Are law grads really better off than 10 years ago? It depends on the law grad.
We just published a story that shows that, on average, recent law graduates have a better standard of living than they did in 1998 — by 74 percent for those who enter private practice and by 45 percent for those who enter public service.
But while the average has improved, one has to take a close look at the data to understand what really happened to the legal profession over the past ten years.
Large law firms increased the number of hires, and they significantly increased their salaries – from $70,000 in 1998 to $160,000. That means that there is a segment of the population — 22.3 percent — that is far better off than 10 years ago. But there is a segment — the 18.7 percent who landed jobs with firms of two to 10 attorneys and those unemployed — that would be worse off — except for the fact that loan repayment plans are much more flexible. The other 50 percent of graduates saw modest improvements in standard of living.
That has created a world of tiers. For the top tier, the 22.3 percent who get jobs at firms with 101 or more attorneys or land prestigious clerkships, law school is a very good financial decision. Even if their debt is high, their salary makes up for it. For the next tier, the 9.3 percent who get jobs at law firms with 11 to 100 attorneys, the 13.5 percent who go into business and the students who land other clerkships, law school is most likely a wise decision, so long as they watch their debt. For the third tier, the 18.7 percent who work for a small law firm, the 5.7 percent who enter public interest, and the 11.4 percent who work in government, law school is a poor choice, unless they planned for the lower salary.
Luckily, many who enter government and public interest planned for the low salary. They were able to keep their debt low by attending a public law school, receiving scholarships or tapping into loan repayment programs. They can also have their federal loan debt forgiven after ten years.
Law schools are aware of the challenges and many are set up to assist students who want to enter public service. It is the last part of this third tier that should concern us the most. These are the law students who hoped to land a job at a larger firm, but fell short and landed a part-time position, a non-legal job or a job at a small firm. While the $50,000 median salary for small firms is better than the nationwide average, keep in mind the debt these students have following them. After debt and taxes, these students average a net income just slightly higher that what they lived off while in law school.
So, while things have improved for most recent grads over the past ten years, they are not pretty for the underemployed, unemployed and those employed at the smallest firms — which I am guessing account for about 28 percent of the Class of 2010. These graduates can survive thanks to the new income-based loan repayment plans ($0 monthly payments when you earn less than $15,000 a year; $421 monthly payments when you earn $50,000 a year - or about 10 percent of income).
An economic recovery would of course make things a lot better for a large percent of that pool. But let’s hope that law schools are doing what they can to help these graduates now. And lets hope future law students know what they are getting into, so they can make smart choices about how much to spend on that legal degree.
Jack Crittenden is Editor in Chief of The National Jurist