The WSJ on Law School and the Recession — A Deeper Look

Law School AdmissionsLast week, Nathan Koppel of the Wall Street Journal wrote a thoughtful piece about young professionals retreating to law school as a form of safe harbor in the current economic climate. The column explored both sides of the issue, offering both reasons for and against going back to law school. While I agreed with much of it, I also felt that a great deal of analysis –- and more importantly, critical advice -– was missing from the article.

Again, I want to stress that Koppel’s take on this issue was fundamentally solid and that he presented the issue without much by way of an obvious agenda. That said, the first aspect of the column with which I take issue was his use of statistics. To put it bluntly, I believe he cherry-picked his “application increase” stats around which to build the story, citing Washington and Lee (29% increase), Yale (8%) and Texas (8%) as proof of a massive migration. However, as we wrote a while back, the ABA reported only a 1% increase in applications across the board this year. So again, I don’t think there has been quite the “retreat!” mentality that Koppel makes it out to be. Of course, that may just make the underlying question — Is heading to law school right now a good move? — all the more relevant because that small increase for this year is a harbinger of a huge increase next year. (See that same blog article for an analysis of the 2001 recession that saw a very small spike that year followed by 17% increase in 2002 applications.)

As to whether or not going to law school at this time is a good idea, I am more on the “yes” side of the fence than I am down the middle. With that in mind, here are key considerations that were either missing from the column or were not explored in great enough depth:

Safe Harbor. For starters, law school lasts three years, so the “hide out” argument could be bolstered by the fact that it gives students longer to ride out the recession. I think Koppel missed an easy chance to compare MBA students (who only get two years) and to introduce the notion of a JD/MBA degree, which provides even more of a diversified skill set and, depending on the school, can allow a student to ride out a down economy for four years. Even the most skeptical among us likely believe that things will be better four years from now — especially in the legal markets, where transactional attorneys will be in great demand once lending starts up again. In fact, when that day comes, there simply won’t be nearly enough junior and mid-level attorneys to draft all the documents that will be needed to support those deals. I could see a major corporate associate hiring boom in the next two-to-four years when lending kicks back in throughout the financial markets (commercial real estate, not so much, but that is beside the point).

New Jobs. I also think Koppel missed an “emerging industries” angle with regard to financial regulation (which would have been a perfect transition from talking about JD/MBA degrees and their value) and corporate governance. Given the clear cause of the economic crisis and the reform being called for by the Obama administration, I believe there are going to be a plethora of new legal jobs in the regulatory sector — both within governmental agencies (existing bodies like the SEC and possibly those that have yet to be formed) and within companies and law firms as well.

Alternative Career Path. One additional angle that Koppel went for in the column was some advice on how a graduating law student can prop himself up in a down job market. Not to beat a dead horse, but he missed a few things here as well. Koppel got the “elite school” thing right when he discussed the impact that graduating from a top 14 law school has on one’s prospects with BigLaw, but when he wrote about pursuing a non-legal job, he made it sound way too easy.

In fact, this part of Koppel’s article would have been the ideal place to drop in some of the soundest advice a prospective law student could ever receive: start your alternative career path while in law school. Too many law students make the mistake of assuming they can just waltz out of an elite law school with a JD and get whatever job they want, in whatever industry they want. And while a JD does signal certain things (critical thinking, strong writing skills, work ethic, problem solving) that can make a law school grad immediately attractive in particular industries such as management consulting, it doesn’t help much at all in the wide majority of industries who naively see law school as “lawyer training.” Never mind that this isn’t really true; that’s the perception.

So a law student who wants to work for an NBA team, or in business development for Warner Brothers, or for a hedge fund (or name your industry/company) can’t simply go take summer jobs at big law firms, graduate, and then send out their resumes. Yes, those summer associate gigs pay a mint, but they put law students on a straight-line path with 20-foot walls towards working at a big law firm. If a law student really wants to work for Warner Brothers, that person has to spend her summers working there for free or for cheap, so that the big guns at Warner Brothers get to know her and value her and desperately want her to work there. Then, when she graduates with her prestigious law degree, they have to pay her and position her accordingly. That is how it works for “alternative” career paths.

And I just desperately wish people would tell prospective students this reality. Maybe the Wall Street Journal wasn’t interested in that type of social good or perhaps Koppel didn’t even think of this or know about this reality, but this article would have presented a perfect opportunity to broadcast an important message.

The Money Game. The only other thing I would have put in this article is that students should be more cognizant of the financial aspects of their law school choices. With an uncertain job market at the other end of the pipeline, it is no longer a cavalier thing to take out $150,000 in debt to obtain an elite law degree. In 2004, I would have been crazy to go to Duke for $70,000 rather than Chicago for $150,000. Now, in 2008? I’d probably be crazy to do the opposite. Schools are leveraging each other right now too, so it is a good time to pay attention to trends (this year Michigan appears to be the big spender) and also to barter with the schools.

All of this signifies a sea change in the selection/enrollment process. Until now, I would have told a student to pick among the top 14 law schools in this order:

1) fit
2) rank/prestige
3) cost.

Now, under these market conditions, I would change the order to:

1) cost
2) fit
3) rank/prestige.

In my humble opinion, it is far better to go to Cornell and have $50,000 in debt than go to NYU and carry $120,000 in student loans, when it might not matter much with regard to job prospects. Either the deals are going to start happening by the time you graduate (in which case you can get a great job from either school), or they’re not (in which case you might be trouble coming from either school). This is now a major consideration. Put another way: students have to consider law school a little more like undergrad with regard to their cost versus return on investment (ROI) analysis.

All in all, Koppel’s article got some key issues out on the table and will get people talking. That’s the most important thing. I simply wish the analysis had gone deeper and that some key and useful messages would have been delivered to the confused law students and prospective law students who need that information so badly.

To get more law school admissions news and analysis from Veritas Prep, be sure to follow us on Twitter.