Why is Biglaw the only financially viable option?

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dihydrogenmonoxide
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Why is Biglaw the only financially viable option?

Postby dihydrogenmonoxide » Sun Dec 05, 2010 7:13 am

0L here trying to figure out the situation with regard to employment options other than biglaw.

Conventional wisdom around here seems to be that if you pay sticker to attend law school, the only employment that will allow you to not "drown in debt" is biglaw. So what does that mean if you don't get biglaw? That you'll live in a van by the river? That you'll go bankrupt?

How is making 45-50k doing PI work not financially viable? Even if you go to a school with a crappy LRAP, doesn't IBR with the 10 year discharge for PI make it viable? Or is the idea just that PI is impossibly competitive, so if you don't go for biglaw you'll probably end up working as a waiter or doing some quasi-legal non-PI work for 25k a year or something?

In a nutshell:

1) What does it mean to be crushed with debt as the term is generally used around here?
2) Are there any non-biglaw jobs that allow someone going to a T20 and paying sticker to not be crushed with debt?


Thanks!

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General Tso
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Re: Why is Biglaw the only financially viable option?

Postby General Tso » Sun Dec 05, 2010 7:53 am

PI work used to be something that mid-level candidates (lower T1, T2) students could get fairly easily. In this economy, those jobs are highly sought after even among T20 students, both those who want the work for ideological reasons and those who struck out at OCI and are looking for a way out of 200k worth of loans. Long story short....today's PI is only slightly less exclusive than big law. Don't forget the effect that dwindling gov't budgets are having on PI jobs as well.

So once you take PI and big law off the table, 75-90% of what is left is either going to be working in small firms or in other sectors. Usually that translates into 40-65k salaries. That kind of salary will not support debt of 130k+. It is not all bad though, I believe both IBR and tax deductions on student loan interest kick in once you are earning less than 70k.

2LLLL
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Re: Why is Biglaw the only financially viable option?

Postby 2LLLL » Sun Dec 05, 2010 11:49 am

BigLaw is the only financially viable option because law students commonly make the very irresponsible decisions to (a) go straight from UG -> LS without working for a few years and saving money, and (b) going to the highest ranked school, instead of one that offers $$$ or in-state tuition.

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Cavalier
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Re: Why is Biglaw the only financially viable option?

Postby Cavalier » Sun Dec 05, 2010 12:29 pm

Big law is the only thing that makes law school worth going to. There's no point in dropping $150K on law school just to make the same amount of money that someone with a bachelor's degree could make.

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RVP11
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Re: Why is Biglaw the only financially viable option?

Postby RVP11 » Sun Dec 05, 2010 12:48 pm

BigLaw is arguably the only financially viable option because it's one of the only options to people fresh out of law school. If you think getting a BigLaw job is hard, try getting a non-BigLaw legal job.

The vast majority of people I know who didn't get BigLaw also haven't gotten anything else for after graduation.

pasteurizedmilk
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Re: Why is Biglaw the only financially viable option?

Postby pasteurizedmilk » Sun Dec 05, 2010 12:49 pm

2LLLL wrote:BigLaw is the only financially viable option because law students commonly make the very irresponsible decisions to (a) go straight from UG -> LS without working for a few years and saving money, and (b) going to the highest ranked school, instead of one that offers $$$ or in-state tuition.


This generalization isn't really true....

If you have a useless degree going to a top school straight out of UG can make sense.

xyzbca
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Re: Why is Biglaw the only financially viable option?

Postby xyzbca » Sun Dec 05, 2010 1:06 pm

This is a round about way to answer your first question:

Monthly budget assuming you are single on a 50k yearly salary and a federal employee contribution amount for health insurance (this assumption is very generous):

Income: 4,166
Fed. Taxes: 737
FICA Taxes: 316
IBR: 422
Health Ins. 120
*****************
Remaining $2,571/month

Add in misc. things like dental/vision/local taxes and that number is even lower and now you need to address housing, transportation, utilities and food.

In most metro areas, your choice on housing will come down to paying a lot for a smaller place near your work or having more space and a crappy commute.

