Remember when Simkovic and McIntire published their, uh, landmark research about the million dollar degree (n/k/a "The Economic Value of a Law Degree") during the summer months and it generated quite a bit of online discussion back in the higher-LSAT days of 2013? Remember when Simkovic himself received a grant from Access Group?
Wouldn't it look somewhat incongruous if Access Group also sponsored a report from an independent economist that indirectly undercuts Simkovic & McIntire's research?
Meet Sandy Baum, who has a PhD in economics from Columbia and studies things like higher education finance and student loan debt. Unlike Simkovic, she's not a law professor and seemingly has no skin in the "enroll-'em-up!" game. In December, Ms. Baum published a report for the Access Group Center for Research & Policy Analysis entitled "A Framework for Thinking about Law School Affordability." Note that the date of publication on SSRN is December 22.
While "Framework" is light on novel solutions (although her analysis of what would make law school a "good" investment is very solid), it gives us a bona fide third-party economics expert who even-handedly analyzed law school affordability. She wouldn't fit in here or on PrawfsBlawg, and that's a good thing.
And this is some of what she has to say, from the Conclusion section, p. 15-17:
[T]here is no guarantee that even with a positive net present value, the investment in law school will be sufficiently financially rewarding to make the sacrifices involved in paying off the debt most students accrue acceptable.
The variation in law students, in law schools, and in earnings among lawyers makes simple rules about reasonable levels of tuition and debt unrealistic....A young person seeking a career in corporate law who can enroll at Harvard Law School with a scholarship and reasonable expectations for academic success is likely to see a very high rate of return to her investment. A 30 year-old considering enrolling in a lower-tier law school knowing he is geographically constrained to staying in the Midwest should carefully monitor the net tuition he is paying and consider the very real possibility that the investment may not be worth it. His earnings are likely to be below $100,000 a year for his entire career and alternative paths might be more remunerative. Almost certainly, he should not borrow more than $100,000 to finance his education. (emphasis added)
...
Law schools know who their student bodies are and what their career outcomes are likely to be. The hard questions are those facing law schools whose graduates do not have access to the relatively small number of very high paying jobs—those who can expect about the median earnings for lawyers or even less. The reality is that current prices not only lead to debt levels not sustainable at typical earnings levels, but likely generate earnings premiums for many students that do not support the investment.
This isn't revolutionary, particularly for those who have paid honest attention over the last few years, but it is heterodox considering that Access Group - a cabal/civic group of law schools themselves - apparently paid for it and put its stamp on the research. While the paper is written in a neutral tone, it more or less says that paying significant tuition and living expenses at most private and expensive public non-elite law schools is foolish for most students. Given the source, it is remarkable to see something so contrary to the rhetoric still being pushed by sub-first-tier administrators.
Moreover, Baum - again, a Columbia economics PhD who studies this stuff regularly - implicitly rolls right over Simkovic & McIntire's research. She's aware of it - it's cited and discussed on page 10 - but it's impossible to reconcile her general remarks and conclusions with Simkovic & McIntire's. Her analysis admits a wide and uncertain earnings variance among graduates and the distinct possibility that a law degree "premium" will not justify the investment paid. Moreover, she admits that even a net positive economic investment may not be worth it from a psychological/emotional standpoint in terms of expectations (see p. 12-13). At times, it's difficult to not see her trying to impeach Simkovic and McIntire sub silentio by being thoroughly reasonable:
The complexity of evaluating the “affordability” of a law school education is multiplied many times by the extreme variation in prices, job opportunities, and earnings in this market. Knowing that on average, a law degree pays off means little for those for whom the payoff is below average, including the significant portion of graduates for whom it is far below average.
"Framework," p. 13. Again, this is coming from Access Group - the same organization that allegedly paid Simkovic a six-figure grant.
