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June 09, 2015

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(M)([a)(c)(K)

Derek:

I remember the very first Five Guys - I ate in one when the brothers were still running it. When you say: "The reason Five Guys is able to increase the customer base is because it's a difference of kind, not just of degree. It's simply a different type of product, competing in both the fast food burger market and the delicious food market" I kind of get your point, up to the delicious food line. Their burgers are pretty greasy and nasty.

Derek Tokaz

MK,

Before this devolves into something particularly ugly (people do get defensive about their burgers), let me note that the absolute quality of Five Guys isn't important, only the relative value. You can still think they're not very good; what matters is that it is so much better than McDonald's and Burger King as to draw from a different customer base, rather than being marginally better and competing for the exact same pool of customers. (Or pick another example; Chipotle vs. Taco Bell; True Detective vs. Every Other Police Procedural.)

I do agree with your assessment of the JD as a tool for advancing in a company. All the listings I saw that required a graduate degree wanted something very specific, like a STEM degree, econ, public health, etc. None of them wanted just any degree, nor did they want a JD.

BoredJD

Steven- Getting a JD out of college or after a couple years in some other unrelated career is a much different story from picking up an MBA or a MPP or a PhD to advance in a field in which you are already establishing a career. The high scorers who are foregoing law school are likely people from very good UG schools (since the LSAT median at a school like Harvard or Princeton is in the mid-to-low 160s range), but who, either because of an LSAT in that 165-169 range or a low UGPA, will end up paying close to sticker at a T13 school. And even out of a T13 school a sizeable minority of students end up not getting a biglaw job or a comparable gov/PI job- that is a very scary prospect even if it is only 10% of the class. If you dip down to T30 schools, you may be able to swing a lot of scholarship money but your biglaw prospects go down considerably, as do starting salaries.

For a liberal arts student from an elite college, their traditional alternative to law school if they want an upper middle class corporate career is banking/finance/consulting (or now tech) - careers that start at a lower salary, but by Year 3.5 (when your classmates who went to law school are starting at their firms) will have lead to a comparable salary to a junior biglaw associate without the additional debt. They may have to do an MBA program to see additional jumps in comp/responsibility, but this program is shorter, cheaper or free if the employer pays, and much less stressful. Their ultimate earning potential will be equal to or greater than the average biglaw associate over the course of their careers.

Or the thought process might not be this complex- it just might be that very few of these students see themselves spending their mid-to-late 20s working long hours but giving $3K or $4K per month back to the government in loan payments when they could be working long hours for less money but get to keep more of it.

For public interest minded students, the political headwinds are very unfavorable for the PSLF program at the moment and a lot of elite law schools have linked LRAP and PSLF. This may be influencing students who otherwise would have taken on the 300K debt in reliance on PSLF to pursue non-profit work in a different, non-legal, capacity. Elite schools are going to have to recommit themselves fully to PI students instead of just passing the buck to the government.

Barry

JM: "Students from terrific undergrads have the most to lose by going to a less prestigious grad school. However, the debt from a prestigious law school at full price will likely exceed $200k unless they are drawing on major financial resources. So the first 5 years of private practice will be spent getting back to square one, which is about the time where most associates are forced to leave or cannot take it anymore. Going the public interest route and relying on PSLF is a huge gamble that this type of individual will be averse to."

There will be a couple of conflicting factors (which would be fascinating if I were a sociologist):

1) These people will have the best information networks. They won't be the people from third-tier undergraduate programs who are thrilled to be admitted at all to third-tier law schools.

2) Going from an Ivy (for example) to a no-name law school would be a big prestige blow.

3) These students will also have the best access to good jobs= without law school.

Barry

Steven Freedman:

"So it looks like the students who would probably gain the most from the current admissions environment (large scholarships at good schools with good employment prospects) are the ones turning away the most. My guess? These students are finding employment opportunities right out of college making them less likely to seek a graduate degree. My other guess - in time they'll find that career building without a graduate degree has its limits."

Thanks for posting those figures.

Now, for the criticisms:

1) You are actually stating a hypothesis which I first saw proposed by Paul Campos, that law schools had be profiting from a bad job market, which pushed more students into law schools, no matter the cost. He figured that an improvement in job availability would hurt law schools, since there'd be fewer desperate college graduates.

2) "(large scholarships at good schools with good employment prospects)" are rarer than hen's teeth, because the schools willing to pay those scholarships have horrible employment prospects.

3) "My other guess - in time they'll find that career building without a graduate degree has its limits." Nice try, but not going to law schools doesn't mean not getting a graduate degree.

JM

Barry, those factors support, not conflict with what I said. We are saying the same thing, students from top undergrads have the most to lose from going to law school. Even more than similarly intelligent students from lower ranked undergrads.

