From the CNBC column:

"[F]or those of you who are money hungry, go to law school. Is it boring? I've heard nothing to suggest otherwise. But if you get into a decent place and get good grades, then you're pretty much in the promised land of $200,000 a year salaries as soon as you graduate."

FIRRRRRRRRRRRRRRRSTTTTTTTTTT!!!

Fourth and its still not worth it.

Is it worth the money, though? I work for a V5 for 5 years now -- I ask that question every day.

sixTTTh

"Is Your Law Degree Still Worth Anything?"

T14 = yes

Below T14 = not so much

SEVENTHSIES!

Damn you, 1. Not only did you steal my spot, but you don't even celebrate your firstiness. What is this world coming to?

-3

8 - You can't count. That is why you went to law school.

Great, another recession, another horde of B-school refugees who come to the law only for the money. So much for all that truth and justice crap.

Damn you, 1. Not only did you steal my spot, but you don't even celebrate your firstiness. What is this world coming to?

-3

There are some interesting links and statistics in the complete Conglomerate post:

http://www.theconglomerate.org/2008/09/what-is-the-npv.html

Sara Palin farted.

Hey 10, I bet you wish you were as fourteenthsies as me!

signed,

seventhsies

I GIVE UP!

-seventhsies/fourteenthsies

GULC Degrees are worthless.

-- UVA2L

Not really. Most law school students are above-average students who would on average do better than the average college grad even if they didn't go to law school, especially those pulling up the median. Moreover, while a legal career at a top firm is probably a better financial move than say being a physician, I doubt it is better on average than going to a top business school and then working for a big three consulting firms or investment banking (on average). Most people I know with just undergraduate degrees from Wharton make more than my jd's top five schools.

GULC collars are popless.

-- UVA2L

the real question is the impact a law school degree has on one's ability to get a callback at WILDMAN HARROLD.

4:26 - But do those Wharton grads still have jobs? Despite all the law firm layoffs (hi Cadwalader), things are much worse on Wall Street.

I guess its all relative - the alternative (B-School) doesn't look attractive either.

I'd say, avoid racking up loans and spend the time aggressively climbing the professional ladder in some other institution and you'd pretty much end up at the same position in 3yrs.

HLS worth it? Absolutely. Ed's Podunk Law School worth it? Absolutely not. Obviously the moron who wrote this knows nothing about how snobbish the legal profession is. Oh wait, the guy who wrote this is at Drexel. His grads probably don't even make the median. No wonder he wrote this. Just the usual trash that people at below-average schools peddle.

From the CNBC column:

"[F]or those of you who are money hungry, go to law school. Is it boring? I've heard nothing to suggest otherwise. But if you get into a decent place and get good grades, then you're pretty much in the promised land of $200,000 a year salaries as soon as you graduate."

It's crap like this that fuels the glut of law schools and law students. Oh, there's nothing completely false about it, but it's heavy on exaggeration and ambiguity. "Good grades" at a "decent place" can be interpreted to mean top third at, say, University of Georgia. But is that going to get you $200k as soon as you graduate? I don't think so.

24 makes a valid point.

"Good grades" at a "decent place" should be construed as B+ or better at a top six law school.

24 = Loyola 2L reincarnated?

I now recognize "you should go to law school/become a lawyer" as the harshest insult I have ever received.

"But if you get into a decent place and get good grades, then you're pretty much in the promised land of $200,000 a year salaries as soon as you graduate."

I think CNBC should be sued for fraudulent misrepresentation. Wow is that inaccurate. Did some T3 law schools pay this journalist to write this?? The vast majority of students at "decent" schools do not get biglaw salaries.

The guy who wrote this is a total idiot. Because of his idiocy, other idiots will now believe that "decent" schools and "good" grades will get you a six fugure salary. HARDLY the truth!

The vast majority of elite schools are far from being decent.

MysTTTal

Are the rumors about WILDMAN HARROLD true?

BIGLAW is not the only place to make money as a lawyer, though it is for the risk-averse.

As to making more money in business out of undergrad, I'm sure that's true, but you've got to ask yourself if that's actually what you want to do day in, day out. I have no interest in the nitty-gritty of business, so I would've been a miserable failure and my earnings would've petered out very swiftly had I gone the analyst route.

Yes, a law salary is an annuity -- smart. Ask the Heller or Thelen partners if their salary is an annuity that will last 40 years.

He would better off having his students do a multiple regression analysis to see what the correlation is between a 3 year advanced degree and higher salary. It wont be too strong of a correlation given the bi-modal distribution model. It will only be strong for T-14 grads (who stay in the profession). As someone wrote on the conglomorate, TTT law school is perfect for people who have no statistical background. NPV is not the way to go with this study.

