Law Schools, Student Loans

Actually Useful Studies About The Value Of Going To Law School

Last week, we focused a lot on a controversial study about the economic value of going to law school. Today, I want to look at some more useful approaches to the question.

Looking at the lifetime earnings of of J.D. holders compared to people with undergraduate-only education based on historical data about J.D. earnings couldn’t have less to do with the current decisions facing prospective law students. Prospective law students are looking at a shifting market for legal employment, and they are dealing with skyrocketing tuition. Are there any studies that are looking at the economic value for them?

In fact, there are… and while the outlook doesn’t paint the rosy picture some law professors seem really invested in, there are rational arguments available for those who want to convince people to go to law school…

A Moritz College of Law professor, Deborah Jones Merritt, has done some very interesting research about the salaries of Arkansas law graduates (from the two law schools in Arkansas) versus other kinds of Arkansas graduates. Here are the top-line findings:

The College Measures database doesn’t have figures yet for 2012 graduates — or even for 2011 ones in Arkansas. But it does report the average first-year earnings of graduates from the classes of 2006 through 2010 who stayed in-state to work. For the Fayetteville campus, the average was $45,745, and for the Little Rock campus it was $47,060….

[H]owever, the salaries of Arkansas law graduates suffer in comparison to starting salaries in other advanced degree programs. The Little Rock campus collected sufficient salary data from three different PhD programs: higher education administration, educational leadership, and physical sciences. The average starting salary in each of those programs was higher than in law, ranging from $52,726 in physical sciences to $72,134 in educational leadership.

The study looks at average starting salaries, and again, averages aren’t the most useful figures when talking about lawyer salaries, given the bi-modal distribution of salaries in the legal market. And the study doesn’t look at how much it costs to go to law school as opposed to other degree programs. Despite that, Merritt finds that the starting salary for some Arkansas undergraduate programs outpaces the average salary of Arkansas law graduates.

But if we are going to be looking at the value of a J.D., it seems that at the very least we should be looking at specific J.D. programs, and we should be looking at the actual money earned by J.D. holders in this economy versus other people who have invested in their post-graduate education. Remember, many people who obtain law degrees could obtain other advanced degrees with the time and money they are spending in pursuit of a J.D. Whether it’s a Ph.D. program or a master’s degree, formalized or informal training, many people who are willing to invest three years in legal education are also in the position to invest in other post-graduate training. Rare is the person who says, “Oh, I could go to law school OR I could just sit on my BA in English and teach high school for the rest of my life.”

It’s also useful to ask whether or not J.D. holders will actually get a job, any job, in this economy. Writing on DealBook, Merritt’s colleague at Moritz, Professor Steven Davidoff, frames the debate about law school value this way: “Will the recent turbulence persist, or will the historical data win out?” If you think that the “new normal” is just representative of another down cycle in the market for legal services, then looking at historical data becomes more defensible.

Steven J. Harper, author of The Lawyer Bubble (affiliate link), looks at just that question on Am Law Daily. He argues that the market is broken:

In a properly functioning market, reduced demand would prompt suppliers to cut output in search of equilibrium. But the legal profession is anything but a functioning market. In fact, it consists of several distinct and dysfunctional markets.

For example, there’s plenty of unmet demand for lawyers on the part of people who can’t afford them, and reduced federal funding for the Legal Services Corporation has only exacerbated that problem. So has the rising cost of law school tuition and the resulting explosion of student debt. Over the past 25 years, law school tuition increases have far outpaced the rising cost of other forms of higher education.

In another segment of the market, demand for corporate legal work has remained flat for years. But law school business models generally have focused on filling classrooms, regardless of whether students will ever be able to get the high-paying jobs they need to repay their six-figure educational loans. Because most tuition revenue comes from federally guaranteed loans that survive bankruptcy, schools have no financial incentive to restrict enrollments — that is, until they run out of applicants.

Law professors seem reluctant to admit and deal with the fact that law school tuition has reached historic levels in total cost that are disproportionate to anything we’ve seen before. Tuition is up in absolute terms, it’s up relative to inflation, it’s up relative to expected lawyer salary, and it’s up compared to other kinds of higher education. The tuition is too damn high. To look at the value of legal education without addressing these fundamental points misses the entire problem.

Research like Merritt’s should point us in the right direction. In this economy, the suggestion that law school is, on average, a good investment, should sound ridiculous to every serious person who is concerned with the realities facing prospective law students. Instead, we should be looking at micro-arguments. The question isn’t whether law school is a good decision for most people, the question is whether law school is a good investment for you, given your particular circumstances.

Do you live in Arkansas? Would you like to practice there? How much will it cost for you to go to school there? Can you make a living servicing the clients that are available in that market? These are the questions that prospective law students should be asking themselves before coming to law school, and the legal academy should be producing research geared to helping them make that micro-decision. It’s entirely possible that a person should get an Arkansas – Fayetteville J.D. to practice family law in their community as opposed to a Ph.D. in philosophy from the same school. But the micro-factors at play in that decision probably involve a prospective law student working closely with a law school officer, and maybe a pre-law advisor, coming up with a plan of action that makes sense.

Are law schools interested in doing that hard work? Or do they just want the next carpet-bombing campaign they can run to try to keep applications up? Do law schools want people who have actually thought through what they want to get out of legal education, or do they just want people showing up on a wing and a prayer, hoping that it’ll all work out? Does Arkansas want people showing up on campus because they’ve researched the post-graduate employment market in the area? Or do they want people who are there because it’s ranked a meaningless eight spots higher in the U.S. News Rankings than LSU?

Every law school should be able to muster one argument about why a certain type of student should go to their specific school. Make those arguments. Contribute to the knowledge that real people need in order to make actual decisions about their future professional and financial livelihoods, as Merritt and Harper do here.

But leave the general “it’s just always good to get a law degree” crap to the dustbin of history. Too many recent graduates have already paid the price for such hyperbole.

New Salary Data: Arkansas Law Schools [Law School Cafe]
How — and Why — the Lawyer Bubble Keeps Growing [Am Law Daily]

Earlier: Another Study Offering Misleading Statistics On The Value Of A Law Degree

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