Just read Don't Go to Law School (Unless) Forum

[rayiner]

This report, like any recent employment report of graduates, has the flaw that it only includes those who respond to the survey. In all likelihood, responders are much better off and happy than non-responders. This is not a random cohort; it is biased. This is valuable data, but one has to be careful about drawings conclusions because of this and other limitations.

See page 14:

Of the 360 living graduates of the University of Virginia School of Law Class of 1990, completed surveys were returned by 260; 155 of these respondents (60%) were men and 105 (40%) were women. The response rate was 72.2%.

A 72.2% response rate is really quite good for a study tracking graduates from their last-known address a full 20 years after graduation. E.g. it's been only 5 years since my graduation, and I've managed to move enough that my undergraduate institution has lost my trail as far as mail begging me for alumni donations. While I imagine there is some skew in the data, I think it would be unreasonable to assume that everyone who didn't respond was dissatisfied.

You need to be careful drawing conclusions from any data. That's a given. However, you have to also quantify how much the unknown data can affect the known data. E.g., even if everyone who didn't report is dissatisfied with being a lawyer, 58% of the whole class is still satisfied. Pessimism is different than rationality, and it's important to note which pessimistic assumptions cannot be simultaneously true.

I think one of the most valuable things the data shows is the existence of a substantial number of legal jobs 20 years out. The presumption on TLS seems to often be that after you're finished with big law, you go back to waiting tables or whatever you did before law school. But the study shows 232 reported full-time salaries in 5 categories, all with solid averages.

E.g. It shows 64 people still working in large law firms 20 years out. We don't know how many ever worked at a large firm, but we can bound it between 148 (the number of people who started at large firms) and 360. So anywhere from 18-43% of people who ever worked at a large firm found some long-term position.

E.g. The data shows 41 people working in small firms at apparently substantial salaries after 20 years. This is a category of jobs people generally assume doesn't exist. While it's true that this isn't a relevant category for fresh graduates, because these firms take maybe one associate every year or two, it's a very relevant category for trained lawyers lateraling out of big firms.

E.g. Even if you assume all of those 28% who didn't respond had bad outcomes, it's important not to "double count" them. You can't say, on one hand, that 28% never got a decent legal job when discussing jobs after graduation, and then say, on the other hand, that 28% ended up working at Wal-Mart after leaving big law.

E.g. The weighted average salary of those who were working full-time is well over $300k. Even if we assume that everyone who didn't report is making zero, that puts the average well above $200k. Now, that doesn't tell you much about the exact distribution, I think it's reasonable to compare that number to other longitudinal studies reporting averages. The average salary of Harvard UG graduates is about $115k, in comparison.

[LeBronBBall]

You have to define "top" pretty narrowly for this to be true. Finance hiring is very tight now and for the foreseeable future. To get into a BB you basically need 3.8+ at HYPS (or connections). My brother graduated from HYPS this year, and the vast majority of his friends have nothing like the opportunities you mentioned open to them. Indeed, a lot of the 3.8+ people who would have gotten finance, etc, in better years had to settle for consulting, which has a nice starting salary but nothing like the headroom in finance.

In defining 'top' schools - I am obviously talking about target schools for finance. Ivies, MIT, Duke, U of Michigan (Ross), U of Virginia (Darden), Georgetown, NYU Stern, NU, and U of Chicago all place well into finance.

If your brother went to HYPS and had 3.8+ GPA, he must've been more than capable to break into banking. Maybe he and his friends didn't have enough hustle to get the banking offers. The thing about I-banking recruiting is that you have to be very persistent and strategic to get offers. Even if you attend HYP, you can't just cruise and expect to land banking offers just because you have a high GPA. Most banks nowadays basically fill their entire IB analyst class via summer internship programs made up of college juniors. What that means is that most successful I-banking applicants would need to load up their resumes with strong finance internships and be set to go for those grueling IB interviews by the time they are second semester juniors, when recruiting for summer IB analysts begin. As you can see, it takes a bit of hustle and focus to land a banking offer.

I went to Wharton for UG, which is considered to be an I-banking factory. I know plenty of people who managed to break into bulge bracket or elite boutique banking with 3.5-3.6 GPA. Some people who failed to grab banking or trading got gigs in sales roles at BB's, where as long as you have strong people skills, there is a lot of leeway for your GPA compared to banking/trading. Also, many people who didn't place into front office roles managed to break into middle office at BB's, which start out at 70-90k all in. But, the general rule of thumb on campus was that you had to have 3.5+ GPA to be competitive for I-banking interviews. Once you land an interview, it didn't seem to matter much if you had 3.5 GPA or 3.9 GPA. From that point on, it all depended on your interview performances.

