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Washington Lawyer

Price and Perils of JD: Is Law School Worth It?

From Washington Lawyer, March 2013

By Rick Schmitt

cap_moneyHaving worked as an airport security guard and a part–time paralegal at her father’s law office, Rachel Grainger decided she needed a new challenge. So in 2007 she enrolled in law school. It seemed like a good idea at the time.

“My career was not advancing as much as I hoped it would. I thought it might be a good idea to go back to school,” she says. “The legal field is something I knew about. It seemed like a practical choice.”

Today, Grainger, 33, is scrambling for work, her supposedly sound investment in a legal education gone awry. Unable to find full–time work since graduating from San Francisco’s Golden Gate University School of Law in 2010, she has been trying to develop a solo practice, networking with friends and other sources to take cases on a contract basis.

While business has improved as she has gained experience, Grainger still does not earn enough to support herself and to pay her bills. Last year she earned $30,000, less than what she took home working at the airport. Among her debts: $160,000 in law school–related loans. She recently moved back home with her parents, where she operates her law office out of a spare bedroom.

“Would I do it again? To be honest, I have asked myself that a lot,” she says. “I think you have to like what you’re doing in addition to making a good living. But there is some point where if you have so much debt that you cannot pay … it really is a stress.”

Rocked by a brutal job market and a huge and growing student debt, an increasing number of young lawyers have been asking themselves the same question: Is law school worth it?

Big Dreams, Crushing Debt
The case against law school is regularly made in the national media and by Internet bloggers. An article in Forbes magazine last year went so far as to declare: “Why Attending Law School Is the Worst Career Decision You’ll Ever Make.” Even the American Bar Association (ABA) has weighed in with concerns. And the issue has obviously large implications for not only students, but law schools and the profession in general.

Based strictly on economics, investing in a legal education seems increasingly hard to justify. Only a fraction of graduates these days are finding full–time jobs that require a law degree, and salaries are declining. While there has been some recent improvement, the starting salary for a lawyer in private law practice has fallen 35 percent since 2009, according to a July 2012 report of the National Association for Law Placement. A select few graduates continue to make big money at large firms—as much as $160,000 a year—but those jobs also are getting scarcer as law firms have cut back.

Many more young lawyers work temporary positions doing document review or other contract work that, aside from lower pay, provides no job security or benefits. Public sector jobs are shrinking because of a federal hiring freeze and budget problems at the state and local level. Nonprofits are too cash–strapped to hire public interest lawyers. More and more graduates are taking jobs outside the law, not out of choice but of necessity to pay the bills.

Legal education costs have soared, meanwhile. Average tuition at a private law school has quadrupled in the lifetime of students graduating this spring, with even sharper increases at public institutions. Including living expenses, the cost of law school now averages between $150,000 and $250,000, much of which is debt-financed. The average debt for students who graduated from a private law school in 2011 was $142,565, which does not include loans they may have racked up as undergraduates. The upshot: Rising costs and declining earnings have many students approaching their very own fiscal cliff.

“We have a generation of people with huge debts, no way to pay them back, and degrees that in many ways stigmatize them going forward. That is a combination of factors that produces genuine desperation,” says Paul Campos, a University of Colorado Law School professor and author of the book Don’t Go to Law School (Unless): A Law Professor’s Inside Guide to Maximizing Opportunity and Minimizing Risk. Campos is also the author of the blog “Inside the Law School Scam.”

Demand for legal services has always ebbed and flowed. The recession, coming on top of a decade of huge growth in pay and demand for lawyers, has added to the shock and woe. But structural factors also are playing a role, as corporations and other users of legal services are finding ways to cut their legal costs, which could permanently reduce the number of lawyers needed in the future.  

Even the organized bar has warned college students to think carefully before investing in a legal education. Even before the recession hit bottom, the ABA Commission on the Impact of the Economic Crisis on the Profession and Legal Needs warned in a 2009 report that the rising cost of a legal education and the realities of the job market mean that going to law school “may not pay off for a large number of law students.” In the summer of 2012 the ABA created the Task Force on the Future of Legal Education to study “the impact on law schools of persistent weaknesses in the economy, rapid and substantial changes in the legal profession, and shortcomings in the delivery of legal education.”

The sobering message seems to be registering with potential students. Law school applications—typically rising through boom and bust—have declined by more than 20 percent over the past two years. First–year enrollments at ABA–approved law schools in the fall of 2012 were 15 percent below the fall 2010 levels.

