Which Law Schools Make Rational Economic Sense to Attend? Forum

[hardrive6]

http://papers.ssrn.com/sol3/papers.cfm? ... id=2433032

[03152016]

I estimate that if a student pays full sticker price to attend law school, then based on data from the class of 2012 there are only 48 law schools the student could attend and expect to have a positive economic return within 10 years.

That seems ridiculously optimistic.

[aboutmydaylight]

There's a couple of optimistic assumptions. For one, the opportunity cost is really underestimated. The opportunity cost for a YLS student is estimated to be $34,275 which is likely way off. Its probably more like ~$45-50k. Also, as far as I can tell the study assumes you stay at the same place of employment for 10 years after graduation. Basically if you start at biglaw, you're still there 10 years later with your income going up according to some constant that the author chooses to be average salary increase rate.

It also uses average starting salary after making it clear the distribution is very bimodal. It would probably be better to stratify the groups into big law / other. No one is getting paid $120k a year, and not a lot of people going into PI expect to have a positive financial return to their investment 10 years later after paying sticker even at the top schools.

[03152016]

For a student paying sticker who strikes out -- if I very optimistically assumed $200k debt after fees ($2,300/mo on 10 year plan) and $60k salary ($3,200 after-tax in NYC), getting to that "break even" point by the 10 year mark basically requires living in poverty. Having positive economic return after ten years != economically sensible decision.

Average salaries are complete flame, the ABA should bar schools from using it

[Kimikho]

fucking lol



ETA: Despite the excel graphs/averaging of salaries, this paper isn't actually that bad.

...applicants should apply to a wide variety of schools and negotiate the amount of scholarship money that schools offer...one thing that students must consider when accepting a scholarship is the strings that are sometimes attached.

...if students in law school funded positions counted towards schools' unemployment rates, than six fewer law schools in table 7 would make rational economic sense to attend.

...it would be a terrible economic decision for someone like Average Anderson [3.11/151] to attend law school.

Unfortunately...going to law school would be a terrible economic decision for Above Average Andy [3.6/165] as well. Although Above Average Andy got into higher ranked schools, his economic return 10 years after graduation is worse than Average Anderson's.

However, I urge potential students to not attend the other 115 law schools (unless they receive a scholarship) that have a negative economic return 10 years after graduation. Research suggests that potential students decide to attend these schools because of students' optimism bias. Many students believe that they are going to be one of the select few that get the best grades and receive the best jobs from the school they attend. The problem with this thinking is that every student attending these schools is thinking the same thing. I urge students that are in this position to reconsider. Do not put you and your family's economic future at risk by spending hundreds of thousands of dollars to attend a law school that will hardly increase your earning potential, as this could be a life wrecking investment.

[rayiner]

Even taking the study at face value, the result is that the marginal (48th) school just gets you, after 10 years, back to the position you would have been in anyway. In other words, the school ate up all the positive career value generated by going to law school.

The article also ignores that you're working a lot harder and have much less free time relative to the baseline.

[Kimikho]

Even taking the study at face value, the result is that the marginal (48th) school just gets you, after 10 years, back to the position you would have been in anyway. In other words, the school ate up all the positive career value generated by going to law school.

The article also ignores that you're working a lot harder and have much less free time relative to the baseline.

Yeah, that could have been pushed a little more aggressively. She briefly addresses that here (but in terms of schools that don't give a return, even for full rides):

Table 12 shows the economic return from these 24 schools after 10 years if the student receives a full academic scholarship, and earns the average starting salary from that school. The reason that graduates receiving full scholarships from these schools have a negative economic return is because the additional earnings students receive from attending these schools are miniscule. So miniscule in fact that graduates' additional earnings will not offset the student's lost opportunity cost to attend school.

There definitely could have been accounting for hours worked in the analysis. I'm sure for the 29 schools that give returns (48 give returns if you include in-state tuition) you could figure out the hourly "wage" and then come up with a new salary representing how much that person would earn working 40 hours a week, or some other way to represent the utility given up by working biglaw.