A naive person might think that such a paper would get as much - if not more - press play than Simkovic and McIntire's" Economic Value." Yet Baum's paper barely made a whisper in legal discussion circles, possibly because it was released during the holidays, and possibly because legal academics would rather not republish things like "[one] should not borrow more than $100,000 to finance his [legal] education" when it comes from an Access Group-sponsored paper.
All I know is that TaxProf Blog reported it on January 11. I can't find much else from the usual circles. Maybe law professors, grand philosophic quests for reason and justice aside, are more like rabid television viewers than they wish to admit, and fall for million-dollar scholarbait but can't be bothered official reports written in an objective tone.
The bottom line is that we have a report from Access Group's retained independent consultant that basically says it's likely a bad idea for most law students to enroll under present conditions, it undermines certain law school propaganda pieces, and it was published during the winter holidays and barely reported. I'm no conspiracy theorist, but I'm also not a dumbass.
This is really common sense stuff. You can’t make a blanket statement that going to law school is a good investment because there are variables which dramatically affect whether or not the investment pays off. The top three variables:
ReplyDelete1. What law school will you be attending? If you’re heading off to Harvard or Chicago, you will probably be ok (although anyone with the credentials to get into these schools probably has better options than a legal career). If you are amongst the cannon fodder heading off to Cooley or Charlotte with a 142 LSAT, you are probably making a catastrophic mistake (but are too dumb to realize it).
2. What are your law school grades (particularly 1L grades). Top 10% and law review at a TT? You are probably ok. Bottom half at the same school? Unless Uncle Jimmy has a desk waiting for you at his firm when you graduate, the smart play is almost certainly to drop out after first year.
3. How are you paying for law school? Daddy is a hedge fund manager - cool deal. Taking out $175K in non-dischargeable debt - I got a bad feeling about this.
4. Connections. Mommy is CEO of a Fortune 500 corporation? Daddy is partner at a white-shoe law firm? Then law school will probably work out well for you. No blue-blooded background? Think again.
Delete5. Disqualifying factors. Are you past your twenties? Forget it.
6. Personal factors. Are you a confident go-getter who can sell clients on your ability to serve them well? Do you like to work very hard, in great contrast to the Hollywood "models and bottles" lawyers? Can you stand tedious work? Etc.
DeleteI will stipulate that attending law school for the sake of education is a worthwhile endeavor. One learns the nuts and bolts of our "systems" and we learn "how to read." As a vehicle to a middle class income, not so much anymore. It is a constant grind and struggle in a grotesquely oversaturated market. The pie is not big enough for current attorneys and newly admitted. Law schools need to disclose that upfront. Law Schools shouldn't be in the car business. Its not about moving Hyundai Excels with vinyl roofs or Chinese made junky Buicks.
ReplyDeleteSome of us knew how to read before we went to law school. Many law students still can't read after graduating.
DeleteI didn't. Let me clarify. I read a recent news story about child protective services removing children from Detroit homes after non-payment of utility bills. There was no further fleshing out the story. Me being a good reader, figured out that Child Protective Services investigated the outage and during the course of their investigation discovered additional neglect. Before law school, I would have been like Sarah Palin or Kim Davis and said, "See, the gub'mint takes kids just because mom and dad got behind..."
DeleteAlthough I have not yet read this new report, I don't think it will spend much time in analyzing the high attrition rate of lawyers.
ReplyDeletePlease note I am NOT dissing or trying to undermine this report. From what you describe, it seems like a spot-on analysis, and a very well researched effort.
However, I think one aspect of the legal profession that always gets overlooked is the high attrition rate it has. Although some law school apologists will say it's because "law is stressful" or "lawyers want more free time," I believe the real reason is that there are a lack of jobs for mid-career attorneys. Basically, if you're not partner by 40, nobody wants to hire you.
If you account for this phenomenon into the analysis, I'm certain it will paint a far, far grimmer picture for law school graduates than even this new report has described.
10:06--Could not agree more on the reason for high attrition in law being the lack of jobs.
