Sunk costs

Suppose you’ve absorbed all the bad news about the legal job market, and you have a queasy feeling.  You’re worried that you won’t find a job as a lawyer, that you won’t like the job if you do find one, and/or that you won’t be able to pay off your loans even with a job you like.  But you’ve already invested one or two years in law school.  Should you walk away at this point?  Or does it make sense to finish the degree?

The answer, as any tiresome law professor would say, is “it depends.”  First the bad news:  The time and money that you’ve invested so far are “sunk costs.”  No matter what you do, you can’t regain those hours or dollars.  If you are a law student, you have already spent X dollars and Y hours working towards your degree.  Nothing will change that investment:  Whether you finish law school or choose a different path, those dollars and hours are gone. 

No one likes to think about “goneness,” so your brain will try to give those spent hours/dollars meaning.  This gives rise to what economists call the “sunk cost fallacy.”  Confronted with costs that can’t be recovered, people try to give the lost costs meaning—even if that leads to irrational actions.  The classic example is a person who purchases a movie ticket and then hears from a reliable friend that the movie is revoltingly awful.  At this point, the purchaser doesn’t want to see the movie; he trusts his friend that the ninety minutes will be agonizing.  On the other hand, the purchaser doesn’t want to acknowledge to himself that he wasted eight dollars on the movie ticket.  Some people will go to the movie as a way of giving value to the purchased ticket—even though, paradoxically, they will end up losing both the price of the ticket and the ninety minutes they might have spent doing something more pleasant.  Sunk costs create excruciating decisions, especially when the costs are much larger than eight dollars.

Now the slightly better news:  The time and money already devoted to law school are sunk costs, but not necessarily dead weights.  You should consider these investments when deciding whether to continue law school, but not as sunk costs that have to be validated.  Don’t think about how much you’ve invested so far.  Instead, think about what—if anything—you’ve gained.  This is not a Pollyanna exercise; it’s a way of helping you avoid the sunk cost fallacy.  The question you have to ask is:  Given my talents, experience, and potential (all as measured today), together with the particular options open to me (again, as you know them today), what is the best path forward?  Will another year or two of law school yield benefits that outweigh the costs?  Or would a leave of absence (perhaps leading to a permanent departure) produce a better outcome?  To answer those questions, you have to fully assess your current position—including whatever you’ve gained from time in law school. 

If you’ve finished one or two years of law school, you’re a different person than you were as a 0L. You know a little more about law practice, and a lot more about the challenges of the job market.  You’ve gained the basic skill of thinking like a lawyer, and maybe some more specialized skills (knowledge of a particular doctrinal area, experience mediating, etc).  You know about your own performance in law school—what you loved, what you hated, where you excelled, and where you had trouble.  You can also estimate what your performance, combined with other experiences and attributes, might yield for you on the job market. 

I'm not suggesting that those gains were worth the price; given the high price of law school, both financially and personally, there's a good chance the gains were not worth their cost.  But that's not the relevant question now; regrets will lead you straight to the sunk cost fallacy.  Instead, you have to assess your current position, including any gains you've realized while in law school, without thinking about the amounts you've already paid.  In my next post, I'll suggest how to apply your assessment of your current position, as well as the other information you've gathered, to think through next steps.

Update: [LP] Previous posts by DJM on this topic are here and here.