Are Tier 3 Law Schools Worth The Investment?

Guest Poster Steve V. writes for, an investment and personal finance site dedicated to helping readers obtain true wealth.

When you were a promising young high school or college student, you probably heard countless times that you should become a doctor or a lawyer. It was most likely a well-intentioned remark from a teacher or relative, meant to motivate you to pursue the highest levels of education reserved only for the brightest academic minds with strong work ethics. There was nothing wrong with not being accepted into the best law schools at the time, until countless other less accredited schools started sprouting up everywhere as the competition for a JD grew more intense. Instead of narrowing down the list of law school hopefuls that probably didn’t have the chops to make it as real lawyers, the powers that be instead chose to open up tier 2 and tier 3 law schools to accommodate this new generation of students who didn’t make the cut for top programs. The result today is that there are thousands of law school graduates from these less credible tier 3 schools competing for $40,000 a year contract jobs to repay hundred thousand dollar loans. So now the question looms large: are tier 3 law schools a wise investment?

The Odds of Success are Against You

In “Law School Debt By the Numbers,” a video about law school by Bloomberg, we learn that the average debt load for a graduate of the California Western School of Law was $153,000. That’s well north of a 6-figure debt for a law school that isn’t exactly Harvard or Yale. And it’s downright startling that many schools are allowing students to take out loans that they have no hope of repaying. A recent controversy came about when law schools were discovered publishing graduate employment statistics in the 90% range when many JD’s were working in professions that didn’t require a degree at all. Some were working as teachers while others even resorted to working at local coffee shops for some spending money. Even worse, some law grads weren’t hired for jobs outside the law field because they were deemed to be overqualified. The law profession in many regards has become a make or break type of career path, and a large portion of the students accepted to tier 3 schools shouldn’t have ever attended because their odds of success in the profession are so low.
In “From J.D. to Food Stamps: The Personal Cost of Going to Law School,” Elie Mystal explores the life of a particular law school grad who now has an insane debt load and has resorted to going on welfare and collective food stamps to survive. Here’s an excerpt:

Before I went to law school, I was full of potential. Now, I can’t even get paid a living wage. I have more debt than I’ll ever be able to pay off and Northeastern simply counts the dollars rolling in while relying on federal loan forgiveness programs to deal with the graduates. Northeastern, and schools like it, have absolutely no incentive to prepare its students for a career. Its a cash cow for those professors who thought they would like to work 5 hours a week for their six figure salaries and provide the university at large with a prestigious addition.
I’m so —— I don’t even want to get out of bed. I hate my life. I can’t change any of it. I’m stuck. Its not all Northeastern’s fault. Its probably mostly my fault. But Northeastern said the job prospects were in the 90%s. Not true. Never was.

The average debt burden for a recent law graduate is $100,433 according to a report by a US News & World Report survey. While the amount seems impossibly high, many hopeful students are still determined to stay the course and follow through with law school regardless of how high the odds are stacked against them. When asked why, many tier 3 law grads believe they will be the exception to the rule and are blinded by stories of making partner, corner offices and lavish lunches. The reality is many will go on to work in semi-abandoned offices for $40,000 a year doing outsourced contract reviews for companies they’ve never heard of.

What Ado About Nothing

Succeeding in the law profession these days takes a large amount of preparation and skill, not to mention money. The hard truth is if you’re considering law school and know that your grades or test scores will land you in a tier 2 or 3 school at best, think long and hard before pursuing the JD. Or just make up your mind and don’t go. If you were meant to be in the law field, odds are you’d be at the one of the top tier 1 law schools where your prospects for landing a job in this tough economy are decent.
CBSNews writer Lynn O’Shaughnessy said it best in her article questioning the value of a law school degree:

Unfortunately, too many young college graduates turn to law school as a default career move. They don’t know what else to do — especially in a weak economy when jobs are scarce.
Law school is no longer the route to a steady, well-paying job. According to a report by the National Association for Legal Career Professionals, only 50.9% of 2010 law school graduates who found jobs were employed at law firms. What’s more, today the leading source of law firm jobs comes not from the big firms with fat salaries, but mom-and-pop law firms.

Many people are going to law schools for the wrong reasons, and a tier 3 school is a strong indication of this in my mind. Sure, there will always be a select few who will be wildly successful in the profession despite having attended a less credible tier 3 school, but those exceptions are few and far between. Think of your school’s rank as a strong indicator of how well you’re likely to do in the field. In any career you pick, you’re going to have to work your way up in order to branch out and establish yourself later. It’s going to be much more difficult to do this when you have a six-figure debt load hanging on your neck. The law profession is becoming notoriously hard for graduates to get their foot in the door. Everyone is competing for those coveted internships and clerkships, so unless you have the connections, that’s another huge obstacle that’s going to keep you in the warehouse cubicle rather than the corner office. As far as investments go, tier 3 law degrees seem to have a lousy return.
It’s not just law grads who are feeling the burn of the economy and increased competition. Tier 3 MBA programs are popping up all over the place, including online. I have a hard time believing one can receive a quality MBA education online once a week for a year, but many of these “degree mills” are pumping out diplomas and charging a premium for it despite not helping graduates land high-paying jobs. If you’re having a hard time breaking into a tier 1 law program, it’s time to rethink your dreams or study harder and give it another go. Anything else will most likely result in failure and a huge debt burden on your head.
For those who are still motivated to push forward despite the horror stories from recent law school grads, here’s a transparency index that will at least give you some understanding on how much information (about graduate employment rates, etc) each institution is hiding. The more they hide, the worse the job prospects likely are for law school grads.

