Law School Job Outlook: Two-Tier System Complicates Law School Decision

Considering law school means considering your career, an uncertain process even for the most goal-oriented, an unwieldy process for those who lack a clear direction, it’s a consideration that law firms are changing radically.

The traditional career path at law firms has been fairly stable over the past fifty years, influencing many in their decision to apply to law school, infusing the law school decision with a tolerable blend of caution and certainty.

When I was at Stanford Law School in the late-nineties, I was struck by the scripted nature of the law school career path: Get into a good school, get a great second-year internship, land a job offer in the fall of your third year and start working at a firm when you graduate and pass the bar. While there were no guarantees, no simple equation that allowed us to calculate the value of our law school investment, the process was nonetheless straightforward and the outcomes were almost predictable.

We knew that the first few years at a firm would be challenging. The most ambitious young attorneys put in long hours and distinguish themselves as revenue generators for their firms. These stellar performers eventually make their way to partnership and participate in more and more of the profit that the firm generates. Those who don’t make partner switch firms or switch careers in this “up or out” model.

It’s proven to be a challenging path for many; but it’s also extremely rewarding for highly-motivated attorneys.

According to the New York Times, this model is changing dramatically at some larger firms. Instead of the partner track as the only option, firms are splitting attorneys into highly-paid partner track positions and moderately-paid career track positions:

…now firms are copying some manufacturers…by creating a separate class of lower-paid workers. At law firms, these positions are generally called “career associates” or “permanent associates.” They pay about $50,000 to $65,000…

Career associates know that they will never reap the rewards of the partner track. They are typically located in smaller markets to avoid the costs of expensive metropolitan areas like New York, Los Angeles or San Francisco.

“It’s our version of outsourcing,” said Ralph Baxter, Orrick’s chief executive. “Except we’re staying within the United States.”

There are positives to this development: While career associates make less, they also work less. This means that law firm careers may require less personal sacrifice, allowing attorneys to pursue interests outside of work. Further, in many parts of the country, a $65,000 annual salary is a solidly middle-class income, far above the poverty line, particularly for dual-income households.

The Times suggests there are also negatives to consider:

But as has been the case in other industries, a two-tier system threatens to breed resentments among workers in both tiers, given disparities in pay and workload expectations. And as these programs expand to more and more firms, they will eliminate many of the lucrative partner-track positions for which law students suffer so much debt.

The Times highlights an interesting facet of this structural change: Whether you are in the partner track or the career track, you likely are shouldering the same amount of student loan debt, making monthly payments that have to be considered as a major part of your household budget.

While law school debt is likely a hardship for all new attorneys, its impacts are dramatically different if your starting salary is $160,000 vs. $50,000. And keep in mind the completely different financial trajectory implied by these starting salaries. While a Career Associate may never make more than $70,000 – $80,000, a partner-track Associate will easily make $250,000, if not more, as they move on in their careers.

A financial analysis should be part of everyone’s decision to go to law school, plugging in the numbers to see if law school makes sense, weighing your possible futures, deciding if that monthly loan payment is really going to be worth it. But with the introduction of a two-tiered system, your analysis hinges upon which track you are placed in, a decision that, more than likely, will be made for you rather than by you.