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Discuss various money matters here. Loans (federal and private), scholarships, lottery winnings, or other school finance related information and queries.
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RedBirds2011
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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby RedBirds2011 » Fri Jun 08, 2012 1:06 pm

rayiner wrote:
sunynp wrote:Fine, you are right. Everyone warning otherwise is wrong and has no idea what they are talking about. They know nothing about oci and the chances of getting biglaw. They know nothing about the instability of biglaw. They have no friends who are on school funded fellowships, they know no one who was no offered, they have no former classmates fired from Dewey or Lathamed in the recession.

They know nothing about commuting home in exhaustion from working all night. ( but who cares the firm will send you home in a car after feeding you.) They know nothing about the cost of living in New York. They know nothing of how much you need to spend on clothes and social networking events to keep your career going. They don't even know how much the insurance deductions will be. So their opinion is meaningless

You should take on massive six figure debt. You will win the lottery! You will get a job that requires 24/7 availability to work and billing retirements of thousands of hours so you can repay all that debt. You should have no concern about the stability of your biglaw job. Everyone knows that biglaw is completely secure until you choose to leave.

Why were those people trying to warn you?


At the same time, your extreme risk-aversion is a caricature of the opposite extreme. You seem to live in a world where only 1/3 of HYSCCN gets big law, Lathaming is a yearly occurance, and Dewey is something that happens multiple times a year affecting a significant portion of all big law associates.

I have friends who are/will be on law school funded fellowships. I have friends who got no-offered. I have classmates who got Dewey-ed. At the same time, the vast majority of my 1L section got jobs doing more or less what they wanted. The biggest contingent of people who didn't aren't people who tried for big law and missed it, but rather people who wanted to do public interest and got hit by the complete shutdown in public interest hiring.

The fact is that getting big law is still more likely than not (substantially so) from a T14 school. The fact is that in the Great Recession, which terminated the longest legal bubble in history, only 4% of associates got Latham-ed. The fact is that post-crash, unemployment in law has ticked up by law by less than in pretty much any other field.

The fact is that pretty much every profession is far less stable than big law. Technology is considered a safe and booming profession right now. Yet, industry stalwarts like HP, RIM, IBM, and Yahoo are laying off tens of thousands of people as wee speak. Even accounting for the fact that there are about 4x as many software engineers as big lawyers, we're still talking the equivalent of multiple Dewey's. And to a large degree, these layoffs aren't even that exceptional. Engineering is a cyclical industry and layoffs like this happen constantly.

Only someone with a paralyzing level of risk aversion would consider big law "unstable" relative to the economy as a whole.


"Paralyzing" is definitely the right word here.

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rayiner
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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby rayiner » Fri Jun 08, 2012 1:10 pm

Honestly what makes lawyers such terrible people besides the risk aversion is the absolutely unrelenting "grass-is-greener" mindset. STEM is better than law, medicine is better than law, finance is better than law. The truth is:

STEM -> laid off every five years until becoming unemployable at 40
Medicine -> healthcare reform-pwned
Finance -> laying off tens of thousands of employees as we speak

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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby sunynp » Fri Jun 08, 2012 1:16 pm

Lol. My response was to the person who asked why people were questioning that ridicous budget. I'm sorry if I hurt someone's feelings. The point was that people were planning on paying off debt in a few years from a job they probably won't get and they may not keep. Note: my feeling is that most of the people advocating this plan have never even had a law school course, much less an exam. The point was that you better damn well have a backup plan as elaborately carved out as your minimal food and transportation ( ride a bike! Never a taxi!) budgets. There is a non-trivial chance that it won't work out that way.

I was sarcastic because I realize that nothing I say will make any difference. It simply doesn't matter. You guys win.

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vanwinkle
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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby vanwinkle » Fri Jun 08, 2012 1:16 pm

rayiner wrote:Only someone with a paralyzing level of risk aversion would consider big law "unstable" relative to the economy as a whole.

