Street Smart Attorney

In an article supporting the issuance of its latest law school rankings, US News writer Jessica Rettig includes some important warnings for potential law school applicants.  The article also contains a pro law school pep talk by ABA President Carolyn Lamm.  A few snippets from the article,

With tuition at an all-time high, more and more lawyers worry about finding work that will enable them to repay their loans. The American Bar Association reports that from 2007 to 2008, average tuition rose 6 percent at private law schools, to $34,298, and 9 percent at in-state public schools, to $16,836. Add in living expenses and pricey books, and at least 80 percent of students now rely on student loans to fund their law education.

It may seem out of touch for law schools to be raising prices in a lousy economy, but it’s a reflection of supply and demand. Indeed, an increasing number of people appear willing to take on six-figure debt to get a law degree. In 2009, the number of people who took the Law School Admission Test hit a decade high, up 6.4 percent from the year before. “As long as people keep applying to law schools in record numbers, (a) there’s no incentive at all for the universities to charge less for the law schools that are already established, and (b) there’s every incentive for other universities to open new law schools,” says Elie Mystal, editor of the popular legal blog Above the Law.

With free government money, new guaranteed government payback options (IBR), we are currently incentivizing reckless behavior and creating an educational bubble.  Much like housing prices were propped up by free flowing flexible payment options and interest only loans, the law school bubble is being floated by government backed, guaranteed loans.  The government is now issuing loans as well.  While this credit keeps flowing, there is no incentive to reduce tuition at law schools.  Of course, if liberal arts majors with zero job prospects stopped applying to law school, the tuition would drop and schools would close.

In the end, law schools are the big winners here, as they get the loan proceeds with little obligation.  Law schools guarantee nothing to their students except three years of the Socratic method (at most schools; see Washington & Lee for an exception) and little practical training.  This bubble will of course result in the US taxpayers absorbing the many inevitably defaulted loans for jobless graduates of these 200 ABA approved (and more unapproved) law schools.  There will be no legal jobs for the majority of these highly leveraged students.  Particularly, the students at the bottom of the class who usually pay full tuition in loans, will have virtually zero job prospects and triple digit debt.  Throw in the rampant outsourcing of entry level jobs to India (legitimized by ABA Formal Opinion 08-451) and you have the perfect storm of greatly reduced opportunity for law students and practicing lawyers.

The article continues, comparing the average law students chance of finding a biglaw job that pays well enough to pay off their loans, to winning the lottery.

Students themselves are critical in establishing manageable debt levels. Many do not research the real economic costs and benefits of a law degree, says Prof. Herwig Schlunk of Vanderbilt University. “It’s kind of blindly accepted that education in general, and legal education in particular, is always worth the money,” says Schlunk. “[But] there’s a lot of kids who do go to law school who really have no business, at least not as an investment matter, in going.”

Being realistic about your career path is step No. 1. Success stories from the industry’s glory days tend to fuel law students’ assumptions that they will be able to get a high-paying job, says David Stern, CEO of Equal Justice Works, a nonprofit organization that promotes careers in public interest law. “In their mind’s eye, [law students are] thinking of hitting the lottery and getting one of these $160,000-a-year jobs, and it is a fiction,” he says. “By and large, it’s just like the lottery. You’re spending a huge amount of money in the hopes of hitting the jackpot, and there’s relatively small chances, and the chances have gotten a lot smaller.”

The article concludes by encouraging law students to develop their non-legal skills.  Why is it that people go to law school again?

Now that some students are finding a law degree is not as immediately marketable as they had hoped, they may benefit from focusing on building nonlegal skills, such as Web producing or social media networking. Laura Bergus, a second-year law student at the University of Iowa and blogger for Social Media Law Student, got her first summer law job after an employer commented on one of her online posts. “Following blogs and commenting on blogs is a huge piece of this puzzle,” she says. “That’s how you showcase what makes you an individual that the firm you’re interested in should hire.”

In another down year for attorney hiring, people continue to flood into law schools, still with dreamy, pie in the sky expectations.  Understandably many of the dreamers will awaken only to find themselves in a fiscal nightmare of disastrous proportion.  With many thousands of licensed attorneys out of work and getting increasingly desperate, the ABA continues its policy of opening  more law schools.   Carolyn Lamm does her part by pronouncing that hiring at large firms is on the rebound.

The good news for incoming students is that job prospects are improving. Carolyn Lamm, president of the ABA and a partner at White & Case, says the legal industry is showing signs of a turnaround. Big firms are beginning to hire again and are bringing back associates whom they had previously hired and then deferred when the market went south. “It’s not as dead as it was in late ‘08 and early ‘09,” Lamm says. “Things are moving forward.”