Law School Cost/Benefit

The WSJ Law Blog recently ran a post that’s worth linking to just for its title:  “Mamas Don’t Let Your Babies Grow Up to Be Lawyers.” Its substance–or the substance to which it links*–is less cheery, being an academic paper that addresses whether “a law degree is a good investment.”  The paper examines the investment of law school for three hypothetical students:

  • “Also Ran [who] achieves above average grades in a relatively nonmarketable major from a middle-of-the-pack undergraduate institution; he could have earned a mere $40,000 in a non-legal job. Also Ran manages to claw his way into a second or third rate law school and has at best a remote prospect of landing a “Biglaw” job[;]”
  • “Solid Performer [who] achieves relatively good grades in a relatively marketable major from a better institution; he could have earned $60,000 in a non-legal job. Solid Performer makes his way into a low-first or high-second rate law school and has a prospect (if all goes well and the stars are aligned), but far less than a certain prospect (since all does not always go well and the stars do not always align), of landing a “Biglaw” job[;]” and
  • “Hot Prospect [who] earns stellar grades in a very marketable major from a top notch institution; she could have earned $80,000 in a non-legal job. Hot Prospect attends a first rate law school and has a strong chance of landing a “Biglaw” job.”

The paper examines each hypothetical student’s opportunity costs, tuition and fees, and net summer wages to determine their respective total cost of law school.  It then looks at the direct benefits of a law degree, discounts them, and concludes

that even at a very modest 10% discount rate, much less a more realistic higher discount rate, Also Ran, who will with great likelihood fall into the $40,000 to $65,000 starting salary range, has no business investing in a private law school degree. Similarly, Solid Performer should question his decision to attend a private law school, in spite of the fact that his expected starting salary may be around $105,000.  The reason is that he faces a substantial likelihood of falling far short of that figure . . . Finally, for Hot Prospect, who will in all likelihood land a Biglaw job starting at $160,000 per year, the law degree appears to be an acceptable investment at a 10% discount rate, albeit hardly a no-brainer. However, if a discount rate higher that 10% is deemed appropriate, even that conclusion is open to revision.

To round out this grim tale

[t]here is no reason to believe that the currently-experienced changes in the legal market for freshly-minted law school graduates are temporary; indeed, some legal scholars think they may well be permanent.  If so, then it is not just the current crop of Hot Prospects, but all future crops as well, who will need to ratchet down their expectations not only with respect to first-year compensation, but also with respect to job security and chances for partnership.

The paper notes that each student’s calculations involve different factors; the three hypothetical categories of student are painted with broad strokes.  The paper is only twelve pages long and more readable than the WSJ Law Blog post suggests.  It does not sing a different tune than readers have heard from but it does provide a structured approach to analyzing the costs and benefits of attending law school.

*Yes, this a post about a post about a post.

6 Replies to “Law School Cost/Benefit”

  1. Mark Curry Macfarlane

    Greate article. Keep posting such kind of info on your site.
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  2. Brian Chin

    I also think the paper can be applied to all types of degrees whether it be law, medical, dental or business. No one can predict what the future holds. I believe that a person should try to pursue the career of their choice even if the investment may not be as profitable. It is always important to choose a career that interests you. If you enjoy what you are doing, the monetary value is not as crucial. Having the law degree opens up many opportunities not just “Big law” jobs. In addition, if in the end it does not work out, you can always get a non-legal job.

  3. Jane Li

    I agreed with Jason that this problem may not be only limited to law degrees, but most other post graduate as well. A "biglaw" job or any "big" job never come in handy, as everyone else saw the potential returns as well. It exists in every area if you want to "achieve" something, which is why I think the main purpose of the paper is not discouraging people from going the law school, but trying to show them the whole picture of the "bright future" after graduating from law school.

    This paper might talk some people out of going to law school as they found it less worthy of the efforts and time and money they are going to invest, but on the other hand, might make some people more determined to enter such a place to as the whole competition thing make the prize more worthwhile. Of course, there are also people enter this competitive market without fully preparing themselves to the reality but still taking future returns for granted, which won't surprise me if they later still become the victim of the law school trends.

    I do think this paper is very important for someone who was just about to enter law school mostly for the "considerable profit" after it. But for those who is interested in law, or seeking for developing some skills in law school, such as rigorous way of thinking, what you learned will never go away and will certain come in useful later even you ended up in a non-legal career.

  4. Jason A.

    Yes, but I feel that this paper fails to take into consideration that this problem may not be unique to law degrees, but to most other post graduate degrees as well. While the paper claims to take into consideration a thirty five year law careeer (and its related oppurtunity costs) I feel that it at best, completes only a cursory analysis. Quite simply, nobody can predict what is going to happen to them over thirty-five years.

    While pursuing a law degree does seem to be increasingly risky (as you have made clear by this point), some students may actually want to do so for more than a paycheck at the end of the day. Even if this were not the case, there are still oppurtunities to be had in pursuing a legal career, or perhaps a non-legal career with the degree; they just may be fewer and far between, which dosen't seem out of line with the rest of the job market.

    In closing Professor Randall, I will continue to read, and post, in hopes that one day there will be some encouragement for aspiring law students.

    ** I guess this makes this a post about a post about a post about a post.

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