Some things to think about:

1. The marginal value of $422. In my community, with an additional $422/month I buy a house that has an additional 300 square feet and put an additional $2500 year into retirement savings. Or my current house is ~10 miles closer to work (you would be surprised how important your commute is to quality of life), I ride the light rail (significant savings on car insurance/gas) and I'm putting an additional 3000/year into retirement/savings.

2. A tight budget looks doable but you get hammered if something big is needed.

3. Living on a college type budget isn't bad those first few years removed from school. My wife and I certainly pulled it off when we were fresh out of UG. It starts to suck as you watch your friends move on and do better. Going back to school has obviously rearranged our finances. I'm not suggesting that I'm some tortured soul or that my life sucks but I wouldn't mind doing that yearly ski trip that my college buddies do. It just isn't in the cards right now. Caveat: For some people, it really sucks if to watch their younger siblings start to do better than them. I've seen a small amount of people (all guys) really struggle with watching their younger brothers do significantly better than them. Petty? Sure, but humans are funny creatures like that.

4. Pay raises and promotions are great b/c you typically get to "keep" 100% of the after tax money. Example: you lock in your lifestyle on a budget of $50k/year and you get bumped up to $55k. That's roughly an extra $300/month after taxes. The cumulative effect is even greater. Due to promotions and pay raises within 4 years of the last major lifestyle change my wife and I made, we found ourselves grossing about 35% more than we were initially making. Our debt-to-income ratio looked a whole lot better and law school without student loans became doable. Given that IBR re-calibrates every year, you won't see the full impact of your pay raises and promotions. Granted, you'll still be in better shape after a pay raise/promotion.

5. Taxes. IBR is based on AGI. If your spouse has any kind of a career you may find IBR's advantages blunted if you file a joint return and you may be forced to file separate returns. I just ran a quick hypo through the gov's IBR calculator. A married couple filing jointly grossing $100k with one child and $90k in student loans is looking at a payment of $900/month. If you don't have a kid it jumps up to $975/month. If you file separately at an income of $50k your IBR payment without a kid is $425/month. Yes, I understand that you may not be thinking about marriage right now, but odds are that at some point marriage will enter the picture for you.

6. You'll see other people without professional degrees making as much or more than you and it raises interesting questions. I know somebody who is 28 and acknowledges that her UG degree is an M-R-S degree. She's been with the same Fortune 150 company since graduation and her yearly salary is a now little over $70k. I know that at 22 it is easy to think these types of things won't matter but they do.

Edit: bad typo.
Last edited by xyzbca on Sun Dec 05, 2010 1:29 pm, edited 1 time in total.

warumnicht
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Re: Why is Biglaw the only financially viable option?

Postby warumnicht » Sun Dec 05, 2010 1:17 pm

For those with useless majors, this is a tough situation to be in. Many of those majors require a higher degree in order to make it in life, and jobs that will be available to them straight out of college will likely not pay enough to allow the students to save up money before law school. And they are not the kinds of jobs that make for interesting conversation during EIW. Those with useful (science!) degrees, however, will probably be well-off financially right after college...and they will also most likely get a good Biglaw IP job, so they won't have to worry about loans nearly as much.

That said, I think that much of the concern about paying off the loans stems from unrealistic lifestyle expectations. If you end up working at a small firm or doing PI, you can still pay off those student loans (yes, with the help of IBR and LRAP) provided that you don't try to lead the same kind of life that a Biglaw lawyer does. You survived on very little money during college and law school, right? Well, wait a few years before moving from an efficiency into a 1-bedroom with a den. Yes, you're going to need professional attire, which will cost some money, but it doesn't need to be Armani. Didn't have a car in law school? Hold off on buying one; rely on public transportation for a bit longer. Basically, don't try to drastically upgrade your lifestyle until you know that your financial situation is under control.

Granted, certain things will have to change, as the life of a working lawyer is certainly not the same as the life of a student, and your expenses will reflect that to a certain degree. But keep in mind that to a large degree, our expectations of lavish lawyerly expenses are shaped by Biglaw lawyers who have the salaries to match. If you manage to divorce yourself from those expectations, you should be able to make it.

solidsnake
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Re: Why is Biglaw the only financially viable option?