I went to a top 10 engineering school, but one that's not a target for finance recruiting. The people who excelled in quantitative majors at my school didn't go to Wall Street making $150k+ in their 20's. A good job was going to work for Lockheed-Martin for $60k starting, or maybe Accenture for $70k starting. A best went to PhD programs and came out 6 years later to get a job that paid $90k-100k. And these were great jobs! Everyone else we knew outside of STEM was making $35k or so working HR or marketing. This was before the recession, so people were at least all employed.

Well, even if you didn't attend a finance powerhouse for college, if you have the sufficient talent, you could still break into top finance positions. If you are smart enough to get 3.8+ GPA in engineering/CS/math at a school such as UIUC or Georgia Tech, but missed boat on finance due to lack of finance recruiting on campus, you could still get into a grad school at an Ivy in engineering/ finance/ CS/ financial engineering/ or math-related fields. From then on, you would have not only the access to I-banking interviews, but also access to more quant-heavy finance positions (such as algo/quant trading) where your strong quant skills are greatly appreciated from those employers.

Sure, it's more than possible, but if you've got good networking skills and a solid head for business, it's also "more than possible" to get very good jobs in law that pay a lot more than $80-90k mid-career. Senior counsel positions in the City of Chicago law department pay $100-$120k. If you've got the people skills to work your way up into a middle-management $90k job with just your BA/BS, you've got the people skills to work your way up a municipal bureaucracy.

Assuming that the person can land even a 55-60k/yr entry level job out of college, I can't see how going to law school can dramatically increase one's earning potential over the career, after factoring in the opportunity costs/ tuition incurred from attending law schools as well as the fact that most biglaw folks don't last more than 3-4 years into their jobs.

[dingbat]

Assuming that the person can land even a 55-60k/yr entry level job out of college, I can't see how going to law school can dramatically increase one's earning potential over the career, after factoring in the opportunity costs/ tuition incurred from attending law schools as well as the fact that most biglaw folks don't last more than 3-4 years into their jobs.

exit options from biglaw tend to start at the kind of salary that for many careers is more like a ceiling.
For many careers, the typical person will barely break $100k over their career; many white-collar professionals barely break $150k

[rayiner]

If your brother went to HYPS and had 3.8+ GPA, he must've been more than capable to break into banking. Maybe he and his friends didn't have enough hustle to get the banking offers.

He got into GS/JPM/MS, and his summer class was disproportionately magna at targets. Some of his STEM/magna friends had to settle for management consulting. Average students at his school weren't even sniffing these jobs.

Assuming that the person can land even a 55-60k/yr entry level job out of college, I can't see how going to law school can dramatically increase one's earning potential over the career, after factoring in the opportunity costs/tuition incurred from attending law schools as well as the fact that most biglaw folks don't last more than 3-4 years into their jobs.

Are we talking about typical outcomes now ("most big law folks")? I'm confused, because you just spent a page ranting about outcomes for people with good grades and a lot of hustle out of Wharton UG.

The fact is that most jobs you can get with a BA/BS don't clear much past $100k. The average mid-career salary out of Harvard UG is, as I said, about $115k. That's the typical outcome.

The BLS median salary for all lawyers is $123k/year. I think it's safe to assume that the mid-career salaries for people from T14 law schools who got big law is somewhat or substantially higher. See the longitudinal study I cited above.

[LSAC Trollop]

A 72.2% response rate is really quite good for a study tracking graduates from their last-known address a full 20 years after graduation.

Just wanted to emphasize this point...as someone who was in a PhD program for 3 years studying research methodology, I can confirm that 72.2% for a study like that is ASTOUNDINGLY good. To put it into context, a lot of schools can't get a 72% response rate on course evaluations. Yes, these results do need to be taken with a grain of salt. But, at least with respect to statistical considerations, the grain in this case is about as small as it's ever going to be for a survey of this nature.

[JCougar]

A good look at the outcomes from a top law school is the Monahan study tracking UVA law graduates in the class of 1990: http://www.law.berkeley.edu/files/manus ... wanson.pdf. It's a good 20-year longitudinal study with a high response rate (72%).

It should still be relevant, because I don't think the legal field has changed structurally since then. The explosion in big law happened in the 1970s and 1980s, not in the 2000's as some people assume. Moreover, the oversupply of JD's back then wasn't really any better. 36,400 JD's graduated in 1990, versus 44,500 in 2011. The 1990 figure is slightly higher than the 2011 figure adjusted for population growth, and quite a bit higher when adjusted for GDP growth. While C/O 2011 graduated into a substantially worse economic climate, it should be noted that C/O 1990 graduated into a recession, one that hit the legal field pretty hard. After all, Latham invented Lathaming in the early 1990s recession...

