Why not pay sticker at T14 when biglaw salary could pay off loans?

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nixy

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Re: Why not pay sticker at T14 when biglaw salary could pay off loans?

Postby nixy » Wed Jun 13, 2018 2:55 pm

I think you’re overestimating how much more money a T14 nets you over the kind of school you can get a decent scholarship to if you’re getting into T14s.

Also what the average T14 grad makes isn’t much help if you end up not being average.

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Re: Why not pay sticker at T14 when biglaw salary could pay off loans?

Postby IPProf » Wed Jun 13, 2018 3:04 pm

dropout wrote:I am sorry for the mistake in the time period needed to repay, i was using someone elses statistic in this thread. Really, this should be looked at the perspective of marginal benefits. The difference in the amount you can earn with or without a jd and the probable income from a t14 versus a t1. I believe that the increase in earnings from a t14 versus a bs/ba is likely to be greater than 50k conservatively speaking. That would give you a return of just over 15%, not bad. Alternatively, the average t1 grad will not see much of an income boost from law school versus their bs/ba if the degree is in a demanded field. If you want to tweak my numbers feel free, these are very rough estimates, but i do believe that the average t14 grad may earn as much as 100k more annually than if they entered the field with just a bs/ba.

This is the calculation that everyone should be doing. The question of whether you should got to X school at sticker can't be answered without knowing what happens if you don't. What is the best scholarship offer on the table, and what are that school's prospects? Where do you work if you don't go to law school, what do you make, and how much do you enjoy it? The central problem is that it's really really hard to project the state of your career, in any field, 5-8 years out. Normally the solution is to make conservative estimates, but that's obviously imperfect.

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Re: Why not pay sticker at T14 when biglaw salary could pay off loans?

Postby Npret » Wed Jun 13, 2018 4:15 pm

IPProf wrote:
dropout wrote:I am sorry for the mistake in the time period needed to repay, i was using someone elses statistic in this thread. Really, this should be looked at the perspective of marginal benefits. The difference in the amount you can earn with or without a jd and the probable income from a t14 versus a t1. I believe that the increase in earnings from a t14 versus a bs/ba is likely to be greater than 50k conservatively speaking. That would give you a return of just over 15%, not bad. Alternatively, the average t1 grad will not see much of an income boost from law school versus their bs/ba if the degree is in a demanded field. If you want to tweak my numbers feel free, these are very rough estimates, but i do believe that the average t14 grad may earn as much as 100k more annually than if they entered the field with just a bs/ba.

This is the calculation that everyone should be doing. The question of whether you should got to X school at sticker can't be answered without knowing what happens if you don't. What is the best scholarship offer on the table, and what are that school's prospects? Where do you work if you don't go to law school, what do you make, and how much do you enjoy it? The central problem is that it's really really hard to project the state of your career, in any field, 5-8 years out. Normally the solution is to make conservative estimates, but that's obviously imperfect.

That’s true but so far people have only mentioned coding and boring office job as alternative to sticker debt. They are already not looking at alternatives.

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hoos89

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Re: Why not pay sticker at T14 when biglaw salary could pay off loans?

Postby hoos89 » Wed Jun 13, 2018 5:32 pm

dropout wrote:
I think that 4-5 years to recoup the costs of an investment is reasonable. If i was offered a financial investment with a 20% annual return I would jump at that opportunity. I think t14 is a viable option, 75% of the class will get biglaw or clerk. Those numbers arent that bad. Then consider the prestigue and status that comes with the investment as a park. I also agree with the mentioned ibr perspective. If you miss biglaw you will likely not have to pay your entire debt.


Except we're not talking about a capital investment. We're talking about your life and thousands of hours of labor, which is a real cost that needs to be accounted for. Also you're not getting back to where you would be without law school. Oh and the 3 years of law school should count so it's 7-8 years, not 4-5.

Npret wrote:
How are you repaying 300,000 plus in debt plus interest back in 4 years? Can you break that down?


I said 4-5, not 4 (in other words...between 4 and 5 years). Assuming balance is $325k when you start repaying, I don't think it's crazy to pay it down in under 5 years if you stay in biglaw. The first couple years you probably won't be paying off a huge number, but remember that your income almost doubles between year 1 and year 5. Going off the new Cravath scale, and even if I don't count stub year income/bonus or the summer bonus, and assuming monthly expenses of $7500 (which I don't think is particularly conservative, even for NYC), you'd have a total discretionary income of almost $300k through year 4, plus another $125k+ in year 5. So yeah I think you could definitely finish off a loan balance of that size with a big law salary by the end of year 5.

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Re: Why not pay sticker at T14 when biglaw salary could pay off loans?