Postby solidsnake » Sun Dec 05, 2010 1:27 pm

IBR is a relatively new program run by the government -- lots of bugs and bureaucrats aren't the best managers. Also policies change; i wouldn't go relying on it.

warumnicht
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Re: Why is Biglaw the only financially viable option?

Postby warumnicht » Sun Dec 05, 2010 1:35 pm

Another note: working for a few years before law school to save money will result in less financial aid, because you'll have to report your savings. So, if the law school offers any need-based scholarships (which you then supplement with loans), they will be reduced based on the amount of money you have stowed away, and you'll have to pay that money instead.

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romothesavior
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Re: Why is Biglaw the only financially viable option?

Postby romothesavior » Sun Dec 05, 2010 1:46 pm

Depends on what you mean by "viable." I think going the public interest/government route and getting 10 year IBR is pretty financially viable, if you can get a job in it.

In the private sector, biglaw is pretty much the only financially viable option. In-house is nearly impossible to get straight out of LS, and most small firms pay horribly.

Of course, having less debt allows for more financial freedom, and if you have little or no debt, I think most legal jobs are at least financially viable options.

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Grizz
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Re: Why is Biglaw the only financially viable option?

Postby Grizz » Sun Dec 05, 2010 2:03 pm

warumnicht wrote:Another note: working for a few years before law school to save money will result in less financial aid, because you'll have to report your savings. So, if the law school offers any need-based scholarships (which you then supplement with loans), they will be reduced based on the amount of money you have stowed away, and you'll have to pay that money instead.


lol @ need based aid that basically never happens for law school. There's merit aid a-plenty, however.

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romothesavior
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Re: Why is Biglaw the only financially viable option?

Postby romothesavior » Sun Dec 05, 2010 2:19 pm

rad law wrote:
warumnicht wrote:Another note: working for a few years before law school to save money will result in less financial aid, because you'll have to report your savings. So, if the law school offers any need-based scholarships (which you then supplement with loans), they will be reduced based on the amount of money you have stowed away, and you'll have to pay that money instead.


lol @ need based aid that basically never happens for law school. There's merit aid a-plenty, however.

+1. Very, very few students get need based financial aid. Almost all students are going to pay for law school with scholarships, loans, and savings.

pasteurizedmilk
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Re: Why is Biglaw the only financially viable option?

Postby pasteurizedmilk » Sun Dec 05, 2010 2:30 pm

warumnicht wrote:Another note: working for a few years before law school to save money will result in less financial aid, because you'll have to report your savings. So, if the law school offers any need-based scholarships (which you then supplement with loans), they will be reduced based on the amount of money you have stowed away, and you'll have to pay that money instead.


not much need-based aid out there.....

BUT assuming LS increases your income, workign for a few years to save up to pay for it is really a net loss unless you're making a lot of money. In which case - don't go to law school

warumnicht
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Re: Why is Biglaw the only financially viable option?

Postby warumnicht » Sun Dec 05, 2010 2:42 pm

A quick Google search for "need-based law school" shows within the first 5 results that Berkeley, Vanderbilt, and GW all give out need-based grants. So does my T14 law school (I would know; I got one).

"Need" is subjective, of course, but if you're not a dependent and have no significant income and no savings, your chances of getting at least some free money are not negligible. (Though yes, you will have to take out loans as well.)

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wiseowl
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Re: Why is Biglaw the only financially viable option?

Postby wiseowl » Sun Dec 05, 2010 2:43 pm

My two problems with IBR:

1) Yes, I'm risk averse, but relying on the government basically to keep you out of the bread line seems like a shaky proposition. All you need is a change in administration similar to the one that just occurred where cuts have to happen NAO and we don't care where or how they happen, and *POOF* you're suddenly paying $1000 a month on a $2000 a month salary. Anyone saying "This could never happen!!!" is naive.