That's an interesting study. Lots of good information. I found this interesting:

Respondents’ cumulative GPA while in law school and the number of hours worked during the prior week bore significant negative relationships to current life satisfaction.

I wonder if that's simply because people with higher GPAs were more likely to work for big firms, and big firms suck, or whether it's an underlying psychological variable such as perfectionists are more likely to have a higher GPA, yet they are never happy with themselves because nothing is ever perfect...or something like that.

I think studies like this are generally solid, but the largest flaw between then and now is the significant debt loads all students are carrying. If those people couldn't stand Biglaw, they had the option to quit if they wanted. Today's graduates have to work there 5-8 years to put a dent in their debt, depending on how frugally they live. And if they miss out on Biglaw or get Lathamed, they are less likely to be happy carrying a cumbersome mountain of debt.

Also, the bottom 25% of that class would likely have trouble paying off today's debt loads. 10% with HOUSEHOLD incomes of less than $70K, and 25% with household incomes of less than $150K. If those household incomes of $150K were from two lawyer incomes of $75K each -- with each person carrying $200K in debt, for a total of $400K, things wouldn't be so rosy.

[JCougar]

A 72.2% response rate is really quite good for a study tracking graduates from their last-known address a full 20 years after graduation.

Just wanted to emphasize this point...as someone who was in a PhD program for 3 years studying research methodology, I can confirm that 72.2% for a study like that is ASTOUNDINGLY good. To put it into context, a lot of schools can't get a 72% response rate on course evaluations. Yes, these results do need to be taken with a grain of salt. But, at least with respect to statistical considerations, the grain in this case is about as small as it's ever going to be for a survey of this nature.

I will confirm that a 72% response rate is fairly incredible.

[Elston Gunn]

1. HYS do need based aid only--i.e you won't end up in 200K in debt from HYS unless you're the type of person who can afford that anyway. Big difference.

Any HYS students care to comment on this? With full loans leading to roughly 270K (LinkRemoved) in debt when repayment starts I'm wondering whether this assertion that even 200K debt just isn't happening without substantial family wealth is accurate.

It varies from school to school and year to year, but minimum contribution at Stanford this year was 37k. Last year it was a little more generous (33k minimum?). These figures assume you're hitting the maximum COL expenses and I've been able to live below that figure by a little. So subtract any dollar you can save below the COA figures.

Your contribution then goes up if your family/you have wealth or you make over 6k in a summer (you keep 43% of all dollars over 6k). But if you and your family are a median US household you're pretty close to the minimum contribution mark plus the tax on summer earnings. (Of course, the majority of HYS students don't come from median US households.)

COL is high in Palo Alto but (a) that's built into the 37/33k figure above and (b) if you're taking out 200k in loans then you have bank somewhere (parents, prior six-figure employment, a HOUSE). I guess there are a few cases where you'll get an unfair package because of the way the rules work (estranged parents who've written you out of their will?), but those are the exception and not the rule.

So if you're "dirt poor"--a median US household!--I think it's easy to end up with less debt than 135k-140 at Stanford, especially if you do firm work 2L summer or cut costs in other ways (e.g., TA/RA during the year).

To chime in, BW is sort of right, sort of wrong. I'm at Y and, anecodotally, there are lots and lots of people here who either come from money or have made enough money before LS to make a significant dent in their debt (often both). Average debt load is around $100K IIRC, though I suspect that's seriously pulled down by those with parents covering close to the full bill, and people who can't afford to contribute themselves are in that 135K range. That's of course still a great price for the degree.

That said, there still are a few people who get stuck in the range where they don't qualify for grants and their parents aren't kicking in (i.e. me), but it's definitely the exception.

[rayiner]

Also, the bottom 25% of that class would likely have trouble paying off today's debt loads. 10% with HOUSEHOLD incomes of less than $70K, and 25% with household incomes of less than $150K. If those household incomes of $150K were from two lawyer incomes of $75K each -- with each person carrying $200K in debt, for a total of $400K, things wouldn't be so rosy.

Quite probably.

I should note something about the household incomes though... almost half of respondents were married with a spouse who did not work full time, and a third were married with a stay at home spouse.

[Sheffield]

Using a debt of $400K against an income of $150K, after taxes (20%) and loans you would being home $5,200. If taxes are 25%, bring home goes down to $4,600. $4K if taxes are 30%.

Generally speaking a number of people I know have $150K in debt and will earn around $120K. . . figure monthly bring home at $5,700.00 Not counting spouse. A BL salary ups monthly take home to $9,600 (after loan/tax).