Postby Npret » Wed Jun 13, 2018 5:48 pm

hoos89 wrote:
dropout wrote:
I think that 4-5 years to recoup the costs of an investment is reasonable. If i was offered a financial investment with a 20% annual return I would jump at that opportunity. I think t14 is a viable option, 75% of the class will get biglaw or clerk. Those numbers arent that bad. Then consider the prestigue and status that comes with the investment as a park. I also agree with the mentioned ibr perspective. If you miss biglaw you will likely not have to pay your entire debt.


Except we're not talking about a capital investment. We're talking about your life and thousands of hours of labor, which is a real cost that needs to be accounted for. Also you're not getting back to where you would be without law school. Oh and the 3 years of law school should count so it's 7-8 years, not 4-5.

Npret wrote:
How are you repaying 300,000 plus in debt plus interest back in 4 years? Can you break that down?


I said 4-5, not 4 (in other words...between 4 and 5 years). Assuming balance is $325k when you start repaying, I don't think it's crazy to pay it down in under 5 years if you stay in biglaw. The first couple years you probably won't be paying off a huge number, but remember that your income almost doubles between year 1 and year 5. Going off the new Cravath scale, and even if I don't count stub year income/bonus or the summer bonus, and assuming monthly expenses of $7500 (which I don't think is particularly conservative, even for NYC), you'd have a total discretionary income of almost $300k through year 4, plus another $125k+ in year 5. So yeah I think you could definitely finish off a loan balance of that size with a big law salary by the end of year 5.

What are you considering take home to be in NYC monthly?

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Re: Why not pay sticker at T14 when biglaw salary could pay off loans?

Postby Npret » Wed Jun 13, 2018 5:59 pm

Npret wrote:
hoos89 wrote:
dropout wrote:
I think that 4-5 years to recoup the costs of an investment is reasonable. If i was offered a financial investment with a 20% annual return I would jump at that opportunity. I think t14 is a viable option, 75% of the class will get biglaw or clerk. Those numbers arent that bad. Then consider the prestigue and status that comes with the investment as a park. I also agree with the mentioned ibr perspective. If you miss biglaw you will likely not have to pay your entire debt.


Except we're not talking about a capital investment. We're talking about your life and thousands of hours of labor, which is a real cost that needs to be accounted for. Also you're not getting back to where you would be without law school. Oh and the 3 years of law school should count so it's 7-8 years, not 4-5.

Npret wrote:
How are you repaying 300,000 plus in debt plus interest back in 4 years? Can you break that down?


I said 4-5, not 4 (in other words...between 4 and 5 years). Assuming balance is $325k when you start repaying, I don't think it's crazy to pay it down in under 5 years if you stay in biglaw. The first couple years you probably won't be paying off a huge number, but remember that your income almost doubles between year 1 and year 5. Going off the new Cravath scale, and even if I don't count stub year income/bonus or the summer bonus, and assuming monthly expenses of $7500 (which I don't think is particularly conservative, even for NYC), you'd have a total discretionary income of almost $300k through year 4, plus another $125k+ in year 5. So yeah I think you could definitely finish off a loan balance of that size with a big law salary by the end of year 5.

What are you considering take home to be in NYC monthly?

Also, how many firms are matching Cravath? That thread is aids.

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hoos89

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Re: Why not pay sticker at T14 when biglaw salary could pay off loans?

Postby hoos89 » Wed Jun 13, 2018 10:48 pm

Npret wrote:
hoos89 wrote:
dropout wrote:
I think that 4-5 years to recoup the costs of an investment is reasonable. If i was offered a financial investment with a 20% annual return I would jump at that opportunity. I think t14 is a viable option, 75% of the class will get biglaw or clerk. Those numbers arent that bad. Then consider the prestigue and status that comes with the investment as a park. I also agree with the mentioned ibr perspective. If you miss biglaw you will likely not have to pay your entire debt.


Except we're not talking about a capital investment. We're talking about your life and thousands of hours of labor, which is a real cost that needs to be accounted for. Also you're not getting back to where you would be without law school. Oh and the 3 years of law school should count so it's 7-8 years, not 4-5.

Npret wrote:
How are you repaying 300,000 plus in debt plus interest back in 4 years? Can you break that down?


I said 4-5, not 4 (in other words...between 4 and 5 years). Assuming balance is $325k when you start repaying, I don't think it's crazy to pay it down in under 5 years if you stay in biglaw. The first couple years you probably won't be paying off a huge number, but remember that your income almost doubles between year 1 and year 5. Going off the new Cravath scale, and even if I don't count stub year income/bonus or the summer bonus, and assuming monthly expenses of $7500 (which I don't think is particularly conservative, even for NYC), you'd have a total discretionary income of almost $300k through year 4, plus another $125k+ in year 5. So yeah I think you could definitely finish off a loan balance of that size with a big law salary by the end of year 5.

