Last year, contributing writer Shawn O’Connor stated in Forbes magazine – a respected source on value investing – that, despite its cost, a law school education is a “relatively low-risk investment that will have an impact on your future and can pay exceptional dividends over a lifetime.”
This advice seems to fly in the face of the chorus of critics of legal education who would have you believe that going to law school today would be a terrible investment. So who is right? O’Connor or the critics?
Though popular perceptions might lead you to follow the critics, the smart money should follow O’Connor’s advice in Forbes. Now might well be an excellent time for you to attend law school – at least in Denver.
To understand this, let’s look at why critics say you should not go to law school:
Myth #1: Unemployment rates for lawyers are high.
Fact #1: Unemployment rates for lawyers are extremely low compared to other fields.
Reality: A JD is one of the most powerful degrees available for finding a job.
The critics of legal education argue that the legal industry has suffered from high unemployment. However, in deciding on career paths, it makes little sense to look at employment prospects for one field in isolation. It makes more sense to compare potential career paths. And in almost any comparison, law has fared extremely well.
The Bureau of Labor Statistics (the BLS) reported that, in 2010, the national unemployment rate for lawyers was 1.5%. This was far lower than the 9.6% national unemployment rate for that year. Moreover, the unemployment rate for lawyers was lower than that for the vast majority of professions, including biomedical or mechanical engineers (4.2%), financial managers (4.4%), computer software engineers (4.6%), accountants (5.0%), financial analysts (5.6%), computer programmers (5.7%), and marketing and sales managers (7.0%). In fact, few occupations listed by BLS had lower unemployment rates than lawyers.
Not surprisingly, one of the best predictors of low unemployment is education. In a 2012 report entitled “Education Pays” the BLS reported that those with only a bachelor’s degree had an unemployment rate of 4.5%, those with a master’s degree had an unemployment rate of 3.5%, and those with a professional degree, like a JD, had an unemployment rate of only 2.1%.
As U.S. News noted, “While holding a graduate degree is not a guarantee of ultimate success, it certainly opens many more doors for employment.”
Critics of legal education tend to ignore the employment rates for lawyers as a whole, and instead point to the plight of recent law graduates. But this group, too, has fared well compared to those with other degrees. Consider the Class of 2010, the most recent year in which data is available for multiple degrees. The employment rate for new 2010 JDs was 87.6%, according to National Association for Law Placement (NALP). As law placement rates go, these were low compared to other years. But compared to recent graduates with other degrees, JDs fared quite well. For example, those graduating that year with an MBA had an employment rate of only 75.7%. And those graduating that year with only a bachelor’s degree had an employment rate of only 63.6%.
And the figures in Denver are even better. Denver Law’s employment rate for its most recently tabulated graduates, the Class of 2011, was significantly better than the national average. The NALP-calculated national average for that year was 85.6%, while Denver Law’s NALP employment rate for that class was 90.5%. (To ensure the accuracy of this data, we had it independently audited.)
The short of it: Relative to other time periods, lawyer unemployment is high, but compared to other occupations, lawyer unemployment is low.
Myth #2: There are not enough law jobs.
Fact #2: The Denver legal market is likely to produce enough jobs for our graduates.
Reality: Employment numbers are promising for those entering the Denver legal market beginning in 2016. The time to enroll in law school is now. The place to enroll is Denver Law.
Many critics argue that law school is a bad investment because there are not enough law jobs for new graduates, and will not be for the foreseeable future. However, legal markets are highly regional. The math for Denver, the primary market served by the University of Denver Sturm College of Law, is very different – and very favorable.
The critics tend to focus on national statistics. Nationally the Bureau of Labor Statistics projects that there will be roughly 26,000 job openings per year for lawyers over the next few years. This compares poorly to the 44,000 new graduates per year that law schools across the country have produced in recent years – nearly 2 graduates for every law job nationally.
But the math in Denver and Colorado is very different. Here the Colorado Department of Labor and Employment projects that there will be roughly 550 lawyer job openings per year over the next few years. This figure understates the job opportunities for JDs in the state, since it only counts jobs for which bar passage is required. (While some critics scoff at jobs that do not require bar passage, many law school graduates seek and enjoy such jobs. Even during the boom years, when law graduates had fewer constraints, roughly 16% selected jobs for which bar passage was not required.) But even counting only the 550 bar-passage-required jobs projected each year in Colorado, the situation looks good. When you consider that our state’s two law schools, the primary suppliers for Colorado’s legal market, produce fewer than 450 new law graduates per year, the math here looks favorable – more than one lawyer job for every law graduate in Colorado. And most of those jobs are in Denver.
