Kiplinger’s Personal Finance always offers great case studies of real people struggling through life’s financial pitfalls and decisions. Recent law school graduates are no different; in fact, their plight is riddled with twists and turns about how to save money, where and when to spend it and how much and by when student loans should be paid off.
In a March article, “Smart Ways To Manage Student Debt,” the reporter features a recent pharmacy school graduate making $100,000 annually with $120,000 in student loans.
Her plans are to purchase a home in Hawaii near family, buy a vehicle, and pay off her student loans within the 10-year timeframe. Experts in the article provide a few pointers that may also be applicable to recent law school graduates with new junior associate positions. The young woman featured in the article, 24-years-old, was concerned about her student loans. She wondered whether she should put the majority of her paycheck towards that debt, or do something else with her money.
Here are some of the tips provided by experts cited in the article:
- Build up savings as a “rainy-day fund” for just-in-case situations. Experts suggest a six-month reserve is smart (this goes for most people, actually).
- Consider certificates of deposit because they’re harder to tap for every-day expenses. If the money is in a six-month or 12-month CD (even though its return is still poor), the money is not easily accessible for a spur-of-the-moment getaway to the Cayman Islands.
- Another expert suggested long-term disability insurance to guarantee salary. This tip is something to research as there are many factors that contribute to a buy decision.
- Here’s what’s interesting…the author of the piece says “Because Caitlin has other financial goals, her student loans aren’t a priority.” Fascinating! Caitlin is paying $1400 monthly on a 10-year repayment plan. She can temporarily extend the term of debt to 25 years, and she can lower her monthly payment by as much as 50 percent. The other half of that payment can go towards goals like the house, a car, or a safety net.
- Two final tips from experts suggest about 30 percent of take-home pay be set aside in savings in addition to the full $17,000 contribution permitted in 2012 to a 401(K) account. (With matching contributions, she can save $6300 in state and federal taxes.
- The close of the article was the most important for those expecting high dollar student loans — use the same principle about student-loan repayment as mentioned above. Adjust the terms of debt so your monthly payment is manageable, and you can still put money away to tick off your goals.
Tips From Bruce MacEwen
Bruce agrees with the experts quoted in the story and states, “This is surprisingly sound advice, but the future is uncertain and the most important asset you have is yourself, so that’s what you should invest in first.”
Bruce suggests law school graduates should max out their 401k contribution and pay off any other loans that bear a higher interest rate than student loans. If a student is very successful and later has the money to pay off student loans comfortably, while also making other higher-priority financial investment, that’s great.
On the other hand, Bruce cautions, if you decide to take lower-paying but more psychically rewarding jobs, or suffer other unanticipated setbacks, you can always resort to the federal Income-Based Repayment plan (IBR) which limits the percentage of your income you have to contribute to servicing student loan debt and ultimately forgives them whether or not they’re repaid in full.
As you graduate from law school, your resume needs to tell your story in an accurate, professional and chronological manner. Let me emphasize the importance of chronology, too; it used to be trendy to develop resumes by topic, but recruiters prefer sequential unfolding of employment history.
There are various sections recruiters expect to see on every resume and these form the foundation of the document. Other sections you might include are “value add” and help illustrate your potential within a law firm or other place of employment.
For starters, should you add an objective statement to your resume?
There are many schools of thought on whether you need that, a summary or a profile. Let’s be clear about each of these, because they are different:
- A summary statement top lines work history; no need for that as law students don’t have much.
- A profile describes the candidate with a variety of descriptors that are subjective. Recruiters gloss over that for the most part.
- An objective statement is what’s needed; it provides recruiters with a look into your future. Where do you see yourself working? In what practice area of law? For a department, firm, or in another sector? What size of firm appeals to you? Many of these questions are answered in an objective statement. Here’s an example for nobody in particular:
Seek junior associate position at (name of firm) or (size of firm) anywhere in the U.S. as a generalist. As published writer in student law journal, blogs and other legal publications, wish to contribute writing expertise in a cross-cultural team environment.