4 Responses to Are Tier 3 Law Schools Worth The Investment?

  1. John Doe says:

    About to graduate from a Tier-1 school. They’re offering a special program to those graduates who haven’t lined up jobs, in which the school offers to pay you 16 bucks an hour and you can work for a for-profit firm–at zero cost to the firm. I know multiple top students (you know, honors grades, on journals, published, with prior work experience at famous entities) who, not having any other offers, will be doing this. (I’m not in the program, but I’ll likely be graduating with honors, too, and don’t have a job yet.) Obviously, I don’t know everyone’s financial situations. But I expect that they’re not out of the norm of 100k of debt–it’s a very expensive school. So I’m having trouble figuring out how a Tier-1 school is worth it.

    But your question? Your question is easy. No, don’t go to a Tier 3 school if you’re paying money. Any money. The opportunity cost alone probably makes it a bad investment. How is this an issue?

    • Duglas says:

      his reasoning is silpme: There’s too many lawyers in Wisconsin.From an ABA study about malpractice claims, More Sole Practicioners: There appears to be an increasing trend toward sole practicioners, due partly to a lack of jobs for new lawyers, but also due to increasing dissatisfaction among experienced lawyers with traditional firms; leading to some claims which could have been avoided with better mentoring.New Lawyers: Most insurers have noticed that many young lawyers cannot find jobs with established firms, and so are starting their own practices without supervision or mentoring. This is likely to cause an increase in malpractice claims, although the claims may be relatively small in size due to the limited nature of a new lawyers“In a survey conducted back in 1972 by the American Bar Association, seventy percent of Americans not only didn’t have a lawyer, they didn’t know how to find one. That’s right, thirty years ago the vast majority of people didn’t have a clue on how to find a lawyer. Now it’s almost impossible not to see lawyers everywhere you turn.”Growth of Legal SectorLags Broader Economy; Law Schools ProliferateFor graduates of elite law schools, prospects have never been better. Big law firms this year boosted their starting salaries to as high as $160,000. But the majority of law-school graduates are suffering from a supply-and-demand imbalance that’s suppressing pay and job growth. The result: Graduates who don’t score at the top of their class are struggling to find well-paying jobs to make payments on law-school debts that can exceed $100,000. Some are taking temporary contract work, reviewing documents for as little as $20 an hour, without benefits. And many are blaming their law schools for failing to warn them about the dark side of the job market.The law degree that Scott Bullock gained in 2005 from Seton Hall University where he says he ranked in the top third of his class is a “waste,” he says. Some former high-school friends are earning considerably more as plumbers and electricians than the $50,000-a-year Mr. Bullock is making as a personal-injury attorney in Manhattan. To boot, he is paying off $118,000 in law-school debt.A slack in demand appears to be part of the problem. The legal sector, after more than tripling in inflation-adjusted growth between 1970 and 1987, has grown at an average annual inflation-adjusted rate of 1.2% since 1988, or less than half as fast as the broader economy, according to Commerce Department data.On the supply end, more lawyers are entering the work force, thanks in part to the accreditation of new law schools and an influx of applicants after the dot-com implosion earlier this decade. In the 2005-06 academic year, 43,883 Juris Doctor degrees were awarded, up from 37,909 for 2001-02, according to the American Bar Association. Universities are starting up more law schools in part for prestige but also because they are money makers. Costs are low compared with other graduate schools and classrooms can be large. Since 1995, the number of ABA-accredited schools increased by 11%, to 196.According to the Internal Revenue Service, the inflation-adjusted average income of sole practitioners has been flat since the mid-1980s. A recent survey showed that out of nearly 600 lawyers at firms of 10 lawyers or fewer in Indiana, wages for the majority only kept pace with inflation or dropped in real terms over the past five years.Many students “simply cannot earn enough income after graduation to support the debt they incur,” wrote Richard Matasar, dean of New York Law School, in 2005, concluding that, “We may be reaching the end of a golden era for law schools.”Now, debate is intensifying among law-school academics over the integrity of law schools’ marketing campaigns.David Burcham, dean of Loyola Law School in Los Angeles, considered second-tier, says the school makes no guarantees to students that they will obtain jobs.OK, I have to interject right here. Did a dean of a law school basically say you could go through all the nonsense of getting into law school, law school, ethics exam, bar exam and you should not expect some sort of gainful employment after you are through? You might as well go to Las Vegas and put your tuition money on the rouelette table and let it ride, you may have better odds of making money than going to his school and getting a decent paying law job. This guy is a jerk.Yet economic data suggest that prospects have grown bleaker for all but the top students, and now a number of law-school professors are calling for the distribution of more-accurate employment information. Incoming students are “mesmerized by what’s happening in big firms, but clueless about what’s going on in the bottom half of the profession,” says Richard Sander, a law professor at the University of California-Los Angeles who has studied the legal job market.But in law schools’ self-published employment data, “private practice” doesn’t necessarily mean jobs that improve long-term career prospects, for that category can include lawyers working under contract without benefits, such as Israel Meth. A 2005 graduate of Brooklyn Law School, he earns about $30 an hour as a contract attorney reviewing legal documents for big firms. He says he uses 60% of his paycheck to pay off student loans $100,000 for law school on top of $100,000 for the bachelor’s degree he received from Columbia University. “Most people graduating from law school,” he says, “are not going to be earning big salaries.”Adding to the burden for young lawyers: Tuition growth at law schools has almost tripled the rate of inflation over the past 20 years, leading to higher debt for students and making starting salaries for most graduates less manageable, especially in expensive cities. Graduates in 2006 of public and private law schools had borrowed an average of $54,509 and $83,181, up 17% and 18.6%, respectively, from the amount borrowed by 2002 graduates, according to the American Bar Association.But just as common and much less publicized are experiences such as that of Sue Clark, who this year received her degree from second-tier Chicago-Kent College of Law, one of six law schools in the Chicago area. Despite graduating near the top half of her class, she has been unable to find a job and is doing temp work “essentially as a paralegal,” she says. “A lot of people, including myself, feel frustrated about the lack of jobs,” she says.The market is particularly tough in big cities that boast numerous law schools. Mike Altmann, 29, a graduate of New York University who went to Brooklyn Law School, says he accumulated $130,000 in student-loan debt and graduated in 2002 with no meaningful employment opportunities one offer was a $33,000 job with no benefits. So Mr. Altmann became a contract attorney, reviewing electronic documents for big firms for around $20 to $30 an hour, and hasn’t been able to find higher-paying work since.Some new lawyers try to hang their own shingle. Matthew Fox Curl graduated in 2004 from second-tier University of Houston in the bottom quarter of his class. After months of job hunting, he took his first job working for a sole practitioner focused on personal injury in the Houston area and made $32,000 in his first year. He quickly found that tort-reform legislation has been “brutal” to Texas plaintiffs’ lawyers and last year left the firm to open up his own criminal-defense private practice.He’s making less money than at his last job and has thought about moving back to his parents’ house. “I didn’t think three years out I’d be uninsured, thinking it’s a great day when a crackhead brings me $500.”Here is an example ad in Massachusetts for an experienced attorney, that mentions salary, it was posted this week. Most jobs don’t state salary in the ad cause the pay is pretty low.Office of the District Attorney, criminal attorney, for the Bristol County District seeks staff attorney for the Appellate Division. Excellent writing skills and a passion for appellate advocacy are a must. Sala