Isn't it this simple:

Yes, I'm in a lot of debt and don't particularly "like" being a lawyer. But if I wasn't a lawyer I'd be making what, $60K as a [...].

So instead I'm a lawyer and I make $100K.

I pay roughly $1K a month to generate the extra $40K. And let's face it, there are a few perks (e.g. coming in hungover and just shutting the door - can't do that just anywhere).

Reluctantly, I've decided my decision was not all that bad.

And if not, 35, you'd still be killed for your organs by the roving bands of hungry ex-bankers that will come to define wall street.

absolutely untrue. law school is not a good value. the number of "great jobs" paying $200,000 to first years is miniscule. the majority of first year jobs pay much less than $100,000, probably closer to an average of $60,000.

NPV based on law firm salary as an annuity is flawed. Ask any Thelen or Heller partner today if their salary is a 40 year annuity. A multiple regression analysis would provide a more accurate picture, especially given the bi-modal distribution of law salaries and number of lawyers who leave the profession before 10 years out. My guess is there is a very weak correlation for below T-14.

"So, as I say to my students, think of your law degree as an annuity. It represents a payment stream that lasts for a career."

Except of course that your law degree does not in fact confer a direct financial benefit. It only allows you to work your ass of, providing services the market value of which is, well, whatever it happens to be.

Redo the math to take this into account. What is the present-day value of an income of the average prospective law student with a BA. (More accurately, the average prospective law student who is likely to pass the bar.) This number also has to be subtracted from the $700k - it's your opportunity cost.

I strongly suspect that for most people, it becomes a wash, at least financially.

"But if you get into a decent place and get good grades, then you're pretty much in the promised land of $200,000 a year salaries as soon as you graduate."

I think CNBC should be sued for fraudulent misrepresentation. Wow is that inaccurate. Did some T3 law schools pay this journalist to write this?? The vast majority of students at "decent" schools do not get biglaw salaries.

David Lat keeps me in the basement of his parents' house in Fort Lee and pays me to click on advertisements on his website. I have a small cot and a hot plate fashioned from what appears to be copper wire spun around an old folgers can. Payment comes in the form of seashells and plastic beads. I was recently given an aluminum thimble as a form of bonus.

Regards,
Miles

The law school as an annuity argument is stupid because in a real annuity you get money for not doing anything. When you have to sell your sold plus the money to go to law school, that's a different thing.

Oh, and the wildman harrold schtick is not funny. At all.

24 = coa clerk with pretty decent job prospects.

I just think there's a lot of BS being spewed out there.

-24

24 = coa clerk with pretty decent job prospects.

I just think there's a lot of BS being spewed out there.

-24

it's not like you are working for that money after you graduate, right?

why not subtract out all of the hours put in (even subtract it out at a plumber's salary, if you want) before concluding that law school is a three-bagger?

I just GULCed all over my law degree. Oh well, I'll just go online and print out another.

GULC4L

Too many law schools

And median salary - so BS

Take all salaries eliminate the top 5% and lowest 5% then take the average...would give you a better idea what most law school grads are looking at making.

And also quality of life needs to be taken into account. You can make real good money right out of lawschool as a contract attorney, but you are not going to like it.

I have been gone for a couple of days, what is all this about WILDMAN HARROLD?

I guess no one informed the author that using NPV for personal finance is silly. NPV assumes you have the choice between investing at a market rate or investing in a stream of cash flows. You can't invest all your tuition costs and your economic costs (lost wages) at the market rate. You CONSUME most of your wages.

A rigged NPV analysis looking only at income "left over" after accounting for basic needs like food and shelter would be more appropriate.

For Biglaw salary rates (w/o making partner or bonuses), assuming a) $50K per year in tuition, b) $80K per year opportunity cost while in school, and c) 20% discretionary income, the NPV of a JD (not considering the risk of not obtaining a biglaw job) is slightly over $144K.

This is still a good investment, but not quite the $230K the author suggests for AVERAGE JDs. If the best-case scenario is $144K, it only goes down from there. Factoring in risk, a JD from an institution where Biglaw isn't guaranteed for a large percentage of the class isn't a smart use of time or money.

But no one needed an NPV analysis to figure that out.

48 - somebody figured out that there is a law firm called Wildman Harrold, and now thinks its really funny to say Wildman Harrold a lot.

That's pretty much it.

Harrold is a Wildman!!

I'm so glad I go to an elite school

I'm so glad I go to an elite school

52-52: you must go to Hofstra. It's top 100!

Wildman Harrold = small Chicago law firm. Decent place for someone in the bottom 25% at NU to end up at.

His analysis is flawed. It ignores people that get a law degree but then cannot get (or hold) a job as a lawyer. I'm sure that the average salary for those is much lower, and thus the average salary for law grads is lower than the average salary for lawyers.

