Are folks overconservative? Quantifying the long tail Forum

[wons]

There are lots of threads looking at the employment numbers for 2Ls, graduates, etc. These are very helpful. But they don't give a lot of information about outliers. We all know that if you're top 5 in your class at any T14, you're picking between tippy-top firm jobs, PI, clerkships, etc. The oft-posted data doesn't tell you how much value there is in being an outlier at Harvard versus, say, Penn.

The thing is, outliers MATTER. Lets assume, for sake of argument, that the difference b/w Harvard and Cornell for a typical top 5% CAREER from each school for a given year is that the Harvard student ends up as a partner at Skadden while the Cornell guy would end up as a partner at White & Case.
The median mid-career partner at Skadden is making $1million (or more!) extra per year. That's a lot of dough over a 25 year career. I'm not going to bother to calculate the NPV of the difference, but remember that 5% of $10,000,000 is $500,000. With such big numbers at the tail, small percentages add up quickly.

This is all moot if there isn't much of a difference in partner chances coming from various T14 schools. So I summed up the partners at a bunch of top firms,* mostly NY-focused, from a range of NY-focused law schools - Harvard, CLS, Penn and Cornell. I chose these schools because they've been roughly the same over time - I left out, for example, NYU (has gotten better over the last 25 years) and Michigan (worse).

The results, I think, clearly show that by ignoring the economic value of the lottery ticket for a top career, posters here are systematically undervaluing the top schools:

HLS: 358 partners
CLS: 225 partners
Penn: 57 partners
Cornell: 42 partners

Or, expressed as a percentage chance of achieving the partnership from each school, assuming 2013 enrollment numbers and a 25-year average partnership term
HLS: 2.1%
CLS: 1.8%
Penn: 0.7%
Cornell: 0.7%

I'll grant this data isn't perfect. For example, if a top student drops down to a lower-ranked school for the money, and does better there and gets a job at Cravath anyways, will their law school matter to their career success? I don't think anyone knows. But clearly, there needs to be SOME adjustment to the calculations folks are making to account for 2-sigma positive outcomes. Especially when you consider how many of the top students at HLS are being siphoned off to academia or government work, there's a lot of economic value in the opportunity to be a top alumnus of HLS.



*The firms: Wachtell, Cravath, S&C, Davis Polk, Cleary, Skadden, Simpson, Quinn, Kirkland and Paul Weiss.

[twenty]

Interesting numbers and whatnot, but the reality is that even you have to recognize that 1) you're looking at a percentage of a percentage, and more importantly, 2) the difference between HLS at 2.1% and Cornell at .7% is not worth giving up the full ride at Cornell a student admitted at both schools would have access to.

[Tiago Splitter]

Someone taking on 100k debt instead of 300k debt will pay about 300k less over a ten year period. Those far right-tail outcomes better pay really really well to make up for that.

You also can't really do this kind of analysis without discussing utility. A huge portion of graduates from all four schools will end up in the same kinds of jobs but the ones who do so without debt will have a much higher quality of life. At 28 that extra 50k in the bank means a lot. At 55 that extra million doesn't mean nearly as much.

Expected value is normally a great way to look at things but it loses a lot of usefulness when you only play the game once. Life insurance has a negative E(V) but for a lot of people it makes a ton of sense to buy it.

[bombaysippin]

Someone taking on 100k debt instead of 300k debt will pay about 300k less over a ten year period. Those far right-tail outcomes better pay really really well to make up for that.

You also can't really do this kind of analysis without discussing utility. A huge portion of graduates from all four schools will end up in the same kinds of jobs but the ones who do so without debt will have a much higher quality of life. At 28 that extra 50k in the bank means a lot. At 55 that extra million doesn't mean nearly as much.

Agree with the bolded, but at the same time idk, an extra million at 55 sure sounds nice haha...unless I already have millions upon millions.

[vball1]

Also Harvard/ Columbia have quite a few more graduates than Penn and Cornell further reducing any distinction you are trying to draw between the school's results.

[Dog]

To the above guy - he factored in enrollment numbers. Otherwise Harvard would be much more than 3x as likely as Cornell to make partner. 358/42 is ~8.5.

I definitely agree with the idea that the money helps more when you're starting out. A few hundred thousand in my twenties could potentially give me more utility than a few million in retirement.