DeleteThe up or out policies of large law firms, which have a high percentage of the high paying lawyer jobs in the US, constitute DISPARATE IMPACT DISCRIMINATION in the legal profession due to the extreme oversupply of lawyers. Many more jobs for younger lawyers than older ones as a result of these policies. Problem is that the EEOC will not challenge disparate impact discrimination in the legal profession. The EEOC has actually turned their backs on this issue.
You also have a lack of data on how bad the job market is for older lawyers. Just the numbers of jobs held by first years and the number of legal jobs overall, from which it becomes obvious that there are painfully few jobs for older lawyers- otherwise the numbers don't add up.
Incredible that in most large law firms you find most lawyers in their 50s or 60s are white male partners. Very few women in the older age groups and fewer minorities.
A big part of the forced turnover in the legal profession is the bottom heavy workforce in terms of age. If large law firms were required to hire older lawyers as associates, and to age balance their workforce, it never would have come to the degree of turnover and lawyer oversupply of those who after law school got legal jobs.
The failure of the EEOC to act on disparate impact age discrimination and an even worse problem of dual discrimination based on age and sex, and age and race, has damaged hundreds of thousands quality lawyers with quality law degrees and created a horrific workforce imbalance. The EEOC's refusal to act when it should have a long time ago has built in unemployment in the legal profession for many very strong, very high quality lawyers who have no place to go after several years of working at good legal jobs that mostly do not retain significant numbers of older lawyers.
Absolutely. The attrition rate is effectively 100% in most firms, and a 3-4 year stint as an associate at a respectable firm is what passes for a law firm "career." The "up or out" nature of law hasn't changed one bit; only now, there's no up.
DeleteEstablished firms and big law have long profited from the law schools' vast overproduction of JDs. There has long been a steady, replenishing stream of eager labor that appears year after year. This helps firms keep costs lower, and prevents young workers from getting too much exposure and developing business relationships with firm clients.
The whole system was based on exploitation. Thank God it is crashing. It is sad that many people will be destroyed in the process, but this is the only way to a cure.
I brought a complaint against a white-shoe firm when a partner foolishly admitted in writing to having asked about my age during an interview. I was a law student in my forties. When the interviewers found out about my age, they laughed at me and, of course, turned me down for the job.
DeleteThe firm defended itself by citing TWO employees in their late thirties or older whom it it had hired in the past 50+ years. Two, out of what must have been thousands! It did not state that they were both lawyers; they may have been secretaries, janitors, receptionists. Or they may have been lawyers with a fat book of business. But even the hiring of two token junior lawyers in the better part of a century would not refute a charge of age-based discrimination.
In the legal profession, count yourself old—and unwanted—at age 30.
It is utterly absurd that at 30 one is considered "old" and "unwanted." Yet, in law, the absurd is our reality.
DeleteThis is all the result of too many lawyers. Given that law school graduates are a dime a dozen, NONE of us are valued as professionals to be mentored. We're just workers to labor in the mines, but without the labor unions to protect us.
If you're not partner by 40, you need to get out and try something new. I wish I had know this at 30.
This study is CYA for inevitable political (and legal?) fallout.
ReplyDeleteProbably. It looks like a way to say "We told you so"—in an obscure, uncelebrated publication issued during the holidays.
DeleteIt's quite interesting, and I'm glad to see this report.
DeleteFor years, LawProfs and Deans were sucking on their blue cheese olives while looking with mocking disdain at their law graduate proletariat. Thank God they are gone, they thought, as law students become like old fish after three years. The whining about jobs is tiresome, teaching is bothersome anyway, and it all takes me away from my pet project law review article of the week. Bring in the fresh catch.
I've noticed that with but a few outliers, the defenders of the scam are getting quieter and more mealy-mouthed. Gone are the "tremendous pronouncements" and half-baked truths, now there are just trying to make hay quietly.
The truth cannot be denied, even if it is ultimately relegated to an out of the way study that the academy would largely prefer to ignore.
