Is Law Student Debt Increasing Your Legal Spend?
This week, the Young Lawyers Division of the American Bar Association released the results of a comprehensive survey it conducted on the issue of student loan debt. Or, more accurately, law student loan debt. The findings:
Average debt for a student graduating law school is $165,000;
More than 75% of graduates have at least $100,000 in student loan debt;
More than 50% of graduates have at least $150,000 in student loan debt; and
Approximately 25% of graduates have at leas $200,000 in student loan debt.
How does this affect the average business owner? Simply put, the average business owner is the one who is paying down the student loan debt.
Here’s how the dirty little secret works:
Enroll in law school and agree to take on significant debt;
Work very hard during law school to advance yourself and get good grades — this includes not helping (or ever hindering) your fellow/sister students as the more you can step on your competition and squash them, the easier it is to be at the top of the class;
Graduate with a high paying job at a Big Law firm, earning an impressive salary but with incredibly onerous demands and expectations imposed, including the dreaded billable hour;
Resurrect the cut-throat attitude of law school by doing whatever it takes to make the billable hour goals — including over-billing clients (also charitably known inside law firms as “padding the bills”);
Clients pay their inflated bills;
You get to keep your job — or are even awarded a bonus based on the amount of money you bring into the firm (which only further incentivizes you to engage in the scurrilous conduct); and
You can pay your student loan debt. If you’re really good at the scheme, you might even be paid enough so you can pay your debt off early.
Now, that all being said, does every young attorney do this? Certainly not. But, based on what I have seen in my career, it’s safe to assume that it occurs more than the average business owner realizes. As a result, legal bills are higher than they need to be and companies’ legal spend is inflated as a function of trickle down from the student debt crisis.
Business owners need to be scrupulous about the legal bills they receive and pay. Even better, owners should consider alternate fee arrangements instead.
