Monday, October 25, 2010

Is Law School a Good Investment?

Yes, if the new lawyer’s salary is $65,000. So says Northwestern Law Dean David Van Sandt. Two law professors think the break even point may be higher. With higher tuition rates and an ongoing recession, they also predict that less prestigious law schools may close. For a report from the ABA Journal Online, click here.


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As a thirty-year (now retired) lawyer, graduate of a Tier 1 school, I would say that determination of the answer would require imputation of a value to "hedonic" or "psychic" returns, which cannot be determined with any accuracy until a career is over.

Viewed by conventional financial analysis, weighing only the present value of opportunity costs and out-of-pocket costs against the discounted present value of reasonably expectable future earnings, the answer for most propsective lawyers is probably that borrowing substantial sums to attend law school is unwise.

It seems to me that people considering law school should first ask themselves this: would I pay $200,000 for a job? Surely, many people would not. So, perhaps the second question they should ask themselves is: would I pay $200,000 for the mere acquisition of a license that will allow me to seek a job, with no guarantee of a job? Perhaps fewer would answer "yes" to this question. So perhaps the third question might be: would I spend $200,000 to acquire a license if I were guaranteed a job, without assurance of how much it would pay or how long it would last? The fourth question should be: will I spend $200,000 for a license to get a job and a lifestyle I know nothing about, might pay me less than I need or want, but might hate?

Some people think that high risk yields high return. This is a dangerous way to think, as exemplified by people who go to casinos and gamble more than they can stand to lose. But, such people at least have some understanding of the parameters of the games they gamble on.

Prospective lawyers--unless they are the children of lawyers--rarely have any idea of the parameters of the "lawyer game". They don't understand what legal work itself entails or that being able to do the work does not assure that one will make a good living; they don't know the importance of possessing the interpersonal skills required to acquire clients; they have no idea of the pressures imposed by clients, courts, and other lawyers working in an adversarial system; and they have no inkling of the disciplinary and legal constraints imposed on lawyers. They usually haven't the foggiest notion of the most important fact about practicing law: it is a business, and an expensive business to engage in.

Law schools are not in business to teach realities of life in "the law". They exist to give law proessors a place to go to work. Most law professors, however "brilliant" their resume makes them appear, are refugees from the realities of the legal life. Most did not practice long, and few ever had sole responsibility for delivering an outcome to a client. Consequently, most have no idea how to "think like a lawyer". So, they cannot teach anyone how to "think like a lawyer". Only hard experience teaches that, and many lawyers never acquire it.

Life in the law has only one predictable reward: unceasing challenge, often compounded by frustration. If one does it only for the money, there are much easier ways to make much more money than most lawyers earn.

Posted by: Michael Baechle | Jan 10, 2011 6:42:40 AM

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