May 17, 2023 –The increasing debt load of many law school graduates is one ingredient in a witch’s brew of competing interests, demands, and economic realities for Wisconsin lawyers.

Many lawyers that start out as public defenders, prosecutors, or serve in other public sector jobs, may leave for financial reasons. Programs such as the federal Public Service Loan Forgiveness Program allow lawyers in public service to clear debts after a decade of service.

But that may not be a sustainable path for lawyers often starting their professional careers in their early 30s, hoping to start families, buy homes and otherwise contribute to the economy.

Unfilled vacancies in district attorney and public defender offices throughout Wisconsin is now well-documented, with inadequate funding of the criminal justice system a primary culprit.

But law school debt is another antagonist. With the newest crop of lawyers now graduating, this article explores law student debt and the downstream impact on the legal profession, with analyses from Jim Leipold of the Law School Admissions Counsel (LSAC).

Supply and Demand

Leipold is a leading expert on the employment market for law school graduates. Before he joined LSAC, he was the executive director of the National Association for Law Placement for more than 18 years.

Wisconsin may be struggling with current trends in legal employment, but according to Leipold, “this is a trend that [exists]… not just in terms of junior attorneys or new law school graduates but in large jurisdictions across the country, both local prosecutors and defenders have been in short supply and people in those jobs mid-career have been leaving and going into the private sector.”

Like many recent trends, COVID-19 and the associated lockdowns have played an exacerbating ​role in tandem with marketplace pressures.

In the legal field, fearing a similar experience to the 2008 Great Recession, many firms were hesitant, at the onset of the pandemic, with “legal work and particularly transactional work at large law firms paused for a period of time… maybe as long as a year in some places.”

This pent-up demand, no longer at a loggerhead in the post-pandemic reopening, created “a talent shortage and there was a lot written about the ‘war for talent,’” within the legal field as firms began hiring “with abandon and salaries were going up.”

Indeed, Leipold noted the starting salaries for first-year attorneys at large law firms went up twice in the previous year. Public sector employees “looked themselves in the mirror and said, ‘I could be making fifteen times what I’m making, and people are hiring.’”

Critical to the drain, however, was the fact that it wasn’t limited to any one particular career demographic but rather occurred at “the entry level and mid-level and even at the senior level,” in the public sector.

In a longstanding evolution, legal careers and associated salaries have evolved into what Leipold described as a bimodal distribution “which is the opposite of a bell curve.”

For the collective law school class of 2021 “more than half the salaries for students in their first job fell between $45,000 and $80,000. Then about a third, around 33%, were more than $120,000, and [there’s] not much in between.”

That first half, on the lefthand peak of the bimodal distribution, includes not just careers in the public sector but also most careers in small law firms, which constitute half of all private practice jobs, judicial clerkships, as well as administrative positions within law schools themselves.

Indeed, many lawyers “in admissions or career services in the last 18 months… have left and gone to law firms and other private sector jobs because the salary scale has been so high.”

Ultimately, Leipold concluded, “higher education, like public interest employers, have not been able to keep pace with this rapid run-up in private sector salaries,” as well as with inflation.

Nor do employment trends need to be influenced by concepts as complex as supply side economics and the animal spirits of the market. In Leipold’s opinion, simple convenience has played a role as well.

He explained: “private law firms have more readily adopted, even though somewhat reluctantly… more flexible work from home policies. Mid-career lawyers at law firms might only have to go into the office two or three days a week, whereas a public defender or in the civil legal services or a local prosecutor has to be in the office every day and in court every day.”

Observing these seismic shifts in work environment and expectations, Leipold predicted that COVID-19 will be a demarcation for a change in Western society, in much the same way the Industrial Revolution is seen now. The nature of the workplace has been changing and, “people are choosing in general the higher salaries, the greater flexibility, and we see employment patterns even beyond law that reflect those choices.”

A Higher Service

Of course, employment trends in the legal profession are in many respects a second subsequent tier of issues that stem from the problems plaguing the legal education system and American higher education as a whole. The elephant in the room is student debt and the ever-increasing cost of tuition especially when the U.S. is “the only country in the world that requires seven years of higher education” for lawyers.

Forty-five percent of law students are already in debt before they begin their 1L classes, and an average of $118,100 is then borrowed over the next three years.¹

Across all of U.S. higher education “tuition… has risen much faster than cost of living for many years,” and Leipold lamented that “we could do a graduate level seminar just on the collapse of the U.S. higher education economic model.”