Let's say the partners make an extra 20 million in their careers and everybody else is in some other pool. The 1.4% boost multiplied by 20,000,000 still only amounts to an expected value increase of 280k (over say, Cornell) doesn't it? When you factor in the diminishing returns you get on money and the idea the Harvard students are actually better on average (Harvard caliber students at Cornell might be expected to outperform their average peers), I don't feel Harvard is THAT undervalued.

[LegalReality]

The part forgotten in this analysis is that biglaw partners are collectively as a group some of the most miserable human beings I have ever encountered. Everything about their lives besides the money is usually completely broken.

The fact that anyone would aspire to be a partner is absolutely terrifying. Some understanding friends and family can take a few years of the crazy schedule. After 25 years of working like an associate (at my firm partners work way more hours actually), these partners usually have almost no friends besides their clients, and a family that optimistically views them as ATM in the best case, or in the more realistic case, has become a place to deposit alimony. I challenge anyone in this thread to get to know one biglaw partner before saying this is a good outcome.

[wons]

The part forgotten in this analysis is that biglaw partners are collectively as a group some of the most miserable human beings I have ever encountered. Everything about their lives besides the money is usually completely broken.

The fact that anyone would aspire to be a partner is absolutely terrifying. Some understanding friends and family can take a few years of the crazy schedule. After 25 years of working like an associate (at my firm partners work way more hours actually), these partners usually have almost no friends besides their clients, and a family that optimistically views them as ATM in the best case, or in the more realistic case, has become a place to deposit alimony. I challenge anyone in this thread to get to know one biglaw partner before saying this is a good outcome.

Hi, I'm the OP. My pop's a partner, as is my cousin. They seem happy enough.

[PrideandGlory1776]

Hmm I like this thread topic & hope it becomes several pages - definitely an interesting expected value consideration.

[dixiecupdrinking]

The assumption that going to Harvard leads to better chances of partnership is totally ass-backwards. These numbers say more about the composition of Harvard's class about anything that having gone to Harvard did for those people. In other words, you're assuming this has something to do with outputs when in fact it has more to do with inputs.

[Dog]

The assumption that going to Harvard leads to better chances of partnership is totally ass-backwards. These numbers say more about the composition of Harvard's class about anything that having gone to Harvard did for those people. In other words, you're assuming this has something to do with outputs when in fact it has more to do with inputs.

This is something I commented on as well. Still, I think it would be a mistake to assume going to Harvard did nothing for those people (I'm not saying you said that), especially in the way of connections, name recognition, etc. The real impact of going to Harvard is difficult to assess, but I'm quite sure it would provide some advantage.

[bdubs]

Hi, I'm the OP. My pop's a partner, as is my cousin. They seem happy enough.

Are they the guys at Skadden, White & Case, or some "lesser" firm? Why don't you ask them whether they think HLS would have or did make that big of a difference in their take home pay.

If you look at some of the biggest rainmakers in the current partner generation they didn't necessarily go to YLS and HLS. There are major discrepancies between partner pay at top firms.
http://abovethelaw.com/2013/06/which-fi ... -partners/

There are just too many variables to even start an argument about this. You can't even come close to equating being top in your class with being the most likely to make partner at a top firm.

[IAFG]

The part forgotten in this analysis is that biglaw partners are collectively as a group some of the most miserable human beings I have ever encountered. Everything about their lives besides the money is usually completely broken.

The fact that anyone would aspire to be a partner is absolutely terrifying. Some understanding friends and family can take a few years of the crazy schedule. After 25 years of working like an associate (at my firm partners work way more hours actually), these partners usually have almost no friends besides their clients, and a family that optimistically views them as ATM in the best case, or in the more realistic case, has become a place to deposit alimony. I challenge anyone in this thread to get to know one biglaw partner before saying this is a good outcome.

Hi, I'm the OP. My pop's a partner, as is my cousin. They seem happy enough.

0L: how do I get biglaw?
2L: how do I make partner?
1st year: where's the exit?

[twenty]

There's a reason biglaw associates can't wait to get out of their 200k+ a year jobs to make slightly more than half with no upward mobility.

[rayiner]

The part forgotten in this analysis is that biglaw partners are collectively as a group some of the most miserable human beings I have ever encountered. Everything about their lives besides the money is usually completely broken.

