Law Firm Brain Drain (Part II)

I had started writing a reply to the comment Michael (the law school professor) wrote in my original "Law Firm Brain Drain" posting, and my response morphed into another long posting, so I'll start a new thread here instead.

First of all, thanks for your insight, Michael. I'm honored that my "Brain Drain" post has worked its way into a law school classroom discussion.

One clarification: Perhaps I'm not interpreting your comment correctly, but I never meant to suggest that graduating from law school with a lot of debt and going to Big Firm compromises or undermines ethical lawyering, or that one can practice ethical lawyering only by going into non-profit work. I believe -- strongly -- that Big Law attorneys provide a real and important service to their clients and add value that I appreciate even more now that I'm a businessperson myself (and not just a former corporate attorney). Not that I hire Big Firm attorneys — I am far from a Fortune 500 client -- but I do from time to time need the services of for-profit/commercial/business attorneys more generally and, well, God bless them. And there are people who take a lot of pride and derive a lot of enjoyment from their work at BigLaw, although I tend to think they are in the minority.

One of the messages I try to get across to law school applicants is that they are adults, that they are about to make a huge financial investment, and that they should be smart about it. There's no duress there -- no one is forcing them to take out huge loans to go to law school. There is, though, a lot of thoughtlessness involved in that decision-making, and that's why I'm trying to educate people about the financial and work-related realities of committing to law school so that they can make better and more informed choices.

I've reflected on Michael's comment, I still doubt very much that many students with substantial law school debt (or even without debt) can go straight to work for a prosecutor's office, the government, or JAG. Indeed, that's the reason so many end up paying their dues at Big Firm first. Here are some direct quotations that (again) speak best for themselves.

I asked a young prosecutor working in a major metropolitan area how his job works out financially. His response:

"A 'lifestyle job,' despite the conventional wisdom, does not mean 'few hours for mediocre pay.' 'Lifesyle' means being able to lay your head on the pillow at night knowing that you've done some good on behalf of people who need it (rather than corporations, shareholders, or fiduciaries--not that they aren't worthy parties sometimes).

But look at the salaries for prosecutors--$40,000 for rural areas, $44,000 for metropolitan areas. Do the math: $44,000 x .30 = $13,200 (federal taxes). That leaves you $30,800 after taxes -- and that assumes you have no state income tax. $30,800 is $2566 per month. Rent, utilities, groceries? Optimistically, those come to $1000. That's $1566 per month left over.

Health care/pension payments? I pay 11% of my gross in required pension payments, so let's say it's an even 10% ($4,400) per year. That's another $366 per month. Add vision, dental, life insurance, health savings accounts, and my take-home is down to $1100 per month.

So after all of those fixed costs, you still potentially have: undergraduate loans, law school loans, car payments, vacations, Christmas presents, clothes, a beer or two, and savings/retirement contributions ( if that's possible).

I think it boils down to how you interpret the 'life' the professor is describing. JAG is an option for a lot of people (I considered it), but look at what you're comparing: $150,000 (if not more) to start at Big Firm v. $45, active military service. Lots of people enjoy it, but is that really what's required to have a life with a law degree? Enlisting in the military?

The prosecuting jobs and other public service positions are attractive for a lot of people, but most of my friends were unable to do it because of the size of the loans they were facing, and/or their positions in life. One of my closest friends got married during third year of law school and was planning to have a child. If you plug "wife and child" into the $44,000 analysis above, I think the balance would break down relatively quickly.

Or take me...I want to be able to buy a house at some point this year, and I'm single, have no children, and no significant debt. I did the spreadsheet routine with my starting salary (which is about $5000 lower than the median metropolitan area prosecutor's salary) and I realized I needed a second job. Between 25-35% of prosecutors in my office have another job because they just can't afford to live without the extra income. Those are full-time workers, mind you -- many of whom have wives and husbands, mortgages, and children.

I don't know...I guess you could say that there are choices out there that allow you to make a living doing non-law firm work. The issue in my mind is the discrepancy between the law firm salary and the public service salary. While law firms are keeping miserable people onboard by jacking up the pay, public sector jobs are bleeding qualified (and loyal/devoted) labor because they can't offer a reasonable salary. Each group 'endures' something in exchange for a reward, but they are very different burdens and benefits."

So we've got prosecutors working second jobs… and not necessarily glamorous ones. Take a look at this recent Boston Globe article that profiles prosecutors moonlighting as bartenders and house painters. One guy mans a supermarket deli counter in his spare time, while another works at a funeral home. That's probably not what most law school applicants see themselves doing after they graduate from law school. (One prosecutor in the article notes that his girlfriend — a law firm paralegal — makes more than he does.)

As for JAG Corps, I talked to another recent graduate who turned down a JAG offer. His response:

"I was offered commission into the JAG Corps and seriously considered it as an option before deciding not to pursue it. Ideological motivations aside, the reality is that it is difficult for graduates of private law schools and certain public law schools to seriously consider JAG and many other public interest positions as an option upon graduation. As many know, compensation is often less than what elementary school teachers make in certain geographic regions. I was offered $39,000/year salary (first year) and a graduated housing stipend that increases or decreases according to the assigned geographic location. I did the math, and the math did me in.