I think you're focusing on the wrong kind of instability. Even if you're right, and finding a BigLaw job is "easier" than people seem to believe it is, there's still the issue of how stable your job is once you get it. Even before the Great Recession, and most certainly after, BigLaw firms tend to highly leverage themselves and hire far more associates than they intend to ultimately partner-track.

The real question, and the one that's often ignored, is not whether you can get a BigLaw job, it's how long you can keep a BigLaw job. The turnover in BigLaw is pretty extreme, and while part of it is due to "personal choice", most people underestimate how hard it is to bill well over 2000 hours per year and how lifeless they will feel for the years they're doing it. If you can only keep a BigLaw job for 3-4 years, is that worth over $200K in loans?

You'd have to be responsible enough to pay down your loans at a rate of $50K/yr or higher to make sure you left debt-free, and $160K pre-tax translates in NYC to around $90-95K after tax. That means to pay $50K/yr toward your loans you're left with around $40K/yr to live off of. To me that's actually an enormous amount of post-tax money to live on in a year, but living near work means $2-3K or higher in monthly rent for a tiny cramped studio, and that alone will eat most of your living funds.

It's doable, but you have to be responsible enough to plan for it at the outset, and it'll mean living well below your means. Many people will struggle with the idea of living so frugally while supposedly making so much money; they'll splurge on a nicer apartment (even though they'll practically never be both home and awake while in BigLaw); they'll eat out way too often; they'll fail to budget enough to pay their loans down as rapidly as possible. They may even figure they can pay it all off in 6-7 years instead of 3-4, surely that'll be enough, and budget that way so that they still have over $100K in loans left after 3-4 years (since you mostly pay down interest at first).

And then in 4 years, when a partner pulls them aside and politely offers to help them find a new job elsewhere, they panic because they didn't live like a pauper for 4 years and now, after doing nothing but working and sleeping for 4 years, they're still financially deeper in debt than when they started, and losing the BigLaw salary they needed to finish paying those debts.

I think the magic answer here is "find a job that pays market salary outside of NYC". The lower your COL the easier it'll be to both live comfortably and pay your loans down in the limited time you have.

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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby sunynp » Fri Jun 08, 2012 1:23 pm

rayiner wrote:Honestly what makes lawyers such terrible people besides the risk aversion is the absolutely unrelenting "grass-is-greener" mindset. STEM is better than law, medicine is better than law, finance is better than law. The truth is:

STEM -> laid off every five years until becoming unemployable at 40
Medicine -> healthcare reform-pwned
Finance -> laying off tens of thousands of employees as we speak
.

I am not a terrible person for pointing out market realities in contrast to a budget I find ridiculous. Nor am I a terrible person for reminding people that despite their best efforts things may not work out. They need a backup plan.

I'm not worried about people becoming paralyzed because they are simply too happy to go into huge debt. it would be nice to see some solid thought going into what people will do should their dreams not come true. I think that is just being realistic.

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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby NJPitcher » Fri Jun 08, 2012 1:30 pm

sunynp wrote:Lol. My response was to the person who asked why people were questioning that ridicous budget. I'm sorry if I hurt someone's feelings. The point was that people were planning on paying off debt in a few years from a job they probably won't get and they may not keep. Note: my feeling is that most of the people advocating this plan have never even had a law school course, much less an exam. The point was that you better damn well have a backup plan as elaborately carved out as your minimal food and transportation ( ride a bike! Never a taxi!) budgets. There is a non-trivial chance that it won't work out that way.

I was sarcastic because I realize that nothing I say will make any difference. It simply doesn't matter. You guys win.


Since you know so much about our current living/work/LS experience, please tell us what you do. I searched through like 5 pages of your posts but can't find any indication of where you are in life, and don't feel like searching through your other 45 pages of posts. I will guess you went to suny new paltz for something (UG?) but beyond that I'm clueless.