2) At the risk of sounding like a weird Libertarian (believe me, I'm not) things like IBR prevent the market from bringing tuition down. When tens of thousands of people put their fingers in their ears and say "lalalalalalalala I can't hear you - I'm going to take out $200k in loans to work as a Legal Aid attorney!" then it gives schools carte blanche to charge whatever they want. If the safety net isn't there, less people are willing to pay so much, and tuition goes down and/or toilet schools close. Both are net positives.

scribblehead
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Re: Why is Biglaw the only financially viable option?

Postby scribblehead » Sun Dec 05, 2010 2:46 pm

Here's a typical entry level job for anyone outside the Top 14/biglaw-bound crew:

--LinkRemoved--

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BruceWayne
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Re: Why is Biglaw the only financially viable option?

Postby BruceWayne » Sun Dec 05, 2010 2:48 pm

Cavalier wrote:Big law is the only thing that makes law school worth going to. There's no point in dropping $150K on law school just to make the same amount of money that someone with a bachelor's degree could make.


Most people with a Bachelors degree can't make anything straight out of college approaching even many of the lower salaried legal jobs. Because a lot of people on this site attended elite undergrads and/or are upper middle class and have connections; they don't realize how hard it is to get a good paying job straight out of undergrad--it's insanely difficult. If your options are 1. Just try to get a job with a Bachelors from an average school or 2. Go straight through to a top 25 law school, option 2 is almost always the better choice. People on here are constantly acting like the legal field is in a state of utter catastrophe and that all of these other fields are doing well--they're dreaming. The truth is that the legal field has actually weathered the down turn better than most other fields. The other thing, as someone else mentioned, is that a lot of other fields are essentially closed off to someone who wasn't already working in a particular sector (that's the thing that's so frustrating about top MBA schools, to even get into the top MBA program you needed a top job in the first place, which means you probably needed to have attended a top undergrad, which means a decision you made at age 17 dictated the rest of your career path).

The law is one of the few fields (along with medicine, which is much harder to get into) that allows someone from a modest background who attended a normal undergraduate institution a chance to make a significant improvement in their financial demographic.

What the poster in the curmedugon thread said had a lot of truth to it.

scribblehead
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Re: Why is Biglaw the only financially viable option?

Postby scribblehead » Sun Dec 05, 2010 2:55 pm

BruceWayne wrote:
Cavalier wrote:Big law is the only thing that makes law school worth going to. There's no point in dropping $150K on law school just to make the same amount of money that someone with a bachelor's degree could make.


Most people with a Bachelors degree can't make anything straight out of college approaching even many of the lower salaried legal jobs. Because a lot of people on this site attended elite undergrads and/or are upper middle class and have connections; they don't realize how hard it is to get a good paying job straight out of undergrad--it's insanely difficult. If your options are 1. Just try to get a job with a Bachelors from an average school or 2. Go straight through to a top 25 law school, option 2 is almost always the better choice. People on here are constantly acting like the legal field is in a state of utter catastrophe and that all of these other fields are doing well--they're dreaming. The truth is that the legal field has actually weathered the down turn better than most other fields. The other thing, as someone else mentioned, is that a lot of other fields are essentially closed off to someone who wasn't already working in a particular sector (that's the thing that's so frustrating about top MBA schools, to even get into the top MBA program you needed a top job in the first place, which means you probably needed to have attended a top undergrad, which means a decision you made at age 17 dictated the rest of your career path).

The law is one of the few fields (along with medicine, which is much harder to get into) that allows someone from a modest background who attended a normal undergraduate institution a chance to make a significant improvement in their financial demographic.

What the poster in the curmedugon thread said had a lot of truth to it.




What most of you don't realize is that it's also insanely difficult to find legal employment that pays enough to service one's student loan debt. Even the ABA is coming clean and admitting that a quarter of law grads are working as temps:

http://www.abajournal.com/news/article/ ... _stats_sh/

scribblehead
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Re: Why is Biglaw the only financially viable option?

Postby scribblehead » Sun Dec 05, 2010 2:59 pm

Hell, in NJ all the new assistant AG's are VOLUNTEERS:

http://blogs.findlaw.com/strategist/200 ... teers.html

These are licensed attorneys kids- not law students doing an internship. What's hilarious is that the law schools probably count these people as "employed" despite the salary of 0 dollars.

