Why law school is still worth it

There has been a lot of negative talk about law school lately, but the facts belie the hype. The legal profession has low unemployment rates, lawyers earn high salaries and loans are manageable.

By Aaron N. Taylor

It’s open season on legal education — falling applications, lawsuits by former students and dooms day warnings about the legal job market. The rampant bad publicity has taken on a sensational flair. Popular blogs and even established news forums are peppered with anecdotes about law school graduates drowning in debt with no good options for the future.

But as is often the case with anecdotes, these compelling tales of woe represent exceptions. Worse yet, criticisms of the wisdom of attending law school are often based on flawed premises and faulty logic. You’ve likely heard many reasons why you shouldn’t go to law school. I’m going to give you a few reasons why you should.

Legal training helps in tough economy

Let’s start with the legal job market. Lawyers have not been immune to the effects of the recent recession. However, they have fared much better than most workers. According to U.S. Department of Labor data, the unemployment rate for lawyers was 1.5 percent in 2010 — more than six times lower than the overall rate of 9.6 percent. Since 2009, while the overall unemployment rate has remained above 9 percent, the rate for lawyers has exceeded 2 percent only once. It is true that unemployment among lawyers has increased significantly over the last few years (it was barely 1 percent in 2007), but the increase pales when compared to other occupations.

The plight of new lawyers in this economy has been a topic of frequent discussion. According to the National Association for Law Placement, “class of 2010 graduates faced [the] worst job market since [the] mid-1990s.” Only 87.6 percent of graduates in that class were employed within nine months after graduating — the lowest rate since 1996, and down from 91.9 percent in 2007. Again, lawyers are not immune to the effects of larger economic malaise — new lawyers less so. In fact, the 1996 rate was in the aftermath of the recession of the early 1990s. But these statistics show that even in bad times, the vast majority of law school graduates secure employment shortly after graduation. Moreover, logic dictates that employment rates increase with the passage of time, and history dictates that bad times don’t last forever. 

Salary data show that the vast majority of lawyers earn relatively high salaries. According to the U.S. Census Bureau, lawyers boast the fourth highest median salary behind medical doctors, dentists and CEOs (some of whom have law degrees). While the majority of occupations have median salaries between $20,000 and $49,999, the median for lawyers in 2010 was almost $113,000. Again, this was the median — the actual midpoint — which means the majority of lawyers made six-figures. 

Predictably, starting salaries for new lawyers tend to fall below the median for the profession as a whole, but they still tend to be relatively high. According to NALP, the class of 2010 had a median starting salary of $63,000, a respectable living for a new entrant into any profession. On the downside, the 2010 median was $9,000 lower than the year before. But declining wages have buffeted the entire economy. Fortunately, as the economy sputters back to life, salaries are unlikely to continue falling at the same rate — if at all.

The decline in salaries for new lawyers is attributed in part to a decline in private-practice jobs.  About 21 percent of 2010 graduates got jobs in large law firms, compared to about 26 percent in 2009. Because these jobs are among the highest paying — typically starting well above $100,000 — the decline in this sector affected overall salary data for new graduates. This shift, however, does not render law school a bad investment. Even with the 5 percent decrease in BigLaw jobs, the overall employment rate for graduates fell less than 1 percent between 2009 (88.3 percent) and 2010 (87.6 percent). Again, the vast majority of law school graduates find employment paying relatively high salaries — even if it’s not the type glamorized by popular culture. 

BigLaw has always held a special place in legal profession lore, so it’s not surprising that a decline of those jobs has received outsized attention. However, large law firm jobs have always comprised just a small portion of the overall legal job market. In fact, the job market for lawyers has always been broad, and based on recent data it appears to be broadening.

According to NALP, the proportion of 2010 graduates who accepted jobs for which a bar license was required was 68.4 percent — the lowest percentage ever measured. NALP characterizes this trend in negative terms, suggesting that weaknesses in the legal job market are forcing new lawyers to settle for being underemployed in non-legal jobs.

There may be some truth to that suggestion. But it’s also true that there are many well-paying, stable, even prestigious jobs for which the law degree is not required, but for which a law degree can provide a useful advantage in the hiring process. Lawyers have always inhabited non-legal career fields, where employers value the skills and dispositions nurtured in law school. As such, most law schools provide specific career planning services to students pursuing non-legal jobs.  So the trend away from traditional legal jobs is a testament to the versatility of legal training and the favorable position lawyers often find themselves in the non-legal job market.