There are several schools of thought about whether to be very specific in an objective statement and tailor it directly to a firm, or whether to be broad and craft a general overview statement. For those who wish to work harder and be smarter about seeking work, tailoring each resume to a specific firm can position you as more credible than another candidate. That said, if your objective statement is general, don’t get specific about limiting yourself to a geography or practice area. There aren’t enough jobs with your specifications to be that selective.
Employers look at objective statements to help screen candidates. If a law school graduate (is still seeking a position after third year) is absolutely certain he or she knows in which area of law they want to practice, consider specifying it. This is a double-edged sword, however, so be thoughtful about it. Your expertise may be perfect as a general associate learning law firm culture and how to practice law; if you specify a type of law you prefer, then you may not be considered.
Other Sections on a Resume
Professional experience and work history are required sections. No one expects students to have lengthy professional experience, but those with internships oriented directly to the legal industry will show better than students who graduate without.
Work history is critical, and everyone job seeking needs to show how they earn money. When I interviewed for my first position, the prospective employer had never met a corn detassler. That curious job prompted him to call me (and I got the job by the way).
Community service, church service, volunteerism, mission work, or other social service engagement provides critical information to recruiters. This type of added value shows a side of a candidate not seen by grades alone.
Also consider adding your law school clubs, groups, and other organizations. Did you write for the student law journal? Do you write a blog? Did you travel abroad to learn global legal experience? What about awards?
A resume shouldn’t be a repository for every detail of your background; however, it should depict your professional achievements as you’ve journeyed through undergrad and law school. These accomplishments help differentiate you from the thousand others vying for an associate’s position in a law firm. Frivolous activities (like winning a beauty pageant, for example) are best left off a professional resume.
Once you are secure in how you present yourself on the resume, do some research about writing that cover letter. Now that’s an art form…more to come on that topic!
Over at our big brother site, Adam Smith, Esq., we just wrote about the newly-released numbers on the Class of 2011’s employment results vis-a-vis the NLJ 250.
In February 2012 the New York-based Edison Awards Foundation selected JDMatch as a finalist in their 25th Annual Innovations & Innovators awards contest, based on the votes of 3,000 professionals from the fields of product development, design, engineering, science, marketing, and education.
We consider this an honor and thank all the dedicated and hard-working members of the JDMatch team; it’s their achievement, not ours.
To all those law students in the audience:
We invite you to take a survey asking you a grand total of three questions so we can learn more about which law firms specifically (that would be by name) and which types of law firms (NYC elite, Global, etc.) you’re most interested in.
The results will help us fine-tune our efforts as we recruit more firms to belong to JD Match, which helps all of us in the community-and yes, we’ll also share the results here when the survey’s complete.
We’ll be updating this page throughout the day – live from Time Square in New York.
9:07am – Conference kicks off with some shockingly steep graphs (up for law school tuition; down for legal industry employment).
9:11 – Keynote underway!
Impact of the Recession
– Credit market freeze dries up transactional work
– Limited counter-cyclical effect from litigation
– 5% fewer private practice jobs
– 20% drop in average salaries
– Federal clerkship applications hit record levels
– State and local government budget shortfalls
– Public interest funding crisis
Legal Employment Market
Series of graphs on distribution by “Type of Employer” and “Bar Passage Required.”
63% of reported Academic jobs are temporary. (schools getting creative to boost employment numbers)
A few interesting slides indicating the changes to the recruitment environment actually predate our current recession.
9:55am – First panel underway. A lot of talk about the bi-modal employment graph for legal recruitment.
For the first time ever, law firms are fighting over market share.
How do law firms fight for market share? No current business model outside of hiring better people along same principles.
Cognitive ability only accounts for 30% of success at complex tasks; 70% is unexplained variance.
Associates vs Partners:
Associates and Partners both focus on initiative, oral communication. But where they diverge is business sense, problem solving ability, and customer focus!
Undervalued selection factors for recruiting:
Pre law work experience
Blue/pink collar background
Law review is negatively correlated to success at Amlaw 100 firms.