What are you considering take home to be in NYC monthly?


Whatever the ADP tax calculator told me when I plugged it in. This is assuming no 401(k), and in fairness I actually said $0 net worth, not loans paid off. So if you did 401(k) that would actually work out more in your favor because it cuts taxes. It really should be doable to get to $0 net worth by the end of year 5 if you're at a Cravath scale firm, even if summer bonuses don't become a thing going forward.

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Re: Why not pay sticker at T14 when biglaw salary could pay off loans?

Postby Npret » Thu Jun 14, 2018 10:06 am

I mean if someone wants to assume the best possible outcome as a reason for 6 figures of non dischargeable debt, I can’t stop them. I don’t know how accurate that take home calculator is, but obviously 401k and health insurance costs will lower that amount. I thought you knew fromexperience how much people were actually getting in their check.

Even if you pay it back in 5 years, that’s still a huge amount of money out the door on loans every month. It’s not easy to do.

I’ve pretty much given up because in my experience, most people just sign for the debt and then don’t think about it or even check their balances. There is a lot of denial that goes along with a fully debt financed education for $300,000 plus, not including interest.

People just see the salary and that’s where their thinking stops for the most part. I feel that people don’t want to hear advice against what they want to do anyway.

Then we get threads of people hating biglaw, burning out, getting fired for incompetence or let go because their practice group isn’t busy, or not even getting biglaw in the first place. I know biglaw works for certain people, but it’s really not for everyone.

I wish people would put as much effort into finding other options as they do teaching themselves law games.

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Re: Why not pay sticker at T14 when biglaw salary could pay off loans?

Postby historyminor » Thu Jun 14, 2018 1:34 pm

Npret wrote: People just see the salary and that’s where their thinking stops for the most part. I feel that people don’t want to hear advice against what they want to do anyway.

Then we get threads of people hating biglaw, burning out, getting fired for incompetence or let go because their practice group isn’t busy, or not even getting biglaw in the first place. I know biglaw works for certain people, but it’s really not for everyone.

I wish people would put as much effort into finding other options as they do teaching themselves law games.


More like advice against what they think they want to do. Unless someone's worked as a paralegal or legal assistant before, it'd be almost impossible for them to know that they want to be a lawyer. Between the promise of the salary and whatever fantasies they've constructed for themselves, even conversations with disgruntled and/or former lawyers (as in, people who do actually know what it's like to work as a lawyer) won't dissuade them. Certainly didn't have much of an effect on me.

I think there are some cool things you can do with a law degree, although a lot of those things are public service JD-advantage-type jobs. That said, I find it disillusioning to read about cool things that other people have accomplished in their jobs - inventing something, discovering something, building something - and realize that I don't really have much of anything concrete to point to as a real achievement in the last several years. Many of my lawyer friends feel the same way.

Law school admissions should really move closer to the business school admission model, which apparently heavily favors people with real work experience. They should also probably have mandatory interviews to weed out people who just aren't going to make it in the job market. Given how much of a cash cow law schools are for universities, I'm not holding my breath.

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Re: Why not pay sticker at T14 when biglaw salary could pay off loans?

Postby Npret » Sat Jun 16, 2018 8:16 am

I wonder if anyone from the thread saw the post by the associate gettting stealthed right after being told they did good work and got a raise?

We aren’t making these stories up.

I know I’m debt averse compared to most. At least realize that biglaw isn’t a permanent career for all but a tiny percentage of people.

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Re: Why not pay sticker at T14 when biglaw salary could pay off loans?

Postby wolfdog » Sat Jun 16, 2018 8:38 am

historyminor wrote:The real issue here isn't the biglaw salary, it's whether the individual student is a good match for that kind of job in the first place. There are some personalities that fit very well into biglaw, and for those people, this is a good investment with reasonable odds of success. I've seen other people not tend to do as well - typically people who have kind of eccentric interests and hobbies, who are very academia-oriented, or who struggle a little in social situations. These people may be super smart and easily succeed at the law school admissions game, but they just aren't going to fit into the culture of biglaw, and may struggle to break in in the first place.I think you've got to be really honest with yourself about whether you fall into these categories before you take on the loans.


Why do these people not do well? Is it poor work product, or because they aren’t well liked?

pleaseberkeley

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Re: Why not pay sticker at T14 when biglaw salary could pay off loans?

