Practice Management

Peter Olson at Solo In Chicago highlights well a Chicago Tribune's article on lawyer disparity.  It is a very informative article and you ought to read it.

The gist of the article is what I have been saying for some time.  Increasingly there are small practices of law and their are large ones, but those that have a hard time competing are the ones in between.  The reasons are many, but it comes down to, in my opinion, overhead and debt.

Overhead is the cost of maintaining a law firm.  Some people are very good at controlling their costs using unconventional means, like I do, such as working from home.  Some attorneys do not, but their earnings make up for the extravagances.  I think it is better that even these attorneys do a better job least they suffer from it later.

Debt begins with law school.  Getting into law school is important if that is what you want to do.  But, getting into a law school that offers you value is even better.  Let us face the issue, most law schools for most students do a bad job at this.  It is school debt that keeps you from taking reasonable risks in going out on your own (hence sometimes taking a poorer paying job), and it prevents you from taking the time to build your practice or niche.  After all, it is one thing to live in a hovel for a while and buy Roma Noodles, but it is something else entirely to meet the large mortgage payment that is school debt.  It is just hard to take risks when you are already at risk because of debt.

The other issue is that too many lawyers focus too much on money.  It is hard to focus on money to the exclusion of what you like to do. But, debt and burdens of financing law school sometimes makes it not enjoyable to take the job you really want.

The Chicago Trib article highlights, for example, Jeanne Wrenn who is a prosecutor.  She is 36 single mother 7 years out of law school.  Her job pays $59,000.00 a year, and it must help finance the $100,000.00 she borrowed to get herself through Loyola University School of Law. It is fine to suggest that this is many times lower than a first year associate at Big Law, but the truth of the matter is that very few lawyers in comparison to the number graduating can get a job a Big Law.  And, from the standpoint of the work, you might question why you would want to work for Big Law, except for the money involved.

However, the article is correct when it states, "contrary to what many Americans believe, [lawyers] need to overcome long odds to earn a lot more. Increasingly among the nation's 761,000 working lawyers, admission to the bar no longer guarantees a gold-plated lifestyle, or even financial security ... Some lawyers make a fortune--more of them than ever, in fact. But these days, far more lawyers make far less than is widely assumed, and newcomers to the law take on drastically more debt for their educations. Year after year, the gap expands between the earnings at the top and the rest".

Increasingly, the law represents two different professions.  I warn my daughter who is in law school about this constantly.  She got an offer to work for a lower end family law firm and she wanted to earn some money.  I discouraged it for the reason stated in the article.  Namely, although it is not hard to move down from the corporate world to practice consumer based laws, it is nearly impossible to move upward.  My fear was that if she took the job, she would rule herself out of more prosperous work later.  As Jack Heinz, a Northwestern researcher who co-authored a detailed study on Chicago's legal community said it best.  "The disparity does not level out as careers proceed. It gets wider." Inside the legal profession, recognition is dawning about its harsh economics".

I liked Kirsten Wolf's analogy  comparing the high cost of her Boston University Law School education and the $40,000 salary that sustains her six years after graduation: "If I'd blown it all on shoes, at least I'd have shoes," she said.

There are two points that I like to make about the statistics and stories.  What the article depicts is true, but you still have to view it in context.  First, law is not much different than any other profession or business.  If you did not go to law school, it does not mean you would not face the same dynamic somewhere else.  Law tends to mimic the marketplace.  It does not vary much from it.  So, understanding is good, and planning is good, but the first goal is to believe that law can serve the purpose you want to achieve.

Second, part of what can help is that you learn to live within your means.  If you go to law school with the hope of being rich, statistics would indicate you might stand a better chance in Vegas.  But, if you choose (or can choose) a law school carefully, keep your debt down, and cut your overhead to the bone you can still achieve a work-life balance or blending, while doing what you want to do.