After deducting taxes from the federal salary, I would be bringing home $2400 a month. While the prospect of trying cases early in my career, representing the military and therefore the interest of the American public, and having the ability to travel to myriad destinations was very attractive, I came to the conclusion that ironically enough, I would be placing myself at a financial disservice in the name of public service. At this pay rate, I could not pay off my school loans, could not afford some of the luxuries I enjoyed in college, and would have to rely on my parents for additional income. Sometimes I wonder what good I am affording to the public while representing corporations and people with deep pockets. On the other hand, I am glad that I don't have to look at my parents and ask them for money. After all, I am not a teenager."

And think tanks?

Some of the most highly paid think-tank JDs make less than they did as a first-year associate at Big Firm, even factoring in all the free think-tank lunches and fabulous benefits.

I'm also not able to find many prominent think tanks that hire JDs straight out of law school. As a think-tank insider told me: "I can't imagine that there are more than a half-dozen such spots open every year, and not at any of the good think tanks."

The JDs I am able to find at the top think tanks (doing a cursory search) all have insanely impressive resumes and experience under their belts. A sample:

Brookings has three JDs:

  • Robert Litan: Yale JD/PhD + experience in OMB and Treasury + former Deputy Asst Attorney General
  • Huge Price: Yale JD + former CEO of Urban Institute + board of F500 companies + NYT editorial board
  • Kenneth Dam: Chicago JD + Supreme Court clerkship + firm experience at Cravath + Chicago Law School professor + former Deputy Secretary at Treasury and State Depts

Center for American Progress has quite a number of JDs. A sample from just A's and B's:

  • Mark Agrast: Yale JD + Board of ABA + former practice at Jones Day
  • Jessica Arons: William & Mary JD + VA Supreme Court clerkship + former attorney at ACLU + private firm experience
  • Melody Barnes: Michigan JD + former chief counsel to Ted Kennedy + former practice at Shearman & Sterling
  • Spencer Boyer: NYU JD + clerkship at International Criminal Tribunal + former director of Georgetown's Constitution Project + former practice at Jones Day
  • Cassandra Butts: Harvard JD + former senior advisor to Dick Gephardt + former assistant counsel to NAACP

Manhattan Institute has two:

  • James Copland: Yale JD/MBA + Winter clerkship + McKinsey + board of two manufacturing companies
  • Peter Huber: Harvard JD + MIT PhD in Engineering + two Supreme Court clerkships + name partner at law firm + Forbes columnist + MIT professor

Heritage has three:

  • Edwin Meese: Boalt JD, former US Attorney General, former member of National Security Council, former law professor
  • Todd Gaziano: Chicago JD + Jones clerkship + House subcommittee chief counsel + OLC
  • Brian Walsh: Bowman clerkship + former practice at Kirkland & Ellis

Progressive Policy Institute has none.

American Enterprise Institute has two lawyers:

  • Peter Wallison: Harvard JD + former GC of Treasury + partner at Gibson Dunn
  • Ted Frank: Chicago JD + Easterbrook clerkship + experience at three Big Firms

Institute for Policy Studies has one:

  • Stacie Jonas: Yale Law School student

Perhaps Competitive Enterprise Institute or Cato hire people right out of law school (I haven't checked), but that's more public-interest work than think-tank work.

I also heard the following from a think tank insider: "Drum Major Institute just got a lot of plaintiffs' bar money for a newly-minted law school graduate to be a hack, but that appears to be a temporary position." (That DMI position is advertised at $50K).

If there are JDs who took the think tank route right out of law school and made it work with substantial law school loans, I would love to hear from them. Maybe they're out there.

Let's turn to debt coming out private vs. public law schools. (Although note that the prosecutor I spoke with above had no law school loans and is still working a second job.) My research indicates that public law school debt is between $46,000 (ABAnet link below) and $51,000 (Newsweek link below), while private law school debt is between $70,000 (ABAnet) and $78,000 (Newsweek). Those numbers don't quite mesh with the general debt studies below (quoting $84,000 in average debt), but then there's also a Chicago Sun Times article reporting on Sen. Durbin's bill to reduce debt for public interest lawyers, and his estimate of average debt for public vs. private law schools is $66,000+ and $97,000 +, respectively. So graduates of public schools have plenty of debt themselves.

Here are the links on private vs. public law school debt if anyone wants to sleuth out the numbers some more:

And studies on public interest vs. private firm salaries:

And finally: yes, there are law school loan forgiveness programs, and this link offers more details on who's offering them. (Loan forgiveness programs are also called LRAP programs.)

A note of caution: Do not assume a given loan forgiveness program is well-funded enough, or that its eligibility rules are going to be generous enough, to make a meaningful financial difference in your intended career path. Once you have an acceptance offer from a law school as well as a financial aid offer, sit down with the person who administers the school's loan forgiveness program and ask her to run the numbers for a couple of realistic scenarios. Some questions to ask:

  • At what annual salary would your loan forgiveness phase out?
  • What happens if your spouse has a well-paying job?
  • Does job X or Y count as a "public interest job" eligible for loan forgiveness?
  • What about undergraduate or other grad school loan burdens?
  • Does the program cover loans that aren't deemed "need-based" (i.e. you or your parents were deemed to have enough resources not to need loans when you first received your financial aid package, but you had to/chose to take them out anyway)?
  • Does your financial aid offer letter even specify whether your loans are deemed need-based? (If not, demand that those amounts be broken out.)

These are just some examples of things to ask. (There's a longer discussion of loans, financial aid, and loan forgiveness programs in my book.)

Bottom line about loan forgiveness programs: Do not automatically assume the program will cover your future situation, and note that public interest jobs are still awfully hard to make work financially for a lot of people, even if they graduate debt-free or a loan-forgiveness program makes all of their debt go away.