10:19am – Upwards of 30% of Partners don’t start with the firm. What does this mean for legal recruiting? Some firms have found success by cutting summer programs entirely and instead optimizing post-grad recruiting for key performance factors.
How might the market change?
-lower starting salaries
-multiple tiers of associates
-move away from lockstep compensation
Don’t go to a law school that is most highly ranked. Go to a law school where you can be highly ranked. And borrow as little as possible. Panel ends.
11:20am – Employer’s Perspective Panel Commences
Great discussion of alternative recruiting approaches at corporations, medium-size and large law firms.
12:06 – In house, the pyramid doesn’t narrow as much as in large firms, creating more opportunity for a long term career path.
12:15 – Breaking for lunch
1:19 – Panel on schools commences
Schools have seen a significant change in a very small period of time.
Big difference: Career services has to teach, not just let students land on their feet.
1:29 – One of the schools’ biggest tasks is managing expectations. Only 20% will be in the top 20%.
3:45 – A lull while this blogger participated in the Student Panel.
3:46 – On to the last panel: The View from the Executive Suite
Technology is outsourcing work that probably won’t come back.
Summer and new associates are more likely to have a curiosity and appreciation for the business aspects of law firms.
People join companies and leave bosses. On the value of firm culture and team cohesion.
What would you tell someone who wants to go to law school?
-Do you want to be a lawyer?
-Why do you want to be a lawyer?
-What are the cost-benefit calculations in terms of the investment in school and return on investment?
– We’re in a fight for market share at the firm and school level
– Firms and schools both face a collective action problem
– Early movers will win the battle for market share
You know it’s bad when MainStreamMedia (outside the legal-world bubble, that is) starts talking about the depressing job prospects for lawyers.
This is basically the story of white collar job changes in the US for the past 12 months. And legal services is just one slot away from totally bringing up the rear.
In other words, for lawyers this is not a “jobless recovery,” it’s still a “job-shedding recovery.” If you can call it a recovery at all.
And of course this doesn’t reflect the fact that law schools pumped an additional 45,000 or so new grads into the market during that same period. And will do so next year and the year after and…
Is there anything to be done? We would urge you to do everything you can to take control of your own career, using every tool available. Including, of course, JD Match.
Merry Christmas to All!
By now the news has been all over the place that Duncan School of Law in Knoxville, TN (featured in an article in last Sunday’s NYT about their quest for ABA provisional accreditation) has sued the ABA for turning down its application. (Here’s the NYT’s follow-up and here’s the WSJ’s Law Blog coverage.) The two primary causes of action are that the ABA’s chokehold on law school accreditation constitutes an antitrust violation and that Duncan was denied due process (the ABA’s decision was summarily announced without explanation or rationale).
Time to choose up sides! Resolved: The ABA did violate antitrust principles and/or deny Duncan due process.
“It was not our goal to be adversarial with the A.B.A.,” said Duncan’s dean, Sydney A. Beckman, “but we felt as though we had to do this to obtain a fair review. All we want is what we think we’ve earned: provisional accreditation.”
John O’Brien, chairman of the association’s council that oversees accreditation, said Duncan had been denied approval because it did not measure up in essential areas.
“We followed all our procedures,” Mr. O’Brien said, “and as is the case with any school that receives an adverse result, it’s because standards weren’t met in one way or another.”
And speaking as a disinterested party:
“What is critical to understand here is that the council has a duty to prospective students when it grants a seal of approval,” said Stephen Gillers, a New York University law professor and expert on legal ethics. “Their interests may not always align with the interests of the school in winning approval. The people who run the school and the students they want to attract are two different constituencies. The council’s primary duty is to the students.”
[Gillers also thinks Duncan will lose on the merits.]
What are the odds of Duncan prevailing with this lawsuit? Worse than dim, predicted Professor Gillers.
“The lawsuit is doomed,” he said. “The antitrust argument seems to be that the A.B.A. is limiting the number of law schools. But there are 200 A.B.A.-approved law schools, so if the council’s secret agenda is to limit competition, it’s doing a lousy job.”
