An Open Letter to Dorothy Depalo: Re: Infilaw

Dorothy Depalo InfilawDorothy Depalo works for Infilaw. Infilaw doesn’t really have anything to do with the law, other than it’s a private equity company that owns a bunch of ABA-accredited law schools. Dorothy sent me an email earlier today asking for my considered opinion on a variety of Infilaw company “law schools”.

Naturally, I rated them all POOR because what else would you call scam institutions that seek to deprive the unwary of money and time in the futile hope that someone will employ them as lawyers to pay back student loans.

In 2015, if you can’t get into a real law school, then it’s better not to go at all. Infilaw schools are not real law schools. They merely operate as pass-throughs for federal loans (which students can take out at up to the total cost of law school plus cost of living).

Infilaw gets the money now. Infilaw law students, nearly all of whom do not get jobs in the legal profession, are forced to pay back these debts to Infilaw (via the Federal Government) because the debts are non-dischargeable in bankruptcy and the federal government, except through certain programs, does not forgive these promises to pay.

That money pays, in part, for Dorothy Depalo’s salary. How she sleeps at night is a mystery to me.

A Letter to a 1L Law Student

This page provides a lot of information.

At this point in your education, my recommendation is:

  1. Keep debt to a minimum. If you graduate with significant debt from law school or combination of law school and undergrad, you are going to have a very difficult time. Do not take out loans unless absolutely necessary.
  2. Figure out which area of law you want to practice. Pick two areas. Take relevant classes. Then intern at places where you can get some real training. If it’s criminal law, intern at a PD’s office. Locate a mentor who can give you actual legal guidance when you leave law school and get your own paying clients.
  3. Have some money put away (or some way to pay for your life) for the first year after you leave law school. You will make very little money that first year.
  4. Keep debt to a minimum.
  5. Keep debt to a minimum.
  6. Etc.

USNWR Rankings Out: Law School Debt Figures Climb

UNC Law School RankingsLegal academics, law students, and prospective law students are pouring over the latest US News law school even if they say they aren’t.

For me – who graduated from the University of North Carolina at Chapel Hill Law School but started law school at Arizona State University’s Sandra Day O’Connor School of Law – the rankings are especially humorous.

When I first went to law school ASU was ranked in the 50s and UNC was ranked in the 20s. Having been at both, I’ve always said that ASU’s program was much better than UNC’s even though I love the Tarheels. The rankings have flipped, such that ASU is ranked 29 and UNC is ranked 31. That seems about right.

If you’re going to law school, the rankings are meaningless. Unless you’re going to Harvard, Yale, or Stanford where employment is all but assured, you want to consult two sets of number before going to law school: The cost of attendance and average debt on the one hand and the employment outcomes on the other.

UNC does better than most law schools in terms of debt, but “better than most” is of course a relative term. The average UNC grad will leave the school with $75,000 in law school debt plus an additional roughly $10,000 in accrued interest plus whatever undergraduate or other educational debt the person brought into school.

While there are no average total educational debt figures available to my knowledge from UNC, a fair estimate would be somewhere close to $100,000.

That is a lot of money.

At this point, if you’re a prospective law school student, you’re probably telling yourself, “Why should I worry? I’ll get one of those $160,000 BigLaw jobs, pay off my debt in four or five years, and it’ll be fine.”

Sadly, that is almost assuredly not going to happen out of UNC, where employment in BigLaw firms that can pay those kind of figures is few and far between. As Law School Transparency shows, UNC has an overall employment rate of just 62.7 percent. That includes all long-term law-related jobs.

A mere 9.7 percent of all UNC-Chapel Hill law school grads were employed in firms of more than 500 employees, which are the kind of firms that can pay starting salaries of $140,000 to $160,000.

In fact, one out of five UNC law school 2011 gradautes were either unemployed (13.4 percent!) or underemployed in part-time or short-term jobs (7.3 percent!)

So if you want to go to a law school where the average debt is close to $100,000, but you have only a 1 in 10 shot of earning the money to pay it back or a 1 in 5 shot of being unemployed or underemployed, then go to UNC.

Law School Scam: Spreading to Higher Education

Paul Campos, who has been a keen observer of the law school scam, has an excellent article on the general bubble in higher ed. A reckoning is coming…

I’ve written elsewhere about the problem of the law school scam. Too many people are taking on too much non-dischargeable debt in order to then get law degrees that, for the most part, do not pay enough to pay back that debt.

