Given I just came back from the Future of Legal Ed Conference in NYC, it seems ironic I received this e-mail just before I went. While I answered the author in a shorter version prior to the conference, I’ve opted to post a more complete answer here because there are many with the same question.
I’ve just come across your blog. I’m writing to you from my phone, so I apologize for the limited knowledge I have of your posts.
A little about me: I’m in my undergrad years, with roughly two years left. I have a 3.56 gpa and haven’t yet taken the LSAT.
I am very interested in solo practice, but law school figures truly scare me. In my state of Michigan, average law school debt is about $100,000, while average starting pay is supposedly only about $50,000.
Interest being the way it is, after my undergrad loans and law debts, an Internet student debt calculator estimates that I’d end up paying about $250,000 in debt (should all payments be on time, etc.).
So that being said… Is it really possible for a small/mid-sized town solo attorney to be able to pay off the student loans, house payments, and still carve out a good living for themselves?
You seem to have a lot of information on the topic, and your insight would be HUGE to me, honestly.
Please give me any insights you may have, or refer me to any posts, sites, etc that you think would be well advising to me.
Basically I just wanna know if law school is worth the cost, and what a small town solo attorney can realistically expect to make.
Thank you so much for your time! I hope to hear back from you.
Thanks for the e-mail.
You are asking for a lot given I know so little about your background, your ambitions, how much you want to be a lawyer, your ability to relocate, your family obligations, your finances, even your age, etc.
So, I can only speak in generalizations.
First, make sure you really want to be a lawyer and really understand what being a lawyer is, not what you think a lawyer is or what you hope a lawyer is and does and earns. Understand the day-to-day ups and downs, the ups and downs of serving your clients and the profession, the challenges of running a business.
If you are in college there is a very easy way to ‘sit on the beach and watch the action in the ocean’: join the Solosez listserv (which is free and doesn’t require membership) and lurk. Start getting a feel for the conversations, the issues that present themselves, who is in an area of law you could be interested in and start determining who has a ‘voice’ you want to follow. Start tracking their digital footprint on the internet through the various social media platforms. Find local lawyers or practice area lawyers you like, see if they blog and follow them. Reach out and see if you can talk with them in person about their experiences. You have at least two years to do this while you are finishing up your undegraduate degree.
After doing some soul searching and networking, if this is a true calling for you then you have to do some serious number-crunching to see how you are going to make it work financially. What are you willing to forgo in order to meet any and all financial obligations you will have during the course of your legal education and after?
If your goal is to go solo or small firm, I would encourage you to select the best law school you can afford. The best is not determined by USN&WR. It is determined by where you will get the best education for what you want to accomplish. Affordability doesn’t just turn on how much student loan money you can get but how much you are comfortable being obligated for on a monthly basis after graduation and the next 25 years. Be the best student at the best school you can afford and take advantage of all they have to offer their best students.
You are already making assessments and doing some serious evaluating which is very smart. I would go a step further and find out how much your loan payments would be upon graduating law school as well as projected living costs to determine how much you NEED to earn after graduation in order to not only live day-t0-day but to make a life for yourself. You don’t want student loans to prevent you from having a life. You want them to be a monthly responsibility you can reasonably afford without drowning and foreclosing the chance to actually build a life for yourself.
When you get to that number, look at the realities of practicing and try to project out what this will be like in five years from today when you conceivably start practicing. The legal profession is moving very fast and changing literally daily. You have to closely monitor and plan for these rapid fire changes that will undoubtedly impact your livelihood. In many ways, it’s become the wild west and the new frontier.
In addition, accrediting bodies and state authorities are trying to erect even more hurdles upon graduation which you must jump which could inhibit your plans to go solo right away. How realistic then is it for you to get a job working for another if your state erects such barriers?
I’m not looking to dissuade you. I don’t know you. However, I do know many students do not take a serious look at the costs and benefits of graduate school and the reality of the returns separate and apart from believing they want to be lawyers for noble purposes. They do believe they are special and will defy the odds. It’s OK to have that attitude while also looking at the practical side of the issues and making informed decisions which will impact the rest of your life.
Do you believe no matter the cost all you’ve ever wanted to be is a lawyer and nothing is going to stop you? Or do you believe law is a noble profession and one which you would enjoy if everything falls into place? Or do you believe you simply want a graduate degree to separate you from the pack and whether or not you practice law, as long as you make a respectable living, it’s as good a choice as any? How you answer this question will determine many things.
Given the economy, the cost of a legal education, the saturation of lawyers, the downward pricing pressures on the majority of lawyers, the growth of overseas competition, and the hustle to revamp existing practices to eke out a living as a result, unless you fall into the first category, I would seriously reconsider the choice of law school as a profession.
I can say this very question was addressed at the Future of Legal Ed Conference. When recognizing the increasing criticism being leveled at law schools, the value of a legal education was strongly reinforced. The recurring theme was you can’t take away this unique knowledge and the license you receive. However, only you can determine if this unique knowledge and license is worth the ‘investment’. I think you will discover the answer when you honestly determine ‘why’ you are considering law school. If it is for any reason other than the fulfillment of a lifelong passion and you can’t imagine being anything but a lawyer, then it’s not worth the financial burden you will bear for the majority of your adult life.
How Much Does A Solo Earn?
As to how much a solo earns? You can read this post here. And throughout my blog you will find a lot of information, particularly under Demographics/Economics and Inspiration. Which category resonates with you the most…I guess that will also influence your path.
But for something a little more concrete and unbiased, in 1999 a book came out called The Millionaire Next Door. Clearly this book isn’t focused on lawyers. However, I happened upon a chart called ‘The Top Ten Most Profitable Sole-Propietorship Businesses” which was put together based upon IRS federal tax data for 1992 and for the sole purpose of comparing gross receipts required to generate the average net incomes of traditional sole proprietorships compared to that of Coal Mining (don’t ask;-). It listed Legal Services as 10th. The number of legal services sole proprietors in 1992 was 280, 946. Their average net income was $39, 800 with gross receipts of $84,000. (The percent of sole proprietors indicating a net income was 86.6%). This means for every dollar earned the sole proprietor took home less than $.48. This rings true for me as just a few years later when I started practicing the established law firm in our building shared they paid approximately $.55 of every dollar to overhead. We did not have support staff or a library or health care plans, unemployment insurance, etc. and took home about $.70 of every dollar.
If you were to convert the 1992 net and gross numbers to 2011 dollars via an historical currency converter, a sole proprietor today would on average be netting $63,392 and grossing $133,793.50. However, I do not believe sole proprietors today are paying $.55 of every dollar to overhead. Technology, virtual offices, remote independent staff have cut costs considerably. If you reduced overhead to 30% of gross receipts, it would reduce needed gross sales to roughly $90,000 per year. (Again, this is totally unscientific, does not reflect years practicing, practice areas, nor is it broken down by state. However, I trust these numbers because they were not voluntarily reported but gathered from tax records for a purpose totally unrelated to the actual question so bias is absent.)
Yes, these numbers do not reflect our current economy. However, for purposes of calculating a pure return on investment, I’d say this is a very reasonable number to work with when determining if you can build a life as a solo practitioner with student loan debt of $250,000. I wouldn’t use this number, though, for your first year or two after law school as this represents an average.
In conclusion, whether law school is a good choice given all the variables, I know it’s lame….but only you can decide what works for you.
To our audience, please chime in with your thoughts on the subject. Mine is but one opinion and perspective.