Money

The Associated Press reports today that the indebtedness of over 37 million American graduates now tops $1 trillion. That’s more than the total American debt load from credit cards. It’s more than the debt load associated with car purchases. And somewhere there is probably some politician touting how college is now “affordable” for every child.

And, as usual, the plight of law students in debt is a great case study in how debt is crippling a generation’s ability to generate wealth…

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Jordan Graham and Cody Johnson

* Scared of an audit, were we? With the unsealing of the case against Dewey’s former finance director comes greater insight into what was really going on behind the scenes at the failed firm. [DealBook / New York Times]

* The American Bar Association is willing pay up to $15,000 to organizations that match unemployed law grads with jobs to serve the legal needs of the poor. So, how much do the poor law grads get paid? [National Law Journal]

* Tenure may be “under fire,” but law professors are fighting back — and hard — because law school deans seem unwilling to speak up on their behalf. Let’s face facts though, tenure isn’t going anywhere. [Forbes]

* It figures one of the faces of America’s $1 trillion of outstanding student loan debt is a lawyer. Hey, heavily indebted lawyers make great headlines and even better first paragraphs. [Big Story / Associated Press]

* Jordan Graham, the newlywed who pushed her husband of eight days off a cliff, was sentenced to serve 30 years in prison. Protip: an annulment would’ve been a better option than second-degree murder. [CNN]

Here’s a sentence from a recent Seventh Circuit opinion:

[T]his case shows every sign of being an overzealous prosecution for a technical violation of a criminal regulatory statute — the kind of rigid and severe exercise of law-enforcement discretion that would make Inspector Javert proud.

This was a sentence from the dissent.

Amazingly, though, the majority voted to reverse the conviction. Judge Sykes, who authored the dissent, would have affirmed the conviction — though, presumably, not because she thinks a Javert-like prosecution is a model that the Department of Justice ought to aspire to.

It’s an odd day when such strong language appears in an opinion that supports a court of appeals affirming a district court decision. And this case, United States v. Abair, is odd. (And thank you, Professor Volokh, for pointing the case out!)

Why is the case odd?

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Yesterday, we brought our readers some “startling” statistics about law student debt levels. It seems that average indebtedness for law graduates increased by more than $50,000 between 2004 and 2012, with a typical law student saddled by about $140,000 in loans.

In fairness, those statistics probably weren’t all that startling to our readers — many of them are heavily indebted themselves. In fact, we know that many of them are carrying debt loads that surpass even that six-figure number.

Which law school graduates have the most debt of all? U.S. News has a ranking for that…

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I think we’ve long known that law is a refuge for people who are afraid of numbers. People who are good at math don’t borrow hundreds of thousands of dollars for a shot at winning the bi-modal salary distribution lottery and a job that they’ll most likely hate. I don’t think we needed a longitudinal survey to show that.

But the National Longitudinal Survey of Youth also found that lawyers are more likely to come from relatively rich families, which does surprise me.

Studying law is hard, and your financial success is somewhat directly tied to the amount of hours you work. A banker can earn money in his sleep. A lawyer has only 24 hours in a day to bill. If your family makes a lot of money, aren’t you supposed to get an anthropology degree and work for an NGO? Why would you slum it with the social climbers trying to get into the upper middle class, one deal sheet at a time?

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Some of the study’s more eye-popping statistics pertained to law school students, whose job prospects are famously declining. The level of indebtedness for this group rose by more than $50,000 from 200[4] to 2012, with the typical law student now owing $140,000, the study found — a jump that’s unprecedented in any other field, including medicine.

Molly Hensley-Clancy of BuzzFeed, discussing a recent report by the New America Foundation about the student debt crisis.

As we noted in Morning Docket, there’s a new survey out about corporate America’s legal spending in 2013. As noted by Am Law Daily, the LegalView Index “is based on actual dollars paid by clients, not on surveys of law firms” — so perhaps it’s more reliable than many of the other studies.

What does the survey say? Here are some highlights:

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It’s one thing to say that you bill at $200 or $500 or $1,000 an hour; it’s another to actually collect those fees. Every time a client fails to pay a bill, you’re effectively discounting your overall rate. And while writing off $500 here or there may not seem like much, over the course of the year it can amount to several thousand dollars – which doesn’t take into account the added cost of chasing down clients to collect from them.

Of course, the best way to avoid getting stiffed is to obey Foonberg’s Rule: Get the money up front. Unfortunately, sometimes, you can’t predict the full cost upfront – and if the expected bill is mid-five figures or more, a client simply may not have that kind of money all in one place. Moreover, taking payment up front won’t guard against a client asking for a refund down the line if you haven’t vetted the client properly. So beyond upfront payment, here’s a list of tips to avoid getting stiffed:

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Juan Monteverde and Alexandra Marchuk

Last week, we wrote about lawyers leaving Faruqi & Faruqi, the litigation boutique that’s locked in an ugly legal battle with a former associate, Alexandra Marchuk. Marchuk’s lawsuit accuses F&F partner Juan Monteverde of severe sexual harassment and alleges that the firm’s leaders turned a blind eye to his misconduct.

We asked our readers for more information about the recent Faruqi departures. Well, ask and you shall receive. We have the details on the lawyers who left — as well as info about how Faruqi is looking for laterals, and how much it pays them (hint: not enough)….

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Biglaw firms don’t need to scam people. Or do they?

I did find a law firm in Denver. It’s called Gibson and Dunn, legitimately. When I called Gibson and Dunn, they said that I was their fifth call in that two-day period of other people who had called them and asked them why they were being accused of criminal charges.

– Michael Kleczka, explaining his communications with the Denver office of Gibson Dunn & Crutcher after his son received a call from the “Gibson Dunn Law Firm” threatening him with arrest unless he paid $1,200 immediately.

(A Gibson Dunn spokesperson stated that the calls are not coming from GDC and that the firm has reported the scam to the authorities.)

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