The problem is that this debt is secured by the federal government – the debt is not dischargeable in bankruptcy, and guaranteed by the federal government – and so a 20 year old can get $200,000 in educational debt, but not $200,000 in debt to buy real estate, or start a small business. Such a situation is insane. It creates for bloated markets – lawyers with too much debt who are unskilled – in certain areas, and insufficient economic output in other areas.

The answer to this problem is that there should be no subsidy to go to law school, or higher education of any sort.

Should I go to UNC Law school?

I’m a graduate of the University of North Carolina Law School at Chapel Hill. As I have written elsewhere, few are applying to law school and that’s a good thing.

I’ve also written about my experiences in attending law school, graduating, and establishing a law practice. I was profiled by MSNBC in 2011.

Required Reading Before Going to Law School

Paul Campos’ Don’t Go To Law School (Unless) should be required reading for anyone going to school.

I’d also recommend Brian Tamanaha’s Failing Law Schools.

Don’t Go to UNC at Sticker

UNC charges in-state students about $27,000 for tuition, books, travel, health insurance, and miscellaneous. It’ll cost you an estimated $15,000 to live for nine months in Chapel Hill. Non-North Carolina students will pay closer to $40,000.

Multiplied by three years, without any adjustment for tuition increases, and the instate student will pay close to $80,000 while the out of state student pays $120,000 not including any living expenses.

Since most students, having paid for expensive undergraduate degrees, debt finance the cost of law school, students can come out of UNC with between $100,00 and $150,000 in debt. Adding in the financing of that debt, and the numbers climb.

This is an outrageous amount of money, but is worth while if students coming out of UNC can secure jobs of $100,000 or more to pay that debt. While there are government programs such as Income-Based Repayment, such programs are not feasible for most students.

UNC is not worth that kind of cost, and its employment numbers do not justify that kind of expenditure.

Only go to UNC at sticker if you are independently wealthy, by which I mean you have money to burn.

UNC’s Employment Numbers are Not Good

In 2011, fewer than 25 people who attended UNC reported a salary of $117,500 or more out of a total class of 247. That’s pathetic. That means that less than 10 percent of the entire graduating class made enough money to finance six-figure school debt.

Note also that the employment numbers for 2010 and 2009 are substantially better.

It would not be pathetic if UNC charged reasonable tuition. But, having charged $75,000 for North Carolinians to attend the school (without factoring in living expenses), UNC does not produce the kind of employment results that justify the cost.

UNC Law Professors are Overpaid

If UNC professors were paid commensurate with the employment opportunities they generate for their students, then there would be no issue. But in light of these dismal numbers, students should consider whether they want to help finance the salaries of even assistant law professors who earn somewhere between $100,000 and full professors or deans who earn high $100s and more.

So if UNC tells you when you apply that there is no scholarship money available to give you a tuition break, maybe you want to ask them whether they’ve looked at professors’ salaries.

Only Go to UNC if You Get a Good Price… And Want to be a Lawyer

The image that lawyers have comes from television and the movies, where high-minded lawyers do interesting work, make impassioned pleas for the downtrodden, and argue before the Supreme Court.

The reality is that the vast majority of UNC grads – or any law school grads – do no such thing. Rather than think you’re a special snowflake, think more critically about why you want to go to law school.

Law school is boring tedious. But practicing the law is not, for the most part, a joyous party. It is hard, difficult work, and usually never exciting. It is, in fact, a job.

Lawyers have high rates of drop-out (leaving the profession), alcoholism, and drug abuse. That is not an indication that the profession is fun. It is an indication of the exact opposite.

The only reason you should go to law school is to be a practicing lawyer.

The JD is not Versatile

Law school admissions officers will tell you that the JD is versatile, so even if you’re not sure you want to be a lawyer, don’t worry, you should spend $100,000 and up for the privilege of learning how to think like a lawyer.

First, virtually nothing you learn in law school is actually applicable to the daily practice of law, and very few law school professors or admissions officers have practiced for more than a couple of years before escaping to academia.

Don’t believe it.

Second, as most recent grads who are struggling to find employment will tell you, having a JD is actually almost uniformly a warning sign to people in other sectors of the economy.

Lawyers are regarded as litigious, as know-it-alls, as people who can’t take direction because they went to law school and are full of themselves, and as people who will quit a non-legal or semi-legal job in order to become a lawyer if the market improves.