We’re not going to get into the weeds of whether the ABA’s claim that Duncan fell short on a standard requiring students to appear “capable of satisfactorily completing its educational program and being admitted to the bar” does or does not hold water. Amusingly enough, Duncan in its suit contends that their median student LSAT score (147) is higher than 8 accredited schools, so what’s the problem? As Elie Mystal over at Above the Law puts it, “Duncan Law is claiming that the ABA approves crappy law schools all the time, so it’s unfair to deny Duncan.”
Another ironic facet to this Big Mess is that the ABA has long defended its rather, shall we say, promiscuous accreditation of law schools (claiming it doesn’t have the authority to enforce regulations with real teeth) by predicting it would be sued for antitrust violations if it ever did turn down a plausible school, and here you have exactly what they predicted when they try to limit the number of schools by 0.5% (1 in 200).
But let’s step back and try a little plain old economic analysis. If you could assume that schools published accurate and meaningful statistics on graduate employment rates (a heroic assumption, we understand) who’s to say that students shouldn’t be allowed to enroll in schools trying to provide a cheaper, admittedly less-than-average quality law school education? (I say admittedly less than average because this isn’t Lake Woebegone; not all law schools can be above average.)
Think of the analogy to MBA Land. If you want to work for Goldman Sachs or McKinsey, better get thee to Harvard (or Wharton or Tuck or Stanford–the usual suspects). But if you want to be promoted in brand management at Procter & Gamble, or middle management at almost any randomly selected Fortune 500, maybe a night program would be just fine. In other words, different educational experiences-and, yes, pedigrees-for different purposes. What’s wrong with that?
Oh, wait, I forgot one thing: You don ‘t have to pass a state bar exam to practice as an MBA. And who’s behind that requirement? Maybe we’ve gotten totally ahead of ourselves here.
We are pleased to let you know that JD Match has been nominated for an Edison Award, described on their site as follows:
The Edison Awards have been recognized as America’s innovation awards that take the time-tested characteristics of innovation from earlier visionaries and write a new chapter in American innovation history. Every year, the Edison Awards Steering Committee accepts nominations from companies and inventors just like you.
New Products and services are the economic engine to the American economy. The Edison Best New Product Awards have recognized and honored some of the most innovative products, services and business leaders in the world. The Edison Awards are named after Thomas Alva Edison (1847-1931) whose extraordinary new product development methods garnered him 1,093 U.S. patents and made him a household name across the world.
The criteria for selection include:
- Concept: Opportunity, conception, method, and development;
- Value: Need/desire, differentiation, advantage & cost
- Delivery: Message, engagement, availability, achievement
- Impact: Sustainability, social responsibility and potential
The comprehensive list of finalists is sent to more than 3,000 senior business executives and finalists are notified in February.
Over at The Careerist, the entertaining, talented, and insightful Vivia Chen has hosted an asynchronous debate between the dean of Thomas Cooley Law School’s Grand Rapids campus, Nelson Miller, and two of the people behind the Law School Transparency Project, Kyle McEntee and Patrick Lynch.
Miller argues that “lawyer employment prospects remain strong” and claims that “Probably, no field of recent college graduates fares significantly better than law graduates do.”
The floor is now yours, dear readers. Vote for who you think has the better of this argument:
About a week ago we posted a poll asking what you thought of the Cravath level bonuses.
Specifically, we teed up a “debate” between Cravath’s implied defense of their bonus levels and David Lat’s endorsement of them (he called them “fair”); and on the other side Steven Harper’s critique of them as penurious given how PPP has kept rising “to the sky.”
Well, over 200 of you have expressed your opinion, and here’s the result:
Not even a fair fight: 85% of you agree with Harper & Frank vs. 15% Cravath & Lat.
If you were in the Cravath/Lat camp, all I can offer is Mo Udall’s famous words when he shut down his Presidential campaign after being roundly trounced in the New Hampshire primary: “The people have spoken. Damn them!”