Also, budget =/= not ridiculous. 33k take home is liveable. 40k is even easier, and 45k is a lot. At 25 you're not entitled to live like the partners do, get over it - you'll be fine. And then, wow! Debts are paid off and you're making lots of money or transferring to a job with better hours/still better pay than you'd have without your degree. Shocker, it took 5 years, but your investment paid off. It's an investment. One more time, but this is an investment. You don't see immediate returns. Deal with it.

Also, from top schools, the majority do get big law/clerkships. It's not 90%, but it's not less than 50%. Please point to numbers before you start saying it's something they probably won't get. How does probability work in your world? If >50% are getting these jobs, isn't that...probable?

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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby manofjustice » Fri Jun 08, 2012 1:32 pm

vanwinkle wrote:
rayiner wrote:Only someone with a paralyzing level of risk aversion would consider big law "unstable" relative to the economy as a whole.

I think you're focusing on the wrong kind of instability. Even if you're right, and finding a BigLaw job is "easier" than people seem to believe it is, there's still the issue of how stable your job is once you get it. Even before the Great Recession, and most certainly after, BigLaw firms tend to highly leverage themselves and hire far more associates than they intend to ultimately partner-track.

The real question, and the one that's often ignored, is not whether you can get a BigLaw job, it's how long you can keep a BigLaw job. The turnover in BigLaw is pretty extreme, and while part of it is due to "personal choice", most people underestimate how hard it is to bill well over 2000 hours per year and how lifeless they will feel for the years they're doing it. If you can only keep a BigLaw job for 3-4 years, is that worth over $200K in loans?

You'd have to be responsible enough to pay down your loans at a rate of $50K/yr or higher to make sure you left debt-free, and $160K pre-tax translates in NYC to around $90-95K after tax. That means to pay $50K/yr toward your loans you're left with around $40K/yr to live off of. To me that's actually an enormous amount of post-tax money to live on in a year, but living near work means $2-3K or higher in monthly rent for a tiny cramped studio, and that alone will eat most of your living funds.

It's doable, but you have to be responsible enough to plan for it at the outset, and it'll mean living well below your means. Many people will struggle with the idea of living so frugally while supposedly making so much money; they'll splurge on a nicer apartment (even though they'll practically never be both home and awake while in BigLaw); they'll eat out way too often; they'll fail to budget enough to pay their loans down as rapidly as possible. They may even figure they can pay it all off in 6-7 years instead of 3-4, surely that'll be enough, and budget that way so that they still have over $100K in loans left after 3-4 years (since you mostly pay down interest at first).

And then in 4 years, when a partner pulls them aside and politely offers to help them find a new job elsewhere, they panic because they didn't live like a pauper for 4 years and now, after doing nothing but working and sleeping for 4 years, they're still financially deeper in debt than when they started, and losing the BigLaw salary they needed to finish paying those debts.

I think the magic answer here is "find a job that pays market salary outside of NYC". The lower your COL the easier it'll be to both live comfortably and pay your loans down in the limited time you have.


I like magic answers. I agree.

I think the overall lesson we ought to learn from all of this mess--the financial crisis, the recession, the legal employment fiasco--is that following the herd doesn't work anymore, at least not for the time being.

The Northwestern "State of the Legal Market" report confirms vanwinkle's inkling: Mid/big Law: Up. Mega Law: Down. And NYC and DC are the biggest loosers by several factors.

Another thing I'd mention, and perhaps someone can comment: why V10? V10 pays the same as V40. I theorized that it's because you can make partner at V2 and make sooooooo much money. But most people rightly said 0Ls don't think about that. So what do they think about? At least (possibly) making sooooooo much money seems an economically rational reason (playing a lottery isn't always wrong...). I fear the real reason is simply to be at a V10. Well that's a bad reason to pick a job, and a worse reason to pick a law school to pay sticker at.

Just take the same argument and relativize it to your actual options. If you are choosing Fordham at sticker over BLS with a fully scholly, ask: why V50?

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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby NJPitcher » Fri Jun 08, 2012 1:36 pm

manofjustice wrote:If you are choosing Fordham at sticker over BLS with a fully scholly, ask: why V50?


