Law Students in Debt and in Doubt – Spread the Word

Mr. ToughMoneyLove enjoys blogging but makes his living practicing law.  I also teach part-time at a local top 20 law school.  I hope this allows me to speak with some authority on the topic of excessive borrowing and unreasonable financial expectations of law students and law student wannabes.  If you or a friend/family member are a lawyer wannabe, please carefully consider what you are about to read. 

The National Law Journal this week published an article aptly titled A Grim Verdict Awaits Law GradsThe grim verdict is that many law school graduates will be unable to find employment that will allow them to service their massive student loan burdens.

Why is this a suitable topic for discussion on a personal finance blog?  Two reasons.  First, it brings home the point that the economy is hitting the legal profession hard.  Second, for reasons that continue to amaze me, thousands of young adults think of a law degree as a ticket to wealth and career satisfaction.  Indeed, there are many recent college graduates who seem to subscribe to the following career planning thought process: 

Step 1:  I majored in history, political science, English, or some other field that offers interesting job opportunities that can be counted on one hand. 

Step 2:  Not being a fan of careers in call center operations or restaurant management, I really don’t like the jobs that are available to me.  Hey, maybe I’ll go to grad school. 

Step 3:  Those guys on Boston Legal make a lot of money and work on interesting cases so maybe I’ll go to law school and get one of those jobs. 

Step 4:  I don’t really have money to pay for grad school.  But that’s what student loans are for, right?  With my high-paying job at the fancy Boston Legal law firm, I’ll re-pay those student loans in a hurry. 

Now let’s review the hard truth: 

We have way too many lawyers in the U.S. 

Because we have way too many lawyers, we have way too many lousy lawyers who ruin things for the rest of us, financially and otherwise. 

Law schools don’t care that there are way too many lawyers.  They are too busy admiring the gobs of tuition money flowing in from students who just completed career planning Steps 1-4 summarized above. 

These cash cow law schools are graduating 44,000 new lawyers every year with an average student loan balance of $77,000. 

Job prospects for new lawyers are diminished in a down economy because business clients are known to start cost cutting with the legal budget. 

While the top students from the elite law schools can find jobs at top firms earning $160,000 or more, the median salary for new lawyers is only $57,448.  (Source:  PayScale

So why do so many young adults follow this path for the wrong reasons and incur so much debt for not so much money?  The choices are: (a) they are misled by law school promotional literature; (b) they get all of their information about careers in law from television and movies; or (c) they just don’t know any better and don’t care to find out.  Mr. ToughMoneyLove is afraid that a lot of them fall into categories (b) and (c).  Unfortunately, the students who fall into those categories often end up being the lousy lawyers, i.e., clueless law students become dangerously clueless lawyers. 

You can argue that the poor judgment demonstrated by defaulting sub-prime borrowers is similar to that shown by many law students in debt.  In each case we must ask:  What were you thinking? 

What can we do about this law student debt party?  The number one thing to do is get the word out.  New college grads need to understand the realities in both job opportunities and student loan burdens.  Can we count on law schools to do this?  Probably not.  Law schools are profit centers.  Why would a university want to discourage tuition generating activity in one of its profit centers?  

To be honest, maybe the best thing to hope for is that some cable network will produce a reality series about lawyers who struggle to make ends meet after writing the big check each month to the student loan lender.  Each show could include a segment on involuntary pro bono work.  (That’s when a lawyer works for free because the client refuses to pay.)  There should also be segments where young lawyers try to figure out if they have enough money to buy an obnoxious Yellow Pages or TV ad so that they can stick out among the gazillion other lawyers chasing clients with money.

By this point, a lot of you may be thinking “who cares – let all these young lawyers crash and burn – better for us.”  Fair enough.  But wouldn’t it be better if some of the for-profit law schools crashed and burned instead?  That will cut off part of the supply permanently while saving a lot of young adults from incurring needless student loan debt. 

Before I finish, I need to make the point that I know lots of great lawyers.  There is always room for more of those.  What we need to discourage is the constant flow of college grads who look at law school and the law as primarily an economic strategy.  That is bad for them, bad for their future clients, and bad for our economy.  So please help spread the word. 

If we are really lucky, maybe we can persuade some of the lawyer wannabes to become engineers instead.  Our economy could certainly benefit from having more engineers.


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16 Responses to “Law Students in Debt and in Doubt – Spread the Word”
  1. richgirl says:

    You left out (d): they don’t like blood and stink at math, so medical school and accounting are out. Of course, the math thing also makes them less likely to go to engineering school too.

  2. Excellent post, Mr. ToughMoneyLove. You’ve hit the nail on the head.

    I went to law school for all the right reasons- I loved the law and was fascinated by it, and had been aiming for law school since junior high. I love being a lawyer, I loved law school and I love my job. Even so, I’m currently on a campaign to convince people NOT to go to law school, for many of the reasons you list above. Far too many people are going to law school for the wrong reasons or with faulty assumptions, and many law schools are only too happy to take advantage of that. The situation in Canada is slightly less dire, but the same issues hold true.

    With respect to the average law salaries, you might be interested in a post I did a few months back on this topic about the bi-modal distribution of law salaries. The median salary is a misleading measure of starting salaries for lawyers.

