Last week, I got a letter in the mail from my law school. Printed on very nice, heavy-weight paper, the law school was politely informing me that tuition was going up this year, yet again. They made sure to clarify that they were not increasing at rates much worse than other schools, which isn't saying a lot when some California students are looking down the barrel of a 60% increase. Even still, the typical rate increase around the country is sitting around 8%.
Every day, it seems like I hear some other unfortunate soul saying that they are going to law school. Without fail, I tell them to forget about it and find a real job. And, without fail, every single one looks at me like I am an idiot and then promptly signs their life away to Sallie Mae. That bitch is Satan. No one believes me, so I needed a way to prove it. I am an economics major trapped in law school with a bunch of people that cannot tell the difference between a profit margin and compounding interest, so I figured I would do the leg work for them. So, for a few hours over the last week, I put together some cashflow projections to assess how awesome law school is. The results floored me.
The results tell the story of two friends, Larry and Carl. Larry and Carl went to college together. Both were bright, business-minded guys that were very, very frugal. Carl left college and got a typical job, making a typical salary of $46,000 (the average salary for college graduates last year). Larry was more ambitious and decided he wanted to go to law school. Larry thought Carl was an idiot when Carl said Larry was an idiot for going, but they both remained fast friends. When Larry got out of law school, he took a job at a mid-sized firm making $60,000 his first year. Throughout their lives, Larry and Carl lived next to each other in similar houses, got yearly 5% raises, bought the same things, invested in the same things, got married at 30, had Child 1 at 35, and Child 2 at 40. Eventually both of them retired at 65.
Larry's law school decision ended up making him more money. But not a lot. After it was all said and done, Larry passed Carl's net worth when he was 46 years old. At retiring age, Larry was still worth only $40,000 more than Carl, an average of less than $1,000 per year since they were 22. For that $1,000 a year, Larry worked 60 hour weeks to Carl's 40. Larry developed an alcohol problem that will cut short his retiring years due to liver disease. Carl saw more of his kid's baseball games, while Larry spent more time on the phone with Sallie Mae trying to refinance his loans. Oh yeah, and neither one of them ever paid taxes. There goes that advantage...
The fact is, for 95% of people, law school is a bad choice. The hours suck, the stress is overbearing, and the job isn't even that fun. I heard a statistic one time (fyi, I have never been able to confirm it, so take it with a grain of salt): 10% of people that attend law school will still be practicing 10 years out. A retention rate like that makes Hiroshima's death toll look favorable. Very, VERY few people will ever be the one to get the 6-digit starting salary, be the international legal advisor to the stars, or win the million dollar settlements. In fact, for most people that attend law school, you will be getting paid slightly better than your non-lawyer friends, for the sole fact that you have $92,000 in debt kicking your ass for as long as Sallie Mae has a collections department (and they don't look like they'll be scrapping that anytime soon).
But why to we still go? I'll tell you why I went to law school: money. Plain and simple. I could say all I wanted about helping people, and all that crap, but lets face it, working at a soup kitchen won't keep you from eating there later on. I heard that one anecdotal story about that one friend of mine that had her house paid for with her signing bonus, and I had lottery fever. Never mind the fact that she blasted out #1 at a top-tier school and was on a first-name basis with half the named partners, I could do that, all while going out 5 nights a week.
Yes, of course I was an idiot. Fools and their money are easily parted. Fools part with money much more easily when Sallie Mae gives it to them for filling out a simple form. She comes back with a vengeance.
So why do lawyers let law schools fleece students for home-mortgage-sized debts? As much as lawyers love to say they love helping people, they are no different from me. They want money, and they have loans to pay off as well, so they want to charge as much as they can. They can't very well do that if there are thousands more lawyers out there competing against them, so they increase the requirements to practice. The United States is the ONLY COUNTRY IN THE WORLD that requires a doctorate for lawyers. In fact, the three countries with legal systems very similar to the US (UK, Canada, and Australia), only require a bachelors degree, which typically takes 5 years, instead of 7 here. In fact, it used to be the same way in the United States. Hell, Lincoln was a lawyer and he never even went to college, because back then you could join the profession through apprenticeship. It was not until the two powerful interest groups of the American Bar Association and the Association of American Law Schools pushed for a 3-year post-graduate course requirement did the American legal landscape change, and it never looked back.
Things have come to a head at long last. A century of increasing requirements on becoming lawyers has choked the legal labor pool. There are half as many lawyers per capita than there were 20 years ago. The ABA (yes, that one) is committed to "expanding access to legal services," but refuses to consider changes to allow more lawyers to enter the workforce at lower cost. Meanwhile, law schools have jacked up the prices to attend, and now students are leaving school with mountains of debt. Those mountains of debt were sustainable because of the huge salaries that were being doled out at even mid-sized firms until recently. However, the Great Recession has set off a nuclear blast in the legal market. Some large firms no longer have the money to afford their potential new associate's debt load. New lawyers do not have jobs, and are having to defer loans, stacking up their principle to the tune of 8% interest (a rate that is twice the rate for a mortgage). In fact, some lawyers now get debt-forgiveness if they work specific government jobs that pay insanely low salaries, but those jobs are filled to the brim with applicants. Therefore, most new lawyers are looking at unemployment, or taking a job in the "sweet spot": the range of income where they cannot pay off their loans, but aren't eligible for loan assistance.
And to top it off, law schools are still increasing their tuition at 4 times the rate of inflation.
So, to all you people that look at me like I am an idiot when I tell you not to go to law school, YOU are a shit-for-brains punk if you think you have the system beat. Take it from someone that played that game and lost. There are plenty others like me. Einstein said the definition of insanity is doing the same thing over and over and expecting different results. He was smart enough not to go to law school.
[I have posted the cash flows below if you're interested.]
