Post-law school employment in the United States

Post-law school employment in the United States reflects the degree to which students who obtain a law degree after attending law school in the United States are able to find employment, and specifically able to find employment in the legal profession or another area relevant to the degree. Because of the high cost of attending law school, the ability of graduates to find employment that pays well enough to recoup that cost is a concern to prospective law students. In some cases, law schools have been criticized for allegedly misrepresenting the difficulty of finding employment.

Employment statistics and salary information

According to the Employment Summary Report prepared by the ABA's Section on Legal Education, around 85% of recent law graduates were employed 9 months after graduation, but only 57% of U.S. law school graduates who graduated in May 2013 were employed in full-time, long term positions that required a law degree.[1] This is consistent with findings in Professor Simkovic and McIntyre's study of U.S. Census Bureau data, which found that 40 percent of law school graduates do not practice law.

However, Professor Simkovic & McIntyre's study found that law graduates who do not practice law still derive substantial benefits from their law degrees—specifically, they earn more than they likely would have been had they never attended law school. Unemployment and underemployment rates are higher for similar undergraduates than for law graduates. Long term earnings data is available from the U.S. Census Bureau's Survey of Income and Program Participation, a nationally representative survey first used to measure law degree holder earnings premiums in a widely cited study by Simkovic and McIntyre.[2] The National Law Journal also compiles employment informationtracking the proportion of recent graduates working in the 250 largest law firms in the country.[3]

Brian Tamanaha, a law professor and legal theorist at Washington University, has questioned the accuracy of employment statistics provided by some law schools.[4] He notes that employment and salary information provided by law schools is based on surveys of recent graduates. This information is consolidated and made available by the American Bar Association.[1] In his book entitled "Failing Law Schools," Tamanaha concludes that because of the debt loads and job prospects facing law graduates, "Many law professors at many law schools across the country are selling a degree to their students that they would not recommend to people close to them."[5]

Labor Economist Frank McIntyre and Michael Simkovic criticized Professor Tamanaha's research, noting it had factual errors, misleading and selective citations to sources that contradicted the proposition for which Tamanaha cited them, and inappropriate and misleading uses of data.[6] However, Simkovic and McIntyre praised Tamanaha for his lively writing style and creative policy proposals.

Following these revelations, Professor Brian Leiter of the University of Chicago—an early supporter of Tamanaha—withdrew his endorsement of Professor Tamanaha's research and criticized Tamanaha's work as "badly confused."[7] Professor Tamanaha complained that Leiter was trying to "destroy" his reputation and "grind his face into the dirt",[8] but never responded to Simkovic & McIntyre's critical review of his research. The Washington Post criticized Tamanaha for falsely claiming that Simkovic & McIntyre's research only looked at average outcomes when it in fact also considered outcomes for law students toward the bottom of the distribution and still found substantial benefits to legal education.[9] Tamanaha subsequently conceded that he may have been overly focused on short term outcomes whereas Simkovic & McIntyre were looking at long term data.[10]

However, in the same post, Tamanaha stated that "For two reasons, however, I continue to believe my short term analysis is more appropriate. First, the legal employment market remains very poor (even as the general economy has improved), and economists agree that people who enter job markets during down times suffer lower lifetime earnings. No one knows when the turn-around will happen and how strong the recovery will be--the people who entered law school in 2009 and 2010 betting that the job market would improve are now struggling. Second, as Simkovic and MacIntyre acknowledge, the risks differ by individual school."[10]

Simkovic & McIntyre responded that Professor Tamanaha was confused about the current state of the employment market, which the data showed remained depressed outside of law, and that unambiguous and fundamental rules of valuation dictated that the long-term approach to valuation was the correct one.[11]

Subsequent research by McIntyre and Simkovic using U.S. Census data and "back testing" investigated differences in earnings premiums between law school graduates graduating into strong and weak economies and found that over the course of a lifetime, the differences were too small to sway the decision about whether or not law school was a good financial investment.[12][13][14][15] Even for those graduating into high unemployment and close to the bottom of the earnings distribution, a law degree still typically provided greater benefits than it cost. The second Simkovic & McIntyre study also found that current unemployment does not predict future unemployment in 3 or 4 years when those currently entering law school would graduate.[16]

