Wednesday, January 12, 2011

Lies, damned lies, and statistics: Lawyer employment and salary surveys conceal more than reveal

Nothing like a couple of lawyer-income stories to heat the blood on a cold morning....

Without a hint of irony, the January 10 Chicago Daily Law Bulletin reported on a salary survey (subscription required) of partners nationwide that concluded that the average law partner compensation in the City of Chicago was $524,000.

This staggering figure was only the ninth highest nationwide. New York, of course, topped the list with partners claiming average compensation of $938,000.

Yet, speaking of New York, on January 10 Yahoo! Finance posted a story from the New York Times (genuflection optional) by David Segal entitled "Is Law School a Losing Game?" The Times article chronicles the travails of Michael Wallerstein, 27, a recent graduate of the Thomas Jefferson School of Law in San Diego, who brought his degree and a quarter-million dollars of student loan debt back to his native New York after graduation.

Wallerstein has found one full-time legal position since graduation. It lasted less than a month and he earned a princely $10 an hour at a small firm in Queens:
[Wallerstein] worked for a manager who seemed to have walked straight out of a Dickens novel. Over a firm-wide lunch, as Labor Day approached, she asked employees to thank her, one at a time, for giving them the holiday off.

"When it was my turn, I said, 'Labor Day is about celebrating the 40-hour workweek, weekends, that sort of thing,'" Mr. Wallerstein recalls. "She said, 'Well, workers have that now so you don't need a day off to celebrate it.'"
Currently Wallerstein works for a temp service "in office space rented on the 11th floor of the Viacom building in Times Square. He sits in a small, windowless room with five other lawyers, all clicking through page after page of documents on computers under fluorescent lights. The walls are bare except for the name of each lawyer, tacked overhead."

If you read the Times article you'll see that Wallerstein is the author of at least some of his own misfortune: He could have attended a school closer to home and possibly forged connections that might have led to more meaningful employment. He certainly seems to have incurred far more debt than he had to, even studying abroad for a time.

Moreover, though says that Thomas Jefferson Law School is an institution "on the rise," it remains in the bottom quarter of all law schools as ranked by U.S. News and World Report.

But -- the Times reports -- some graduates of even the most prestigious law schools are not thriving:
Jason Bohn is earning $33 an hour as a legal temp while strapped to more than $200,000 in loans, a sizable chunk of which he accumulated during his time at Columbia University, where he finished both a J.D. and a master's degree.

"I grew up a ward of the state of New York, so I don't have any parents to call for help," Mr. Bohn says. "For my sanity, I have to think there is an end in sight."
One of the many factors that figure into the U.S. News rankings is the percentage of graduates employed after nine months. Folding pants at Macy's or waiting tables at Applebee's counts as employment. According to the Times article, Georgetown created three jobs in its admissions office paying $20 an hour -- and lasting six weeks, just long enough so that the three recent graduates hired for these positions could be counted as 'employed.'

The Times article notes that many law schools, including many not in anyone's Top 40, claim a median starting salary for graduates of $160,000 -- the same claim made by Harvard and Yale. And therein lies the link to the Law Bulletin salary article: These extraordinary income claims, both for new graduates and partners, depend on self-reporting.

You can access the entire Major, Lindsey & Africa 2010 Partner Compensation Survey by following the link in this sentence. The report depends on attorneys responding. If you check out the Methodology Appendix, you'll read that 33,063 partners from around the country were solicited by email. Some 2,959 emails were returned as undeliverable. Only 1,873 responses were received.

Who do you think responded? The ones who were doing great? Or the ones engaged in a grim struggle for survival in an increasingly competitive environment? In case the answers are not immediately obvious, let me ask this a different way: Are you more likely to go to your high school reunion when things are going great -- or when you're unemployed or chronically ill or staggering under crushing debts?

The U.S. News rankings also depend on self-reporting. As the Times reports:
[The U.S. News rankings] are based entirely on unaudited surveys conducted by each law school, using questions devised by the American Bar Association and the National Association for Law Placement. Given the stakes and given that the figures are not double-checked by an impartial body, each school faces exactly the sort of potential conflict of interest lawyers are trained to howl about.

The surveys themselves have a built-in bias. As many deans acknowledge, the results are skewed because graduates with high-paying jobs are more likely to respond than people earning $9 an hour at Radio Shack. (Those who don't respond are basically invisible, aside from reducing the overall response rate of the survey.)
William Henderson, an Indiana University law professor quoted in the Times story says, "Enron-type accounting standards have become the norm.... Every time I look at this data, I feel dirty."

I don't feel dirty. I feel angry. ... And maybe a little jealous, too. Who the heck is really earning a half million bucks out there? And why can't I?


Ellee Seymour said...

We have the same problem in the UK right now with bankers and their million pounds bonus.

Jean-Luc Picard said...

Statistics casn always be changed to prove something.

Jeni said...

I can relate fully to how you feel when reading this story and also, to the plight of the lawyers unable to earn a wage that allows them a bit of an edge in repayment of those loans and such.
I graduated from college at the ripe old age of 50 and was never able to find employment in my field nor that paid enough for me to exist (barely) and still repay those student loans! And one of the mantras I heard over and over in class after class too in college was how college graduates would then be able to earn such large salaries, high percentages over what just a high school grad would earn, etc., etc. The end result was/is that I feel somehow that I either didn't work hard enough in college or that there is possibly something intrinsically wrong with me that prevented me from being hired at a job that paid a decent wage AND was also in my field of study. For the record, after five years of constant job searching, applying, getting no response to my applications, etc., the only full-time job I could land was the same one I had left before going to college --that of asst. manager of a truckstop restaurant working for a chain operation, barely scraping by both financially and mentally. (I hated that job -can you tell?)

Shel said...

Jeni, stories like yours scare the life out of me. I'm in the same boat...went back to school to get out of retail...only to find myself working with ladies who have MASTER'S level degrees that can't find anything else. Makes me wonder why I'm bothering..sweating blood to pass these classes and taking out thousands of dollars in student loan debt.
Oh, and the original reason I hit "comment"...I'm taking Statistics this semester!