[rayiner]

Using a debt of $400K against an income of $150K, after taxes (20%) and loans you would being home $5,200. If taxes are 25%, bring home goes down to $4,600. $4K if taxes are 30%.

Generally speaking a number of people I know have $150K in debt and will earn around $120K. . . figure monthly bring home at $5,700.00 Not counting spouse. A BL salary ups monthly take home to $9,600 (after loan/tax).

I assume you're a K-JD?

At $150k, total taxes are at least 30% (Texas) - 40% (New York City).

If you've got $150k of debt, your take home after taxes and loans in NYC is $6,325.

[Sheffield]

I assume you're a K-JD?

At $150k, total taxes are at least 30% (Texas) - 40% (New York City).

If you've got $150k of debt, your take home after taxes and loans in NYC is $6,325.

More like preK-JD.

Whose calculator do you use?

[rayiner]

I assume you're a K-JD?

At $150k, total taxes are at least 30% (Texas) - 40% (New York City).

If you've got $150k of debt, your take home after taxes and loans in NYC is $6,325.

More like preK-JD.

Whose calculator do you use?

--LinkRemoved--

[NoodleyOne]

A question about that... would it make sense to live in Hoboken or somewhere while working in NYC for lower state taxes? Or are the taxes taken based on where you work and not where you live?

Edit: I also don't know if NJ's state taxes are lower, but was just curious in general. Obviously there are also other benefits (lower CoL), but was mainly curious about the taxes.

And right now, $5k monthly take home sounds like a damn fortune.

[Sheffield]

I assume you're a K-JD?

At $150k, total taxes are at least 30% (Texas) - 40% (New York City).

If you've got $150k of debt, your take home after taxes and loans in NYC is $6,325.

More like preK-JD.

Whose calculator do you use?

--LinkRemoved--

Thanks. Yours is very detailed. Mine a bit simplier, but probably close enough, Agree?
(On mine a $150K debt and a $150K salery would equal a $7,594 take home).

http://www.law.harvard.edu/apps/sfs/cal ... home-calc/

[JCougar]

A question about that... would it make sense to live in Hoboken or somewhere while working in NYC for lower state taxes? Or are the taxes taken based on where you work and not where you live?

Edit: I also don't know if NJ's state taxes are lower, but was just curious in general. Obviously there are also other benefits (lower CoL), but was mainly curious about the taxes.

And right now, $5k monthly take home sounds like a damn fortune.

Remember, your rent for a 1br apartment in NYC will run you $3000/month.

[JCougar]

We're all kind of getting sidetracked here, because we were talking about a household that has $400K of debt making $150K, not one with $150K of debt making $160K.

You'll still have a good life making a Biglaw salary in NYC today, but we're talking about whether those c/o 1990 graduates at UVA would be feeling just as happy with their lives if they were shouldering the debt load of today's students. The 25th percentile of that class is likely pretty happy making $150K in household income given the debt loads incured by 1990 students.

Due to limitations of the study, we don't know how much of that $150K in hosehold income is coming from the attorney, and how much of it is coming from the spouse. If you split it down the middle, you can assume that $75K is coming from the attorney. This may or may not be a safe assumption to make. But if the same salary stats were to hold true for today's graduating classes, we're talking about paying off a $200K debt load with a $75K salary 20 years down the line, and that's not good news. If you're making IBR payments on that debt load, I don't even think you'd have the debt paid off by then.

[IAFG]

We're all kind of getting sidetracked here, because we were talking about a household that has $400K of debt making $150K, not one with $150K of debt making $160K.

You'll still have a good life making a Biglaw salary in NYC today, but we're talking about whether those c/o 1990 graduates at UVA would be feeling just as happy with their lives if they were shouldering the debt load of today's students. The 25th percentile of that class is likely pretty happy making $150K in household income given the debt loads incured by 1990 students.

Due to limitations of the study, we don't know how much of that $150K in hosehold income is coming from the attorney, and how much of it is coming from the spouse. If you split it down the middle, you can assume that $75K is coming from the attorney. This may or may not be a safe assumption to make. But if the same salary stats were to hold true for today's graduating classes, we're talking about paying off a $200K debt load with a $75K salary 20 years down the line, and that's not good news. If you're making IBR payments on that debt load, I don't even think you'd have the debt paid off by then.

Tuition was lower in 1990, but so were first year salaries. You make a lot of silly assumptions.

Also, doesn't the study break down what spouses are doing?

[Tiago Splitter]

A question about that... would it make sense to live in Hoboken or somewhere while working in NYC for lower state taxes? Or are the taxes taken based on where you work and not where you live?