Of course, Pig Simkovic did not go into any detail into how a TTT law degree will lead to a graduate earning an extra million dollars in their lifetime. Seeing that these bitches and hags make up figures out of thin air - and can NEVER provide a cogent argument as to why law school is a good investment for most students - you can see why they don't practice law for a living.
ReplyDeleteForget for the moment about discounting for the time value of money. Let's say that we'll accept as "an extra million dollars" an additional $25k for each year of a 40-year career. Again, that's less than a million dollars in present value, but let's be generous and disregard that. Let's also disregard the discounting effect of income taxes. Let's also disregard the cost of getting the Million-Dollar Degree™, including high interest on student loans. And let's disregard opportunity cost. In other words, let's be just about as generous as we can to Scamkovic's bullshit position.
DeleteHow can anyone possibly think that a law degree from Bumblefuck U would annually bring in $25k extra for the graduate's entire career? Most likely the unemployment rate for Bumblefuck U's graduates ten months out of law school is several times that of the general population. Many graduates will never get a license to practice law. Few to none will get a well-paying job as a lawyer. So how exactly would the graduates of Bumblefuck, on average, get $25k extra per year? It makes no sense, and anyone who checks a few basic facts and does some simple mental arithmetic can see that.
I'll repeat it: a typical law student "should not borrow more than $100,000 to finance his education".
ReplyDeleteHow many accredited law schools are there at which a person borrowing the maximum amount—in other words, funding everything with debt—would borrow no more than $100k?
ZERO.
All right, that's not quite accurate. There are two law schools at which the maximum debt at the time of repayment for residents of the state falls just under $100k: the University of North Dakota ($99,071 for residents, $150,140 for non-residents) and the University of Montana ($94,476 for residents, $166,643 for non-residents). There are also two in Puerto Rico with somewhat lower debt, but they're not likely to be relevant to most of the people reading this message.
For the 198 accredited law schools on which Law School Transparency reports data (again, I've left out the Puerto Rican ones), the lowest debt for someone relying wholly on loans is just a hair's breadth shy of $100k—if that person happens to be a resident of North Dakota and to attend that state's one (dreadful) law school. The median debt is about $217k for students paying resident tuition, and somewhat more (I don't have the time to run the calculation) for those paying non-resident tuition.
In other words, the quotation above should read (with the usual exception for hereditary aristocrats):
DO NOT GO TO LAW SCHOOL.
That's just absurd. Given the ROI on your average law degree, you should probably be borrowing no more than $30k...
DeleteI agree.
DeleteAnd isn't it interesting what happens when an objective analysis is made vs. the bought and paid-for law school hype?
No more than 30k and even that may be hard to pay down on a approx $40k salary (interest on interest, capitalizing).
That's the Real World. In the Real World, 95% of lawyers enjoy no premium and make no more than a starting college grad. Many make less due to the JD "discount".
I've been in the business thirty years. Perhaps I don't know what is going on, but far as I can tell, most lawyers are working and making a living. Some a very good living.
DeleteThe problem boils down to the amorphous title, “lawyer.” Literally understood, it means anyone who gets the JD degree and then is admitted to a bar. That’s all. Theoretically speaking, setting aside obvious character/fitness issues, it’s possible for most anyone to become “a lawyer” as understood by the dictionary. We are witnessing that obtaining a JD is no great distinction, and the law school crowd is now chipping away at bar exam standards using civil rights rhetoric. The schools can largely deliver the title of lawyer.
ReplyDeleteFor many –especially the perennially guilty Proud Parents and shortsighted students – the notion of “being a lawyer” is a big deal. The title gives bragging rights: “My son the lawyer.” “I’m a lawyer.” American phraseology loves to equate “doctors and lawyers” and many people enjoy the surface luster from having the professional title.
