2007 was certainly an entertaining year. The Wall Street Journal exposed the reality of the legal job market, Brooklyn Law School and Seton Hall suffered massive public relations damage, and WSJ readers voted 'Loyola 2L' Attorney of the Year.
Here's a link recap for those who missed these events:
Loyola 2L's award:
http://blogs.wsj.com/law/2007/12/19/the-law-blog-lawyer-of-the-year-loyola-2l/
Legal Job Market Reality exposed:
http://online.wsj.com/article/SB119040786780835602.html
http://www.elsblog.org/the_empirical_legal_studi/2007/09/distribution-of.html
Brooklyn Law School administration criticised:
http://temporaryattorney.blogspot.com/2007/12/2007-beastly-behavior-award-joan-king.html
The public relations battle continues to rage on blogs, jdunderground, and pre-law websites like lawschooldiscussion.org. I predict that the number and quality of applicants to low-ranked private law schools will continue to drop through the 2008 admissions cycle.
The word is out -- these schools have mediore to poor job prospects and cost up to $40,000/year in tuition alone. Don't be fooled by misleading law school publications advertising high "average" starting salaries. Save yourself money. Go Prestigious, Go Public, or Don't Go At All.
Monday, December 31, 2007
Friday, December 14, 2007
Contract work and the high life
Contract work can be a money trap. People get on a great project that lasts a couple months, and make good money working a lot of overtime. What I've observed is that people get used to living as if they will always be hauling in large paychecks, and then get into trouble when the project has its hours reduced or ends alltogether.
In Philadelphia, the average pay rate is around $30/hr + OT. A 50 billable-hour work week means a paycheck of $1650. Bill 60 hours and that paycheck grows to $2100. It's not biglaw pay, but its a hell of a lot more than most working Americans will ever see on their pay stub.
There's a lot one can do with that much money. You can afford the payments on a new car, take out a mortgage on a condo, or buy a lot of stuff at the mall. But what happens if the project goes to 40/hrs a week, or you get let go? Can you afford to make those mortgage and car payments? Can you pay off that credit card?
Here are my thoughts on surviving financially as a contractor:
(1) Save at least 3 months of living expenses in a Money Market Fund or Online Savings Account. It is not uncommon to go a few weeks or months without work. The extra money will tide you over if you are unable to find a new contract before your umeployment benefits end.
(2) Avoid budgeting on the assumption that overtime hours will be freely available. Obviously, there's a huge gap between $1200/week and $2100/week. Project hours can go up and down at a moment's notice. Taking out that big mortgage might not be a good idea if your pay prospects are not certain.
And if by chance you get on a great project and have lots of disposible income:
(1) Use your agency's 401(k) plan. You can contribute up to $15,500 pre-tax each year. I generally recommend investing in mutual funds with low expense ratios. Check out Kiplinger.com, CNN Money, or other websites for investment advice.
(2) Open a Roth IRA or Traditional IRA. These are two great tax advantaged savings vehicles.
Contracting work may be boring, but there are few jobs that have the potential to allow workers to generate large amounts of cash in short bursts. Invest your extra cash, and you can give yourself an excellent chance of securing a comfortable retirement several decades down the line.
In Philadelphia, the average pay rate is around $30/hr + OT. A 50 billable-hour work week means a paycheck of $1650. Bill 60 hours and that paycheck grows to $2100. It's not biglaw pay, but its a hell of a lot more than most working Americans will ever see on their pay stub.
There's a lot one can do with that much money. You can afford the payments on a new car, take out a mortgage on a condo, or buy a lot of stuff at the mall. But what happens if the project goes to 40/hrs a week, or you get let go? Can you afford to make those mortgage and car payments? Can you pay off that credit card?
Here are my thoughts on surviving financially as a contractor:
(1) Save at least 3 months of living expenses in a Money Market Fund or Online Savings Account. It is not uncommon to go a few weeks or months without work. The extra money will tide you over if you are unable to find a new contract before your umeployment benefits end.
(2) Avoid budgeting on the assumption that overtime hours will be freely available. Obviously, there's a huge gap between $1200/week and $2100/week. Project hours can go up and down at a moment's notice. Taking out that big mortgage might not be a good idea if your pay prospects are not certain.
And if by chance you get on a great project and have lots of disposible income:
(1) Use your agency's 401(k) plan. You can contribute up to $15,500 pre-tax each year. I generally recommend investing in mutual funds with low expense ratios. Check out Kiplinger.com, CNN Money, or other websites for investment advice.