Postby pleaseberkeley » Sun Jun 17, 2018 3:16 pm

Thats why I want to live with my mother if I get biglaw hehe. Home cooked food, and no rent.

historyminor

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Re: Why not pay sticker at T14 when biglaw salary could pay off loans?

Postby historyminor » Mon Jun 18, 2018 2:49 pm

wolfdog wrote:
historyminor wrote:The real issue here isn't the biglaw salary, it's whether the individual student is a good match for that kind of job in the first place. There are some personalities that fit very well into biglaw, and for those people, this is a good investment with reasonable odds of success. I've seen other people not tend to do as well - typically people who have kind of eccentric interests and hobbies, who are very academia-oriented, or who struggle a little in social situations. These people may be super smart and easily succeed at the law school admissions game, but they just aren't going to fit into the culture of biglaw, and may struggle to break in in the first place.I think you've got to be really honest with yourself about whether you fall into these categories before you take on the loans.


Why do these people not do well? Is it poor work product, or because they aren’t well liked?


I don't think it's necessarily poor work product--at least not for the folks who strike out at OCI and never break into a firm. Law is a business, and the partners are looking to invest in potential associates who will turn a profit for the business. That means they want someone who is business-oriented and client focused. The partner may see someone with these traits as a poor investment.

In any business, it's very important that the customer likes the people they're going to be working with. A client may have a hard time relating to an associate with unusual hobbies or interests. For example, I had a classmate who was into writing slam poetry and practicing polyamory. People tend to like other people who share their interests, and there just aren't going to be very many--if any--clients who are interested in slam poetry and polyamory. The client is probably going to be interested in very mainstream things like attending sports matches or raising children, and it's better for the business to have associates who can bond with the clients over these kinds of interests.

In hiring, it's also important to consider return on investment. It costs time and money to train an associate, and the associate won't turn an immediate profit for the firm. Everyone knows that there are going to be a certain number of associates who wash out before the firm really makes any money. It's pretty hard to know ahead of time which associates will leave the firm first. However, if someone is dedicating much time to developing their hobbies and interests, that's a pretty good indicator that they could get frustrated and not stay around for as long. A while back there was a story, I think on yahoo! news, about an associate who gave her notice through a cartoon. Basically, the associate was really into drawing, and was really frustrated that every time she tried to sit down to work on her art, she'd get interrupted by a client emergency. So she left for a job that gave her more time to work on her art. She likely didn't ever reach her peak point of profitability for the firm.

Finally, a law firm needs to hire someone who thinks like a businessman/woman. Someone who is very academia-oriented tends to be focused on coming up with new and original ideas, or exploring obscure parts of the law. Academia rewards this, but the business world does not. A biglaw partner would prefer to hire someone who is less intellectual/cerebral, and is really focused on how to increase profits for the firm.

It's worth noting that there's a huge discontent between law school and the business world. Universities tend to reward applicants who stand out as a little unusual, but law firms definitely do not.

historyminor

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Re: Why not pay sticker at T14 when biglaw salary could pay off loans?

Postby historyminor » Mon Jun 18, 2018 4:26 pm

historyminor wrote:
wolfdog wrote:
historyminor wrote:The real issue here isn't the biglaw salary, it's whether the individual student is a good match for that kind of job in the first place. There are some personalities that fit very well into biglaw, and for those people, this is a good investment with reasonable odds of success. I've seen other people not tend to do as well - typically people who have kind of eccentric interests and hobbies, who are very academia-oriented, or who struggle a little in social situations. These people may be super smart and easily succeed at the law school admissions game, but they just aren't going to fit into the culture of biglaw, and may struggle to break in in the first place.I think you've got to be really honest with yourself about whether you fall into these categories before you take on the loans.


Why do these people not do well? Is it poor work product, or because they aren’t well liked?



In hiring, it's also important to consider return on investment. It costs time and money to train an associate, and the associate won't turn an immediate profit for the firm. Everyone knows that there are going to be a certain number of associates who wash out before the firm really makes any money. It's pretty hard to know ahead of time which associates will leave the firm first. However, if someone is dedicating much time to developing their hobbies and interests, that's a pretty good indicator that they could get frustrated and not stay around for as long. A while back there was a story, I think on yahoo! news, about an associate who gave her notice through a cartoon. Basically, the associate was really into drawing, and was really frustrated that every time she tried to sit down to work on her art, she'd get interrupted by a client emergency. So she left for a job that gave her more time to work on her art. She likely didn't ever reach her peak point of profitability for the firm.



By the way, here's a story about the departure memo: http://time.com/3005173/lawyer-cartoons-departure-memo/. Seems that the original is no longer available, but a good story nonetheless.

longlivewho

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Re: Why not pay sticker at T14 when biglaw salary could pay off loans?