[M][@][c][K]

Derek:

Hesitant though I am to get into the burger wars - yes I may agree that Five Guys is marginally better than the horror of other fast food places, but then it and in particular Shake Shack are not competing with McDonalds. The relevance to law school admissions - well frankly, the sort of student that would get admitted to Harvard, Yale or Stanford might, marginally, consider going to a T-14 law school, but will not go to a school outside the top tier.

As for me, as a junior lawyer I found the burgers at the Sign of the Whale outstanding, but "she who must be obeyed" banned them on the basis of my expanding waistline. She did allow the occasional at the Guards, but then the owners young wife went to law school in Florida it changed hands. Recently I did go to P.J. Clarke's in Midtown for the first time in 40 years, when my father brought me to what was then a very disreputable institution, and was then allowed a burger and I have to say it was really very very good.

Steven Freedman

@ bored JD

Could you point me towards the employment figures for MBA/PhD/MPP students? Specifically I'd like to know what percentage of such students are employed within ten months of graduation, what size company they work for, and how many are funded by their own schools. Find me that info, show me that it's better than for law schools, and then I'll buy your point that an MBA/PhD/MPP is a better choice than the JD.

Matthew Bruckner

This comment thread seems to have drifted from the topic of the original post. That said, I'll note the following:

Cooley closed one of its campuses. Hamline and William Mitchell merged, as are Rutgers Newark and Rutgers Camden.

But as a counterpoint, Penn State and Widener are both splitting into separate law schools. And for all the hoopla about Thomas Jefferson, the school restructured its bond debt instead of closing.

All in all, law schools seem to have encountered financial difficulty but there are as many data points suggesting that they are muddling through as there are data points suggesting we should expect further consolidation in the industry.

Some additional thoughts were recently posted by myself at Credit Slips (http://www.creditslips.org/creditslips/2015/01/why-troubled-law-schools-may-remain-open.html) and by Cassandra Burke Robertson over at Prawfs (http://prawfsblawg.blogs.com/prawfsblawg/2015/03/bankruptcy-and-higher-education.html).

BoredJD

Steven,

The statement that you made was that an elite student (someone who gets a 170 or 165 on the LSAT), "in time they'll find that career building without a graduate degree has its limits." Sure, that statement might be true as a general matter, but that's not a reason for them to immediately commit to 300K and a JD when they could try out that management consulting gig for two years and then have cheaper, easier, better options for graduate study to advance in their career. If an alternative career doesn't work out or they don't like it, they can then take their scores to a T13 law school and reset into a legal career.

For our hypothetical 168 LSAT 3.5 Harvard political science major, if she goes to a lower T13 law school and gets a SA position and a firm job, she is looking at probably 250K in loan debt and about 3.5 years after graduation before she starts working. If she spends 2 years in finance/consulting and then goes to a 2 year MBA program at a top school, she winds up with the following salary options which are slightly less remunerative than entry-level associate jobs:

https://www8.gsb.columbia.edu/recruiters/employmentreport
http://www.hbs.edu/recruiting/data/Pages/detailed-charts.aspx.

This is assuming the person gets no tuition reimbursement from their employer and does not work during business school. As for debt, it looks like debt loads at top business schools are about 2/3 what they are at elite law schools (and of course you stay in law school one year longer, a significant loss of salary).

I'm not going to do industry-specific research for you, but it's better for an intelligent person in their early 20s to keep their career options open rather than narrow them by immediately running to law school.

[M][@][c][K]

Steve:

Fairs fair, can you point to statistics that show that junior and midlevel managers careers stall out for (a) lack of a graduate degree and (b) in particular lack of a JD.

Hell just some data that shows how the JD turbocharged their careers would be good.

Steven Freedman

@ mack

For the most part, this provides the answers you are looking for.

http://www.payscale.com/college-salary-report/majors-that-pay-you-back/graduate-degrees

terry malloy

Admissions Dean Freedman only demands data when someone else is talking his/her book.

All the statistics he needs are his clean conscious and S&M's million dollar premium.*

* some limitations apply.

Jeff Harrison

Sorry to be so late to the party and I confess I did not read all the comments but the first one seemed to hit the nail on the head as far as some of the logic. So, let's just say I am the University president who is asked for more funding since we are not in free fall any more. I'd have two questions. First are you not in free fall because you have beefed up your advertising and lowered tuition directly or indirectly through more scholarships. If so is that really hitting bottom ? Second, since you are asking for increased subsidization, could you explain what the return is to this public investments. I understand you are saying the private rate of return to a legal education may have leveled off but why should you be subsidized any further unless you can articulate how the involuntary payers of tuition are better off?

