In 1985, Cravath paid new lawyers $53,000; that was the salary other BigLaw firms tried to match. During the same year, Harvard Law School charged tuition and fees of $10,060. Yale and Stanford were a bit higher at $10,700 and $10,776. The CCN charged $11,076 (Chicago), $11,200 (NYU), and $11,518 (Columbia).
What are the comparable numbers today? Cravath is paying its first-year associates $160,000--three times what it paid in 1985. Inflation hasn't been nearly that high. If Cravath had increased first-year salaries simply to match inflation, those salaries would be $112,849. So today's associates are getting 42% more, in constant dollars, than associates did in 1985. Sounds like these greedy millennials are doing pretty well for themselves, doesn't it?
Not so much. Law school tuition has gone up even faster than BigLaw starting salaries. This year, Harvard is charging tuition and fees of $50,880--five times what it charged in 1985. The multipliers for the rest of YS/CCN are similar; they range from 4.59 (Chicago) to 4.95 (Stanford). A student who attends one of these schools and lands a BigLaw job today is actually worse off financially than a student who did the same in 1985--much worse off.
Here's another way to put it: In the mid 1980s, three years of tuition at Harvard Law School cost about $30,180. A student who landed a job at Cravath or another top-salary firm earned $53,000 in her first year--considerably more than the full amount she paid Harvard. Three years of law school tuition was 57% of the BigLaw graduate's first-year, pre-tax salary. Today, the same student will pay about $152,640 to Harvard for three years of schooling. That total is 95% of a BigLaw graduate's first-year, pre-tax salary.
But what about scholarships? Perhaps fewer students pay full freight at Harvard today than they did in 1985. Maybe, although only half of today's Harvard students receive any scholarship aid. And the scholarship would have to be pretty substantial--more than $30,000 per year--to put today's graduate in the same position as the 1985 one. The bottom line is that even the most financially successful law graduates today, coming from the most elite schools, reap a substantially smaller initial return on their law school investment than students did a generation ago. BigLaw is paying more, but BigEd's tuition has gone up even faster.
Compared to other schools, HYS and CCN have been fairly conservative in their tuition increases. In 1985, UC-Hastings charged California residents $1,212 for a year of law school. This year, tuition and fees are $44,186. A year at Hastings now costs thirty-six times more than it did in 1985. Here are three other comparisons that I made for schools picked with a random number generator:
- At the University of Missouri-Columbia, resident tuition and fees have risen from $2,490 in 1985 to $18,582 this year. A year today costs 7.5 times more than it did in 1985.
- At the University of Iowa, resident tuition and fees have risen from $1,680 in 1985 to $27,344 this year. A year today costs 16.3 times more than it did in 1985.
- At Villanova, tuition and fees were $7,000 in 1985; today they are $38,910. That's 5.6 times more expensive than in 1985.
None of this touches the plight of today's graduates who work for government, mid-law, small-law, document review companies, and alternative employers. Tuition has gone up for these students, just as it has for the graduates gaining BigLaw jobs. But starting salaries in these other tracks have risen much more slowly than in BigLaw; some actually lag behind 1985 salaries in constant dollars. That's a subject for another post.
Starting salaries, of course, do not reflect the lifetime financial rewards that lawyers receive from investing in a JD. Salaries for many of today's job entrants will go up over time. But so did salaries for those who entered the legal job market in the 1980s. Indeed, the period from 1980 through 2000 produced particularly rich rewards for many attorneys. There's little reason to think that today's starting salaries--in any law-related field--will increase at higher rates than starting salaries did in the 1980s.
Investing in law school still pays off financially for some students, although that group is rapidly shrinking. But even for the biggest winners, the investment won't pay off nearly as well as it did in the 1980s. Some of the loss comes from changes in the legal market, but the lion's share derives from the much higher cost of legal education. Whatever legal jobs they pursue--even if they are lucky enough to land those lucrative BigLaw jobs--our children will reap far lower financial returns from their law degrees than we did.
Update: [PC] Here's some more comparative data. Most of the run-up in starting salaries at big firms took place between the late 1950s and the mid-1980s. In real dollars the going rate is currently 14% lower than it was in 2006.