The Law-School Scam

The Atlantic:  “For-profit law schools are a capitalist dream of privatized profits and socialized losses. But for their debt-saddled, no-job-prospect graduates, they can be a nightmare. . . . lorida Coastal is one of three law schools owned by the InfiLaw System, a corporate entity created in 2004 by Sterling Partners, a Chicago-based private-equity firm. InfiLaw purchased Florida Coastal in 2004, and then established Arizona Summit Law School (originally known as Phoenix School of Law) in 2005 and Charlotte School of Law in 2006.”

See also “The Canary in the Law School Classroom.”

Ripping Off Young America: The College-Loan Scandal

Rolling Stone: “The federal government has made it easier than ever to borrow money for higher education – saddling a generation with crushing debts and inflating a bubble that could bring down the economy. . . . But the dirty secret of American higher education is that student-loan interest rates are almost irrelevant. It’s not the cost of the loan that’s the problem, it’s the principal – the appallingly high tuition costs that have been soaring at two to three times the rate of inflation, an irrational upward trajectory eerily reminiscent of skyrocketing housing prices in the years before 2008. . . . Tuition costs at public and private colleges were, are and have been rising faster than just about anything in American society – health care, energy, even housing. Between 1950 and 1970, sending a kid to a public university cost about four percent of an American family’s annual income. Forty years later, in 2010, it accounted for 11 percent. Moody’s released statistics showing tuition and fees rising 300 percent versus the Consumer Price Index between 1990 and 2011.”

Starting Salaries For Law Grads Drops Significantly

ABA Journal:

New law grads in private practice are no longer taking home median paychecks in the six figures.

The erosion in BigLaw jobs is depressing the salaries for all class of 2011 law graduates, according to new statistics from NALP–The Association for Legal Career Professionals.

Law grads from the class of 2011 are earning median pay of $60,000, a 5 percent drop from 2010 and a 17 percent drop since 2009. Average pay is $78,653, a 15 percent drop since 2009. The figures are for grads who found full-time employment in jobs lasting at least a year.

The drop in starting pay is even more pronounced when only private practice jobs are considered, according to a press release. Median pay for 2011 law grads in private practice is $85,000, an 18 percent drop from 2010, when the median was $104,000, and a 35 percent drop since 2009, when the median was $130,000. Average pay in private practice is $97,821, a 15 percent drop since 2009.

Record Low Number of Law Grads Have Job Requiring Bar Passage

ABA Journal:  “New statistics from NALP paint a bleak picture of the job market for 2011 law grads.

The overall employment rate nine months after graduation was 85.6 percent, the lowest it has been since 1994, according to a NALP – The Association for Legal Career Professionals press release. But the employment rate doesn’t tell the whole, dismal story.

Among law grads whose employment status was known, only 65.4 percent were in jobs requiring bar passage, the lowest percentage ever measured by NALP. The number has fallen nine percentage points since 2008. Only 60 percent were working full-time as lawyers in jobs that required bar passage.”

ASU Plans To Create Law Grad ‘Residency’ Program

ABA Journal:  “Arizona State University’s Sandra Day O’Connor College of Law isn’t the first to consider helping new graduates hard-hit by the dismal legal economy establish their own law firms.

But it’s hoping to do so in a bigger way than others than other law schools have previously done.

Dean Douglas Sylvester hopes to create an affiliated program akin to a medical residency for new graduates at what is being billed as the nation’s first large-scale nonprofit law firm for training attorneys, the National Law Journal (reg. req.) reports in an article reprinted in the New York Law Journal.”

Can Law School Be Made Affordable?

New York Times:  “The economics of legal education are broken. The problem is that the cost of a law degree is now vastly out of proportion to the economic opportunities obtained by the majority of graduates. The average debt of law graduates tops $100,000, and most new lawyers do not earn salaries sufficient to make the monthly payments on this debt. More than one-third of law graduates in recent years have failed to obtain lawyer jobs. Thousands of new law graduates will enter a government-sponsored debt relief program, and many will never fully pay off their law school debt.

How did we get into this mess? And how do we get out?

Two factors have combined to produce this situation: the federal loan system and the American Bar Association-imposed accreditation standards for law schools. Both need to be reformed.”

Law Degree Comes with $150,000 of Debt & Maybe No Law Job

Salon:  “Approximately half of the 45,000 people who will graduate this year from ABA-accredited law schools will never find jobs as lawyers. (The Bureau of Labor Statistics estimates that over the next decade 21,000 new jobs for lawyers will become available each year, via growth and outflow from the profession.)  Most of those who do find jobs will be making between $30,000 and $60,000 per year.  People currently in law school are going to graduate with an average of $150,000 of educational debt. This debt will have an average interest rate of 7.5 percent, meaning the typical graduate will be accruing nearly $1,000 per month in interest upon graduation”

The Debt Crisis For Law School Graduates

Tax Prof Blog:  “Approximately half of the 45,000 people who will graduate this year from ABA-accredited law schools will never find jobs as lawyers. (The Bureau of Labor Statistics estimates that over the next decade 21,000 new jobs for lawyers will become available each year, via growth and outflow from the profession.) 

Most of those who do find jobs will be making between $30,000 and $60,000 per year. 

People currently in law school are going to graduate with an average of $150,000 of educational debt. This debt will have an average interest rate of 7.5%, meaning the typical graduate will be accruing nearly $1,000 per month in interest upon graduation. Unlike almost every other form of debt, these loans cannot be discharged in bankruptcy.”