No idea how big a difference this would make, but a decent number of people with law degrees aren't able to work as lawyers.

57th

"Nice. Of course, that median salary is largely dependent on top firms paying their lawyers large salaries, based on the huge fees charged to wealthy clients."

Mean versus median anyone? Elie? Anyone?

feed me.

-Loyola2L

If you guys actually read the blog post on Karl Okamoto's website, you would realize that this is not a full out study, but instead just an exercise for his students to get them thinking about finance concepts.

I think this is a more interesting financial lesson:

If on my 18th birthday, my parents had stuck my college tutition (say $120k) in a trust earning 8%, it would be worth ~ $760k on my 40th birthday.

And if on my 22nd birthday, I had put the cost of law school (say $140k) in a trust earning 8%, it would be worth ~$480K on my 40th birthday.

Bottom line, if I avoided school and real work my entire life (and instead worked ski patrol in the winters and worked in a surf shop during the summers - i.e. an awesome life), I'd have $1.24 million in the bank at age 40.

Instead I went to an expensive college and law school, neither of which were top 10 schools. Now I work at a V50 firm in manhattan and, according to the surveys cited by Okamoto, earn an income in the top 10% for lawyers. After 3 years of practicing, I'm 29 and have about $150K in the bank and save ~50K a year. I have two to three more years of biglaw in me, before I'll have to go in house or switch to a smaller firm that pays a lot less. I won't make a bonus this year and expect bonuses in 2009 to be pretty shitty. Anyway, asuming I can keep making the same salary for the next 11 years doing a job I hate, when I turn 40 I'll have saved a grand total of $1.25 million in the bank (assuming my savings compound at 8%).

So if I'd skipped college and law school completely and spent the first 22 years of my adult life chilling and never saved a dime, I'd only be worth $100K less.

It makes the investment in education pretty hard to justify.

61 - you are assuming that you will continue to earn that 8% interest on your investment. I'm not sure exactly where you can get 8% interest these days.

Also, there's life after 40 to be considered. Presumably, even if you do not continue practicing as a lawyer, you'll still have a fairly well-paying job that you would not have without a law degree. If you spend your time until age 40 chilling, you may not have as good a job to go to after age 40, when you're not employable at an entry-level position.

61: Interesting, but consider this:

You assume your parents had 120k cash laying around when you were 18 and that they would just give it to you in lieu of investing in your future by getting an education. Sweet deal if you can get it.

Also, where would you, the 22-year-old high-school-educated-ski-patrolman-slash-surfer-dude-who-only-works-six-months-a-year, get 140k cash to drop into a trust and let sit for 18 years? Just curious.

Also, let us know where we can get a savings account that bears 8% interest, that sounds pretty righteous.

62,

Decent points. But even now you can get an interest rate of 6% on legitimate AAA 20-year bonds. If you use 6% instead of 8%, the difference is $800K for no school v. $1.07 million with a law degree and top 10% job. And just like you can't count on an 8% interest rate these days, I'm not sure that M&A lawyers like myself can count on having jobs in 6 months. ANd if I lose my job, I'm just goign to be eating into savings until I find a new one.

I'm not going to do the math, but if I had gone to a decent state college, paid 5k a year in tution and majored in engineering, business, or some other practical major where I'd be making 80K a year by now, I think I'd be substantially ahead at age 40.

There is life after 40 (hopefully a lot of life after 40), but I hope to god I'm not still doing corporate law during that time. Whatever it is that I do end up doing, I doubt I'l make more than an engineer with 20 years of experience.

63,

The question was whether a legal education is a good investment, so my hypothetical situation is based on a student having the cash and choosing to invest it in something else instead. In real life, not a lot of people get that deal or are in a position to make that choice.

The private college thing is what really makes me think. Out of my admittedly unaccomplished circle of friends from college (in fairness, a college in the south), I'm the only one that will have anything close to $700K when we all turn 40. My friend the software tester won't, my friend the T3 law school grad won't, my friend the top-50 law school grad won't either, my friend the anthropology PhD won't, my friend the reporter definitely won't, etc. All of my friends got something out of going to a top 25 school, but it wasn't a good financial investment for any of us.

As for the 8%, the historical return on large-cap stocks and bonds during the 1970–2007 time period was 11.1% and 8.5%, respectively. I didn't think 8% was that crazy for a 22 year average return.

I find it difficult to grasp that my investment makes sense when I borrowed for a fancy college and law school, am well into six-figure debt, live in a costly major city, and have a slim to no chance of making it to the partner ranks in biglaw. I wouldn't be making my salary if I hadn't gone but I also wouldn't have 4 digit loan payments to make for the next couple decades.

@17

UVA degrees = worthless

-GULC3L w/ biglaw job