Postby longlivewho » Mon Jun 18, 2018 5:42 pm

historyminor wrote:
wolfdog wrote:
historyminor wrote:The real issue here isn't the biglaw salary, it's whether the individual student is a good match for that kind of job in the first place. There are some personalities that fit very well into biglaw, and for those people, this is a good investment with reasonable odds of success. I've seen other people not tend to do as well - typically people who have kind of eccentric interests and hobbies, who are very academia-oriented, or who struggle a little in social situations. These people may be super smart and easily succeed at the law school admissions game, but they just aren't going to fit into the culture of biglaw, and may struggle to break in in the first place.I think you've got to be really honest with yourself about whether you fall into these categories before you take on the loans.


Why do these people not do well? Is it poor work product, or because they aren’t well liked?


I don't think it's necessarily poor work product--at least not for the folks who strike out at OCI and never break into a firm. Law is a business, and the partners are looking to invest in potential associates who will turn a profit for the business. That means they want someone who is business-oriented and client focused. The partner may see someone with these traits as a poor investment.

In any business, it's very important that the customer likes the people they're going to be working with. A client may have a hard time relating to an associate with unusual hobbies or interests. For example, I had a classmate who was into writing slam poetry and practicing polyamory. People tend to like other people who share their interests, and there just aren't going to be very many--if any--clients who are interested in slam poetry and polyamory. The client is probably going to be interested in very mainstream things like attending sports matches or raising children, and it's better for the business to have associates who can bond with the clients over these kinds of interests.

In hiring, it's also important to consider return on investment. It costs time and money to train an associate, and the associate won't turn an immediate profit for the firm. Everyone knows that there are going to be a certain number of associates who wash out before the firm really makes any money. It's pretty hard to know ahead of time which associates will leave the firm first. However, if someone is dedicating much time to developing their hobbies and interests, that's a pretty good indicator that they could get frustrated and not stay around for as long. A while back there was a story, I think on yahoo! news, about an associate who gave her notice through a cartoon. Basically, the associate was really into drawing, and was really frustrated that every time she tried to sit down to work on her art, she'd get interrupted by a client emergency. So she left for a job that gave her more time to work on her art. She likely didn't ever reach her peak point of profitability for the firm.

Finally, a law firm needs to hire someone who thinks like a businessman/woman. Someone who is very academia-oriented tends to be focused on coming up with new and original ideas, or exploring obscure parts of the law. Academia rewards this, but the business world does not. A biglaw partner would prefer to hire someone who is less intellectual/cerebral, and is really focused on how to increase profits for the firm.

It's worth noting that there's a huge discontent between law school and the business world. Universities tend to reward applicants who stand out as a little unusual, but law firms definitely do not.


This post sums up the massive disconnect between law schools and big law. Beautiful.

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hoos89

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Re: Why not pay sticker at T14 when biglaw salary could pay off loans?

Postby hoos89 » Mon Jun 18, 2018 9:49 pm

Npret wrote:I mean if someone wants to assume the best possible outcome as a reason for 6 figures of non dischargeable debt, I can’t stop them. I don’t know how accurate that take home calculator is, but obviously 401k and health insurance costs will lower that amount. I thought you knew fromexperience how much people were actually getting in their check.

Even if you pay it back in 5 years, that’s still a huge amount of money out the door on loans every month. It’s not easy to do.

I’ve pretty much given up because in my experience, most people just sign for the debt and then don’t think about it or even check their balances. There is a lot of denial that goes along with a fully debt financed education for $300,000 plus, not including interest.

People just see the salary and that’s where their thinking stops for the most part. I feel that people don’t want to hear advice against what they want to do anyway.

Then we get threads of people hating biglaw, burning out, getting fired for incompetence or let go because their practice group isn’t busy, or not even getting biglaw in the first place. I know biglaw works for certain people, but it’s really not for everyone.

I wish people would put as much effort into finding other options as they do teaching themselves law games.


I don't work in NYC, and even if I did I wouldn't really know what take home is from experience because the first pay checks for the raises haven't come through. Health insurance is accounted for by expenses. 401(k) is a boon on the track to $0 net worth because of the tax benefit (again: I said 4-5 years to $0 net worth, not loan paid off).

I'm not advocating for T14 at sticker by the way. My point is that taking 7-8 years of a ton of work/stress just to get back to $0 is just not that great...and that's the BEST CASE. You still need to get a biglaw job and hold onto it for that long, which is much easier said than done. If the economy tanks there's a decent chance you'll just be screwed...and there's a pretty good chance it will at some point in that span.



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