(2) Open a Roth IRA or Traditional IRA. These are two great tax advantaged savings vehicles.
Contracting work may be boring, but there are few jobs that have the potential to allow workers to generate large amounts of cash in short bursts. Invest your extra cash, and you can give yourself an excellent chance of securing a comfortable retirement several decades down the line.
Sunday, September 23, 2007
Wall Street Jorual Report: Job market poor for most law graduates
The findings of the WSJ speak for themselves.
In a nutshell:
In a nutshell:
- Earnings for most law graduates and lawyers have been stagnant or declining since the 1970's.
- The number of law schools and law graduates has dramatically increased, flooding the market with J.D.'s
- The Cost of earning a J.D. has skyrocketed.
- Generally, only attorneys at large firms have seen salary increases in recent years.
Monday, September 3, 2007
Law school is the wrong choice for most people
In several of my smaller law school classes, professors would ask students to tell the class on the first day something about themselves or why they went to law school. One very common response was: "I was a(n) [English, Literature, History, Sociology, Gender Studies, Philosophy, Political Science, or other Liberal Arts major] and I couldn't do much with that degree." In a nutshell, people went to law school because they didn't know what to do with their Liberal Arts BA, and they thought a law degree was a path to gainful, secure employment. This is a terrible reason to go to law school. Why?
(1) A law degree will generally lock a person into the law profession, at least for a few years. A new law graduate looking for a non-legal job will inevitably observe two types of responses from prospective employers. First, most employers will say the JD holder is overqualified. Why pay for a JD when a kid fresh out of college will work for less? And there's always the lingering fear on the part of the employer that the JD holder will eventually run to a firm. Second, some employers will question the quality of a law graduate seeking non-legal work. A person who went to law school with no clear goals is not a person who thinks ahead. Also, I get the sense that there is some stigma attached to those who want to leave the law. The public perceives this legal "profession" as a surefire path to wealth and power. This leads people to believe that those want to leave just aren't good workers because they were on easy street, and still can't do well.
(2) Law school is expensive. Three years of tuition and living expenses, and three years of lost earnings are not trivial. As I wrote in April, law school expenses can easily add up to $50,000/year. It is foolhardy to spend so much money for no reason other than "I don't know what to do."
(3) Law school is boring. Reading cases and debating policy is fun at first, but the fun wears off quickly. Digging through thousands of pages of cases to glean principles and rules of black letter law is time consuming and monotonous. Debating policy is an endless cycle of weighing values, with no right answer, and often little reasoning. By the end of my 3L year, I didn't know anyone who wasn't tired of the whole rat race.
To sum up: Don't go to law school just because you think you have nothing better to do. It closes doors outside of the law profession because a law degree makes you overqualified. It is horribly expensive. It is also boring. Save your money. Save yourself. Don't go to law school because you lack direction at the moment.
(1) A law degree will generally lock a person into the law profession, at least for a few years. A new law graduate looking for a non-legal job will inevitably observe two types of responses from prospective employers. First, most employers will say the JD holder is overqualified. Why pay for a JD when a kid fresh out of college will work for less? And there's always the lingering fear on the part of the employer that the JD holder will eventually run to a firm. Second, some employers will question the quality of a law graduate seeking non-legal work. A person who went to law school with no clear goals is not a person who thinks ahead. Also, I get the sense that there is some stigma attached to those who want to leave the law. The public perceives this legal "profession" as a surefire path to wealth and power. This leads people to believe that those want to leave just aren't good workers because they were on easy street, and still can't do well.
(2) Law school is expensive. Three years of tuition and living expenses, and three years of lost earnings are not trivial. As I wrote in April, law school expenses can easily add up to $50,000/year. It is foolhardy to spend so much money for no reason other than "I don't know what to do."
(3) Law school is boring. Reading cases and debating policy is fun at first, but the fun wears off quickly. Digging through thousands of pages of cases to glean principles and rules of black letter law is time consuming and monotonous. Debating policy is an endless cycle of weighing values, with no right answer, and often little reasoning. By the end of my 3L year, I didn't know anyone who wasn't tired of the whole rat race.
To sum up: Don't go to law school just because you think you have nothing better to do. It closes doors outside of the law profession because a law degree makes you overqualified. It is horribly expensive. It is also boring. Save your money. Save yourself. Don't go to law school because you lack direction at the moment.