BoredJD

Steven, I responded to you but it unfortunately got caught in the filter (links). Business schools look like they have data readily available on their websites, and in even more granular format than law schools.

Derek Tokaz

Steve,

Perhaps you missed this question among all the others. You said, "I've hired several people with the requirement that they have a graduate degree."

Can you explain why you required a graduate degree? What sorts of graduate degrees did you require, and what specifically about the graduate school experience made these people qualified?

anon

It seems to me that this discussion has drifted into truly irrelevant topics. It isn't worth debating whether someone should go to law school as a financial decision, and folks like Freedman, who constantly spin the discussion into a decision about buying a commodity, do a huge disservice to legal academia.

In other words, this demeaning posture reveals everything that is wrong with legal academia. A law school permits its salesperson to pitch on internet websites, like a stock broker. Is it any wonder then that law schools, in general, behave in the ethically challenged ways that are par for the course on Wall Street? When one is just selling and selling a product as a financial product, the claims just get creepier and creepier.

Why do legal academicians permit themselves to be humiliated in this way? They rely on crass and bogus "economic" proofs of value that wouldn't pass a first year associate's review if presented as a prospectus (which is the tenor of most of this drek). They argue about the "value" of a legal education almost strictly in terms of dollars, and, in order to further these claims, wind up making wild and ridiculous forward looking statements about future employment prospects (again, statements that might in liability in any other context).

This post was about declining enrollment. Most of the comment thread demonstrates the reason therefor: the law academy has lost any sense of the reasons to become an attorney. These persons are so hopelessly lost that it is hard to understand how the majority of them, so divorced from the practice of law, reality and common sense, can ever return to a semblance of understanding of the only reasons their privileged cocoons can be rationalized.

Until the legal academy, top to bottom, begins understand the true reasons to attend law school, it will not be able to recover. Period.

Anon

Please ask the author of the 1:51 am post to join the FL. That comment perfectly summarizes the issue. It is undeniable that the law academy long ago lost any understanding of the reasons to be an attorney.

Derek Tokaz

@1:51 and @9:33,

I think what's happened is that the profession, economy, and the students themselves have changed it ways that make the old reasons less relevant.

If you were looking at the tail end of Gen X (or the very start of Gen Y) considering law school around 2005-2007, you'd argue money, prestige, job security, and lack of alternatives. That argument, when directed at humanities students, worked very well, and the job security seemed to give law an edge over getting an MBA and going into finance.

For current students in the current market, the argument doesn't hold water. More money? You know, maybe that's true, I don't want to relitigate the S&M numbers. But, it's not a huge premium. $1 million over a 40 year career is $25k a year. Yeah, that's a pretty nice pay raise, but you have to lose 3 years (plus lost earnings), $150,000 or so in tuition, plus maybe another $100,000 in interest, and you're going to be working longer hours to earn that extra money. If you do some back of the envelop math, you realize that after 14 years you'll break even, then you consider the time deficit, and the financial payoff doesn't look very good.

For students who do want to chase the money, $1 million over a career isn't enough. They're looking at people like Zuckerberg and Cuban, and want careers with larger upsides than law. No law firm ever has an IPO or gets sold to Google for a billion dollars.

Then there's the prestige argument. Gain the respect of your peers! Be a leader of your community! I don't think that flies with Gen Y at all. If they want the respect of their peers and to be a community leader, they'll find a fashionable nonprofit to work for. A legal career is bound to have the opposite effect. Be seen as a sellout! Be what's wrong with America!

Job security? Yeah, not after a ton of law firms gave their junior lawyers the ax. I think people have caught on that the argument about law always being in demand doesn't really work. Some areas may be recession resistant, and others are countercyclical, but you can't change practice areas on a dime -- what changes is who's making money. And the only way to be truly recession proof is to have clients who are recession proof. If they don't have money, they're not paying you. If you want job security, you go to the government or something with a very strong union.

And finally, there's the argument "What else are you going to do?" I suspect today's students are more savvy about their career options, especially with the stronger emphasis on getting multiple internships while in college. There's also a lot of new options in the health care industry (meaning things like health care management and policy, not doctoring) which are going to pay as well or better than legal work. The economy has also changed in lowering the financial barrier to starting your own business. You can now easily strike out on your own to have a tech blog, or a web comic, or a food truck, build an app, or crowd fund your indie movie through kickstarter.

I'd really hate to be in a law school marketing department, because I really don't know what sales pitch is going to have broad appeal with today's undergraduate students.

Jeff Harrison

For more on law school marketing. http://classbias.blogspot.com/2015/06/wasteland-in-law-school-industry.html

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