At a time when many are questioning whether a law degree is worth the hefty investment of money and time, two professors have put a dollar value on it:
The lifetime earnings of law graduates are $1 million greater than for holders of a bachelor's degree alone.
Based on data from 1996 through 2011, a law degree translates into a mean annual earnings premium of $53,300 in 2012 dollars, Michael Simkovic and Frank McIntyre write in "The Economic Value of a Law Degree."
That income boost held true not just at the top or middle of the pay scale but also in the lower half, with law graduates at the 25th percentile still recouping a long-term return of hundreds of thousands of dollars, the study finds.
And although lawyers were adversely impacted by the recession, they are still better off than their peers who did not go to law school.
"The results suggest that — absent catastrophic and unprecedented changes exceeding changes already seen from 2008 to 2011 and uniquely affecting law graduates rather than the broader labor market — many college graduates who follow the critics' advice and skip law school will forgo a lucrative career and face higher long-term risks of financial hardship," the authors say.
In other words, law school is worth it from a dollars and cents perspective.
Simkovic, who teaches bankruptcy, tax and secured transactions at Seton Hall University Law School in Newark, says the idea for the study arose when he was writing a paper on student loans and observed that the default rate for law school loans was "extremely low" even at low-ranked schools.
Because the default rate on student loans is normally driven by the ability to pay, the low default rate did not mesh with what he was hearing about law school being a bad deal and not worth the cost, he says.
He and McIntyre, of Rutgers Business School in New Brunswick, devised a study that differs from others on lawyer earnings. Studies based on starting salary figures from NALP are problematic, he says, because those amounts represent a very small portion of a lawyer's lifetime earnings. Moreover, they do not look at what earnings would have been without law school.
To find out what a legal education is really worth in economic terms, "the meaningful information is relative earnings," Simkovic says.
The study he and McIntyre conducted compares law graduates' lifetime earnings to those of a similar group of people who earned only bachelors' degrees to find out how much value was added by the J.D.
And it takes into account the fact that bachelor degree holders who share the same demographic, educational and economic characteristics as law graduates tend to do better than bachelor degree holders in general. If they had not controlled for those factors the law-bachelor degree differential would have been even greater, Simkovic says.
They looked at 33,158 people with bachelor's degrees and 1,382 law graduates, utilizing data obtained from the U.S. Census Bureau's Survey of Income and Program Participation and the National Education Longitudinal Study.
Other significant findings were that despite the recent drop in salaries and employment for recent law graduates, experienced lawyers were less impacted, and the data did not reflect a structural shift that reduced a law degree's value.
Simkovic is hopeful that the study, which he hopes to see published in the coming year, will correct what he refers to as a misperception that law school is not worthwhile.
The study results are set forth in a working paper that is still being updated as more recent data become available. Although it has not yet been published in a journal, it has been circulated among academics, sparking an online debate.
In a July 17 post on the "Above the Law" blog, a commentator blasted it as "Another Garbage Study Offering Misleading Statistics on the Value of a Law Degree," saying it "purports to show that a law degree is actually quite valuable, while blatantly ignoring all of the things that have led to ruinous financial consequences for so many students drawn into the clutches of law school."
The post — by Elie Mystal, described as a Harvard Law School graduate and former Debevoise & Plimpton litigator who "quit the legal profession to pursue a career as an online provocateur" — focuses on the study's finding of an average $1 million law degree premium, calling an average a "useless metric." A Yale Law degree is "way more than a million dollars more valuable over the course of your life" than an undergraduate one from Western Michigan University, while a law degree from Cooley Law School is unlikely to be that much more than a Yale undergraduate degree, Mystal wrote.
He added that Simkovic and McIntyre did not take tuition costs into account on the ground that they vary so widely.
Simkovic's rebuttal, posted on that site and another blog, Brian Leiter's Law School Reports, says the study looks not just at averages but at the 25th, 50th and 75th percentiles and "includes a range of possible tuition values . . . and explains clearly how to compare the cost of the degree to the value of the degree."
Another critic is Brian Tamanaha, a professor from the Washington University School of Law in St. Louis and the author of Failing Law Schools, published by University of Chicago Press in 2012.
His chief concern is that the study covers only 16 years and omits post-2008 graduates and a recession in the early 1990s, coinciding with the boom in big law — a time that many expect will never return. "Someone thinking about law school today cannot rely upon that article," Tamanaha says.
Blog host Leiter of the University of Chicago Law School took a more favorable view, writing on July 17 that it "ought to fundamentally change the conversation about the economic value of legal education" because of its sophisticated methodology and comparison of a J.D. to the alternatives.