Chief among the issues driving up costs, however, has been the proliferation of services in the higher education system at every level. “At the undergraduate level we see universities marketing climbing walls and full price health clubs, gyms, spa environments and new apartments for students that have bistros in the bottom where you can get an espresso 24/7,” Leipold noted.

However, not all of the services are as indulgent. “We’ve got, and necessarily so, full time mental health counselors and lots of layers of support for students, with accommodations for disabilities and academic support and career counseling,” Leipold said. “That layer of administrative professional support for students has grown dramatically in U.S. higher education including in law schools over the last two to three decades.”

The services themselves, necessary or not, have become marketing tools for many schools as they compete for students, while simultaneously establishing a new baseline norm at many institutions. With rising costs for these services, and in an inflationary environment, the spiral trends upwards.

Still, Leipold contends, while carefully noting the political nature of this observation, the rise in costs has worked in tandem with the federal student lending program. The program, broadly speaking “allows students to borrow up to the full cost of attendance in federally subsidized loans, and full cost is defined by the university,” which therefore almost always includes all fees and services.

Thus, paraphrasing critics of the program, Leipold says there have been no cost constraints on universities in decades, and “no penalty for rising costs because students could continue to borrow whatever it costs.” Leipold allows that “these are programs that were designed with tremendously good intentions about access to higher education and equality in this country,” but their limitless nature has seemed to create a feedback loop and the price of ‘whatever it costs’ has grown steadily.²

“It’s essentially federal funds that are passing through to the university, on the backs of students.” Law schools are participants in this program and system, and like “other academic units, have been able to raise costs [to] hire more staff and build new buildings and build climbing walls through federal money that passes to them through students, and that students then have to pay back.”

Whatever it Costs, Whatever it Takes

When asked if there was a point where the costs of higher education would become so high as to be prohibitive even with federal subsidized loans, Leipold was skeptical. “Everything we do exists in a marketplace and a marketplace has its own rules in supply and demand and there is a theoretical point of no return at which students would say this is too much, I’m not going to pay it. We have not reached that point in education or legal education.”

Part of this he attributes to a “culture of hierarchy and status that we’ve built around prestige in higher education in this country. We saw it with the admissions scandal that unfolded over the last couple of years in such a public way.”³ The costs of higher education are in some ways seen as an investment that ultimately will pay itself off in dividends tangible and intangible, monetary and social.

Leipold fears, however, for young students being blinded by the light, so to speak. “It’s almost like developmentally, at that age, people aren’t able to make rational economic decisions because they assume this will work out in their favor,” and so if given a chance of admission, they gladly pay sticker price as a premium on prestige.

Then, “at the other end of the spectrum, there are schools that are not as prestigious, but who will take chances on admitting people that others might not.” For those students, “they’re willing to pay whatever it costs, as are their families, because it’s the only pathway to a legal education, which is seen as a way to move up in society,” and improve economic standings for themselves and potentially the entire family.

He summarized, “education is seen as something that will have returns on investment greater than the costs, whatever that cost is.” But Leipold notes that the statistics suggest that is not that case, and if one looks at “lost opportunity cost and debt borrowed and repaid, that investment in legal education is only a net gain for about half the students who go to law school, over their entire economic life.”

The issue here, Leipold finds, lies in part with the kind of people who generally pursue legal education in the first place: “People who get into law school have always been super achievers and super competitive. They rose to the top in high school, they rose to the top in college and now they’re in law school. And they imagine they will sort themselves to the right-hand side of every graph. They think they’ll get a job that pays $190,000, they think they’ll be in the top quarter of their class. Three quarters of them aren’t going to be in the top quarter of the class by definition.”

The spiral of tuition and debt, however, isn’t necessarily preclusive to public sector employment. Referring to a large study called After the JD, which followed a national cohort of law school graduates in the first 12 years of their careers, Leipold observed “debt levels for graduating law students were pretty even regardless of what jobs they took. So, people going into public interest in the aggregate had about the same debt levels as people going into private practice in the aggregate. So, debt is not necessarily a differentiator in terms of job type.”⁴

What the debt did do, however, was influence other economic conditions, often by delaying them. So, “law school graduates were postponing marriage, postponing first time home ownership, postponing a number of normal life developments based on age because of the debt they were carrying.”