Lifetime value of a law degree

According to a peer reviewed study published in the University of Chicago's Journal of Legal Studies and authored by labor economists Michael Simkovic and Frank McIntyre, a law degree increases lifetime earnings by $1,000,000 compared to a bachelor's degree.[17][18][19][20][21] This is present value, as of the start of law school, and includes opportunity costs and financing costs. After taxes, the mean present value will be around $700,000. At the median, or 50th percentile, the pretax present value is $610,000 and the after tax value is $430,000. After tuition, the median law graduate becomes around $330,000 richer. Even toward the bottom of the distribution, the value of a law degree will typically exceed its costs by hundreds of thousands of dollars.[22]

According to the United States Department of Labor, Bureau of Labor Statistics, the national average salary for lawyers in 2012 was above $130,000.[23] Salaries vary by geography, with higher average salaries in big cities—especially New York, Washington D.C., Chicago, and Los Angeles—and lower salaries in rural areas. An unpublished table produced by the U.S. Bureau of Labor Statistics shows that unemployment rates among experienced lawyers are lower than those for most high-income occupations.[24] BLS data also suggests that lawyer employment has grown slightly faster than other occupations, with lawyers comprising a growing share of the work force over the last decade.

BLS figures exclude law firm partner profits. Profits per partner at the 200 largest law firms by revenue are reported by the American Lawyer magazine in its AmLaw 100 and AmLaw 200 rankings. According to American Lawyer, profits per partner at these firms have ranged from around $300,000 at the least profitable to $5,000,000 at the most.[25]

Not all law school graduates work as lawyers. According to Simkovic and McIntyre's study of U.S. Census Bureau data, around 40 percent of U.S. residents with law degrees do not practice law.[26]

Law graduates are disproportionately represented in leadership positions in business and government.[27] The National Association for Legal Career Professionals produces an annual report summarizing the employment of recent graduates of U.S. law schools at a single point in time, 9 months of graduation. Employment at that point is typically around 90 percent, although from 2009 to 2011, the numbers were lower, at around 86 to 88 percent.[28] Approximately 2 percent of graduates were employed in non-professional jobs.[28] Approximately 75 to 85 percent work in jobs classified by NALP as "JD required" or "JD preferred", and another 5 percent work in other professional jobs.[28] A law degree increases earnings, even including those who do not practice law.[29]

Because federal tax rates are around 30 percent, and the mean value of a law degree is $1,000,000, the benefit to the federal government's budget is on average $300,000 per law student.[30] In addition, student loans to law students are profitable because of low default rates relative to other degree programs, high interest rates on loans to graduate students, and high recovery rates on defaulted loans.[31] Default rates on loans to law students were low both before and after the availability of programs such as Income Based Repayment.[32]

McIntyre and Simkovic report that the expected value of a law degree is different depending on college major[33] and economic conditions at graduation.[34]


Lawsuits related to American legal education

In 2011, several law schools were sued for fraud and for misleading job placement statistics. Most of these suits have been dismissed on the merits.[35][36][37][38]