Falling enrollments are producing challenges for law schools across the country, including the seven ABA–approved law schools in the Washington metropolitan area—American University Washington College of Law, George Mason University School of Law, George Washington University Law School, Georgetown University Law Center, Howard University School of Law, The Catholic University of America Columbus School of Law, and the University of the District of Columbia David A. Clarke School of Law. The number of first–year law students at Catholic University in the fall of 2012 dropped nearly 50 percent compared with the school’s fall 2010 first–year admissions. Other law schools have been looking at new programs to increase the employability of their graduates, and in some cases putting recent graduates on the payroll until they can find full–time paying work.

“How do you increase the students’ chances of getting a good job? How do you take steps to ensure that the debt burden is not excessive? How do you keep tuition increases from going up too dramatically? These are the issues that I and every other law school dean are really focused on right now,” says William Treanor, dean of Georgetown Law Center.

The New Normal
Not too many years ago, it seemed the sky was the limit for lawyers, at least financially. Large firm salaries grew to fantastically high levels, and then grew some more, cracking the $160,000–a–year barrier in 2007. A law degree became a ticket to financial security, if not riches, a view that sent law school applications and enrollments to record levels. The ABA accredited 16 new law schools between 2000 and 2010, double the number in the 1980s and 1990s.

The financial crisis, however, shattered dreams of rising fortunes. Big firms, buffeted by the problems of their clients, scrambled to cut costs. Scores of young associates lost jobs. By one estimate, one–third of all entry–level law jobs disappeared between 2008 and 2010.

“You are seeing people who formerly would have no problem getting a job not being able to find anything locally,” says Jeffrey Lowe, managing partner at the Washington, D.C., office of Major, Lindsey & Africa and the firm’s global practice leader. “The world changed. It is the new normal.”

Even before the recession, firms were under growing pressure from clients to reduce the cost of legal services, leading to a breakdown of a longstanding profit engine built on associate leverage. The recession has only intensified those pressures. Legal temps are now doing document review formerly handled by junior associates. Predictive–coding software is reducing the role of lawyers in the discovery process. More and more firms are outsourcing operations, in some cases to foreign countries, taking a page from the playbook of garment makers and computer companies.

“The big law firm is no longer the solitary player in the marketplace. There are all kinds of options for in–house counsel,” says Susan Hackett, a legal management consultant based in Chevy Chase, Maryland, and former senior vice president and general counsel at the Association of Corporate Counsel. “That is a very different message for kids going to law school. There are not going to be as many jobs at law firms, and not just the biggest firms.

“What is going on is a longer-term march toward questioning the value of what it is that lawyers provide, especially in different stages of their careers,” Hackett adds.

The changing economics of the marketplace is starting to shake a long–held belief that a law degree is a valuable credential, even for those not necessarily interested in practicing law. For years a legal education was touted as a versatile and marketable postgraduate experience for the undecided. Today, lawyers are finding that a law degree is closing rather than opening doors, especially in jobs in business. Employers are skeptical of unemployed lawyers who are not using their law degree in a traditional way. Some also are concerned that lawyers will bolt once they find a legal job.

After graduating from college and working two years as a paralegal, Kaity Butler chose law school in part because so many friends and mentors convinced her that a law degree “was a good degree to have.”

“I went to law school with the hope either I would find my passion in law or that it would serve me like a business degree,” says Butler, who enrolled at Catholic University’s Columbus School of Law in 2007.

Today she has that law degree, fully financed with student loans, and uncertain career plans. After three years of law school, various internships, and contract and temporary jobs, she has decided to change course in favor of a business career. She is currently working for a running shoe and racing company in Northern Virginia, hoping to move up. Eventually she would like to work in law firm management. “I have been finding that my degree is not providing the help I had hoped as I try to chart my new career path,” Butler says.

Even those with jobs are finding that current salaries do not provide a livable wage. The median salary for all students graduating in 2011 was about $60,000, and many graduates do not even earn that much, including the growing number that do temporary work.

“Subtract a thousand [dollars] a month to live in the D.C. area and $700 in student loan payments. That doesn’t leave a whole lot of wiggle room,” says a young lawyer who moved to Washington a few years back in the hope of a career boost, and who since the recession hit has yet to gross more than $50,000 a year. “And temps have to get their own health insurance if they want some. Add in vehicle expenses and eating regularly and there isn’t much left to play with.”

