Law Schools, Money, Student Loans

Don’t You Love It When Recent Law Grads Become The Poster Child For Income Inequality?

Regular readers of Above the Law are well aware of the bimodal salary distribution curve of starting salaries for new lawyers. Lawyers understand why the curve looks the way it does: there are a few “elite” firms that essentially engage in salary collusion at the very top (don’t everybody start thanking Above the Law at once), while most lawyers will struggle to find a job in the $40K – $60K range.

When non-lawyers see this curve, they are surprised. The curve popped up on Mother Jones the other day, and author Kevin Drum called the $160K spike “pretty weird.” Then the commenters on his post — actually HELPFUL commenters who managed to weigh in without personal attacks on the author — explained to Drum why it was so.

But that’s kind of the problem: people only become aware of the bimodal salary distribution curve after they’ve been to law school (and done things like become a regular reader of Above the Law). They don’t get the information before they commit to law school, when the information could be useful. In a world without time machines, hindsight is blind.

Still, even people who have already committed to their dread fate can benefit from an understanding of history. Do you know what the salary distribution curve looked like in 1991, during the last “great” lawyer recession? Do you think the people who are charging you money to go to law school have seen it?

The Mother Jones article led me to a post from University of Connecticut professor Peter Turchin. Turchin does work in evolutionary biology and ecology, so he basically details how we’re all gonna die and how it’ll all be our own fault.

Turchin used the curve to explore the “extreme inequality” that happens because of elite competition. You’re familiar with these arguments: a widening gap between haves and have nots, Cooley grads rising up to stick Harvard grads with pitchforks, dogs and cats living together. It’s pretty sad that law degrees — long thought of as a path for upward mobility for hardworking people — now serve as a way of locking in massive inequalities between elites and everybody else. If you are not starting from a position of strength that allows you to get into the very best law schools, going to law school at all is probably an extremely bad call.

But again, you know this. What you probably haven’t seen is just how much that salary distribution has changed in your lifetime. Here are the slides:

Look on my works, ye Mighty, and despair! Just 20 years ago, the “bimodal” distribution… did not exist. The value of a law degree was more or less standardized. Getting into a law school, any law school, conferred a certain range of expected benefits. Now, getting into law school is like playing a slot machine: some will win, most will lose, others will win just enough to keep playing. A few other points in no particular order:

  • Note that the spike around $30,000 in the 90s is pretty much the same as the spike around $50,000 today, adjusted for inflation. At the low end, law school is almost exactly as valuable as it was 20 years ago… except that law school tuition has skyrocketed to the point where it is often more than double what it cost 20 years ago. Do you think law schools know they are charging everybody a lot more for the same slop? I do.
  • From Turchin: “In other words, the group of elite aspirants who have gone to the law school since 2001 have been sorted into two completely separate categories: those who succeeded in entering the top ranks of the elites and those who have failed utterly, with very few people in between.”
  • The next law professor type who wants to defend law school based on how things were when he went to law school can jump in a lake of statistical reality. The experience of a person who graduated in 1996 is irrelevant to the experience of a person who graduates today.
  • The next law professor type who wants to talk to you about the value of a law degree over the lifetime of your career is LYING TO YOU. Look at the changes we’ve seen in the market for legal services just over the past 20 years. Nobody knows what the world is going to look like 20, much less 40 years, from now. And using past historical models as a predictor for the future in this industry is stupid as we’re seeing just how radically compensation patterns have changed even in recent history. All we can know is that the people graduating today who don’t snag a top Biglaw job are starting in a massive hole. Whether or not they’ll be able to drag their way out of that hole over the course of 40 years is a guess, and not an educated one.

The social scientists find all of this “curious.” It’s fun to read the Mother Jones comments and watch people wrestle with the concept that essentially one law firm (Cravath) sets a price “ceiling” for 80 to 100 other firms, which then do not compete on price to lure “elite” graduates who view $160K as a price “floor.” But what I find a far more interesting problem is how Harvard Law School charges $52K for its suite of opportunities while New England Law School in Boston charges $42,000 for its far less lucrative range of opportunities, and people are still dumb enough to pay it. How can you look at the bimodal salary distribution curve and come to the conclusion that New England should be only $30K cheaper than Harvard over three years?

That’s why the history is so interesting. There probably was a time where it made sense for all law schools to charge relatively similar prices because all law graduates were going to fall along a tight range of economic outcomes. THAT TIME HAS LONG SINCE PASSED. Either the low-end law schools are criminally overcharging people, or the elite law schools are giving you a huge discount.

What does that mean for you, current law student or recent graduate who does not have access to a DeLorean? I think it means that you must do what all people must do who find themselves on the short end of market forces beyond their control: it means you need new skills. Your law degree was a bad investment, sorry. But instead of clutching your buggy whip and waiting for people to come back to the rustic simplicity of horse-powered transportation, you need to develop skills for which there is an actual market. Maybe you should take that plumbing course at ITT Tech. Maybe you should learn some coding skills and get to work on your killer app. Maybe you should stop throwing good money after bad in an attempt to make your law degree “pay off,” and instead figure out what the hell else you can do to make a living.

Whatever you do, you probably shouldn’t keep banging your head against the bimodal salary distribution curve in a desperate attempt to jump from one end to the other. History is against you.

Starting Salaries for Attorneys Are Pretty Weird [Mother Jones]
Bimodal Lawyers: How Extreme Competition Breeds Extreme Inequality [Social Evolution Forum]

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