Once upon a time not long ago, lawyers were respected and made lots of dough. Parents would brag about the fact that their kid is in law school. It was like if you were in med school or law school it was a ticket to the good life. Med school still maintains that reputation but law school is starting to struggle.
Law grads never had it as good as people thought. The average starting salary was never really all that high, and at $78,000 it’s actually falling. What’s far more interesting though is the fact that very few people actually make the average. It’s usually much higher or lower.
This is a bell curve. When someone says the average starting salary is $78k we assume there’s a normal distribution of salaries. In other words, most people are probably making somewhere around that number and then there are some outliers at the top and bottom of the spectrum. But lawyer salaries don’t look like that at all. Here’s what the distribution of 1st year lawyer salaries looks like.
This is what’s known as a bimodal distribution. As you can see there looks to be a normal distribution of salaries around the $50k mark and then a spike at the very high end of the job market. But only about 2% of people are actually making the average salary of $78k. What gives?
A lot of statistical assumptions are based around the idea that most situations involve a bell curve. If we can observe just a few events we can plot them on a distribution and predict the next outcome with some degree of reliability. An example. We poll 50 law school grads asking them their salaries and get a middle range of $45-75K with an average of $60k. We could use a bell curve to say something like “with 95% confidence the next person we poll won’t have a salary above $100k”. This is used all the time in everything from biology to wall street. And thankfully, most everything in nature and humanity does fall on a bell curve.
Just not lawyer salaries. So am I saying lawyers aren’t natural? Kind of. But really it’s that law firms aren’t rational. What’s happening then?
Well, first of all you have an interesting market for lawyer education. Law schools can be divided into tiers. The top tiers are schools like Harvard, Yale, and Stanford. 2nd tiers might be something like Florida State, Baylor, and Gonzaga. 3rd and 4th tiers include Phoenix School of Law, Vermont Law School, University of Akron. Over the last couple of decades many law schools have popped up or grown in size to capitalize on the notion that people think law schools pay good money. But the jobs were never really there, so many end up taking jobs you don’t need a law degree to do, or just don’t make much money as lawyers. This has created a law school bubble of sorts that may be in the midst of popping.
That however doesn’t explain the spike in salaries at the top end that ruins a potential normal distribution. You can thank the ultimate high-end 100 hour week NYC law firms for that. They all pay basically the exact same salary to their first year lawyers: $160k. And they used to hire tons of lawyers from the top tier schools but since the recession hit they can’t afford to do that. So instead of reducing the average pay of first years, they’re just hiring fewer people. Apparently they may be doing this to make their own firm look strong, as you don’t want to be the only top law firm that pays its lawyers less. That would hardly mean you’re a top law firm.
This has also contributed to the law school bubble’s burst. Because even grads at top tier schools are having some trouble getting good pay due to the odd salary distribution. And you certainly can’t trust the numbers published by schools, those are more rigged than an emerging democracy’s election.
The point of this is not to scare anyone away from law school, just that the salary distribution is very odd. If you want something with a higher average pay and more stable distribution, consider medical or business school.
Read: The Toppling of Top-Tier Lawyer Jobs
 By The Weakonomist |
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