What’s your career ROI (return on investment)?

9 03 2011

A couple of interesting articles on the Careerist recently about law schools and their responsibility to law students. In particular there is a debate about the responsibility schools have to accept students (and their fees) when, in the current climate, job prospects can be slim.

Paying back the law school fees was never easy

Here in the UK, there is another dynamic that has come into play. With the advent of a serious hike in tuition fees, particularly at the top-end universities (that will undoubtedly attract a high percentage of aspiring lawyers), I think it is time to take another look at the cost of entering the profession, and see whether the end justifies the outlay.

The corporate world has shown me the value of pulling together a business case for any serious capital expenditure – the sums might not turn out to be 100% accurate, but the discipline of going through the process forces you to ask some sensible questions and can stop you wasting serious money.

But aside from my current struggles with the Spousal Budget Approval Committee (required in my house for gadget purchases), this rigour rarely makes an appearance in home life.

But should it?

While fees this side of the Atlantic remain below those in the U.S. a three year law degree will soon cost just shy of £30,000, with a year at law school costing £10,000, plus living costs, gives an overall investment of well North of £50,000.

In my book, that’s certainly the sort of money I’d want to stop and think about before spending.

In assessing the value of the education, there are many more factors than simply the straight forward ROI (return on investment), but the basic maths can’t be ignored. If you assume that you are going to come out and join a solid City firm, then chances are you’re on a salary of around £35,000, shifting to say £55,000 when you qualify two years later.

The traditional City law firm career sees salary then increasing every year (subject of course to the economy) with bonuses and perks thrown in, suggesting that it may take a while, but the debt for the not-insubstantial investment will be paid off in relatively short order (subject to any extravagant lifestyle choices!) and the investment then moves into the black and produces serious returns in the long term, especially if partnership in a profitable firm is achieved.

There is of course a “but”. These projections of profitability and a solid, predictable career path, a very much based on some assumptions about the legal market place. Assumptions which have been challenged over the last few years. Profitability at many firms has tanked and the annual salary rise was predicated not just on nice fat profit margins, but on a rise in the price of the lawyer based on higher levels of PQE (post-qualification experience). But if the hourly rate model is dying, and firms can no longer simply hike up fees because a lawyer has another year of experience (and arguably, it’s time served, rather than actual meaningful experience), then where does the annual rise come from? More chargeable hours anyone? In the efficiency-focussed law firm of the future, that might not be an option either.

Speaking of chargeable hours, the lifestyle is also something to factor into your decision. Lawyers in the firms that pay serious money work hard. Really hard. If you’re driven, motivated and enjoy the job, that might not be a problem. But while when my generation (qualified late 1990s) expected to clock serious hours in pursuit of partnership, conversations I’ve had with many partners these days suggest the current generation of trainees and newly qualified lawyers have very different expectations of work/life balance, which can lead to some firing the ejector seat early.

If that’s the case, then the return on investment is not looking quite so straightforward.

For time immemorial there has also been the question of what happens to those who don’t make it. Every year there are plenty who make the financial commitment, and either don’t make it through, or do get the qualifications and can’t find a training contract. Clearly this is particularly relevant in the current environment. If things take a while to pick up, and the graduates haven’t managed to build other experience and contacts in the meantime, then there is a real risk they’ll be passed over for fresher blood when the economy picks up again. Another situation when the initial investment is not looking so sound.

On the positive side, there are other ways of making a return which don’t involve the long game of partnership. As a lawyer, you’ll build up some great transferable skills. Because the profession can be quite insular, it can often be difficult for lawyers to identify these, but trust me, they are there and they are valued in many different arenas (one of the books I found most useful in assessing my skills when looking to career change 10 years after I qualified was “what colour is your parachute“). That said, it’s through the practice of law you will build these skills, rather than the academic training, so I don’t think it’s a question of a law degree opening a huge variety of doors, but in the medium term, other options become available.

Finally, the profession is changing. Big time. This will have implications for all of us in the profession, both the grey hair and the young blood. Given these changes, it also adds another angle to consider when assessing the law as a career. Some may see it as risky, others may see a wealth of opportunity. Much like any other investment, your tolerance for risk will play a part in your decisions, and is just one more component to factor in.

So, no answers, but hopefully some things to think about for both aspiring lawyers and any current or former lawyers feeling reflective. If you’ve just started on the path, I wish you all the best!





Your training was useless. Discuss.

3 08 2010

I asked an experienced law firm partner recently what percentage of his academic training he had used in his career as an outsourcing lawyer. The answer? Less than 10% Now I know that here in the UK, there has been debate for a number of years as to whether the vocational training given on the Legal Practice Course was sufficiently tailored for the large commercial firms, and as a result, the choice of provider and course content has widened, which is undoubtedly a good thing. That, as you might expect, is not the thrust of this post.

Discussion about the latest cases was encouraged in class

Firstly, the classroom based elements of a lawyer’s training take four years via the traditional law degree route. However, non-lawyer graduates can cram those three years into a single year with the CPE conversion course. This raises a number of questions. If it can be done in a year, why take three? I’ve heard hypothetical arguments that CPE students don’t have the same understanding of the law as law graduates, but I’ve never heard of any practical consequences of this. More critically, I would challenge anyone to work with a selection of five-year qualified lawyers and identify those that did the CPE rather than a law degree. I have however come across lawyers who have excelled because their first degree was something else relevant to their practice (a science, a language), and certainly if I had my time again I would have done a business or economics degree and then the CPE course before qualifying.

So, if the core “black letter law” can be covered in a year (albeit a hard one!), why not spend a chunk of those two “spare” years on the law degree either giving more depth in the areas that are of more interest to the students, or create different learning experiences to create a richer understanding of the topics? For example, for the commercial modules, why not teach the students to apply the principles to real world examples (rather than hypothetical problems)? Why not broaden their business understanding with some more commercial knowledge? For aspiring family lawyers, why not give a broader understanding of the emotional dynamics that create a context for a lawyer’s work? Why not arrange the type of six month work experience placements that are common on business degrees?

The second area to examine is the on-the job training. My belief is that the practical experience and supervision that young lawyers get is actually a critical component of their development, and for all the talk about investment in people, once a young lawyer gets on the chargeable hours treadmill, this can often come second to revenue generation. Now to be fair, there are many firms that take their trainee development seriously and do an excellent job at it, but I suspect even the best firms can (and should) strive to be even better. Think world class. Technical training. Commercial (or other context-specific) training. Interpersonal skills. Project management training. Financial acumen. Management training. Leadership training. Mentoring. Coaching.

Finally, with all this focus on effective training for young lawyers, what about those who are “fully formed”? Is training then off the agenda? Is every year another last minute struggle to rack up some CPD points by going to a nearby seminar and working on the blackberry while waiting for lunch to be served and then the event to finish? In my experience some of the best lawyers are those that never stop learning. Always curious, whether it’s a new area of law, a client’s business, a new technology or a new business development opportunity. This life-long learning should be celebrated, not least because these people can be great role models for the younger lawyers, and because they create new intellectual capital for the firm and new value for clients.

To finish, training comes with a cost. But so does attrition and recruitment. While the credit crunch has ensured that recruitment of bodies is not the problem it was a few years ago, the war for the best talent hasn’t gone away. If the training you or your team received in your academic years was not as effective as it could have been, what can you do now, to keep your learning fresh?