HIGHER ED BUBBLE AND LAWYERS PART 2 – In my book I spend a lot of time discussing the Winner Take All Economy and lawyers. The comparative earnings of solo practitioners and law firm partners over the years displays the issue perfectly:
Look at how close the earnings of law firm partners and solo practitioners were in 1967. The average law firm partner earned about twice what a solo practitioner did, and both types of lawyers earned more than the median household income. In 1967 law could really be called one profession. By 2012 law firm partners earned seven times what a solo practitioner did and there are clearly two completely separate professions – corporate lawyers and everyone else.
And note that the “law firm partner” category displayed above contains a number of relatively low-budget small partnerships. If you use the average earnings of the equity partners at the fifty most profitable law firms (as ranked by Am Law) in 2012 the gap grows a lot more. In 2012 the wealthiest American law firm partners earned $1.6 million, thirty-two times what a solo practitioner earned.
And let me cut anyone off at the pass who is thinking “$1.6 million sounds good. Shouldn’t I go to law school? There’s a visible uptick for partners in 2012!” Is it a good time to go to law school? Hardly. First, note that there are (and have always been) way more solo practitioners than law firm partners. So don’t go to a law school outside the top 10 unless you’re willing to work as a small firm lawyer, and earn what solos and small firm lawyers earn.
Second, while there has been a rebound in law firm growth, it has not been evenly distributed. The top 25 most profitable firms have done best of all, the top 50 firms earn more than the next fifty and so on down the line. So yes, growth has returned, but mostly at the tippetty top. So if your question is, “How’s life at Cravath, Swaine and Moore?”, then the answer is peachy. If your question is, “has the legal market recovered enough that it’s a good time to spend as much as 200k on a law degree?”, the answer is still no.
Glenn and I obviously ride or die with the University of Tennessee, which is consistently rated as a pretty good deal. If you get into a top law school and receive a scholarship or a steep discount in tuition, go for it. If you are going to pay in-state tuition at a school with a big alumni network and a history of getting their graduates jobs, fine. But if you’re going to pay full freight (especially at an expensive and poorly ranked law school), because you’re pretty sure les bon temps will roulez again, the good times were never that good for most lawyers, and even those good times won’t be back any time soon.