“I expected to have a job. I expected to go to an office every day. I was a mediocre student in law school, so I wasn’t expecting to get on with a big firm and make six figures after a couple years,” he says. “But I did expect to find something with regularity that didn’t require me to spend a month or two every year dedicated to finding my next work assignment.”

“I do not regret studying law. I liked law school. It was an interesting intellectual pursuit,” this young lawyer says. “I do regret the consequences. I feel that I am pigeonholed into the profession. I would leave it in a heartbeat for a healthy, steady income doing something else. I sincerely regret the financial consequences. My younger siblings have stable jobs, stable income, and can plan ahead. I’m just stuck as intellectual migrant labor in financial servitude to student loans.”

Financial Lifelines
While the cost of and debts from law school are a lot greater today than a generation ago, so are the options available to students struggling to deal with those debts. A 2007 federal law has given law students and others a chance to pay back their loans based on their earnings, and offers up the prospect of the debts being wiped out after a period of time. Starting next year, borrowers will only have to pay 10 percent of their discretionary income toward retiring their student loans, with any remaining balances canceled after 20 years. Debts are forgiven after just 10 years for lawyers who do public service work.

The possibility that the government—and taxpayers—will end up having to shoulder some of the financial burden has riled critics who see law schools making a good living under the system while doing little to curb fees. But the liberal loan repayment rules also are proving a lifeline for many law students who are swamped with huge debts and little hope of repaying them anytime soon.

“It is already a crisis. Without those changes, it would be a disaster,” says Heather Jarvis, a Wilmington, North Carolina, lawyer who advises students with debt problems. “People graduating today are starting out way behind. . . . It is like having a mortgage without having a house.”

The financial breaks have been especially important for students considering public interest careers, where salaries have always lagged far behind those available in the private market. About 100 law schools have programs that forgive debts of students who practice public interest law. Many also provide scholarship assistance to students who plan public interest careers. (The D.C. Bar Foundation offers a similar plan—its Loan Repayment Assistance Program.)

Like other legal jobs, even public interest positions are becoming harder to come by. The glut of experienced lawyers has made it hard for many new graduates to break into public interest work right out of law school.

“So the market is just really, really tough for people to get the first rung of the ladder,” says David Stern, executive director of Equal Justice Works, which arranges two–year fellowships, sponsored by law firms, clients, and others, for recent graduates to do public interest projects. The number of young lawyers applying for the fellowships, Stern says, is at an all-time high.

Even with the tuition breaks, the debts can stack up. Whiquitta Tobar, a first–year student at Georgetown, is one of eight “public interest law scholars” in her class who receive tuition breaks and summer stipends for committing to a public interest law career. She figures she will still have at least $75,000 in debt once she graduates, less whatever she can earn during the summer. With starting public interest lawyers earning around $40,000 a year, she realizes she is not on a path to riches.

Her goal is to be a public defender, which she has aspired to ever since her brother was shot and paralyzed from the neck down in an incident while she was growing up in rural Arkansas. A basketball star in college, Tobar had opportunities to play professionally, but always had her eye on another ball.

“This is my life’s work,” she says of a public interest career, adding that the money is “not really a factor for me.”

Inflated Prospects
Law schools, in their rush to fill seats, have contributed to the current crisis, critics say. While many have taken steps to make sure students get more practical experience in an effort to enhance their marketability, few have given much thought to making the overall experience more affordable.

Besides high fees, law schools have been accused of inflating their ability to place students in legal jobs after graduation. Even after the recession hit, many ABA–accredited law schools continued to report that more than 90 percent of their graduates were getting jobs soon after graduation. It turns out that they were including graduates holding down nonlegal jobs, even temporary ones.

Pressure for newer and better reporting has intensified as the job market has deteriorated and costs have soared. Law School Transparency (LST), a nonprofit group founded by two Vanderbilt University Law School students, provides an alternative to conventional rankings that focuses on the real costs of attending individual schools and the prospects for securing full–time legal–related employment upon graduation.

The group has criticized gauges such as the closely watched US News & World Report’s ranking of “best law schools” as misleading by implying that choosing any of the schools listed would be a sound decision. “The truth is that once costs and employment outcomes are considered, many schools are a bad choice for many people,” LST says on its Web site.