    And here’s another hard truth to add to your list: even if you do get that Boston Legal job, you’ll quickly find that it’s mind numbingly boring with ridiculously long hours. You may be able to pay down your student loan quickly, but only if you can stomach the toll it will take on your life and avoid getting caught on the “golden treadmill” like so many young associates at big firms. I’ve been there, and it’s not pretty.

    Again, great post. Perhaps we should team up in an attempt to decrease law school enrollment!

  3. Word.

    I’ve also found lawyers breed more lawyers.

  4. richgirl: I think a lot of law students could probably handle the math but they don’t see that paying off with $$.

    MGL – I remember your post on salaries. I think your point was that “mean” is a misleading measure of starting salaries, as compared to “median.”

    DogAteMyFinances – Agreed. In my case, our three sons have so far chosen different career paths, with my full support and encouragement. So you can’t blame me for breeding more lawyers!

  5. For lawyers’ salaries, both median and mean are misleading (how’s that for alliteration?). Combine that with youthful optimism and societal perceptions of law salaries and you get a lot of very overburdened young lawyers.

  6. goldenrail says:

    So you’ll accept the law students who said, “i’m very interested in x and want to do x… who are the people who do x? what did they study? oh, they’re lawyers… then that’s what i need to do… ?
    As far as the misleading ideas about salaries, maybe lawyers that breed lawyers aren’t that bad. At least those new lawyers know first hand what a real salary looks like.

  7. goldenrail: I am OK with your hypothetical law student as long as their interest in “x” is not based on seeing it on telivision or in a movie and as long as they are not borrowing their future away to get there.

  8. Goldenrail, I’d put that type reasoning in the “bad” category as well. I’ve seen too many people who view law as a door to public office or other simialr leadership roles. It’s not. While some lawyers may take that path, it’s not because they are lawyers. It’s a correlation, not a causation, and a law student should know the difference.

  9. That’s a pretty powerful article. I wasn’t immediately aware of the super saturation of the JD market, but now that I’m looking at the bigger picture, it certainly makes sense.

    Reminds me of an old quote from the Pacino movie “Devil’s Advocate”. There are more law students in school right now than there are lawyers walking the earth.

  10. My Journey says:

    POWERFUL ARTICLE! Considering I graduated Law School in 2006, it truly hit home for me. I may have to write a follow up post, about my experience.

  11. Matt: Yeah – its rough out here. Things in my specialty (IP law) are OK and bankruptcy law is booming but if you are a real estate or M&A lawyer, it’s terrible.

    My Journey – I would enjoy reading a follow-up. Let me know and I will link to it from this post.

  12. richgirl says:

    I found a great article about some more realities of working as a lawyer. Hint: don’t expect to have a life outside of work.

    http://www.bcgsearch.com/crc/weekend.html

  13. crushedbyloans says:

    I consider anyone who graduated from law school with only $70,000 in student loan debt one of the lucky ones. With tuition around $40,000 a year –these students have support from parents, a spouse, etc. I graduated in 2007 with $176,000 in student loans (JD and a masters). Although $13,000 of that amount represents interest that accumulated while in school. If I could do it over again I would find a way to pay the $360/month of interest that was accumulating while I was in school and find a way to get some of the money another way. My monthly payments are $1258/month and I make $70,000 a year. Loans and taxes take the two biggest bites out my salary leaving me with the equivalent of a $35,000 salary. And then what does my law school do — they send me letters asking for MORE! I can be grateful for the fact that I really enjoy practicing law — it is just too bad I had to shell out so much to get here.

  14. Crushed by loans: Wow – your student loan debt is enormous. I am sorry that you are now burdened by it and that your law school seems oblivious to it. It is gratifying to hear that you like your work. So many young lawyers become disillusioned in a hurry but their student loans keep them bound to a career that they really don’t like.

  15. Considering Law says:

    The issue I have is this. Engineering I could do. Tragically all of the engineers I know work in exceptionally small cubicles and lack the social skills to carry a conversation. I’m currently a Real Estate agent, and am confounded by the illitericy of the profession.Most agents can hardly muster through writing a check let alone a contract for purchase. Law seems the logical choice for me. I can work contract law,which I love, avoid the blundering, uneducated masses, and hopefully have a life outside a cube. Your thoughts are appreciated.

    DC

  16. Sorry I’m so late to the party on this one.

    I passed the bar in 2006 with student loans slightly more than crushedbyloans has above. I’m also married to a lawyer and she has nearly the same amount, give or take 10 or 20 grand. Both our loan balances individually exceed our mortgage. With our student loans on 30yr terms now, we like to joke that we have 3 mortgage payments, but only 1 house. Thank God we got a hold of our finances and have a plan to pay those 30yr loans off in 7 years (5 more to go!).

    You are spot-on with your analysis, ToughMoneyLove. I try and discourage people from going to law school unless their heart & wallet is in it. I entered into the law because I was fascinated by it, not because it was a financial or status move. I did, however, know plenty of people in law school that were using it as a time to continue their undergrad partying ways. Most on the outside think we’re all loaded. They wouldn’t believe you if you told them that the median starting salary was less than $60k. Not to mention the excessive alcoholism & depression that saturate our profession.

    My wife is sharp & pretty marketable (licensed in CA & TX) and has forged a great start to her career. I’m the nomad who hasn’t found what I’m looking for quite yet. For now I’ll continue to look to develop my career while thanking my lucky stars I at least have some contract work to keep the bills paid.

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