Maybe this is the crux of the disagreement. Who's advocating Fordham at sticker?

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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby manofjustice » Fri Jun 08, 2012 1:46 pm

NJPitcher wrote:
manofjustice wrote:If you are choosing Fordham at sticker over BLS with a fully scholly, ask: why V50?


Maybe this is the crux of the disagreement. Who's advocating Fordham at sticker?


Just trying to make the argument useful to all people. If we refocus back to OP I think we still disagree.

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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby manofjustice » Fri Jun 08, 2012 1:48 pm

And may I just say one more thing? (Rhetorical question; don't answer).

Your budget: let's just say it's economically rational. ISN'T IT WRONG? Not mathematically wrong...but isn't it wrong that you have to dedicate such a large portion of the future income you earn just to pay for the chance to earn it?

It reminds me of those "seminars" for house flipping. They cost you 10 grand and they give you a lecture, free coffee, and 10 hours worth of "how-to" CDs. The whole thing costs the producers about 10 bucks a person to put on. Why do they charge you 10 grand? Because, they tell you, "think of all that money you are going to make house flipping..." They miss the key word: YOU. YOU make that money, not the seminar-producers--and only if you work hard and work smart. Your seminar producers aren't going to help inspect the first house you consider buying. Similarly, YOU make your BigLaw salary. You write your memos, not your former professors--they won't even give your work product a read-through; they're done with class and at the beach; you work until 3 in the morning, while your alma mater's Dean sleeps peacefully in his partner-sized house. YOU do all of this, not your law school. And you should be able to keep a big chunk of what you earn, not the 20 or 30 or bucks a day surplus you suggest we keep content with.

I hear grumblings of some BigLaw partners that "160 is too much." Is it?

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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby NJPitcher » Fri Jun 08, 2012 1:53 pm

manofjustice wrote:
NJPitcher wrote:
manofjustice wrote:If you are choosing Fordham at sticker over BLS with a fully scholly, ask: why V50?


Maybe this is the crux of the disagreement. Who's advocating Fordham at sticker?


Just trying to make the argument useful to all people. If we refocus back to OP I think we still disagree.


Fair enough that we still disagree, but conflating Fordham with a t10 doesn't do the argument justice. If you still disagree then use a t10 school, it shouldn't change anything and will encourage more relevant responses.

And why is it wrong to think it might take a couple years to see a return on your investment? In what world would investments immediately pay dividends? Most people aren't living on 45k (take home), and if you told them that they could do that for 4 years and then be living on 100k take home, they'd be very happy.

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rayiner
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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby rayiner » Fri Jun 08, 2012 2:18 pm

sunynp wrote:
rayiner wrote:Honestly what makes lawyers such terrible people besides the risk aversion is the absolutely unrelenting "grass-is-greener" mindset. STEM is better than law, medicine is better than law, finance is better than law. The truth is:

STEM -> laid off every five years until becoming unemployable at 40
Medicine -> healthcare reform-pwned
Finance -> laying off tens of thousands of employees as we speak
.

I am not a terrible person for pointing out market realities in contrast to a budget I find ridiculous. Nor am I a terrible person for reminding people that despite their best efforts things may not work out. They need a backup plan.

I'm not worried about people becoming paralyzed because they are simply too happy to go into huge debt. it would be nice to see some solid thought going into what people will do should their dreams not come true. I think that is just being realistic.


I'm not saying you're a terrible person specifically. Your earlier post said that $275k was categorically to much debt to take on at any school. I think that is an unreasonably risk-averse viewpoint. I think you're blowing Latham and Dewey out of proportion. I think your arguments are based on emotion rather than reasoning. It's the highly emotional, super risk-averse, super "grass is greener" mindset amongst lawyers that I'm objecting to.

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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby manofjustice » Fri Jun 08, 2012 2:23 pm

NJPitcher wrote:And why is it wrong to think it might take a couple years to see a return on your investment? In what world would investments immediately pay dividends? Most people aren't living on 45k (take home), and if you told them that they could do that for 4 years and then be living on 100k take home, they'd be very happy.