In terms of outlook, there is some optimism that the legal job market is thawing, albeit slowly.  The legal sector has added about 900 jobs so far in 2011. Law schools are reporting increased employer participation in on-campus interviews. And there are signs that law firm hiring will increase in 2012. The U.S. Department of Labor projects that jobs for lawyers will grow about as fast as jobs overall. So larger economic trends will influence, if not determine, the speed at which the legal job market recovers. But one thing seems certain: workers with legal training will fare better than most in this economy, no matter what happens. According to the U.S. Department of Labor, lawyers make up one of the 10 smallest professions. This finding calls into question the “too many lawyers” memo, especially when you consider the prominence of the legal process in this country. In reality, lawyers are still relative rare — and with rarity comes demand and a wage premium.

Student loans aren’t all bad

Discussions about law school costs are often accompanied by lamentations about the extent to which students are relying on loans to pay these costs. Student loan indebtedness has skyrocketed recently — more than 400 percent since 2000. Law student borrowing has jumped 50 percent since 2001. But much of the discussion surrounding this increase is premised on an assumption that all debt is bad. Critics also seem to have a questionable understanding of the favorable repayment terms associated with federal student loans. 

Before I continue, let me make clear that I’m not defending the pricing structure of legal education. Too many law school pricing structures are premised on exploiting demand for seats in entering classes, and I agree with the view that the rate of tuition increase is unsustainable.  But with that said, legal education isn’t going to get cheaper, and the associated costs of attending are going to increase as well. Moreover, because most law school graduates will have careers spanning 35 years or more, judging the wisdom of attending law school based principally on the immediate costs seems shortsighted. 

The fundamental purpose of debt is to allow the immediate costs of consumption to be deferred to a later date. Used wisely, debt can confer much benefit upon the debtor, particularly when the debt takes the form of an investment. Student loans make higher education possible for many students by allowing them to defer the costs of their education “consumption.” And given wage premiums associated with higher education, student loans represent one of the best investments an individual can make.

Of course, not all student loans are created equal. Federal loans are vastly superior to private loans, and fortunately, most law students are able to finance their entire cost of attendance with federal loans only. Interest rates are fixed on most federal loans, and they are much lower than rates offered in the private market. Federal student loans also come with payment grace periods, deferral and forbearance options and an array of repayment plans — the most generous of which being the Income-Based Repayment Plan (IBR).

Through IBR, debtors with low income, relative to federal student loan debt, are allowed to make reduced payments of no more than 15 percent of their disposable income (defined as the difference between Adjusted Gross Income and 150 percent of the poverty guideline). After 25 years, any remaining loan balance is forgiven. If the debtor is working in a public service job, as a prosecutor, for example, balances are forgiven after just 10 years. IBR and other repayment options help ensure that debtors don’t have to choose between basic necessities and paying their federal student loans. Moreover, the loan forgiveness aspects of these plans are essentially back-end scholarships. 

Given the political obsession with the federal deficit, you should probably take advantage of these favorable options while you can. One of the cost-saving “deals” made during the debt-ceiling-debacle ended interest subsidies on graduate and professional school student loans.  These subsidies went to financially needy students and were typically worth thousands of dollars.  So, along with increased tuition, politics could make law school more expensive in the future.

Applicant environment is favorable

The bad publicity about legal education contributed to a historic decrease in applications for admission during the 2010-2011 cycle. Applications fell 11 percent — the largest one-year decrease on record. When applications fall, law schools tend to admit a higher percentage of their applicants. And if applications fall again during the 2011-2012 cycle, as predicted, applicants will find themselves in a very favorable environment for gaining admission. At some schools, applicants who would have been considered “borderline” just two years ago might be shoo-ins for admission this year. So the strategic benefit of applying during a string of down years is worth ample consideration.

Another benefit of the bad publicity is that law schools will likely provide more detailed employment data. The anxiety over jobs prompted a grassroots movement for more transparency from law schools. The result was a mandate by the American Bar Association that law schools provide employment data that goes beyond traditional employment rates and provides better information about the types of jobs graduates are getting. The ABA will make this information available to the public, allowing applicants to better compare schools and make better informed decisions about where to attend — or whether to attend.

The last few years have been a boon for critics of legal education and the profession. Some of the criticism has been legitimate, but much of it has been uninformed. Law school is not a path to instant wealth — it never has been. But in terms of providing career and financial stability, few educational pursuits compare. And in an economy where workers are increasingly required to think, adapt and thrive in changing work environments, the flexible nature of legal training arguably makes it a better investment than it was 20 years ago. Don’t believe the hype. Law school is still worth it.

Aaron N. Taylor is a professor at Saint Louis University School of Law. You can follow him on Twitter @TheEdLawProf.
 

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