Of course lawyers move across state lines. So a comparison of in-state law job openings to in-state law graduates may not fully capture the available jobs situation. Because Denver is such a desirable place to live and practice law, graduates from out of state law schools come here for jobs as well. In 2012, roughly 1,000 people passed the Colorado bar exam. However, because of our strong networks in the Denver legal community (roughly half of the practicing lawyers are our graduates) and our strategic plan designed to produce practice-ready lawyers, our graduates have a strong advantage in competing for jobs in this market. (See more on this, below.)
And there are other factors that support these positive numbers:
In light of these compelling facts, the numbers add up for Denver Law graduates looking to enter the Colorado legal market: a high and increasing demand for new lawyers in Colorado, and a low and decreasing supply. Graduating with a law degree in the Denver legal market in 2016 might be great timing.
Myth #3: Salaries earned by recent law graduates do not justify the cost of law school.
Fact #3: Law salaries are likely to make law school a solid economic investment.
Reality: When it comes to a career in law, as O’Connor said in Forbes, the significant, “lifelong returns justify the investment for the vast majority of applicants.
Critics of law schools argue that the salaries commanded by new lawyers do not justify the cost of law school as an economic matter. But these critics make two serious economic mistakes. First, they do not ask the critical question: Compared to what? As with unemployment rates, any meaningful salary analysis requires you to look at what you would be doing if you were not a lawyer. Second, these critics rarely look at salary differentials over a lifetime of employment. Looking at comparative salaries over a lifetime of employment, a career in law is a good investment.
O’Connor’s piece in Forbes provides an accurate comparative analysis. He notes that the average lifetime earnings for a lawyer is $4.03 million, and that the average lifetime earnings for a person with only a bachelor’s degree is $2.27 million. In other words, over a lifetime of employment, the lawyer earns $1.76 million more. As O’Connor points out in Forbes, this not only justifies the cost of law school, it is an excellent investmen.t
This analysis is consistent with the data demonstrating that advanced degrees – particularly professional degrees like the JD – drastically increase a person’s lifetime earnings. As the 2012 Bureau of Labor Statistics noted in an analysis entitled “Education Pays,” those holding professional degrees earn an average of $1,735 per week ($90,220 per year), while those holding only a master’s degree earn an average of $1,300 per week ($67,600 per year) and those holding only a bachelor’s degree earn an average of $1,066 per week ($55,432 per year).
That is, those who hold a professional degree such as a JD, make 63% more than those who hold only a bachelor’s degree and 33% more than those who hold only a master’s degree. In fact, in both 2011 and 2012, lawyers were among the 15 highest paying jobs in America, with an average salary of $129,440 in 2011 and $130,490 in 2012.
This comparative analysis also helps you to understand how much you would need to earn as a lawyer to justify the cost of law school. Say that you spend $120,000 in tuition on your law degree (full tuition at Denver Law), and forego $130,000 in earnings for the three years you attend. Your total investment in law school would be $250,000. Assuming a 40 year career, to justify your $250,000 investment, you would need to earn a premium of roughly $13,900 per year above what you would have earned without your JD. If you earned at least $13,900 more per year with a law degree than you would have earned without your law degree, and did so for 40 years, the present value of that higher income stream would justify the $250,000 investment in law school. So how likely is it that a JD will produce an average earnings differential over your lifetime of $13,900?
Earnings differentials from an advanced degree usually increase – often dramatically – over a person’s lifetime. That is, someone with an advanced degree starts at a salary that is somewhat higher than someone without an advanced degree, and the difference between the two tends to get larger over time.
So if we look only at starting salaries, we will significantly understate lifetime salary differentials between educational degrees.
But starting salary differentials can be a useful, if highly conservative, way to determine whether a JD is likely to increase your lifetime earnings enough to justify its cost. In 2011, the average starting salary for those with only an undergraduate degree was $42,987. So if your earnings differential remained constant (which, as noted above, is not likely), then to justify your investment in a JD in economic terms, you would need to find a job with a starting salary of $56,887 ($42,987 plus the required $13,900 premium).