The issue isn't "time to return." It isn't even "degree of return," which, as vanwinkle rightly echoed, can very well be 0 if you don't make partner. It's "kind" of return. We have this idea in our society that there are right ways and wrong ways to make money. While it might not be illegal, the way law schools make money may well be morally wrong. To state it in one sentence: law schools make money that other people earn. In another thread, I called it "rent seeking."

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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby rayiner » Fri Jun 08, 2012 2:25 pm

manofjustice wrote:
NJPitcher wrote:And why is it wrong to think it might take a couple years to see a return on your investment? In what world would investments immediately pay dividends? Most people aren't living on 45k (take home), and if you told them that they could do that for 4 years and then be living on 100k take home, they'd be very happy.


The issue isn't "time to return." It isn't even "degree of return," which, as vanwinkle rightly echoed, can very well be 0 if you don't make partner. It's "kind" of return. We have this idea in our society that there are right ways and wrong ways to make money. While it might not be illegal, the way law schools make money may well be morally wrong. To state it in one sentence: law schools make money that other people earn. In another thread, I called it "rent seeking."


Your return isn't going to be $0 if you don't make partner, that's ridiculous.

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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby Samara » Fri Jun 08, 2012 2:31 pm

vanwinkle wrote:You'd have to be responsible enough to pay down your loans at a rate of $50K/yr or higher to make sure you left debt-free, and $160K pre-tax translates in NYC to around $90-95K after tax. That means to pay $50K/yr toward your loans you're left with around $40K/yr to live off of. To me that's actually an enormous amount of post-tax money to live on in a year, but living near work means $2-3K or higher in monthly rent for a tiny cramped studio, and that alone will eat most of your living funds.

Bonuses and raises, dude, but point taken.

vanwinkle wrote:It's doable, but you have to be responsible enough to plan for it at the outset, and it'll mean living well below your means. Many people will struggle with the idea of living so frugally while supposedly making so much money; they'll splurge on a nicer apartment (even though they'll practically never be both home and awake while in BigLaw); they'll eat out way too often; they'll fail to budget enough to pay their loans down as rapidly as possible. They may even figure they can pay it all off in 6-7 years instead of 3-4, surely that'll be enough, and budget that way so that they still have over $100K in loans left after 3-4 years (since you mostly pay down interest at first).

Here's where I think the disconnect is. It's not that 3-4 years isn't doable, it's that most students probably don't have much experience living well within their means and will fail to adhere well to the budget. Most of the people ITT are arguing two different, yet equally true, points.

vanwinkle wrote:I think the magic answer here is "find a job that pays market salary outside of NYC". The lower your COL the easier it'll be to both live comfortably and pay your loans down in the limited time you have.

So credited. Obviously, not everyone can do that, but maybe people targeting NYC should think twice about going to law school at or near sticker?

vanwinkle wrote:If you can only keep a BigLaw job for 3-4 years, is that worth over $200K in loans?

Absolutely. Even if I still have debt leftover. I am currently on a career path that tops out probably $100k and that's after several years. After 6-7 years, even if we assume that I hate law school and hate biglaw, in all likelihood, I emerge from biglaw in a position that pays more than I would ever make pre-law school, doing what is probably more stimulating and high-level work, and I took a shot at high-level success (firm partner or whatever your goal is).

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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby manofjustice » Fri Jun 08, 2012 2:34 pm

rayiner wrote:
manofjustice wrote:
NJPitcher wrote:And why is it wrong to think it might take a couple years to see a return on your investment? In what world would investments immediately pay dividends? Most people aren't living on 45k (take home), and if you told them that they could do that for 4 years and then be living on 100k take home, they'd be very happy.