Sunday, April 15, 2007
The "stateofbeasley" test
"Go prestigious, go public, or don't go at all."
That's my basic advice to all prospective law school students. Here are my premises:
(1) Law schools can be very expensive. With tuition costing $30,000/year or higher at many law schools, students can easily ring up $120-$150,000 in student debt for 3 years of law school education. In contrast, law schools at public universities often have reasonable rates for in-state residents -- usually half or less that of nearby private institutions.
(2) Students must be able to find jobs that will allow them to pay off their student loans. A student that takes out $120-$150,000 in loans is going to need to find a job that pays a lot of money.
(3) The number of high paying jobs for law graduates is very limited. The large firms that pay the big salaries will recruit mostly from prestigious nationally known schools, and take the top 10-15% of students from respected regional schools.
(4) A large percentage of students (my guess is 90-95%) who took massive loans to go to less well known law schools will NOT be able to obtain large firm work. Smaller firms and government agencies generally start newly licensed lawyers at 30-50k/year. At this salary level, many students will be hard pressed to make their student loan payments.
I think it is reasonable to conclude that in general:
(5) Attending a prestigious law school may be worth the cost, because there is an excellent chance that a graduate will find a high enough paying job to pay down the massive debt.
(6) A state resident attending a law school at his/her state university will generally incur substantially less debt than someone at a private university, and will be able to take a lesser paying job and still pay the bills.
(7) Attending a private law school that will not enable a student to obtain a job that will allow that student to pay his/her loans is a recipe for financial hardship or disaster.
I've typed this out quickly, and left out other variables like financial aid, family wealth, and debt forgiveness, but I will try to examine those in some detail later.
That's my basic advice to all prospective law school students. Here are my premises:
(1) Law schools can be very expensive. With tuition costing $30,000/year or higher at many law schools, students can easily ring up $120-$150,000 in student debt for 3 years of law school education. In contrast, law schools at public universities often have reasonable rates for in-state residents -- usually half or less that of nearby private institutions.
(2) Students must be able to find jobs that will allow them to pay off their student loans. A student that takes out $120-$150,000 in loans is going to need to find a job that pays a lot of money.
- For example: Suppose a law student borrows $135,000 at an interest rate of 7.5%. According to finaid.org, the monthly payments on a 20-year repayment schedule would be $1,087/month. Suppose further that this student decides to work for a small firm or government office in Philadelphia, for $43,000/year. After paying federal, state, and city wage tax (4.26% as of 1 Jan 2007), this unfortunate law graduate will be taking home a meager $607.55/week, or about $2,600/month [calculated at paycheckcity.com, assumptions: single taxpayer, 2 exemptions, PA resident living in Philadelphia County]. This law graduate will be spending almost 42% of his or her net income to service this debt. On a 30-year repayment schedule, monthly payments are still a burdensome $943/month, or 36% of the law graduate's salary. Will you be able to pay all your other bills (housing, food, clothing, transportation and telephone, to name a few) on $1500-$1700 a month?
(3) The number of high paying jobs for law graduates is very limited. The large firms that pay the big salaries will recruit mostly from prestigious nationally known schools, and take the top 10-15% of students from respected regional schools.
(4) A large percentage of students (my guess is 90-95%) who took massive loans to go to less well known law schools will NOT be able to obtain large firm work. Smaller firms and government agencies generally start newly licensed lawyers at 30-50k/year. At this salary level, many students will be hard pressed to make their student loan payments.
- Yes, the salary situation IS that bad. Empirical Legal Studies recently posted a commentary on the latest NALP data, showing a huge bi-modal distribution of self-reported salaries for law graduates. The short version is that most graduates in private practice will be making $50k or less, while a select few in large firms will be making six figures.
I think it is reasonable to conclude that in general:
(5) Attending a prestigious law school may be worth the cost, because there is an excellent chance that a graduate will find a high enough paying job to pay down the massive debt.
(6) A state resident attending a law school at his/her state university will generally incur substantially less debt than someone at a private university, and will be able to take a lesser paying job and still pay the bills.
(7) Attending a private law school that will not enable a student to obtain a job that will allow that student to pay his/her loans is a recipe for financial hardship or disaster.
I've typed this out quickly, and left out other variables like financial aid, family wealth, and debt forgiveness, but I will try to examine those in some detail later.
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