The fact that anyone would aspire to be a partner is absolutely terrifying. Some understanding friends and family can take a few years of the crazy schedule. After 25 years of working like an associate (at my firm partners work way more hours actually), these partners usually have almost no friends besides their clients, and a family that optimistically views them as ATM in the best case, or in the more realistic case, has become a place to deposit alimony. I challenge anyone in this thread to get to know one biglaw partner before saying this is a good outcome.

There's plenty of Al Bundys in the world that don't make a million+ per year. I don't know if the percentage is particularly higher in big law, at least factoring in the personalities of the people that go into the profession to begin with.

[El Principe]

The part forgotten in this analysis is that biglaw partners are collectively as a group some of the most miserable human beings I have ever encountered. Everything about their lives besides the money is usually completely broken.

The fact that anyone would aspire to be a partner is absolutely terrifying. Some understanding friends and family can take a few years of the crazy schedule. After 25 years of working like an associate (at my firm partners work way more hours actually), these partners usually have almost no friends besides their clients, and a family that optimistically views them as ATM in the best case, or in the more realistic case, has become a place to deposit alimony. I challenge anyone in this thread to get to know one biglaw partner before saying this is a good outcome.

I know several happy partners. Pretty happy, but they're definitely not NYC (still big markets). Of course, a few retired early.

[jbagelboy]

You selected a bunch of V20's. No one denies that HCCN has an advantage at the upper vault levels of hiring generally - so naturally you'll see more partners.. that's probably they key flaw in your analysis. You are assuming vault rankings correlate perfectly with job satisfaction/income/practice area strength/ect.. This is an extremely rebuttable presumption.

If you look at summer classes, Harvard and Columbia have by far the largest representation per class size (the occasional random outlier from Yale, like Paul Weiss this year, notwithstanding). I bet if you broadened this survey to all V100 firms, you'd see more equal representation across the T13. In fact, I think UChicago beats out every other school for partners per graduating class in the NLJ250.

[09042014]

There are some big flaws in your methodology.

1) While you pick NY focused firms you seemingly included non NYC offices. People from Chicago go to Harvard and then make Partner at Kirkland Chicago. People from LA go to Harvard and make partner at Quinn LA.

2) A lot of Kirkland "partners" are really just senior associates.

3) You grossly simplify partnership income. Very few firms are on a lockstep system still. So the benefits of partnership at Quinn vs. DLA piper isn't just based on PPP. It's probably pretty equal.

4) Nobody makes partner anymore. This isn't 1990 anymore bros. Firms are firing partners. Whatever your chances WERE they aren't the same NOW.

5) correlation != causation - There are plenty of reasons why this would be true without Harvard being the cause. People who are predisposed to making partner at these firms may just attend Havard and CLS in greater numbers. Like people who have rich as fuck parents who work in big banks, F500 companies, or Senators or whatever. It wasn't so long ago that elite schools were pay to play.

[wons]

Responses:

(1) yes, but it has zero effect on the results. I saved the data on my work computer, but take my word for it. I included those firms to beef up the sample size.

(2) yes, but it has zero effect on the results. See above.

(3) you're going to try to son the fourth year associate on lockstep? AU CONTRAIRE MY FRIEND. Lessee, IIRC, DPW, Cleary and Cravath are straight lockstep, everyone else on my list deviates from that but S&C and Wachtell are closer to lockstep than not, and Kirkland is like a bunch of rabid dogs fighting over a carcass. Your move.

Seriously, while true that I haven't accounted for service partners v. rainmakers, I'm not sure lockstep is relevant. Why would we expect this signal to look different if we isolate for rainmakers? Are Cornell alums particularly charming and good at golf with fund managers?

(4) At these firms, partners are still made on a regular basis. I'm not going to google it for you, but, that's one of the perks at working at this level, they do eventually take a couple of kids from each year.

(5) You're right - and I explicitly note this in my OP. But I think that, absent proof that there's no causation, this is something folks need to consider in their decision process. The big difference in going to Cornell v. going to Harvard is what happens if you have the chops to be top 10 percent at Harvard. If you don't think that magna at Harvard opens doors that top 10 at Cornell doesn't, well, god bless but you're wrong. It's huge for clerkships, lateral ops, selling yourself to clients, etc.