Pressures from LST and other activists—bloggers and academics such as Campos—led the ABA in August 2012 to require law schools to provide more detailed reporting of employment prospects for their graduates out of concern that many consumers were being misled.

The new standards, which went into effect with the class of 2011, portray a much different picture for law graduates than the rosy outcomes many law schools reported as recently as 2009.

Overall, just 55 percent of students in the class of 2011 had found full–time jobs as lawyers within nine months of graduation. In the Washington area, the law schools of George Washington, Georgetown, and George Mason universities all had above–average employment rates, while Catholic, American, and Howard universities had fewer than half their graduates in law jobs.

Concerns that people have been misled have ended up in court. Suits seeking class action status have been filed on behalf of recent graduates of 15 law schools that allegedly published false and misleading employment information, in violation of state consumer protection laws. Several have been dismissed. One of the cases still pending is against Golden Gate University, where Grainger attended law school and where just 42 of its 191 graduates in 2011, or 22 percent, had full–time legal jobs.

Grainger remembers receiving a job survey from Golden Gate after she graduated in 2010, and being surprised at how little distinction the survey made between the types of jobs that graduates were getting.

“They were not asking [about] work people had in mind when they went to law school,” Grainger says. Even though she had worked after graduation as a legal assistant for $15 an hour, she still indicated on the survey that she had not found work. “That is not the kind of work I had in mind when I went to law school, and not something I would want to pass along to someone looking at law school,” she says.

Citing pending litigation, Golden Gate officials said they could not comment on aspects of the lawsuit, but they said they are doing a lot to prepare students for the current market. “GGU professors and staff, as always, support our students and graduates by strengthening our longstanding relationships within the Bay Area legal community, where alumni practice and students extern,” says Rachel Van Cleave, Golden Gate’s law school dean. “In addition, we continue to build on our programs, which have always focused on preparing our students for their legal careers. Currently, we are examining the third–year program to strengthen the bridge to practice by adding further professional, leadership, and practical skills beyond what the ABA standards and recent studies of legal education have called for.”

“It has been a dirty industry secret for a long time,” David Anziska, a New York plaintiffs’ attorney involved in the litigation, says of how law schools have historically reported employment data. “In the recession they were making claims that were facially absurd.” 

Anziska says lawyers were prepared to sue 20 more schools, including American University’s Washington College of Law and Catholic University’s Columbus School of Law, until split decisions in the courts prompted them to reconsider. But he still thinks there is a case to be made against the schools.

American University reported that more than 80 percent of its law school graduates in 2009 and 2010 had found jobs within nine months of graduation. Despite the recession, the school reported that 76 percent of the class of 2011 still found jobs, although the more detailed reporting required by the new ABA standards painted a much bleaker picture of the graduates’ experience. Just 167 of the 467 members of the class of 2011—about 36 percent—had permanent, full-time jobs where bar passage was required. Just 23—about 5 percent—had jobs with the biggest (and generally top–paying) law firms.

Franki Fitterer, the law school’s director of public relations and marketing, told Washington Lawyer, “We do not comment on allegations relating to potential cases.” She says the law school has taken numerous steps to ease the financial burden of legal education and to increase the employability of graduates, stressing practical experience and skills training while expanding scholarship assistance and paid teaching assistantships and research opportunities.

American University still makes a forceful case that law school is a good choice. It has a 45–page “Financing Your Law Degree” brochure on its Web site that provides tips on how to manage the cost of law school, which, including tuition fees and living expenses, totaled more than $70,000 a year for the class entering last fall. “The investment will pay off, but only if you squarely face the challenges ahead,” the brochure states.

Employment Summary for 2011 Area Law School Graduates

School *Employed Total Graduates % Employed
GW 421 518 81.2
Georgetown 403 644 62.5
George Mason 102 170 60.0
Howard 75 157 47.7
Catholic 114 261 43.6
American 167 467 35.7
UDC 16 78 20.5

*Includes only graduates employed in full–time, long–term positions where bar passage is required within nine months of graduation. (Source: Law school reports to the ABA Section of Legal Education and Admissions to the Bar)

Looking Ahead
Other local law schools are taking action. Catholic University is shrinking its law school, offering fewer elective courses and declining to renew contracts of some long–serving adjuncts. Some students worry that tuition, already about $45,000annually, may go up even more if enrollments continue to lag. Reaching beyond academia, the university also has hired a new dean of the law school, Daniel Attridge, the former managing partner of the Washington, D.C., office of Kirkland & Ellis LLP.

