Timing Law School

March 10th, 2015 / By

Michael Simkovic and Frank McIntyre have a new paper analyzing historic income data for law school graduates. In this article, a supplement to their earlier paper on the lifetime value of a law degree, Simkovic and McIntyre conclude that graduates reap most of the value of a JD whether they graduate in good economic times or poor ones. (Simkovic, by the way, just won an ALI Young Scholar Medal. Congratulations, Mike!)

Simkovic and McIntyre’s latest analyses, they hope, will reassure graduates who earned their degrees in recent years. If history repeats, then these JDs will reap as much financial benefit over their lifetimes as those in previous generations. Simkovic and McIntyre also warn prospective students against trying to “time” law school. It’s difficult to estimate business cycles several years in advance, when a 0L must decide whether to take the plunge. And, again according to historical data, timing won’t make much difference. Under most circumstances, delay will cost more financially than any reward that successful timing could confer.

But Is This Time Different?

History does repeat, at least in the sense of economic conditions that cycle from good to bad and back again. There’s no doubt that recent law school graduates have suffered poor job outcomes partly because of the Great Recession and slow recovery. It’s good to know that graduates may be able to recover financially from the business-cycle component of their post-graduation woes. Although even here, Simkovic and McIntyre acknowledge that past results cannot guarantee future performance. The Great Recession may produce aftershocks that differ from earlier recessions.

All of this, though, edges around the elephant in the room: Have shifts occurred in the legal profession that will make that work less remunerative or less satisfying to law graduates? And/or have changes occurred that will make remunerative, satisfying work available to a smaller percentage of law graduates?

Simkovic and McIntyre have limited data on those questions. Their primary dataset does not yet include anyone who earned a JD after 2008. A supplemental analysis seems to encompass some post-2008 degree holders, but the results are limited. Simkovic and McIntyre remain confident that any structural change will help, rather than hurt, law graduates–but their evidence speaks to that issue only in historical terms at best. What is actually happening in the workplace today?

The Class of 2010

Five years ago, the Class of 2010 was sitting in our classrooms, anticipating graduation, dreading the bar exam, and worrying about finding a job. Did they find jobs? What kind of work are they doing?

I decided to find out by tracking employment results for more than 1,200 graduates from that year. I’ll be releasing that paper later this week, but here’s a preview: the class’s employment pattern has not improved much from where it stood nine months after graduation. The results are strikingly low compared to the Class of 2000 (the one followed by the massive After the JD study). The decline in law firm employment is particularly marked: just 40% of the group I followed works in a law firm of any size, compared to 62.3% for the Class of 2000 at a similar point in their careers.

A change of that magnitude, in the primary sector (law firms) that hires new law graduates, smacks of structural change. I’m not talking just about BigLaw; these changes pervaded the employment landscape. Stay tuned.

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  • Unemployed_Northeastern

    I have not yet read the latest bit of S&M, and to be quite frank, since it is above 40 degrees for the first time in what seems like several years up here in metro Beantown, I have every intention of sitting outside in a t-shirt all week. But I will remark on how very different the conclusions appear to be relative to every other study I have read concerning earnings outcomes for recession-era graduates & workers versus non-recession-era graduates & workers. For instance, we have

    – Paul Oyer, Stanford Business School, The Making of an Investment Banker: Stock Market Shocks, Career Choice, and Lifetime Earnings (surprise! A MBA from SBS, which any rational reader will agree is both more versatile and noteworthy than the normative JD, has a $6 million lifetime earnings difference between graduates of bear markets and graduates of bull markets).

    – Lisa Kahn, Yale, The Long-Term Labor Market Consequences of Graduating from College in a Bad Economy.

    – Philip Oreopoulos, University of Toronto and NBER, The Short and Long-Term Career Effects of Graduating into a Recession: Hysteresis and Heterogeneity in the Market for College Graduates.

    – Brian Clark, Duke University, The Career Prospects of Overeducated Americans.

    – Joni Hersch, Vanderbilt Law School, Catching Up is Hard to Do: Undergraduate Prestige, Elite Graduate Programs, and the Earnings Premium (even among graduates of the same elite law schools, people with elite undergrad credentials earn considerably more than their law school classmates).

    – Till von Wachter, Columbia University, Long-Term Earnings Losses due to Mass Layoffs During the 1982 Recession: An Analysis Using U.S. Administrative Data from 1974 to 2004.

    Well, I guess all those studies must be wrong or something. And all of the pronouncements that the profession is undergoing permanent structural change: calls made by international law firms, their clients, the ABA, the NALP, the BLS, senior law professors, etc, are wrong, too. It’s rather like how the handful of anti-climate change scientists insist that the tens of thousands of climate change scientists are wrong.

    Anyways, the JD must certainly be much more resilient and versatile than the garden-variety bachelors degree to have so little earnings variance in and out of recessions, as S&M posit. If that’s the case, though, why was the unemployment rate for the class of 2013 8.4% for undergrads and 14.5% for JDs?

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