The sad thing is that the legal market is not expected to improve. While the economy is getting better in general, the legal market is getting weaker because many law firms and corporations are finding more efficient ways of outsourcing legal work or giving what was once legal work to non-lawyers who are paid a lot less.

So Should You Go to UNC Law School

In short, you should only go to law school if UNC is offering you a substantial – more than 2/3rds discount – on the tuition, and if you have money to pay for the rest. In other words, if you plan to take out any amount of loans, you need to realize that they are not dischargeable. You must pay them back. And it is unlikely that you will get a job out of UNC that will justify paying them back.

That said, UNC is a good enough law school so that if you can pay for it out of pocket, then you should go. But only if you really want to be a lawyer.

How can UNC fix its problem?

UNC Law School employment stats show that just 26 graduates of the 2011 class (total # grads 247) got jobs in private law firms of 250 or more. These are the firms that pay ~$140,000 that can service the debt accrued getting a degree at UNC which is likely to be at least $100,000 in non-dischargeable educational debt. JUST 21 – twenty-one – earned more than $110,000, after having dropped $75,000 (in-state) in tuition, plus $60,000 (living expenses) for a conservative total of $135,000 over three years. Meanwhile, UNC Law School pays its average full professor $175,000 to teach an average course load of 2 to 3 courses semester during a nine month academic year. Incidentially, UNC’s 16 female profs (of all types) earned an average salary $14,000 less than male counterparts.

UNC’s personnel budget is bloated. Cut salaries, particularly at the top – professors, associate professors, and even some assistant professors. Trim the number of faculty positions. This would reduce the budget.

UNC can hire more adjuncts and clinical professors, who cost much less. These clinical professors often have more real-world experience, in any case, and are better at explaining actually how to be a lawyer.

Advancing the Public Discourse

Meet Bernie Burk, assistant professor of law at the University of North Carolina at Chapel Hill. Bernie doesn’t like it when you say the current sad state of law schools or abysmal employment prospects for recent law school grads is a crisis or a disaster.

This is what Burk had to say recently on the blog The Faculty Lounge about a law review comment on the employment crisis among young lawyers authored by the leaders of Law School Transparency, a group of recent law school grads who have meticulously documented employment statistics among recent law grads:

So I was intrigued to look into the latest contribution to the law-school reform discussion authored by LST’s co-founders and its research director … What a disappointment. Commentators with the public stature of Law School Transparency should not “dabble.”

I do not mean to say that three twenty-somethings who have essentially never practiced or taught law have no place explaining how to assemble a curriculum or run a law school so that its graduates will be both prepared to practice and attractive to legal employers in the most difficult legal job market in American history. I do mean to say that, if you don’t know how to do it and you don’t know how to teach it, you really ought to do your homework so that your prescriptions are meticulously grounded in empirical experience and coherent argument. Sadly, you won’t find much of either here….

Burk apparently removed his post, but not before it caught the attention of Paul Caron at TaxProf Blog. Here’s more at Scott Greenfield’s Simple Justice.

But back to Burk, who does a little dabbling of his own in Carolina Law, a glossy magazine designed primarily for UNC alumni and donors to the law school:

“Many more prestigious schools, including Carolina, still see nearly all their graduates employed within nine months after graduation.”

Is Burk correct?

No. Law School Transparency reports that only 68 percent of UNC’s class of 2011 was employed in full-time, long term legal jobs. About 1 in 5 graduates did not have a full-time, long term job of any sort nine months after graduating from UNC.

This is far from “nearly all” graduates being employed within nine months after graduation, even if one wants to assume that a law student who graduates and gets a job in something other than the legal profession is a success for the student or a credit to the school the school.

Apparently if you use stark language to describe the nature of what is a real, lived crisis for tens of thousands of law school grads, you’re not contributing to the public discourse in a manner that meets Bernie Burk’s high standards.

But if you overstate the employment results for recent grads of UNC Law School… you’re Bernie Burk.

University of North Carolina Law School 2011 Employment Statistics

Let’s be very specific about the employment statistics for my alma mater – the University of North Carolina and Chapel Hill. As Paul Campos, author of the Inside the Law School Scam blog, notes, someone considering law school as path should only go to law school in order to practice law – which is to say, go to law school to be a lawyer, where the JD is required.