Also, while she uses COL in the loans to determine how much interest students accumulate, she then subtracts the COL because you normally have to pay that to survive. But this ignores the increased cost of living from trying to be close to school/being in a big city you otherwise wouldn't have lived in etc.

[aboutmydaylight]

Also, while she uses COL in the loans to determine how much interest students accumulate, she then subtracts the COL because you normally have to pay that to survive. But this ignores the increased cost of living from trying to be close to school/being in a big city you otherwise wouldn't have lived in etc.

Does that actually happen irl though? Its probably cheaper to live as a student than to live in a big city while working. If anything that can save you a couple K a year in COL.

[Kimikho]

Also, while she uses COL in the loans to determine how much interest students accumulate, she then subtracts the COL because you normally have to pay that to survive. But this ignores the increased cost of living from trying to be close to school/being in a big city you otherwise wouldn't have lived in etc.

Does that actually happen irl though? Its probably cheaper to live as a student than to live in a big city while working. If anything that can save you a couple K a year in COL.

I was more getting at people living in a city they otherwise wouldn't have lived in, or living on their own when they would have moved back with their parents while working for a bit, which 45% of recent grads do.

[aboutmydaylight]

Also, I don't really see how paying sticker at Penn could net someone a positive economic return after just 5 years...

3 years of foregone income (what like $110k after taxes if you're lucky?) + 300k of debt is a cost of roughly 410k at graduation. If you pay it off in 5 years that $300k is basically $350k so 5 years after graduating your cost will have been like $450k. Divided by 5 that's around $90k more a year you'd have to make over what you would have been making had you not gone to law school, post taxes. How is this possible when even in big law you're only making ~100k after taxes?

Am I missing something or are her assumptions off somehow?

[Kimikho]

Also, I don't really see how paying sticker at Penn could net someone a positive economic return after just 5 years...

3 years of foregone income (what like $110k after taxes if you're lucky?) + 300k of debt is a cost of roughly 410k at graduation. If you pay it off in 5 years that $300k is basically $350k so 5 years after graduating your cost will have been like $450k. Divided by 5 that's around $90k more a year you'd have to make over what you would have been making had you not gone to law school, post taxes. How is this possible when even in big law you're only making ~100k after taxes?

Am I missing something or are her assumptions off somehow?

It isn't 300k of debt by the end, because she subtracts out COL. COL is added in first to figure out how much interest they'll accumulate, then it is subtracted out, so it's more like $200k (very rough estimate there). So they won't have paid off their debt, but because they did a negative-savings thing (spent money they didn't have to live off of), it "breaks even" because now those debt payments are just essentially COL.

Also, I was messing around with the unemployment numbers at law schools for awhile. The data is all pretty messed up. At the lower schools it is most likely more accurate (I can see an unemployed Cooley grad satisfied he/she is able to click "unemployed-seeking" on the survey to spite the school) but at the higher end there is probably reporting bias. I can post my observations from that data actually if anyone wants, I used it for a stats assignment .

[aboutmydaylight]

Also, I don't really see how paying sticker at Penn could net someone a positive economic return after just 5 years...

3 years of foregone income (what like $110k after taxes if you're lucky?) + 300k of debt is a cost of roughly 410k at graduation. If you pay it off in 5 years that $300k is basically $350k so 5 years after graduating your cost will have been like $450k. Divided by 5 that's around $90k more a year you'd have to make over what you would have been making had you not gone to law school, post taxes. How is this possible when even in big law you're only making ~100k after taxes?

Am I missing something or are her assumptions off somehow?

It isn't 300k of debt by the end, because she subtracts out COL. COL is added in first to figure out how much interest they'll accumulate, then it is subtracted out, so it's more like $200k (very rough estimate there). So they won't have paid off their debt, but because they did a negative-savings thing (spent money they didn't have to live off of), it "breaks even" because now those debt payments are just essentially COL.

Also, I was messing around with the unemployment numbers at law schools for awhile. The data is all pretty messed up. At the lower schools it is most likely more accurate (I can see an unemployed Cooley grad satisfied he/she is able to click "unemployed-seeking" on the survey to spite the school) but at the higher end there is probably reporting bias. I can post my observations from that data actually if anyone wants, I used it for a stats assignment .