The issue isn't "time to return." It isn't even "degree of return," which, as vanwinkle rightly echoed, can very well be 0 if you don't make partner. It's "kind" of return. We have this idea in our society that there are right ways and wrong ways to make money. While it might not be illegal, the way law schools make money may well be morally wrong. To state it in one sentence: law schools make money that other people earn. In another thread, I called it "rent seeking."


Your return isn't going to be $0 if you don't make partner, that's ridiculous.


It's possible. 3-4 years is a long time. If you're not on the partner track, by the 3rd or 4th year, you're not getting the assignments you want, you perhaps have already been told to look for another job. Let's just switch gears for a bit and ask an overview question: how many associates, who are not these newfangled "career associates," have 4 years in and are not in the running for partner? Someone can answer that...

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rayiner
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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby rayiner » Fri Jun 08, 2012 3:04 pm

manofjustice wrote:
rayiner wrote:
manofjustice wrote:
NJPitcher wrote:And why is it wrong to think it might take a couple years to see a return on your investment? In what world would investments immediately pay dividends? Most people aren't living on 45k (take home), and if you told them that they could do that for 4 years and then be living on 100k take home, they'd be very happy.


The issue isn't "time to return." It isn't even "degree of return," which, as vanwinkle rightly echoed, can very well be 0 if you don't make partner. It's "kind" of return. We have this idea in our society that there are right ways and wrong ways to make money. While it might not be illegal, the way law schools make money may well be morally wrong. To state it in one sentence: law schools make money that other people earn. In another thread, I called it "rent seeking."


Your return isn't going to be $0 if you don't make partner, that's ridiculous.


It's possible. 3-4 years is a long time. If you're not on the partner track, by the 3rd or 4th year, you're not getting the assignments you want, you perhaps have already been told to look for another job. Let's just switch gears for a bit and ask an overview question: how many associates, who are not these newfangled "career associates," have 4 years in and are not in the running for partner? Someone can answer that...


Even if you get pushed out after four years in, it's not like you exit into the same job you would have had pre-LS, or even the same job you would have gotten without doing big law first. Your return will be positive to the extent that this job pays more than you would otherwise have made.

I've done this analysis elsewhere, but I'll recap it here. The long-term trajectory of former big law attorneys will be: in-house, to partnership at a big firm, to a small firm, to government, to solo practice, or out of the law. Let's look at how many attorneys are in each of these categories:

There are about 65,000 partners in the NLJ 250.
There are probably 30,000-40,000 in-house positions at Fortune 500 companies.[1]
There are about 32,000 lawyers in the federal government.[2]


The first two categories will tend to grow with GDP. Even in this weak economy, GDP is growing at roughly 2%. Let's assume the latter won't be growing at all for the next decade. On top of that, there is some natural attrition from retirement. Let's say 2.5% (a 40 years beyond time spent as an associate).[3] That's roughly 5,250 new jobs opening up each year from growth and attrition, using extremely conservative estimates. There are roughly 5,000-6,000 new attorneys joining big law firms each year.

Essentially, the big law sieve along with the tendency of in-house/federal government employers to hire out of big law makes the post big-law employment situation very different from the post-JD employment situation.


[1] An Altman-Weil/Lexis/Martindale survey found about 3.5 in-house lawyers per billion of revenue (http://www.inhouseinsider.com/); the F500 had $10,800 billion in revenue last year.
[2] http://www.washingtonian.com/articles/p ... are-there/
[3] This estimate is almost certainly too low. Law firm partners spend 8-10 years as an associate first, which means their career as a partner is probably more like 35 years, even if they retire at 70. Federal government pension eligibility means that most will retire at 65 or earlier. Indeed, federal agencies like the FCC are on the precipice of mass retirements: http://www.federalnewsradio.com/?nid=520&sid=2834000

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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby manofjustice » Fri Jun 08, 2012 3:14 pm

Valuable analysis. Now, that 5 to 6 grand going into BigLaw, where is that number coming from. Brian Leiter says BigLaw inflow has contracted by 40%...he could be right or wrong, or that could just be 2010/11...

