SALT LAKE CITY — Law school seems like a good option for Matthew Skanchy.

With top grades and a strong LSAT score, the 24-year-old BYU English major has already been accepted to several prominent law schools, including the University of Virginia. "I feel lucky in the sense that I have lots of options," he says. With a juris doctorate from a top school, Skanchy is confident he will find a good job when he graduates.

But new numbers released in 2011 by the National Association for Legal Career Professionals (NALP) show the difficult circumstances for many law grads. Only 68 percent of graduates from the class of 2010 are actually working in the profession. The study also found that students borrow about S90,000 on average to finance legal degrees against the expectation of a good paying job when they graduate. And in an economy where jobs are hard to find, at least 20 percent of newly minted law grads are taking low-paying contract work to scrape by.

This is all happening at a time in which more students are enrolling at law schools than ever before. Between October 2008 and October 2009 the number of students sitting for the Law Admissions Test went up 20 percent, according to LSAC, the organization that administers the test.

In the coming weeks students who have applied for law school will start hearing back from their prospective schools. Before making any commitments, Kris Tina Carlston, a prelaw advisor at BYU, suggests students recognize the financial realities for most graduating law students. Julie Margietta Morgan, a policy analyst with the Washington, D.C.-based Center for American Progress, a left-leaning think tank, agrees. "Those considering law school need to inform themselves about what a legal education entails, both financially in terms of post-graduation employment prospects."

Scarce Law Jobs

In June of 2007 the number of people employed in legal services reached an all-time high of 1.2 million. Today that number is just more than 1 million, an 8 percent drop. According to the National Association for Legal Career Professionals (NALP), only 88 percent of law graduates from the class of 2010 are employed, down from a high of 92 percent in 2007. While 88 percent seems solid, it conceals several negative trends in the legal job market. Only 68 percent of 2010 law school graduates are employed in jobs that require bar passage, and 11 percent of new JDs work part-time because they are unable to find full-time work. Another 20 percent are working in temporary or contract positions.

Recent law school graduates like Alexandra Gomez-Jimenez are confronting the reality of softening market for lawyers. The 30-year-old graduate of New York Law School (NYLS) had to take a job as a paralegal after months of unsuccessfully looking for employment as an attorney. The difficulty finding a job shocked Gomez-Jimenez. "When I was applying, New York Law School said employment right out of school was high," she says.

Gomez-Jimenez discovered that law schools are given considerable leeway in how they report the employment and salary data supplied by their former students. NYLS reported employment levels upwards of 90 percent at the time Ms Gomez-Jimenez applied. However, many NYLS alums were not working as lawyers, a detail the school failed to mention in their promotional literature. NYLS declined to comment.

Frustrated by the lack of transparency, Gomez-Jimenez decided to join a class-action lawsuit against her alma mater alleging that the school's reporting practices deceive students about what they could expect upon graduation. The complaint, filed last November by New York attorney David Anziska, charges that there is "systemic, ongoing fraud … in the legal education industry (which) threatens to leave a generation of law students in dire financial straits."

Lack of transparency in reporting employment figures means that prospective students aren't getting an accurate sense of what the prospects are for new attorneys. "If we want students to make informed decisions," Margietta Morgan says, "we need to give them an accurate sense of market conditions." Until recently the American Bar Association, the governing body for U.S. law schools, did not require schools to report which sectors their former students were employed in. If a graduate worked as a parking lot attendant or waiting tables, for the purposes of their law school employment statistics, they were employed.

The ABA also didn't require schools to differentiate between students who work full-time, part-time and temporarily. Law schools hoping to boost their employment numbers might hire their own graduates to do hourly temp work. For example, Georgetown Law School sent an email in 2010 to alums who were still seeking employment announcing several newly created temporary jobs in admissions that started Feb. 1 and lasted six weeks. The students they hired would count as employed for the purposes of the school's survey.

Crushing debt

Despite the dwindling job prospects for many would-be lawyers, and the cost of law school, easy accessibility of student loans ensures that money is available for the growing horde of ambitious would-be lawyers. In 2010 law students took out $3.6 billion in student loans, up from $3.1 billion dollars in 2008, according to debt levels compiled by US News and World report, which ranks national universities.

Law school graduates in the class of 2008 accumulated an average of $80,000 in debt, according the National Post-Secondary Student Aid Survey. They report that 88 percent of law school graduates take out loans. Graduates of private institutions average debt loads over $90,000, while graduates of public schools carry loans that average almost $60,000, according to the American Bar Association.

