If you are a recent law school graduate – particularly if you borrowed your way through school – it might have made more sense to buy a subprime house you couldn’t afford with that money and simply let the bank foreclose. “[B]ased on every other source of information… a generation of J.D.’s [Juris Doctor, a law degree] face the grimmest job market in decades. Since 2008, some 15,000 attorney and legal-staff jobs at large firms have vanished, according to a Northwestern Law study. Associates have been laid off, partners nudged out the door and recruitment programs have been scaled back or eliminated.” New York Times, January 8th. Professional schools, as I have blogged in the past, often have $30-60,000 a year in tuition costs alone, plus books (really expensive) and living expenses… law school is three years of toil when you are going full-time. Having student debt loads north of $200,000 is pretty common for lawyers and doctors, a tad less for MBA grads (a two-year program).
Not only are jobs disappearing because of a severely contracted economy – unless you are a tried and true bankruptcy specialist – but the longer-term prognosis for legal jobs faces a corporate America looking for economies everywhere, refusing to pay for the youngest associates who are still “learning the ropes,” demanding caps on legal fees and hitting benchmarks to justify billing rates… and that biggest of all job nemeses – outsourcing: “India’s legal outsourcing industry has grown in recent years from an experimental endeavor to a small but mainstream part of the global business of law. Cash-conscious Wall Street banks, mining giants, insurance firms and industrial conglomerates are hiring lawyers in India for document review, due diligence, contract management and more.
“Now, to win new clients and take on more sophisticated work, legal outsourcing firms in India are actively recruiting experienced lawyers from the West. And American and British lawyers — who might once have turned up their noses at the idea of moving to India, or harbored an outright hostility to outsourcing legal work in principle — are re-evaluating the sector… The number of legal outsourcing companies in India has mushroomed to more than 140 at the end of 2009, from 40 in 2005, according to Valuenotes, a consulting firm in Pune, India. Revenue at India’s legal outsourcing firms is expected to grow to $440 million this year, up 38 percent from 2008, and should surpass $1 billion by 2014, Valuenotes estimates.” New York Times (August 4th).
For lawyers seeking discharge of their student in bankruptcy (hmmmm… lawyers needing lawyers?), the pre-recession overhaul of the application of bankruptcy law to student loans makes getting relief exceptionally difficult. According to the January 9th Legallawhelp.com, a loan-heavy graduate with limited resources has to pass a new threshold, which in the Federal Ninth Circuit is known as the “Brunner Test” (until the Supreme Court creates a single standard, individual federal circuits may have differing approaches): “First, that you cannot maintain, based on current income and expenses, a 'minimal' standard of living for yourself and your dependents if forced to repay the loans… Second, that additional circumstances exist indicating that this state of financial affairs is likely to persist for a significant portion of the repayment period of the student loans… Third, that you made a good faith effort to repay the loans.”
The only arena that is easy to prove is the ‘minimal’ standard of living, but this pretty much captures a federal “poverty-line” test. Showing that law jobs are likely to be down and out for the foreseeable future requires economic proof where experts are battling with the predictions. And exactly what do you have to show to let the court know you have tried hard enough? Most student borrowers don’t even know where to start with these rules. Bill collectors hound them. Credit rating agencies destroy their futures. And hopelessness grows as self-esteem plunges.
Many of these students will lose that continuity between graduation and an eventual job… as time passes, law firms tend to gravitate toward high-ranking recent grads, particularly from the best law schools, and simply write off those who have been unemployed for lengthy periods of time. The lucky ones become paralegals, but this work is often not a track to employment as a full attorney, even if the job-seeker is qualified and has passed the relevant bar exam. For so many, a J.D. is simply an expensive piece of paper that leads nowhere… some “new” lawyers (plus more than a few who have lost jobs) find that they have to go back to school to learn a trade where someone might hire them… someday.
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