References

  1. 1 2 http://employmentsummary.abaquestionnaire.org/
  2. ↑ The Economic Value of a Law Degree, 43 J. Legal Stud. 249 (2014)
  3. ↑ National Law Journal To Go to Law School rankings
  4. ↑ Brian Tamanaha, Failing Law Schools, University of Chicago Press, 2012
  5. ↑ Tamanaha, Brian Z. (2012-06-18). Failing Law Schools (Chicago Series in Law and Society) (Kindle Locations 3413-3414). University of Chicago Press. Kindle Edition.
  6. ↑ Michael Simkovic & Frank McIntyre, Populist Outrage, Reckless Empirics: A Review of Failing Law Schools, Northwestern University Law Review, Feb. 3, 2014, http://colloquy.law.northwestern.edu/main/2014/02/populist-outrage-reckless-empirics.html
  7. ↑ http://leiterlawschool.typepad.com/leiter/2013/07/the-economic-value-of-a-law-degree-redux-1-1.html
  8. ↑ http://balkin.blogspot.com/2013/07/leiters-contradictory-conclusion.html
  9. ↑ http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/18/ignore-the-haters-law-school-is-totally-worth-the-cash/
  10. 1 2 http://taxprof.typepad.com/taxprof_blog/2013/07/tamanaha-3.html
  11. ↑ http://leiterlawschool.typepad.com/leiter/2013/08/the-economic-value-of-a-law-degree-correcting-misconceptions.html
  12. ↑ Frank McIntyre & Michael Simkovic, Timing Law School (2015)
  13. ↑ Steven Davidoff Solomon, Law Schools and Industry Show Signs of Life, Despite Forecasts of Doom, N.Y. Times Dealbook, March 31, 2015
  14. ↑ Debra Cassens Weiss, Why time law school? Value of law degree drops only $30K in bad vs. good economy, study says, ABA Journal, Mar. 10, 2015
  15. ↑ Karen Sloan, Study: Law Grads’ Earning Advantage Seems Recession-Proof, The National Law Journal, March 10, 2015
  16. ↑ Michael Simkovic, The Perils of Prediction, Brian Leiter's Law School Reports, March 19, 2015
  17. ↑ The Economic Value of a Law Degree, 43 J. Legal Stud. 249 (2014)
  18. ↑ Steven M. Davidoff, Debating, Yet Again, the Worth of Law School, N.Y. TIMES DEALBOOK, July 18, 2013
  19. ↑ Dylan Matthews, Ignore the haters. Law school is totally worth the cash, WASH. POST, July 18, 2013
  20. ↑ Jordan Weissmann, Is Law School a Good Deal After All?, THE ATLANTIC, July 19, 2013
  21. ↑ Brian Leiter, Reflections on The Economic Value of a Law Degree and the Reactions to It, Brian Leiter's Law School Reports, July 30, 2013
  22. ↑ The Economic Value of a Law Degree, 43 J. Legal Stud. 249 (2014)
  23. ↑ United States Department of Labor, Bureau of Labor Statistics, Occupational Employment Statistics, Lawyers
  24. ↑ Tableau, Who's got the Biggest Salary
  25. ↑ American Lawyer
  26. ↑ The Economic Value of a Law Degree, 43 J. Legal Stud. 249 (2014)
  27. ↑ The Economic Value of a Law Degree, 43 J. Legal Stud. 249 (2014)
  28. 1 2 3 National Association for Law Placement
  29. ↑ The Economic Value of a Law Degree, 43 J. Legal Stud. 249 (2014)
  30. ↑ The Economic Value of a Law Degree, 43 J. Legal Stud. 249 (2014)
  31. ↑ The Economic Value of a Law Degree, 43 J. Legal Stud. 249 (2014)
  32. ↑ The Economic Value of a Law Degree, 43 J. Legal Stud. 249 (2014)
  33. ↑ McIntyre, Frank; Simkovic, Michael (2016). "Value of a Law Degree by College Major". Social Science Research Network.
  34. ↑ McIntyre, Frank; Simkovic, Michael (2016). "Timing Law School". Social Science Research Network.
  35. ↑ The Wall Street Journal (PDF) http://online.wsj.com/public/resources/documents/072012cooleyopinion.pdf. Missing or empty |title= (help)
  36. ↑ http://taxprof.typepad.com/taxprof_blog/2013/02/nlj-update-on-.html
  37. ↑ http://taxprof.typepad.com/taxprof_blog/2014/09/three-chicago-law-schools-.html
  38. ↑ http://webcache.googleusercontent.com/search?q=cache:OzBU3w89StcJ:www.nationallawjournal.com/home/id%3D1202671671262/Dismissal-of-Fraud-Claims-Against-Law-Schools-Affirmed-%3Fmcode%3D1202615432217%26curindex%3D0+&cd=1&hl=en&ct=clnk&gl=us
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