You're right, I counted COL while in law school but I didn't subtract it out of opportunity cost if you don't go to law school. That makes sense now.

[iamgeorgebush]

some flaws but overall a decent analysis, i think. would be better if the author's analysis better took into account the bimodal distribution. also, obv using $111k or w/e for yale is not right; all YLS kids can get biglaw if they want it.

[papercut]

all YLS kids can get biglaw if they want it.

It seems like this could be right, but I'm just wondering if you have some evidence for this claim?

[iamgeorgebush]

all YLS kids can get biglaw if they want it.

It seems like this could be right, but I'm just wondering if you have some evidence for this claim?

ABA data. among those in the c/o 2013 who entered private practice directly following law school, only 2 were at firms w/ fewer than 100 attorneys, and i'd be willing to bet those 2 students were at preftigious boutiques (which they chose over biglaw). granted, there were also 7 unemployed grads, which i cannot explain. maybe those 7 unemployed were chasing unicorn jobs w/ subpar grades; i don't know.

see http://www.lstscorereports.com/schools/yale/ABA/2013/

also other source is biglaw partner who says they take pretty much anyone from yale.

[2014]

I did not read the paper but this seems likely to be an attempt to justify author's decision to do GULC at sticker lol

[bugsy33]

The major flaw I see is that this data from the class of 2012 will be barely relevant to the class of 2017. With 35% less people graduating in 2017 one would expect a major deviation from the results of 2012. The c/o 2012 graduated into the height of the [url=https://www.lawcrossing.com/article/900 ... ion-Proof/]legal recession[/url], and was glutted with new lawyers. The c/o 2017 will (most likely) graduate into a recovering legal market, and will be far less glutted with new attorneys.

I think what this study shows is that there are only a few schools who's value remains constant through troubled economic times.

Also 10 years is kind of an arbitrary cutoff point. A law degree may not pay off until year eleven, but in a 30-40 year career, that gap grows substantially. IIRC the latest study still showed a $1m average addition in earnings for a JD over a bachelors.

[timbs4339]

The major flaw I see is that this data from the class of 2012 will be barely relevant to the class of 2017. With 35% less people graduating in 2017 one would expect a major deviation from the results of 2012. The c/o 2012 graduated into the height of the legal recession, and was glutted with new lawyers. The c/o 2017 will (most likely) graduate into a recovering legal market, and will be far less glutted with new attorneys.

I think what this study shows is that there are only a few schools who's value remains constant through troubled economic times.

Also 10 years is kind of an arbitrary cutoff point. A law degree may not pay off until year eleven, but in a 30-40 year career, that gap grows substantially. IIRC the latest study still showed a $1m average addition in earnings for a JD over a bachelors.

Do you want to be eating ramen noodles and living in a four-bedroom shared apartment or with your parents 10 years from now?

[iamgeorgebush]

The major flaw I see is that this data from the class of 2012 will be barely relevant to the class of 2017. With 35% lessfewer people graduating in 2017 one would expect a major deviation from the results of 2012. The c/o 2012 graduated into the height of the legal recession, and was glutted with new lawyers. The c/o 2017 will (most likely) graduate into a recovering legal market, and will be far less glutted with new attorneys.

I think what this study shows is that there are only a few schools who'swhose value remains constant through troubled economic times.

Also 10 years is kind of an arbitrary cutoff point. A law degree may not pay off until year eleven, but in a 30-40 year career, that gap grows substantially. IIRC the latest study still showed a $1m average addition in earnings for a JD over a bachelors.

or not. many commentators have speculated that many of the changes to the profession following the recession will be permanent (e.g, http://www.newrepublic.com/article/1139 ... oney-dries). consider that there was not much of a change from c/o 2012 to 2013 (http://taxprof.typepad.com/taxprof_blog ... ases-.html).

what is this "latest study" you refer to? plz show.

iirc the author chose 10 yrs b/c most people can't expect to stay in biglaw much longer than 10 yrs (hell, even 10 yrs is a long time for most), and after biglaw there's a huge dropoff in salary. not an arbitrary cutoff point. considering the changes biglaw is currently undergoing, this should matter even more for future classes.