According to a report filed with the American Bar Association, UNC Law School reported a total 2011 graduating class of 247. (Statistics for those who graduated in May 2012 are not yet available.)

Only 169 of the 247 students (or 68 percent) had full time jobs at the time the numbers were recorded (typically 9 months after graduation) where a law degree was required. Nine other graduates had gotten part-time or short-term positions requiring a JD.

To my mind, that statistic is dreadful.

But let’s assume you think that going to law school, spending more than $150,000 in direct tuition, cost of living, and opportunity costs, justifies an outcome where you have a 1/3rd chance of not having a job where a JD is required.

37 of the graduates who had “long-term” jobs where JDs were required were employed as either solos or in firms of fewer than 10 lawyers.

There’s certainly nothing wrong with such work. Most criminal defense work is done by small firms, or solo practitioners. But these are generally low pay jobs where a group of recent graduates get together in a firm they start to share costs, and try to survive by getting hired on cases.

Or they are lower-paid jobs in small firms that do not have the income to justify paying anywhere close to six-figure salaries.

Many students when they apply to law school have very little idea about what it means to be a lawyer. Their ideas about law school or the practice of law are from television, the movies – dating back to the 1970s film The Paper Chase, the 1980s LA Law, the 1990s Boston Legal and Ally McBeal, and various John Grisham novels turned into films.

They also are thinking about BigLaw life, in firms larger than 250 lawyers, where salaries can start at $140,000 to $160,000, depending the city.

Just how many law students did UNC place into such positions in 2011? Twenty-Six (26).

That’s right, you had about a 10 percent chance – 1 in 10 – of getting a high paid BigLaw job out of UNC if you were part of the 2011 graduating class.

Few are applying to law school. That’s a Good Thing!

From time to time, I’ve written here about the problems of law school education. It turns out that tens of thousands of Americans are reaching the same conclusion that I have about the amount of time, effort, and money that goes into legal education.

Whereas in other counties, legal education is chiefly accomplished through an undergraduate degree and an apprenticeship where valuable skills are learned, in the United States law students pay anywhere from $100,000 to $250,000 for three years of education on legal theory that is, for the most part, irrelevant to the actual practice of law.

Average educational debt coming out of public law schools is about $100,000. Average educational debt coming out of private law schools is higher. This is non-dischargeable debt – meaning that if the student files bankruptcy, the student is unlikely to ever see relief from educational debt.

While there are federal programs that subsidize the cost of loan repayment, these are almost always a bad idea because they saddle the person with repayments for 20 years before relief is given.

Finally, the financial rewards of going to law school have been exaggerated. While the “average” law grad earns something like $70,000 to $75,000, very few actual law grads earn that figure.

That’s because salaries are distributed bimodally. Graduates of the best law schools – Harvard, Yale, Stanford, Columbia, Chicago, and New York University – can earn about $150,000. Comparatively few graduates of lower ranked law schools, including UNC, Campbell, Central, Wake Forest, earn those salaries.

If they can find jobs at all – at 2011’s class had the worst employment prospects in 40 years – many students are grouped around $40,000 salary.

While $40,000 is fine as a recent high school or college graduate with little debt, $40,000 is not tenable as a salary for someone with $100,000 or more in debt who has given up 3 years of time to attend law school.

It turns out that many students are realizing the financial insanity of attending law school given the cost and the limited financial rewards.

In 2004, there were just over 106,000 applicants to law school. This year, so far, there have been just over 16,000 applicants applying to law school which, according projections, would yield only about 52,000 total applicants by the end of the year.

Starting a Solo Practice – A Seminar

You probably don’t need to be told that this is the worst hiring environment for recently licensed (and even experienced) attorneys in… forever. A few statistics:

  • Law schools are graduating 45,000 lawyers each year for what the Bureau of Labor Statistics estimates are about 25,000 new jobs.
  • Average recent law grad educational debt is more than $100,000.
  • My informal survey of 2011 and 2012 recent law grads suggests more than half are under-employed or unemployed (Meaning, for instance, if you’d told them in 2008 that they could pay UNC $100,000 to graduate with a job as a doc reviewer, a volunteer in a PD, DA or non-profit office, on a post-graduate “fellowship,” or no job at all, they would’ve considered that a bad deal.)

You can’t discharge the debt. You can’t even give back your JD in exchange for debt forgiveness. You can’t will into existence new jobs.

But what can you do?

