

  6. You are correct.
    I forget to mention, talent, intelligence and creativity.
  7. jem


    (your nephew is clearly an exception)

    most of the truly talented get out of the law firm grind within 10 years.

    As they either become known as the best trial lawyer around and start their own firm
    or they become known as the best deal makers get pulled into business partnerships.

    Billing by the hour is a great way to earn a living.
    It does get better if you have lots of associates sacrificing their lives underneath you. (and your partnership share is large.)
  8. A huge exception to say the least. I've never heard of an associate rising to partner inside of 3 years at a major law firm.

    The obvious point of the article is that the debt incurred to attend many of these law schools just does not make sense any longer, if the industry has peaked and has begun to contract. It's one thing for this law school graduate to be unemployed, but with $250,000 in debt it's just a catastrophe.

    Obviously, there will always be pretty good demand for graduates from the very top tier law schools, but on a percentage basis of total law school graduates, that number is ridiculously small. Further, the second and third tier schools have absolutely no business charging top tier tuitions and then hiding behind a bunch of bullshit statistics that do no apply to graduates of their schools.
  9. jinxu


    Did you know that only 1% of the population can be in the top 1% no matter how hard one works???
  10. But if one don't strive to be that one percent one will never know if they could be part of it.

    Never ceases to amaze me at the lack of initiative of most college students.
    #10     Jan 17, 2011