Over the next several weeks, Veritas Prep will be running an occasional series on the increasingly popular JD/MBA. We added the JD/MBA Admissions Consulting service last fall in response to the lack of information that currently exists about this versatile grad school option and will be running this series to help people decide whether this is the right degree program for them.
We will start by examining the financial considerations associated with the degree, as the analysis is pretty straight forward and of obvious importance to prospective students.
JD vs. MBA students. From a financial standpoint, a JD/MBA often makes more sense for a law student seeking to add the MBA than vice versa. This is true for a simple reason: law school is a longer program. Since most JD/MBA programs are four years in length (the most notable exceptions are Northwestern, Duke, and Penn – all offer three-year programs), it is only one extra year for a law student, yet it is double the length for an MBA student.
Pros. For an MBA student, the financial advantages to a JD/MBA are sometimes hard to identify but it usually comes down to versatility. A JD/MBA may not increase immediate earning power, but it will provide some security in a recession economy. Lawyers are seeing bonuses minimized and salaries frozen, but for the most part they are keeping their jobs. “Legal” is often the last budget item to get cut. Therefore, it can be quite comforting to have a JD in a time when Wall Street banks are transforming into nationalized institutions, right down to the government jobs. Furthermore, a JD/MBA offers more flexibility with regard to emerging industries. An example of this would be the increased role that financial regulation will have in the American work force in the coming years. There is perhaps no greater educational path to working in regulation or corporate governance than a JD/MBA.
On the law school side, the benefits are more immediate and more tangible. Most top law firms (notable exceptions include: Cravath, Paul Weiss, and Latham Watkins) pay a JD/MBA bonus that is equitable to a low-level federal clerkship bonus ($15K-$30K), and many will start an incoming associate with a JD/MBA at a second-year salary. (Note: very few firms will consider you as a second year associate for partner track simply for having a JD/MBA, which distinguishes it from a clerkship “bump”.)
Cons. The financial downside to a JD/MBA is fairly obvious: the increased cost. A four-year program requires staying in school for at least one more year (two if you are an MBA student), while three-year programs feature higher annual tuition rates due to the summer coursework. However, this is only part of the equation. You also need to account for the lost earnings during that additional year of school. Many people use the wrong calculus here, adding in housing and living expenses (you are going to have to pay for those things whether you are in school or working), but ignoring the wages they fail to garner. A graduating law student going to a BigLaw firm is likely to earn between $140K and $160K as a first year associate – a salary that is lost with an extra year of school. Therefore, the accurate cost of adding an MBA via a fourth year is the tuition, plus the lost year of salary.
The main financial consideration for someone interested in a JD/MBA is to determine whether the long-term cumulative benefits outweigh the known costs of staying in school. And a big takeaway here is that three-year programs are clearly superior to the four-year variety under a purely financial analysis. Of course, there is far more to the equation than simply examining finances and those other considerations will be the subject of future blog topics in this series.
For those interested in learning more about JD/MBA programs, exploring whether the degree might be a good fit, or looking for assistance with a JD/MBA application, please explore our JD/MBA admissions consulting services.