Here’s one area where the ordinarily versatile English language lets us down. The word used to describe an advocate who has paying clients, a relatively stable job that provides acceptable benefits, reasonably meaningful work, in a professional setting, is also called “lawyer.” That’s what most people want ... and it’s sure as hell is the yardstick used to price the degree. The law schools are selling the title as it’s defined in the dictionary, but are pricing it based on the word’s connotation. This linguistic ambiguity and mindset has allowed the law schools to largely escape liability for their highly questionable marketing practices in the courts.
The true “lawyer” jobs have always comprised but a fraction of the overall group of wannabes. Today, however, the number of these positions is steadily shrinking and now there’s this Internet thing to help spread the word and kick open the closet door of shame. In the court of public opinion, it’s becoming clear that very, very few of today’s law students will actually become “lawyers” in the word’s connotative sense. Nearly all of these will have a 3-4 year career as a “lawyer.”
They, of course, can be “lawyers” for their lifetimes if they pay their bar dues and keep up their CLE hours.
What a hell of a price to pay for a title.
Good observations. And they're true even of the many people who purport to go into law for the sake of dolphins or whatever: maybe they want to represent dolphins, but they also expect a lot of money. Nobody who borrows a quarter of a million dollars for law school—non-dischargeable debt at high interest—does so with the expectation of settling for a job paying $30k or $40k or even $50k. As I intend to explain in an upcoming article, payments on that much debt on the standard ten-year schedule would eat up all of a $42k salary. So even someone who doesn't mind settling for $40k gross would need almost $100k gross to cover the payments on student loans. Where are all the jobs that pay that much?
DeleteThe number of such jobs is extremely limited. Just call up the ACLU or Greenpeace or Lambda Legal and ask how many lawyers they have hired in the last 1-2 years (and how many applications they got for each open slot).
DeleteThe last time I checked, a few years back, most jobs like that paid like 30-40K per year and I doubt that things have changed since then. All of the lawyers I have known who worked for such non-profits loved their jobs, but they all either came from wealthy families, or had a high-earning spouse who didn't mind paying most of the bills.
News Alert! The Worst is over, say's University of Minnesota's outgoing dean:
ReplyDeletehttp://www.startribune.com/u-law-dean-says-worst-may-be-over/368490551/
BUT, look at the paragraph under the Chart:
"Dean David Wippman said he expects that by 2020, the law school can end its reliance on year-end financial injections from the university to balance its budget, totaling about $16 million since 2012."
Losing TONS OF MONEY!
Screw them..
DeleteThis is not what is needed. These places, simply, NEED TO CLOSE DOWN. The demand for non-T8 JDs is NEGATIVE. Even at that, you could close down ALL law schools and not see a spike in demand for new lawyers for probably 10 years. There is not enough work or demand for those already out there as it is.
These places are only self-serving Money Pits that crush the economic life out of their students. They need to go down vs. having some Boomer clown donate $25 million to prop them up and get the law school renamed to showcase his own vanity.
You could close down ALL law schools and not see a spike in demand for new lawyers for probably FIFTEEN years. There is not enough work or demand for those already out there as it is, and given the recession's effect on savings, more and more lawyers are staying at it longer and longer. Automation is working its magic, too ... and tort reform.
DeleteAnyone with half a brain is avoiding law school like the plague. It's astonishing that attendance is down only 50% and not closer to 75 or 80%.
Any talk that things have bottomed out and/or recovery is just around the corner in the law market is naïve and, most likely, little more than a desperate sale pitch. Reminds me of the line in 'Full Metal Jacket' when the colonel says, "We all just have to keep our heads until this Peace craze blows over."
This Dean is just trying to cover his own ass.
DeleteHe can't exactly say "our school is done." He has to put a positive spin on things.
But yes, the good news is that the school is losing tons and tons of money. By 2020, it may have to shut down when the injections stop.
The Dollar General near my house is hiring an assistant shift manager. I think this is a JD advantage job. Why? Lawyers know the definition of retail theft.
ReplyDelete