While there are certainly no guarantees, the average recent law graduate easily hits this break-even point. For example, in 2011, the average starting salary for new lawyers nationwide was $78,653. Although this figure is arguably distorted by higher reporting rates by those with larger starting salaries, NALP calculates an adjusted average salary to compensate for this. The adjusted average salary for the JD class of 2011 was $73,984. And 2011 Denver Law grads had an average salary of $70,922. Using a similar adjustment to the one used by NALP to account for reporting bias at the high end of the salary scale, 2011 Denver Law grads had an average adjusted salary of $66,713. All of these figures are substantially higher than the $56,887 salary required to justify an investment in law school.
This analysis suggests that an investment in Denver Law is an excellent one. If you compare the Denver Law average starting salary to the average starting salary of a person with only a bachelor’s degree, the average Denver Law graduate makes $27,935 more per year. And if you extend that difference over the course of a 40 year career (assuming the difference does not grow, which as noted above is unlikely), the current value of that difference is over $500,000 – *double the $250,000 investment,*or a 100% return.
So where does the question of debt fit into this discussion? The critics of law school are – justifiably – concerned about the debt levels carried by recent law graduates. This analysis addresses the value of the investment in a law degree, and suggests that this investment is likely to produce a return that is well in excess of the cost of the money you might use to finance it. (The current rate for federal Graduate PLUS loans is 7.9%.)  But you should definitely seek financial counseling before taking on debt to finance something as significant as a law school education.
Critics correctly point out that the salary distribution for recent law graduates is “bi-modal.” That is, salaries tend to crowd around two different levels, one for those in public interest or government jobs and another for those with jobs in the private sector. For example, at Denver Law, our 2011 graduates in the private sector had an average salary of $81,466, while those in the public sector had an average salary of $51,185. While the private sector salary clearly justifies an investment in law school, those who are considering whether a career in the public sector would justify the investment in a JD in economic terms should do a more careful analysis.
Of course, for those seeking work in the public sphere – and for many seeking work in the private sphere – economic considerations are often secondary to other considerations, such as the meaningfulness of the work, or the quality of the professional life. But for those who are weighing public sector legal employment in economic terms, it is worth keeping three things in mind.
Of course, this analysis is based on averages. Individual graduate experiences will vary. But in most cases, the earnings premium from a JD degree will economically justify the cost of law school. As Forbes noted, “The costs of … law school may be substantial, but the significant, lifelong returns justify the investment for the vast majority of applicants.”
Myth #4: Law schools do not prepare graduates for the practice of law.
Fact #4: Denver Law prepares its graduates to be client-ready by the time they graduate.
Reality: With an innovative curriculum, small classes, and strong ties to the Denver legal community, Denver Law does an excellent job of preparing its graduates for practice.
Many critics of legal education went to school many years ago, or at schools that taught in very traditional ways. Based on their observations, they argue that law school does little to prepare graduates for the real world of law practice.
That may have been true at some time in the past, and it may still be true at some schools. But not at Denver Law—a school that is nationally known for its innovative, hands-on learning opportunities.
At Denver Law, our program is based on a strategic plan developed in consultation with hundreds of people who hire lawyers. Based on their advice, we have adopted two strategic initiatives, both designed to create graduates who are practice-ready and client-ready.
Our Specialization Initiative allows our students to gain expertise in aspects of the law that are important now and will become increasingly pervasive in the legal profession, such as Environmental and Natural Resources Law, Corporate and Commercial Law, or International Law. By following a prescribed curriculum in one of these areas, our students can earn a certificate that signals a high level of subject-matter knowledge to prospective employers.
Our Modern Learning Initiative allows our students to immerse themselves in high-intensity experiential learning. Through live-client clinics, quality externships, and courses built completely around simulation of real legal problems, our students learn to be lawyers by acting as a lawyer under the supervision of experienced teachers and mentors. By 2015 – before our newest students graduate – we plan to offer each student who chooses an opportunity to spend one full year of their legal education doing these types of experiential learning. Those students will have the equivalent of a full year of legal experience on the day they graduate. They will be truly practice-ready.
Our student-faculty ratio is less than 10 to 1. This means that we teach primarily in small class settings. In fact, this year, even in the first year curriculum, which traditionally has large classes, our largest class size is expected to be 65 students. And first year legal writing classes will generally be 17 students. These small class sizes allow forms of innovation that help us prepare our graduates for practice.
