Monday, September 24, 2007

Law Firm Salary Distributions, Part 2

The Wall Street Journal's Law Blog had a good post today entitled The Dark Side of the Legal Job Market. It concerns law firm salaries and the disparity between the top of the class and the rest of the class--and also between top schools and regional schools. The gist is that the top grads get great salaries, but the rest don't--and that when this is combined with mounting student debt loads, it's a structural tension that will have to be resolved in one way or another. In other words, the message is that things can't go on as they are now, and that changes may be substantial.

I blogged about law grad salary disparities in another recent post. As I discussed in that post, these figures have interesting implications for the future of law schools beyond mere graduate salary distributions.

When reading the WSJ Law Blog post above, bear in mind that it blends two points that are actually distinct:

1. Grads of top law schools tend to get more of the "Big Law" (read: Big Money) jobs.

2. Top grads at any law school tend to get more Big Law jobs than their classmates with lower class rank.

In other words, if you go to a national school, you have improved your odds of landing the big paycheck, but you have not guaranteed it. Conversely, if you go to a regional school, fewer people from your school will land these big jobs. But some will. These are obvious points, perhaps, but I think they are worth making, since the WSJ article jumps between the two without distinguishing them.

6 comments:

Joe Miller said...

Thanks for you post. Many law firms have not figured out that no stone can be left unturned in a globalized war for talent. By the same token, many lawyers who did not attend a top U.S. News ranked school (a ranking system that has come under increased scrutiny) and/or did not graduate in the top of their class (based on grading systems that differ vastly from school to school) accept lower paying jobs as fate. It is critical for young lawyers to continue to persevere in the face of plutocratic naysayers who insist that success is dependent upon what school you went to.

shell said...

Just some random thoughts:

The key advantage of attending a top tier law school is having the employers come to you, the student, rather than the other way around. It is not only a confidence booster, but also allows student to test the water of the legal labor market without incurring too much cost (travel, lodging) and too much inconvenience (missed lectures, less time to commit to assignments & other activities, planning the trip, etc.)

As you have pointed out, law students in lower tier schools might still be "discovered" by big law firms if he or she falls within the top percentage of the class ranking. However, it is a bit harder to secure an interview with big law firms due to lack of campus interviews and competition with big law firms.

Thus, in a lower tiered school, the ability of the Career Center staff to market students to big law firms is a key factor in increasing the starting salary of its graduates.

---------------------
And I wonder, at what point would it not be worth it to attend law school? Before I came to law school, I had spoken to two government attorneys who told me that they are still paying off their loans three years after graduation.

Does this mean that it would not be worth going to private law schools if you are not a top law student in a top law school who ended up working for non-big law firm?

There is also another problem. Let's say a student did not get admitted to top law school. He or she can decide then and there NOT to pursue a law school because he or she wants to work for big law.

But what if a student decides to take a chance and go to a lower tier law school. He or she might not know what rank he or she would be in until the end of first year.

By that time, is it too late to drop out (especially after sinking a year's worth of tuition?) What if he or she decides after the first year, he or she is interested in pursuing a non-profit or government job?

Is it worth it to continue law school when he or she can go to graduate school and work in a less competitive job market for similar salary and lesser level of stress?

What about the role of ideals? When does it come into play? Some people choose law school because they want to make money. Some people choose law school because they want to do the "right thing," whatever that means. Some people go to law school because they do not know what else to do, and law seems interesting.

If we strip aside the idealism and motivation, law school serves a training ground for people interested in particular jobs. The advantage of going to a professional school is to make yourself more marketable. By "more marketable" I mean that you want a job that pays more salary than an average Joe job.

If you are not making more than Average Joe (factoring in the stress, debts, lost income due to years of education), then it does not really make economic sense to to to law school. But how do you know ahead of time that you are not going to graduate and LAND a job that pays much more than Average Joe salary?

The uncertainty is certainly off-putting if you falls within the majority group (who are not top students in top schools). How will law school market themselves if the public (and even the legal market itself) perceive the field to be over-saturated to the point only that the best of the best are offered competitive salaries?

Gregory W. Bowman said...

Shell,

That's a lot of food for thought. Here are my random responses to your random observations:

--While I was in practice, I observed a trend of firms interviewing at fewer schools. If associates are "fungible billing units," then why not interview at 6 schools, instead of 10? It's actually hard logic to argue with. And in any event, with so much lateral associate movement after 2-3 years in practice, firms can safely presume that the people they hire probably will NOT stay with their firm, but leave instead. Which means that the more strategically important hires made by firms are lateral hires. And at that point, your school and your grades matters less than they did for your first job out of law school. I myself was not atypical in this regard: I lateraled twice (although once within the same firm).

--The question "Is it worth attending law school" is really another angle on the current higher education debate about whether "top" colleges and universities are worth the money. Should you go to a regional school instead, if you plan on working in that region of the country? I think often the answer is yes: less debt, more local contacts and a network of supportive alumni, and local market prestige that often rivals or equals national schools.

--As for loans, sadly the actual repayment time frame is more like 10 years, or more. 3 years is very common.

--Your point about grades and sunk costs is well taken. There is a good deal of educational literature on testing and evaluation, and I probably should try and post about that soon.

Benson said...

Everyone:

I have no insight to leave, but as an aspiring law student in the process of submitting applications and facing difficult decisions, I want to say thanks for the comments and information. It's really appreciated.

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