Law Schools

Let’s Hope The Law School Class of 2022 Doesn’t Graduate In The Middle Of A Recession

If this happens, graduates will struggle to find jobs and their career paths might be different from the ones they envision now.

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This being the month of June, law schools are in the final phases of deciding who to accept and future law students are narrowing down which law school to attend, or to even attend at all. A few months ago, I thought that law school might not be a bad idea since most law schools are being more selective and the economy is improving.

According to the ABA, the law school class of 2018 had one of the best post-graduate employment outcomes in recent years, with 78.6 perent securing full-time, long-term, bar-passage required or JD-Advantage jobs. In other words, the “good jobs.” But there were fewer graduates in 2018 compared to earlier years, which means the job market was not as competitive. Also, some of these jobs will not pay enough to service their student loans and basic living expenses. As a recent New York Times article pointed out, these lawyers have to take side jobs to make ends meet. And others are working jobs that were not their first, second, or even twentieth choice.

But what goes up must eventually come down. And when it comes down, it sometimes comes down hard. Those who entered the job market between 2007 – 2011 know this painfully well. Offers were rescinded, layoffs were rampant, and employers were only interested in hiring those who were already working.

Many top graduates applied to jobs they would not have even looked at in a good economy (and most left these jobs as soon as things got better). Which meant that everyone else had to scrounge for whatever jobs were left.

It was a terrible time where people were forced to continue living with their parents and watch their student loan balance increase with no end in sight. I know people who graduated with $150,000 balances who now owe more than $200,000 because they have pretty much given up on paying them off.

The end result for many people who graduated during the recession was that they never got a chance to get back into the career track that they planned for. In law, your first job pretty much determines where you are employable in the future, whether you choose it or not. Employers and recruiters might empathize with your story, but as several people in the industry told me, they are not looking to hire people with a story. Your only other option is to start your own firm but as a new graduate, you don’t know how to practice and you will have trouble finding clients. I have seen people do it, so it can be done — but it won’t be easy.

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So what are the chances there will be a recession in 2022? While people talk about a recession coming soon, no one really knows. Recessions cause economic chaos because they usually come unexpectedly. But some event will be the catalyst. Last time, it was the housing bubble. What will it be this time?

Maybe Tesla unexpectedly files bankruptcy. I know this is unlikely but people thought housing prices would never go down.

Maybe investors will stop throwing money into apps like Uber because governments want to end or heavily tax and regulate the gig economy.

Maybe this trade war with China might result in a new trade alliance between the BRIC countries which will hurt the U.S.

My guess is that the next recession will come if President Trump does not seek re-election or if he is expected to lose the 2020 election. Why? I don’t think it’s necessarily because of his policies or his tweets. It’s because it will be really easy for anyone to blame President Trump for just about anything. While some people and businesses can legitimately blame Trump’s policies for their economic woes, others will use them as an excuse for their bad financial decisions and probably get a pass or at least some sympathy. And the mainstream media will be more than happy to publish anti-Trump stories which will only add fuel to the economic inferno.

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I hope the Class of 2022 does not graduate during a recession. Because if they do, they will struggle to find a job and their career path might be different from the one they envision now. If in a good economy only 78.6 percent of law school graduates can get the good jobs, imagine what the percentage will be during a bad economy. To the future law students, you should think about this while negotiating down your tuition with the law school(s) of your choice — wait, you are at least asking, aren’t you? Because you don’t get better grades by paying sticker price. And a $300,000 (and growing) student loan bill after graduation is more likely to depress you than motivate you.

Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at sachimalbe@excite.com. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.

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