In addition, our school is closely tied to the Denver legal community. Approximately half of the lawyers in the area are Denver Law graduates, and a great many of them are highly dedicated to our students. These alumni help teach our students as adjuncts, mentor our students, prepare them for job interviews, and help them network. Denver Law is truly an entrée into the Denver legal community.
As evidenced by this list, we’re into myth busting at Denver Law. And we have the numbers and facts to back it all up. Explore our website to learn more, or feel free to contact our Admissions office with any questions. Come visit. It won’t take long for you to see what sets us apart from other law schools—and why there’s no better time than the present to make an investment in a Denver Law degree.
Martin J. Katz Dean and Professor of Law
2: The BLS unemployment rate is for all lawyers. The situation for recent graduates will be discussed below. Additionally, the BLS unemployment rate does not address what types of jobs these lawyers held. This issue will also be addressed below. The point, however, is that, during the Great Recession, lawyers were much more likely to be employed than those in most other professions.
6: http://www.nalp.org/uploads/Classof2010SelectedFindings.pdf. NALP measures law school employment 9 months following graduation. Reports of legal employment, including those by NALP, have been criticized for counting undesirable jobs. For example, NALP figures include non-professional jobs that do not seem to require a high level of education. For comparison purposes, it makes sense to count all jobs, as that is the convention used for reporting jobs for graduates of other degree programs – presumably on the theory that a job of any kind is better than no job. As with law, the outcomes for other degree programs appear much worse if you exclude less desirable jobs. For example, only 47% of recent college graduates are employed in jobs that require a bachelor’s degree. See http://www.theatlantic.com/business/archive/2012/04/53-of-recent-college-grads-are-jobless-or-underemployed-how/256237/. At Denver Law, in the interest of complete transparency, we have provided detailed employment data on our website so you can see the total number of non-professional jobs obtained by our graduates. And, we provide a special calculator on our website that allows you to calculate our employment rate using only the jobs you believe are desirable. http://www.law.du.edu/index.php/career-development-and-opportunities/employment-statistics.
7: http://www.usnews.com/education/best-graduate-schools/top-business-schools/articles/2011/03/15/us-news-data-indicates-more-jobs-for-mbas-more-jobs-for-mbas. Although US News’ methodology for measuring employment rates for MBA graduates differs somewhat from NALP’s methodology for measuring employment rates for law graduates, the comparison should be helpful, as each methodology represents the predominant way that experts in the field measure employment outcomes.
8: http://www.naceweb.org/uploadedFiles/NACEWeb/Research/Career_Services/CarServ_ExecutiveSummary.pdf. Although NACE’s methodology for measuring employment rates for college graduates differs somewhat from NALP’s methodology for measuring employment rates for law graduates, the comparison should be helpful, as each methodology represents the predominant way that experts in the field measure employment outcomes.
10: As noted above, there is some question of which jobs should be counted. For purposes of comparison with NALP’s figures, in the text we calculate our employment rate using NALP’s formula, which counts all jobs of any kind. The jobs calculator on our website allows you to calculate our employment rate counting whatever jobs you think should be included. If you exclude non-professional jobs, the Denver Law Class of 2011 had an employment rate of 88.0% using all other NALP conventions.
18: http://www.forbes.com/sites/shawnoconnor/2012/04/05/grad-school-still-worth-the-money/. The analysis is based on figures compiled by the Georgetown Center on Education and the Workforce. That report may be found here: http://www9.georgetown.edu/grad/gppi/hpi/cew/pdfs/collegepayoff-complete.pdf.
21: This calculation assumes a discount rate of 5%.
25: http://www.nalp.org/salarydistrib (applying a 6% downward adjustment factor)
26: As NALP does, this calculation applies a 6% downward adjustment factor.
27: The comparison here uses the unadjusted average salary for Denver Law graduates. This is because the comparison is with average undergraduate salaries, which suffer from the same reporting problems.
28: This calculation assumes a discount rate of 5%. Forbes, which does not make the conservative assumptions made in this analysis, says, “The investment a student makes in these degrees today is likely to produce at least a 10x return over his or her career.” http://www.forbes.com/sites/shawnoconnor/2012/04/05/grad-school-still-worth-the-money/.
30: http://www.forbes.com/sites/shawnoconnor/2012/04/05/grad-school-still-worth-the-money/ (emphasis added).