[ManoftheHour]

I estimate that if a student pays full sticker price to attend law school, then based on data from the class of 2012 there are only 48 law schools the student could attend and expect to have a positive economic return within 10 years.

That seems ridiculously optimistic.

[09042014]

all YLS kids can get biglaw if they want it.

It seems like this could be right, but I'm just wondering if you have some evidence for this claim?

ABA data. among those in the c/o 2013 who entered private practice directly following law school, only 2 were at firms w/ fewer than 100 attorneys, and i'd be willing to bet those 2 students were at preftigious boutiques (which they chose over biglaw). granted, there were also 7 unemployed grads, which i cannot explain. maybe those 7 unemployed were chasing unicorn jobs w/ subpar grades; i don't know.

see http://www.lstscorereports.com/schools/yale/ABA/2013/

also other source is biglaw partner who says they take pretty much anyone from yale.

Another 14 are in school funded jobs.

I'd bet that even straight P's is good enough for big law, but plenty of people have bad personalities. And firms don't hire those people if they figure it out.

[iamgeorgebush]

all YLS kids can get biglaw if they want it.

It seems like this could be right, but I'm just wondering if you have some evidence for this claim?

ABA data. among those in the c/o 2013 who entered private practice directly following law school, only 2 were at firms w/ fewer than 100 attorneys, and i'd be willing to bet those 2 students were at preftigious boutiques (which they chose over biglaw). granted, there were also 7 unemployed grads, which i cannot explain. maybe those 7 unemployed were chasing unicorn jobs w/ subpar grades; i don't know.

see http://www.lstscorereports.com/schools/yale/ABA/2013/

also other source is biglaw partner who says they take pretty much anyone from yale.

Another 14 are in school funded jobs.

I'd bet that even straight P's is good enough for big law, but plenty of people have bad personalities. And firms don't hire those people if they figure it out.

yeah but do you really think school-funded is necessarily going to be "didn't make biglaw, had to settle for school-funded" at a school like YLS? my understanding is that those school-funded positions are actually pretty coveted by PI types. at least, that's what some yalies in another thread were saying.

[09042014]

It seems like this could be right, but I'm just wondering if you have some evidence for this claim?

ABA data. among those in the c/o 2013 who entered private practice directly following law school, only 2 were at firms w/ fewer than 100 attorneys, and i'd be willing to bet those 2 students were at preftigious boutiques (which they chose over biglaw). granted, there were also 7 unemployed grads, which i cannot explain. maybe those 7 unemployed were chasing unicorn jobs w/ subpar grades; i don't know.

see http://www.lstscorereports.com/schools/yale/ABA/2013/

also other source is biglaw partner who says they take pretty much anyone from yale.

Another 14 are in school funded jobs.

I'd bet that even straight P's is good enough for big law, but plenty of people have bad personalities. And firms don't hire those people if they figure it out.

yeah but do you really think school-funded is necessarily going to be "didn't make biglaw, had to settle for school-funded" at a school like YLS? my understanding is that those school-funded positions are actually pretty coveted by PI types. at least, that's what some yalies in another thread were saying.

Your understanding is that because stupid 0Ls say so on threads like this.

[Kimikho]

I estimate that if a student pays full sticker price to attend law school, then based on data from the class of 2012 there are only 48 law schools the student could attend and expect to have a positive economic return within 10 years.

That seems ridiculously optimistic.

The 48 is if you include in-state tuition. Assuming all out-of-state tuition, she said there's only 29. So there are 30 schools at most that net a positive return in ten years.

[iamgeorgebush]

yeah but do you really think school-funded is necessarily going to be "didn't make biglaw, had to settle for school-funded" at a school like YLS? my understanding is that those school-funded positions are actually pretty coveted by PI types. at least, that's what some yalies in another thread were saying.

Your understanding is that because stupid 0Ls say so on threads like this.

nah it was that guy cicero who said this. pretty sure he's a current YLS student, not a 0L. maybe he's just a fanboy for his own school though, dunno.