  2. Hi John Doe,

    It’s an issue because many people are still attending Tier 2 and 3 law schools thinking they would be the exception to the rule. I’m not one to discourage anyone’s dreams, but I will say that the odds don’t look good. Take a look around, the lower tier law schools still exist and for good reason: the government is subsidizing students to go and students are taking out massive loans. I just don’t want anyone to be a slave to debt when you can maybe pursue a less prestigious career choice but be okay with having less (in this case, still more than a law school debt slave).


  3. Yoshie says:

    There is a noticeably large gap bteeewn the top schools (the so-called “t14″) and even the 15th-ranked school.Consider Brian Leiter’s, a fairly well-known and respected law professor, rankings. He looks at the performance of top schools at placing their graduates at “biglaw” firms. The difference bteeewn Harvard (top 3) and UCLA (top 15 or so) is astounding. Harvard consistently places graduates in top firms in large numbers and has them scattered at all of the top firms. UCLA, by contrast, is far more regional and only places graduates in around 1/4 of the firms that Harvard does.And that’s going from top 3 to top 15 or so. While you can obviously succeed as a graduate of UCLA’s law school, you will have to be in the top 10% or so of the class to do so: and everyone plans on doing that when they get there. At least at Harvard or Chicago or NYU you can be in the top 25% and still get the kind of job you’d get at a 2nd tier law school for being a gunner in the top 10%. It may even be more lenient for the top 5 grad than top 25%, simply because of the known quality of the graduates.Basically the difference, therefore, is national career opportunities. If UCLA, in the top 15, can’t land students in the biggest name firms, it is much harder for a top 50 law school to do it. Essentially a tier 1 school is a hedge against the risk that you might have a bad semester/quarter and won’t be top 10%.

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