Only about three percent of law students fail to pay off their loans, whereas the average default rate for all students is around nine percent, according to the U.S. Department of Education. Why graduates of law school have lower default rates is unclear, but one reason may be that some states require applicants to include credit scores as part of their bar application. Defaulting on a student loan would "reflect poorly," Margietta Morgan says.

The low default rate doesn't necessarily mean, however, that law students aren't overburdened. Applicants to law school "don't always understand how their salary will mesh with high student debt and what that means in terms of their other life obligations," says Margietta Morgan. "It is very hard to pay off $120,000 in debt working a job that pays $40,000 a year," says prelaw advisor Kris Tina Carlston,

Students don't always understand what repaying these high levels of debt will cost them on a monthly basis. Twenty-three year-old Arizona native Justin Traasdalh, a BYU management student, plans on attending law school. He estimates that he will need to borrow $100,000 to cover the cost of his education, and that upon graduation his monthly loan repayments will be about $500 a month. In reality, lenders expect payments closer to $1,600 a month for that level of debt, says Carlston.

Salary expectations

Many students choose a legal education because of the potential to increase their earning power and social prestige, says Carlston. Both Traasdahl and Skanchy cite this as an appealing factor as they consider law school. Yet, it seems unlikely that many law graduates will earn salaries they need to pay off their law school debts.

Still, it is easy for law schools to convince aspiring young lawyers that they will receive substantial salaries. This is because the National Association for Legal Career Professionals correctly reports that the average starting salary for a first year associate is $80,000.

What that figure doesn't show, however, is the unusual distribution of first year JD salaries. Salaries are clustered in two groups: the vast majority of graduates make between $40,000 and $60,000 a year, while about 15 percent of the graduating class earns $160,000. This means that the average salary, reported as $80,000, isn't as common as people think.

James Leipold, executive director of NALP, makes it clear that the average number must be used with caution. While it can be useful in measuring long-term trends, it is not a good indication of "the likelihood of earning a particular salary when graduating from law school.... Very few law school graduates are going to earn anything close to the [average]," he says in a press release. "Instead [some] graduates will earn much more than the mean salary, and many more will earn much less."

Based on numbers provided by NALP, it appears the disparity between the two salary groups emerged during the tech boom of the late 1990's, and grew during the housing boom of the last decade. As the finance industry earned record profits, a new class of lawyers emerged to help them structure their increasingly complex deals.

The law firm of Wachtell Lipton Rosen & Katz is a good example of a firm that caters exclusively to the financial services industry. They specialize in the fields of "mergers and acquisitions, strategic investments, takeovers and takeover defense, corporate and securities law and corporate governance," according to their website.

Only these elite firms pay top salaries, and they typically hire from an exclusive list of schools including Yale, Harvard, Stanford, Columbia and NYU (not NYLS). If you want the chance to work at Wachtell, chances are you need go to one of these schools. Their first year associates make around $172,000 a year plus a performance bonus of $80,000, according to the Avery Index, an independent law school ranking organization. The enormous disparity between the salary of associates at firms like Wachtell and those available to most graduates creates an opportunity for lower tier law schools to misrepresent the prospects of their graduates.

Fudging the numbers

Running a law school is a lucrative business. Tuition at even low-ranked schools, like Thomas Jefferson School of Law in San Diego, can cost as much as $40,000 a year. Much of the tuition money that flows into these schools goes to pay professors and administrators. Law professors are among the highest paid in academia, according to data provided by the Chronicle of Higher Education, a Washington D.C. based news service for academia. Data that they supply from 2010-2011 shows that an average full professor makes about $82,000. By contrast, full law professors make an average of $134,000.

The number of students that schools are able to attract, and how much they can charge, depends to a degree on how they are ranked on lists such as those published by US News and World Report. Since US News ranks schools according to self-reported data, administrators have an incentive to actively manage their numbers, explains Phillip J Closius, dean of the University of Baltimore School of Law."There are millions of dollars riding on students' decisions about where to go to law school, and that creates real institutional pressures," says Closius.

In an email response to a Deseret News question about how law schools report their data, Anne Nicholas of the American Bar Association stated that they recently adopted new standards for how law schools ought to publish their data. The intent is to "present an accurate and transparent picture of the employment market," she says. Any school that violates these standards "faces serious consequences." Still, "unless students know what to look for these numbers may remain hard to find," says Carlston.

Email: mwhite@desnews.com