I was quoted there on associate bonuses:
Junior associates’ bonuses may be safer than they think
All you junior associates out there losing sleep over end-of-the-year bonuses, take a deep breath and relax. There’s been a lot of talk about penny-pinching since Cravath, Swain & Moore announced its relatively miserly bonus policy last month, and some other big New York firms followed. But Bruce MacEwen, a former in-house lawyer on Wall Street who now runs the Adam Smith consulting group, tells the ABA Journal that despite the challenging economy, firms can’t afford NOT to pay respectable bonuses.
“I think for firms to, heaven forfend, eliminate bonuses or substantially cut them back would be seen by the market as a sign of weakness,” MacEwen says in reference to most Wall Street firms. “Even a $10,000 bonus would be viewed as the functional equivalent of zero.”
The reason, he says, is that clients are watching. “Clients are probably the constituency with the least voice in all of this, or the voice that’s least listened to in any event, but the people that the firms are playing to, their audience, if you will are primarily lateral associates,” MacEwen says. “Lateral associates want to be attracted to firms that seem to be on top of the game, on top of the market.” What’s more, there is evidence that legal spending is growing both internally and on outside counsel, according to this Summary Judgments look at a survey of in-house lawyers.
Of course, it isn’t that managing partners haven’t played with the idea of trimming bonuses, and a bunch of firm leader even told MacEwen off the record that big bonuses in this environment are “insane.” But no one has the guts to go first. “We are sheep as an industry, and it’s extremely hard for any firm to depart from the pack, even if it’s the most sensible business thing to do,” MacEwen says. “So from a funny perspective, I find the whole concept of associate bonuses confirmation that law firms are not yet run like businesses.”
I’m not saying bonuses overall would be in jeopardy if firms were run more like businesses: But they would almost certainly be distributed on a curve with far greater dispersion.
The always worthwhile Steven Harper writing over at The Belly of the Beast takes my good friend David Lat to task for his “unfortunate comment” calling the Cravath bonuses “fair.” Steven helpfully provides an informative table laying out key milestones in the last 5 years of Cravath level bonuses.
Steven’s fundamental point is that while PPP seems to have resumed its inexorable rise “to the sky,” associate bonuses are stuck in neutral, billable hours are back up > 2,000, and the wealth is not being “fairly” spread. He concludes by warning (delighting?) us that his next post will be titled “Occupy BigLaw.”
The mythical Joe Six-Pack out on Broadway would be delighted with compensation ranging from $167,500 to the neighborhood of $300,000, but if you subscribe to Cornell economics professor Robert Frank’s view that all economic success is rivalrous (in plain English, it’s not the absolute amount you make, it’s how you do compared to those you perceive to be your peers), then $167,500 next to PPP in the $3-million range is penurious.
Then again, maybe that’s why they call it the brass ring.
Cravath and Lat or Harper and Frank?
You might be interested in the results of a poll we just updated over at Adam Smith, Esq. on what our readers predict the future of the Eurozone to be.
Where do you go to do research on firms you’re potentially interested?
We have a quick survey that will take you less than 30 seconds: A grand total of two questions.
- It will help us make JD Match more useful to you in the future, and
- Aren’t you curious as all get out what other people do?
David Lat published a piece yesterday titled Law School Accreditation: What is to be Done?, which I read with great anticipation. David had attended a panel at the Federalist Society’s National Lawyers Convention on law school accreditation. Here’s David’s quick report on the panel:
- Justice David R. Stras, Minnesota Supreme Court (moderator);
- Professor Thomas D. Morgan, Oppenheim Professor of Antitrust and Trade Regulation Law, George Washington University Law School;
- Mr. Clark Neily, Senior Attorney, Institute for Justice
- Prof. Ann Shalleck, Director of the Women and the Law Program, Carrington Shields Scholar, American University Washington College of Law
- Dean David N. Yellen, Dean and Professor, Loyola University Chicago School of Law
And the back and forth conversation it generated.
Neily litigates “economic liberty” cases, generally opposing licensing requirements for folks like interior designers, florists, and barbers.
Yellen argued that law schools had changed enormously over the past 25 years to be more market-focused and thought that the “law school transparency” movement is overblown and at times “despicable.”