“Catholic has a strong community of teachers and scholars, but they were looking for someone to add a different dimension,” says Attridge, who has practiced at Kirkland since 1980 and remains of counsel at the firm. “I have a long set of experiences in private practice, and I have been in the market into which virtually all our students go.” He says he plans to emphasize a curriculum that turns out young lawyers who are “practice ready,” who know not just the theory of the law but how to apply it on behalf of a client.

Despite the heavy debts that many students carry, Attridge says law school can be a valuable and rewarding investment. “A law degree is, in many respects, preparation for life. . . . It is not just about paying dollars for tuition and winding up with a degree where you can make money,” he says. “You ought to be able to do that. But you also want to pick an institution where your life’s values will be carried forward in a meaningful way.”

Georgetown is expanding an experiential learning program where students combine classroom work with placement in the field, such as externships at federal agencies. The idea is to give students some face time with potential employers as well as hands–on experience. Dean Treanor sees signs of a rebound in hiring, although he does not expect a return to the boom days.

“Part of it is the economy coming back. But also the huge glut of entry–level associates has worked its way through the system,” Treanor says. The number of Georgetown law students with summer associate jobs has grown from a low of 34 percent for the class of 2011 to 52 percent for the class of 2013; over 70 percent of students landed summer associate positions during the boom. “My guess is that it will probably stabilize at about 55 percent because I think even as the market comes back, big firms are not going to do the same amount of hiring as in the past,” he says.

George Washington University is among a growing number of schools that are actually paying graduates who cannot find work. The school is writing checks to more than 100 members of the class of 2012 who are paid $15 an hour to work in 35–hour–a–week internships at midsized law firms and nonprofits. Officials say the Pathways to Practice Program, which costs between $2 million and $3 million a year, is the most generous of its kind in the country, and is money well spent, helping recent graduates “transition” into paying jobs.

“The more students in the program, the more likely they’ll be hired permanently, which is the end,” former law school dean Paul Schiff Berman said in an article in the student–run The GW Hatchet last year.

Berman, who stepped down as dean in January and currently serves as vice provost for online education and academic innovation at the university, was concerned that the program was becoming so popular that some students were turning down paying jobs to stay in the program, and proposed cutting the subsidies last year as a way to ensure that students stayed motivated in their job searches. A flurry of student protests prompted him to back off the cuts.

Despite the bleak outlook, some students remain undaunted. Taylor Calhoun, who graduated from Texas Tech University School of Law in 2012 with both a JD and an MBA, started in the fall 2009 when it was clear that the economy, including the market for legal jobs, was in a deep funk, although friends assured her that the downturn was just temporary. “Everybody was saying, ‘By the time you get out, it is going to be golden. It is going to be the best,’” she recalls.

It hasn’t turned out that way. “There are so many individuals who are entering the market with their new degrees, and all of these individuals who have been laid off, you run into an oversaturated market where there are people who not only have the degrees I have but they have the experience on top of that,” she says.

Calhoun would like to work in business, in a strategic or analytical position, although she has applied to some law firms as a backup. “I have put in a lot of applications, very, very many, and [had] very, very few interviews. Most of the time I don’t hear anything back at all. It has been a lot of work with very little return,” she says.

She lives with her mother in Dallas, which has become the command central for her job search. “I still cannot imagine what other people are going through that have kids or a family that needs them,” she says. “I feel fortunate for that.”

For now, Calhoun is trying to be patient, hoping to find something in her field of interest. “When do you sacrifice your own aspirations for the job market?” she muses. “I know you go through a lot of changes and your first job is not your last job. But I think it kind of sets the tone for the career you are passionate about.”

At the same time, if she does not have a job by May, a year out from her graduation, “some serious compromises or something is going to have to change,” she says. She admits her law school debt—“a chunk of change, over $100,000”—is a little frightening.

Calhoun spends her time mining job postings through her law school, and is wired into various online job sites. She also says she goes to a lot of lunches and networks with friends. “It has been very, very humbling,” Calhoun says. “I knew it would take a long time. I don’t think I was prepared for how long it would take.”

Rick Schmitt, who has covered legal affairs for The Los Angeles Times and The Wall Street Journal, is currently a freelance writer living in Maryland.