This is the key point: by going to a lesser school, you give up the opportunity to distinguish yourself against the tougher competition of the better school. And "winning" at a better school has economic value.

Also, the measurement above isn't the end of the difference, it's just an easily measured proxy to show that a difference is there. If I were to somehow look at CEOs who started out with law degrees, would there be disproportionately more HLS alums than Cornell alums? What about if I could look at senior staff at the DOJ? Etc., etc. NY firm partners are only a portion of the potential rockstar careers you could end up with. So if folks from Harvard are 3 times more likely to end up partners at big NY firms, and 2 percent of them get there, what would it look like if we had data for all the ultra desirable careers? Personally, I think the effect would be even stronger, since my experience is the DoJ/ fancy PI hiring is snobby as hell when it comes to pedigree.

There are some big flaws in your methodology.

1) While you pick NY focused firms you seemingly included non NYC offices. People from Chicago go to Harvard and then make Partner at Kirkland Chicago. People from LA go to Harvard and make partner at Quinn LA.

2) A lot of Kirkland "partners" are really just senior associates.

3) You grossly simplify partnership income. Very few firms are on a lockstep system still. So the benefits of partnership at Quinn vs. DLA piper isn't just based on PPP. It's probably pretty equal.

4) Nobody makes partner anymore. This isn't 1990 anymore bros. Firms are firing partners. Whatever your chances WERE they aren't the same NOW.

5) correlation != causation - There are plenty of reasons why this would be true without Harvard being the cause. People who are predisposed to making partner at these firms may just attend Havard and CLS in greater numbers. Like people who have rich as fuck parents who work in big banks, F500 companies, or Senators or whatever. It wasn't so long ago that elite schools were pay to play.

[nouseforaname123]

Even assuming your analysis is correct, for the majority of applicants, there is nothing overconservative about significantly reducing upfront costs and forgoing slightly better employment prospects coming out of law school.

Sounds like your family has the resources to pay for law school. If cost isn't an issue for you, sure, take the more prestigious and expensive school. For many applicants, cost absolutely has to be a part of the equation.

[manu6926]

...

[Hutz_and_Goodman]

http://www.abajournal.com/news/article/ ... ower-tier/

OP there is counter evidence to your arguments, and keep in mind that of graduates from the absolute top schools (HYS) still less than 10% of these people are going to become big law partners in today's market. If you are a K-JD, and have some money in the family, the T14 at a sizable cost can absolutely be a solid choice. But once you're practicing it won't matter if your JD says Harvard or Boston College: if you suck at your job you'll be fired; if profits at the firm decline you'll be fired; if you pick a practice group that goes to shit you'll be fired; hell, you may just be fired because someone doesn't like you. There is no golden brick road to the top.

[nouseforaname123]

Even assuming your analysis is correct, for the majority of applicants, there is nothing overconservative about significantly reducing upfront costs and forgoing slightly better employment prospects coming out of law school.

Sounds like your family has the resources to pay for law school. If cost isn't an issue for you, sure, take the more prestigious and expensive school. For many applicants, cost absolutely has to be a part of the equation.

But I don't think school choice can be simplified to choosing the cheapest school.
Assuming A and B are in the same tier or A is considered a tier below B, it's reasonable to choose A school over B school if A is cheaper or gives you $$$.
For instance, I can't imagine anyone choosing Cornell free ride over Yale.

Which is why I talked about "significantly reducing upfront costs and forgoing slightly better employment prospects." Significantly reducing upfront costs and forgoing significantly better employment prospects probably is being overconservative.

[cron1834]

If you account for this in calculating a hypothetical expected value for each school's degree, the effect is going to be pretty marginal (at best). It's just too small of a % of outcomes. Everything "counts," but this analysis is pretty 120 for that reason.

[Johann]

Or, expressed as a percentage chance of achieving the partnership from each school, assuming 2013 enrollment numbers and a 25-year average partnership term
HLS: 2.1%
CLS: 1.8%
Penn: 0.7%
Cornell: 0.7%

Why plan for something that has almost no chance of happening? These stats are the reason to be even more conservative and favor scholly money. The fact is most law students will not be partners at biglaw firms, and next to none will be partners at elite biglaw shops. Plan for the likely event of not being partner and take less debt to make yourself more flexible in exit options and timing.