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Law School Is Not A Stock: It's A Very Expensive Lotto Ticket

Above the Law v. Slate law school deathmatch, round 3.

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Elie here. Everybody wants a deal. Everybody wants to “beat the market,” and the internet makes us think that we can. If a baby with an e-Trade app can make money, why can’t you? Buy low, sell high: I’m sure I read that on a bumper sticker somewhere, or maybe in the New Yorker.

Increasingly, the internet thinks it’s identified just the right undervalued asset to snap up at a discount: legal education. The decline in law school applications has been sharp and truly shocking to some. It doesn’t make sense that a law degree would suddenly be much less valuable now than it was 5 or 10 or 20 years ago. The value should rebound. The world still needs lawyers. And if you haven’t noticed, or just disregarded, long-term structural changes in the market for legal services, the fact that every law dean will tell you that the market rebound is right around the corner gives you more confidence in your logical assessment. It’s not like every law dean in the country would lie about the value of their product, right?

We can and will continue to debate the likely future value of a legal education. But can we dispense with the notion that purchasing full-price legal education right now involves “buying low”? You are not buying low, you are buying at historically unprecedented heights. Nobody would put “Buy high, hope to sell at fair market price in three years” on a bumper sticker.

And nobody should be putting that on the internet either….

For the past ten days, Above the Law has been beating back the groups of people wetting themselves over the latest NALP numbers on class of 2013 legal employment. The report contained some promising numbers, but nothing that should change the fundamental calculus of a person considering taking on massive debt to go to law school. Even David Lat, the most optimistic member of our crew, said: “Things aren’t back to the glory days, and maybe they never will be, but they are getting better.” Fine, an optimist says “things are getting better,” and a pessimist would say “but a lot of people are still f**ked.” Whatever.

But that cautiously optimistic approach wasn’t good enough for the internet. The Wall Street Journal blared: “Big Law Firms Resume Hiring” — which is true in the same way that “Blow Jobs Resume” would be true if your spouse finally gave you one on your birthday. Slate fell over itself with “Apply To Law School Now!” — as if not applying next year(!) might cause you to miss out on the glorious hiring prospects the piece predicts.

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Joe Patrice responded to that article emphatically. And after various shade was thrown between me, Joe, and Slate writer Jordan Weissmann on Twitter, today Weissmann is out with “Now Is a Great Time to Apply to Law School.” If nothing else, I can now tell Dr. Lecter that the lambs do not in fact stop screaming just because I’ve saved my fair share of mutton.

I’ll let Joe offer a point-by-point rebuttal to Weissmann on the next page. All your favorite law school tropes are there: My rosy job predictions are science while yours are just predictions, the bi-modal salary distribution curve won’t stop me from talking about median salaries, Michael Simkovic (whose paper satisfies the Godwin’s law of legal education debates).

But I want to focus on Weissmann’s — and don’t act like he’s the only one — flawed premise:

Right now, law school looks like a stock that crashed too far after a panic, and is suddenly a bit undervalued. It’s a good time to buy.

No. Everything in those two sentences is wrong:

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  • Law school is not like a stock.
  • If you think the crash in law school applications is temporary, now might be a good time to BUY A LAW SCHOOL, not buy the education on the theory that you’ll be good as long as nobody else gets the memo.
  • There wasn’t a panic. People aren’t “panicking” when they say “this thing costs more than it’s worth.”
  • In fact, the “panic” move is to… BUY NOW, as opposed to waiting to see if the market rebounds or the cost comes down.
  • “Undervalued”? Please show me the person in the class of 2014 who wishes he had paid MORE for the slightly improved opportunities his class might receive, so I can shoot him before he breeds.
  • It’s never a good time to “buy” something other people are giving away for free. People paying for law school right now are subsidizing smarter classmates, who get scholarships.

Trying to apply pseudo-investment strategies to law school is always how people get themselves in trouble. You can’t look at “the market” for legal education without noticing a number of market-busting factors: the consumers are at a huge informational disadvantage versus the sellers, the price is unnaturally inflated by government-backed loans, those debts cannot be discharged through normal bankruptcy procedures, it’s hard to assign a monetary value to the three years of opportunity cost you are risking. It’s all well and good to say that law school is “an investment… in yourself,” but don’t let the cliché obscure the fact that investing in education does not follow the rules of regular financial assets. You might reap rewards far beyond what can be accounted for on your taxes. You might meet your financial obligations and still be crushed in despair. “Buy low, sell high” formulations are meaningless when you don’t know what you are buying and have no clue what you are willing to sell.

Law school isn’t an “investment” like buying a stock, so much as it’s a gamble like buying a lotto ticket. If you want to be lawyer (and I’m not even going to waste everybody’s time on people who go to law school, but don’t want to be a lawyer because somebody told them “you can do anything with a law degree”), you have to buy a law school ticket in order to play. Going to law school is gambling with your personal and financial happiness. May the odds be ever in your favor.

Now I call the gamble a lotto ticket, and Weissmann thinks it’s more like playing craps. Fine, doesn’t matter. Everybody is going to believe whatever they want to believe regarding their own personal odds, and Weissmann won’t be around to comfort you if all those rosy scenarios come crashing back to reality.

All I’m trying to say is — and it’s amazing we live in a world where this needs to be said — DON’T TAKE OUT A LOAN TO GO TO THE CASINO. Don’t gamble on credit. Don’t take money you don’t have and put it all on black. THAT IS DUMB. You should call a 1-800 helpline if that makes sense to you.

At least not at these prices. If you want to spend a dollar or two on a lotto ticket, that’s fine. I mean, it’s still dumb, but it’s not life-altering dumb. But if somebody tells you, “now is a great time to by 50,000 lotto tickets, every year for three years because NOBODY else is doing it,” you shouldn’t say “wow, sounds like a deal!” You should say, “hmm… I wonder what everybody else knows that I don’t.”

I think I’ve done enough of a close read of two sentences. Joe… did you actually read this thing?

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