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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby rayiner » Fri Jun 08, 2012 3:48 pm

manofjustice wrote:Valuable analysis. Now, that 5 to 6 grand going into BigLaw, where is that number coming from. Brian Leiter says BigLaw inflow has contracted by 40%...he could be right or wrong, or that could just be 2010/11...


It's a very rough estimate, since I haven't seen any NLJ data for the last couple of years. I assume it's behind a paywall somewhere. Henderson,[1] notes that in 2005 there were about 5,400 entry-level hires in the NLJ 250, rising to 7,100 entry-level hires in 2007. IIRC the 40-50% drop cited by Leiter is accurate, so post-bubble you're probably looking at 4,000-4,500 or so. I don't think NLJ has published C/O 2012 data yet, but I can see us getting back to the pre-boom 2005 numbers. Factor in people coming in off clerkships and whatnot,[2] and I think 5,000-6,000 is a reasonable estimate for the number of people coming into "big law."

This is very back-of-the-envelope stuff, but the point is that it is unreasonable to assume you will return to waiting tables or whatever you did pre-LS after you exit big law, when computing your ROI from LS. Does it happen? Sure. But I was reading an article the other day about a programmer who couldn't get jobs after 40 so he started delivering pizzas: http://www.salon.com/2004/02/03/mcjobs/.

EDIT: I know people are going to skip over the Salon article, but please read it. Read it and realize that there are no secure jobs anymore, that the rosy alternative to big law that everyone seems to presuppose when participating in these threads is pure and utter fantasy. I harp on engineering a lot, because I left engineering for law, but its a good profession as far as post-Reagan, post-McKinsey America goes. And even with the debt, so is going to a law school that offers a good shot at big law.

[1] See page 2: http://firms.law.indiana.edu/events/fut ... 121238.pdf
[2] Market-paying NLJ 350 firms, boutiques, etc.

sighsigh
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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby sighsigh » Sat Jun 09, 2012 2:14 am

People in this thread seem to be overly pessimistic about the amount of time people stay in biglaw. While I don't have any first-hand experience myself, I've read a LOT of posts on different legal forums by former and current biglawyers about their experience.

It seems that the attrition rate in biglaw is both natural and forced. It is around years 3 or 4 when biglawyers begin to burn out and exit options begin to open that will allow them to work shorter hours (such as going in-house). People are underestimating the natural attrition rate... it is very high. It is only around years 5-7 when you start actually getting told to get out unless you are on the equity partner track. Or, if you are lucky, they may keep you around as a senior associate for the long-term, and if even luckier you may make non-equity partner/'of counsel' (with no chance at equity partner). Of course, most biglawyers don't want these things, because working for a biglaw firm is a really shitty job (and even more so if you are looking to settle down and start a family). Even if you do get pushed out before your liking, there is potential to transfer to another biglaw firm.

The picture that TLS seems to be painting in this thread is that starting year 3 associates must routinely get down on their knees in front of a partner and beg to stay one more year before being shitcanned so they can pay their loans. From what I can tell, it isn't like that. The question you need to ask yourself is not WILL you make it past a few years, but CAN you (i.e. will you be able to continuously work long and unpredictable hours to meet the billable hour requirements and not get burnt out).

Of course, if anyone in biglaw (read: not you 0Ls) is willing to argue otherwise, I'd be more than happy to listen.

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JCougar
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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby JCougar » Sat Jun 09, 2012 4:56 am

rayiner wrote:
blsingindisguise wrote:
rayiner wrote:
It really isn't if you can do math. Weighted for risk, law school (a T14) pays for itself in just a few years of big law, and everything after that you're coming out ahead.



lol I would love to see your "math" for this


So let's start with this data: http://www.law.northwestern.edu/career/statistics/

52% in $160k jobs or federal clerkships. Payoff, $450k after-tax including shitty bonus after four years.
7% in $140-160k jobs (probably $145k). Payoff (assuming typical $145k scale and secondary-market tax rate), $400k after-tax.
9% in $100k-$140k jobs. Payoff (assuming $120k average), $320k after-tax.
4% in permanent PI. Payoff (amortizing loan forgiveness and assuming $50k/year salary), $220k after-tax.
28% in other things. Let's assume doc review at $45k/year for simplicity. $130k after-tax.