Those postponements and the debt that caused them “have downstream effects on career related pressures later on, and mounting costs for those who seek out legal services.” Leipold surmised, “legal services are more expensive in this country than any other country in the world, in part because legal education is so expensive.”

Band-Aids and Barristers

Universities are aware of the debt toll. Individual institutions are taking or experimenting with remedial measures. Leipold highlighted Yale’s efforts, noting that the school “has made great headlines this year by providing full scholarships for a growing percentage of its incoming class based on family resources, far more than any other schools,” before adding “but Yale has a ton of resources… and Yale can do a lot more than the University of Wisconsin in terms of subsidizing its costs.”

One recent experiment has been a rethinking of tuition discounting.⁵ Originating in the form of need-based aid, gradually in the race to buy entry credentials like high SAT or LSAT scores and reap the associated ranking metric data, schools have shifted to so-called merit-based scholarships.

Leipold finds that under this model, “disproportionately people with lower test scores have been more likely to pay full tuition,” and provide a pool of money for schools to offer meritorious applicants a discount. He went on, suggesting “we’ve arrived at this weird position, and I think a morally precarious place, where students and their families in some cases with the fewest resources are subsidizing students and families with the most resources.” Therefore, some smaller liberal arts undergraduate schools are doing away with discounting altogether, which will lower the sticker price greatly for all matriculating students but eliminate most scholarship funding.⁶

Outside of the legal education field, the ideas to alleviate costs for both students and consumers in the marketplace have remained mostly speculative. Leipold, looking at the U.K.’s legal system and the medical profession, believes there could be benefits to a stratification and diversification of the legal field.

“In the U.K.,” he explained, “there are different pathways to becoming different kinds of lawyers if you will, but they don’t all require four years of undergrad and three years of graduate school.” Similarly, “you don’t necessarily have to see an M.D., you might see a nurse practitioner, or a physician’s assistant and they’re each licensed to do different things but they’re all doing medicine.”

To that end, Leipold suggests that there may be opportunities for limited practice in fields such as family law or certain real estate matters that would, hypothetically, not require a full seven years of education for a practitioner. Such a system would, in theory, provide different levels​ of education requirements for different levels of services, and therefore potentially increase accessibility and bring down costs.

Conclusion

The student debt saga continues, with a potentially determinative case set before the Supreme Court.⁷ American higher education and a generation of students and lawyers are all being subjected to massive pressures as they try to navigate a system that has seemingly come unmoored.

Change will not happen overnight, nor will the higher education system likely fix itself wholesale or uniformly. But change is necessary, because public attorneys are necessary, as are the rights and system of justice that cannot be protected and promulgated without them.

Endnotes

¹ Melanie Hanson, Average Law School Debt, Education Data Initiative (Nov. 7, 2022), https://educationdata.org/average-law-school-debt#:~:text=71%25%20of%20law%20school%20students,was%20worth%20the%20financial%20cost.

²Tuition Rates, Univ. Wisconsin-Madison, https://mbo.wisc.edu/tuition-rates/ (last visited Mar. 6, 2023).

³https://www.nytimes.com/2023/01/06/us/college-admissions-scandal-heinel-usc.html.

⁴ Bryant G. Garth et al., After the JD, Am. Bar Found., https://www.americanbarfoundation.org/research/project/118 (last visited Mar. 6, 2023).

⁵ Taylor Gilbertson & Alex Kaplan, UW Law School must explore cohort tuition system to increase transparency about education costs, The Badger Herald (Feb. 7, 2023), https://badgerherald.com/opinion/2023/02/07/uw-law-school-must-explore-cohort-tuition-system-to-increase-transparency-about-education-costs/.

⁶ Anemona Hartocollis, A Sign That Tuition Is Too High: Some Colleges Are Slashing It in Half, N.Y. Times (Dec. 14, 2022), https://www.nytimes.com/2022/12/14/us/college-universities-college-tuition-reset.html.

⁷ Adam S. Minsky, 4 Student Loan Forgiveness Updates After Supreme Court Hearing, Forbes (Mar. 6, 2023), https://www.forbes.com/sites/adamminsky/2023/03/06/4-student-loan-forgiveness-updates-after-supreme-court-hearing/?sh=4da3254a18df.