Edit: I also don't know if NJ's state taxes are lower, but was just curious in general. Obviously there are also other benefits (lower CoL), but was mainly curious about the taxes.

And right now, $5k monthly take home sounds like a damn fortune.

Remember, your rent for a 1br apartment in NYC will run you $3000/month.

Not necessarily. There are plenty of ways to avoid that, and someone with sticker price debt has plenty of motivation to keep rental costs down by either living with roommates or living out in a place like Hoboken as the OP suggested. I would have played the NYC city taxes angle there instead.

You'll still have a good life making a Biglaw salary in NYC today, but we're talking about whether those c/o 1990 graduates at UVA would be feeling just as happy with their lives if they were shouldering the debt load of today's students. The 25th percentile of that class is likely pretty happy making $150K in household income given the debt loads incured by 1990 students.

Certainly at sticker price the debt levels would be problematic, but keep in mind that the average debt coming out of UVA law is less than half of the quoted COA + interest for three years of law school.

This goes the other way too; you hear people talking about attending some school at sticker and then give the anecdote about their buddy who just graduated from there who is now living it up. Not only does the potential applicant need to be made aware of the possibility that he might miss the BigLaw boat, but his buddy may have had scholarships, family money, etc. that made the decision analysis far different.

[JCougar]

Tuition was lower in 1990, but so were first year salaries. You make a lot of silly assumptions.

Also, doesn't the study break down what spouses are doing?

None of those assumptions are silly when the contention is that it's not a given that these people would be that happy carrying today's debt loads.

[JCougar]

Certainly at sticker price the debt levels would be problematic, but keep in mind that the average debt coming out of UVA law is less than half of the quoted COA + interest for three years of law school.

This goes the other way too; you hear people talking about attending some school at sticker and then give the anecdote about their buddy who just graduated from there who is now living it up. Not only does the potential applicant need to be made aware of the possibility that he might miss the BigLaw boat, but his buddy may have had scholarships, family money, etc. that made the decision analysis far different.

But most of this "don't go to law school" stuff is aimed at people who are paying sticker or close to it. Although the average debt load of a UVA grad may be far less than COA + interest, in this case, the average doesn't describe the reality for a lot of people. Some are attending with near full-rides, and others are attending at sticker. If everyone paid the average tuition, there would be far less of a problem than the current system where some people's outcomes are very, very good, and others are extremely miserable.

[IAFG]

Tuition was lower in 1990, but so were first year salaries. You make a lot of silly assumptions.

Also, doesn't the study break down what spouses are doing?

None of those assumptions are silly when the contention is that it's not a given that these people would be that happy carrying today's debt loads.

It's a silly thing to speculate about if you are going to ignore first your salaries in 1990. Like tuition, 1st yr salaries have also grown totally out of sync with inflation.

[rayiner]

Thanks. Yours is very detailed. Mine a bit simplier, but probably close enough, Agree?
(On mine a $150K debt and a $150K salery would equal a $7,594 take home).

http://www.law.harvard.edu/apps/sfs/cal ... home-calc/

It's not really close at all.

Monthly payment on $150k is about $1,780 at 7.5%. So you're saying your after-tax income on $150k is $9,374, for an effective total tax rate of 25%. Nowhere in the country is your tax rate on $150k salary only 25%. It's 39% in New York City. It's 34% in Massachusetts. It's 29% even in Texas, which has no state income tax.

Your take home with $150k on $150k salary in NYC is $5,865, about $1,730 lower than your estimate.

[rayiner]

Tuition was lower in 1990, but so were first year salaries. You make a lot of silly assumptions.

Also, doesn't the study break down what spouses are doing?

None of those assumptions are silly when the contention is that it's not a given that these people would be that happy carrying today's debt loads.

You're making a number of worst-case assumptions. First, I think the 50-50 split is an unreasonable estimation when you're talking about a data set where half of the data set has spouses who do not work full time. Second, you're ignoring IBR. How many of the people in the bottom quartile are in government jobs that would be eligible for IBR today? Third, you're assuming that people didn't already pay off their loans before taking these lower paying jobs.

I'm not arguing with your larger point, which is that there are going to be a lot of people who will have trouble paying off their loans. I'm not really presenting the UVA study as evidence of how many people end up happy with their career choices. I'm posting the UVA study to counter the prevalent notion that there are no upsides to getting a JD besides 3-4 years during big law.

[Kurst]

Like tuition, 1st yr salaries have also grown totally out of sync with inflation.

Median salary for Class of 1991, in 2011 dollars: $65,045
Median salary for Class of 2011: $60,000