Weighted average of the above is $336k return over four years.

Now, assume our baseline job is $45k/year, or about $32k/year take-home, or $130k over four years. You're up roughly $200k over what you'd have in the base line, or basically even accounting for loans ($230k full freight - $30k SA take-home thanks to ridic favorable tax situation).

Future classes will have higher tuition, but also higher employment than C/2011.


Maybe as a whole it's a break-even risk, but for each individual, it's hit or miss. If you're below median at the lower half of the T14 and don't have anything else special on your resume, you can really screw yourself.

And in this situation, I'd say the downside risk is a lot worse than the upside is good. For an individual, being completely financially screwed for the rest of your life is a terrible thing, whereas making a biglaw salary isn't going to guarantee you happiness.

And, as others have noted, that's assuming you can stay at biglaw. Attrition rates for biglaw are something like 75% after 5 years. I'm not sure how much of that is after the first year or two, but all the people who get biglaw certainly aren't there for 4 years. Biglaw is a pyramid scheme concocted chiefly to make money for the partners. The associates are disposable.

ToTransferOrNot
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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby ToTransferOrNot » Sat Jun 09, 2012 9:25 am

I don't think individuals should be acting as risk-neutral investors, because education debt essentially represents an extreme lack of diversification. It's very similar to someone whose entire net worth is tied into a single asset--his sole proprietorship--except that, of course, a student is worse off, because a sole proprietorship's downside is limited to zero net worth after bankruptcy, rather than -200k.

Less diversification means that it is *rational* to be more risk-averse. This is a pretty basic aspect of financial planning. Rayiner, correct me if I'm wrong, but your model seems to be for a risk-neutral investor. Isn't that imprudent?

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Bronx Bum
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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby Bronx Bum » Sat Jun 09, 2012 9:48 am

LOL the op has the choice right now to turn away yet feels screwed. W.T.F?

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RedBirds2011
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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby RedBirds2011 » Sat Jun 09, 2012 12:41 pm

ToTransferOrNot wrote:I don't think individuals should be acting as risk-neutral investors, because education debt essentially represents an extreme lack of diversification. It's very similar to someone whose entire net worth is tied into a single asset--his sole proprietorship--except that, of course, a student is worse off, because a sole proprietorship's downside is limited to zero net worth after bankruptcy, rather than -200k.

Less diversification means that it is *rational* to be more risk-averse. This is a pretty basic aspect of financial planning. Rayiner, correct me if I'm wrong, but your model seems to be for a risk-neutral investor. Isn't that imprudent?




When are law students going to stop treating law school like a stock portfolio Lol come on people. Im all for minimizing risk, but if you are looking at law school similarly as an investment in the stock market maybe you shouldn't go to law school.

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Tiago Splitter
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Re: NEVER GOING TO BE ABLE TO REPAY 210K IN LOANS? HELP

Postby Tiago Splitter » Sat Jun 09, 2012 12:44 pm

RedBirds2011 wrote:
ToTransferOrNot wrote:I don't think individuals should be acting as risk-neutral investors, because education debt essentially represents an extreme lack of diversification. It's very similar to someone whose entire net worth is tied into a single asset--his sole proprietorship--except that, of course, a student is worse off, because a sole proprietorship's downside is limited to zero net worth after bankruptcy, rather than -200k.

Less diversification means that it is *rational* to be more risk-averse. This is a pretty basic aspect of financial planning. Rayiner, correct me if I'm wrong, but your model seems to be for a risk-neutral investor. Isn't that imprudent?



When are law students going to stop treating law school like a stock portfolio? More diversification? How would that work with education? Like buying multiple degrees to hedge employment risks? Lol come on people.


In effect he's saying that you shouldn't treat it like a stock portfolio.




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