Wonder how many of these kids thought they'd spend 3 years of their life and study/pass the bar exam to end up working for free?

Anonymous User
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Re: Why is Biglaw the only financially viable option?

Postby Anonymous User » Sun Dec 05, 2010 3:01 pm

Quick question for those who might know- Does this mean that, since there is a lot of competition for biglaw and pi b/c these are options that make it possible to pay down debt, then the competition for these smaller, local, boutique gigs (with small starting salaries) would be less competitive since it would be a poor option for people with a heavy debt burden? Or is that just wishful thinking on the part of one not saddled w/ debt?

I mean, how many people honestly would be able to live on $20/hr and survive the monthly payments?

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romothesavior
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Re: Why is Biglaw the only financially viable option?

Postby romothesavior » Sun Dec 05, 2010 3:03 pm

Anonymous User wrote:Quick question for those who might know- Does this mean that, since there is a lot of competition for biglaw and pi b/c these are options that make it possible to pay down debt, then the competition for these smaller, local, boutique gigs (with small starting salaries) would be less competitive since it would be a poor option for people with a heavy debt burden? Or is that just wishful thinking on the part of one not saddled w/ debt?

I mean, how many people honestly would be able to live on $20/hr and survive the monthly payments?

All law jobs are competitive right now. I'll bet that $20/hour listing got dozens if not hundreds of applications.

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BruceWayne
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Re: Why is Biglaw the only financially viable option?

Postby BruceWayne » Sun Dec 05, 2010 3:04 pm

scribblehead wrote:What most of you don't realize is that it's also insanely difficult to find legal employment that pays enough to service one's student loan debt. Even the ABA is coming clean and admitting that a quarter of law grads are working as temps:

--LinkRemoved-- ... _stats_sh/


It depends on the school you attend. It is not "insanely difficult" to get a job that will service your student loan debt from a top 14 if you are flexible about what/where you do/work (I would even add Texas, Vanderbilt, USC, and UCLA to that equation). Actually, it's not even close in comparison to the prospects of someone coming from an average state university who didn't major in engineering.

http://www.jsonline.com/business/95074089.html

http://www.cbsnews.com/stories/2009/04/ ... 4222.shtml

http://www.nytimes.com/2010/05/25/busin ... djobs.html


Notice how the last article cites that prospects are barely improving for recent grads, but then references 2 elite universities--Penn and Berkeley.

dihydrogenmonoxide
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Re: Why is Biglaw the only financially viable option?

Postby dihydrogenmonoxide » Sun Dec 05, 2010 3:46 pm

It sure is tough trying to figure out what to do. I have two years WE, but am not saving much because I'm using the money I'm making to pay down my undergrad loans.

I'm looking at most likely a school in the Cornell - WUSTL range, probably sticker.

If I accept the positive end of the info and advice I've found here and elsewhere, it seems like those are good options. If I perform above median I have a good shot at a good job.

But if I accept the view that only above median HYSCCN students have more than a small chance of getting a job that doesn't result in their going bankrupt and/or working as a temp, it seems like a terrible idea to go to LS for almost everyone.

I wonder how financially viable relative to LS it would be to take some math classes at a community college (to satisfy engineering pre-recs), then get a 2nd bachelors in comp sci or engineering and just go into one of those fields. :?

xyzbca
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Re: Why is Biglaw the only financially viable option?

Postby xyzbca » Sun Dec 05, 2010 3:51 pm

BruceWayne wrote:
Most people with a Bachelors degree can't make anything straight out of college approaching even many of the lower salaried legal jobs.


1. You are comparing somebody straight out of undergrad to somebody who has completed three years of professional schooling? I'm shocked that somebody at 25 with a graduate degree may be in a better position than a 22 year old!

2. The more apt comparison probably looks like this:

Option 1: Three years after undergrad and no grad school debt.

Option 2: JD + grad school debt only.

If you hit Biglaw, option 2 sounds great. If you miss Biglaw option 2 doesn't seem so appealing.
Last edited by xyzbca on Sun Dec 05, 2010 4:05 pm, edited 1 time in total.




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