A friend, Kellie Mannette (UNC ’09), and I were talking about the parlous state of the legal market today, and how we can help recent grads.

We’re trying to gauge interest in what would be a short, free seminar – perhaps 2 to 3 hours – where we and other attorneys would address – in specifics – how to start a solo practice.

This is not a networking event. This is not a meet and greet. If you do meet other people who turn out to be helpful, that’s great. But the main point is to impart ideas and information on how you – in a practical sense – can start up a solo practice, keep costs down, find clients, get mentored, satisfy bar requirements (CLE, ethics, and trust issues), and figure out how to practice your area of law.

Note: I am not suggesting that solo practices will save the legal job market, or necessarily be right for you. But faced with the avalanche of debt, I don’t have a lot of other suggestions other than to help you figure out whether this is a possible avenue for you.

Even if you “know” that solo practice is not for you, you probably don’t know what solo practice involves. This would be a low-cost way for you to figure out whether you want to try this form of law practice, a form of law practice that goes back hundreds of years, far longer than the Cravath model of the big law firm.

We would host this somewhere in the Raleigh-Durham-Chapel Hill Area.

But we need your help:

  1. To help us reach out to recent and future grads (we think the classes would be 2010, 2011, 2012, 2013, 2014, and 2015) from any law school.
  2. To help us build out the agenda with your questions, suggestions, and ideas.

We will not be offering CLE credit for this seminar. However, we would provide refreshments and it would be casual.

The Terrible Legal Market

First, congratulations to those who passed the North Carolina Bar.

Unfortunately, that’s where the good news ends.

Last year according to the Bureau of Labor Statistics, the American economy created 25,000 new jobs requiring a JD. More than 40,000 graduated from law school. That same imbalance was true, more or less, of 2008, 2009, 2010, 2011, and will be true of 2013.

The problem isn’t that there are too many lawyers. The problem is that there are too many new lawyers with crushing debt loads who are entering a market where there are precious few jobs – under 5,000 – that can justify the debt that was assumed to go to law school.

In addition, layoffs and a 5-year-long weak job market means that there are plenty of more experienced lawyers who are better qualified to take whatever new jobs open up.

The government has stepped in with Income Based Repayment (IBR), but this is a false hope, which basically keeps a person indebted for 10 years before any kind of relief is possible. And then the relief comes with tax implications.

Having been profiled by MSNBC a few years ago for building a successful criminal law practice, I’m routinely contacted by recent grads asking for advice. Just this week I spoke to a gentleman who passed the bar and is busy setting up a practice in the Research Triangle.

For those of you considering going to law school or those of you in the first or second years, here’s my advice. Unless you are going to a Top 10 law school or you are going to law school and will emerge with less than $50,000 in total debt, you should cut your losses now.

Most of the 40,000 people who graduate from law school have no idea what the actual practice of law entails. They are going to law school because for 30 years it has been a ticket to at least a middle (or upper middle) and professional class lifestyle. But those days are over for the vast majority of law school grads.

The corporate economy cannot support ten thousand $160,000 a year hires each year. Those people who would’ve taken those jobs are now seeking what have long been derided as second-tier public service and non-profit jobs. The people who occupied those jobs are being pushed out of the market entirely.

And yet law schools continue to hike tuition, in large part because:

  1. Law schools have bloated budgets, driven by excessive faculty salaries.
  2. Law schools can foist those costs onto students who defer payment for three years.
  3. Law schools have either obscured or mis-represented hiring statistics.
  4. Law schools have had such significant cultural power that no one would think they would do 1, 2 & 3.
  5. The government has subsidized the true cost of law school, but denies the law student relief in bankruptcy by making student loans non-dischargeable.

Note that what’s true of law schools – the bloated budgets, the overpaid faculty, the bloated administrations – is also true of American higher education in general, just not to the same degree (although I don’t for a moment believe an English professor, who provides as much or more value than a law professor, would ever think himself overpaid.)

The problem in all this is that there is a denial of responsibility on the part of law schools, who insist that whatever problems their students are having in finding jobs are directly related to their students’ lack of “networking”.

I’m happy to take calls from law students who have graduated and are now seeking some advice. I’m afraid I’m not going to be the bearer of overly optimistic news. While the general economy is doing a bit better, than legal market is terrible, and will be terrible for at least the next 5 to 10 years. There’s just too much supply, too much debt, and too few jobs.



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