Morgan evidently confined himself to remarking that one regulator is better than dozens, which is self-evident in the extreme (especially if you’re the regulate-ee, interested in maximizing the odds of “regulatory capture”).
Here’s David’s conclusion:
In fairness to law schools, however, the case against them grows weaker and weaker with each passing day. With every new lawsuit filed against a school, every new newspaper article or blog post about the dangers of going to law school, and every new call by a senator for an investigation into law school employment reporting, it becomes that much harder for a law student entering the system today to claim that she was duped about the value proposition of legal education.
In November 2011, there is ample information out there, accessible to anyone with access to Google, showing that going to law school can be hazardous to your financial health. If you carefully consider this information and decide to matriculate anyway, that’s fine; there is a case to be made in favor of going to law school (for some people).
But if you ignore the warning signs, only to find yourself jobless and $100,000 in debt three years later, maybe you shouldn’t blame your law school for taking your money, or the ABA for accrediting your school. Maybe you should blame yourself.
Disclosure: I count David a friend, and his invocation of laissez faire has my strong instinctive sympathies. Yes, college juniors and seniors contemplating law school have far more information available today than did their counterparts even a year ago.
But don’t you still have to ask yourselves if it isn’t it hypocritical in the extreme for schools that teach “legal ethics” (yes, the value of which I increasingly question) or, say, good old securities law (“disclose, disclose, disclose!”) to take refuge in the argument that no matter what they say or would like you to believe, Google to the rescue?
Indeed, I happen to recall that some analysts questioned Enron’s accounting before the entire scheme collapsed. Should Jeff Skilling’s sentence be commuted because people “ignored the warning signs?”
We have set the bar very low indeed for these institutions of higher learning when we don’t have a strong public-forum comeback to people such as Dean Yellen who call their critics “despicable,” while failing to mount an honest and trenchant rebuttal of the allegations that they have committed knowing, continued, and brazen fraud.
PS: Did anyone else notice another little problem we might have here in the Ivory Tower? To wit: Director of the Women and the Law Program, Carrington Shields Scholar, American University Washington College of Law? Further affiant sayeth not.
Our title today is of course the cynic’s version of The Golden Rule. (Cynics were legendarily defined by Oscar Wilde as those who know the price of everything but the value of nothing.)
And our text for this morning is Prof. Bill Henderson (a good friend) writing over at the new and invaluable Law School Review, sponsored by the National Law Journal.
Bill’s short and consummately to-the-point piece is “Waking Up Law Professors,” and it serves to extend the compelling logic of Brian Tamanaha’s immediately prior piece laying out some shocking numbers detailing how much in federally guaranteed student loans some law schools collect every year. (Well, I suppose nothing should be shocking in this world by now, but count me either a prude or an idealist.) For example (figures for the class of 2010):
- Thomas Jefferson/Cooley: $91 million
- New York Law: $48 million
- Suffolk: $46 million
- Florida Coastal: $45 million
- Harvard: >$50 million
- Georgetown: $71 million (Georgetown is enormous)
Bill’s point when looking at these numbers?
It’s something of a misnomer to call these “student” loans: The students merely serve as convenient pass-throughs direct from the Department of Education (read: The US Treasury) to the schools themselves–with the convenient parenthetical that the schools are not on the hook for assuring the loans are repaid. That’s entirely the students’ problem. Or, yours and mine as taxpayers for all principal and interest ultimately waived through IBR.
This is what happens next:
Because the vast majority of all schools’ funding now comes from loans originated by the Dept of Education, the federal government holds all the cards. If Congress or the Department of Education don’t like what is happening, the can use the power of the purse to advance what they believe is a better outcome. […] It is absolute madness to argue with students, or their creditors [the US government], over value. Ignoring them is a mistake of the same magnitude. We are about to exit the realm of self-regulation because we have failed to take serious issues seriously.
If I were 12 years old again, I’d be tempted to inscribe that phrase–“we have failed to take serious issues seriously”–on the underside of my schoolhouse chair’s wooden seat. As it is, I’ll just try to commit it to permanent core memory.
The other shoe is going to drop, people.
Writing over at Adam Smith, Esq.