Lawyers’ debt hits all-time high

After working at ESPN in Bristol for three years, Glastonbury native Allison Cantor developed an interest in intellectual property and decided to pursue a law degree.

In May 2010, she graduated from the University of Connecticut School of Law, an institution whose in-state tuition of $21,500 is among the lowest in the nation.

After passing the bar exam in August, she started a job search. Within two weeks, she was hired as an intellectual property and corporate technology attorney for Day Pitney LLP in Hartford.

She is the exception.

Today’s law school graduate has more debt than ever before, and is facing a market where getting a job is an extensive, grueling process. First-year lawyers are leaning on clerkships and part-time legal work, forced to abandon — or at least delay — their dream jobs to make their monthly debt payments.

These factors have led to a large drop in the number of people wanting to be lawyers. After surging in 2009 and 2010, the number of application to law schools nationwide dropped 11.1 percent this year. The three law schools in Connecticut — Yale University, Quinnipiac University and UConn — saw an even steeper drop of 17 percent.

“We are assuming that people are getting the message that it is not as easy to get into law school, that it isn’t as easy to find jobs, and there is a lot of debt involved,” said Wendy Margolis, spokeswoman for the Law School Admission Council.

The large debt is what sets this recession apart from all others, said James Leipold, executive director for the National Association for Law Placement. All modern economic recessions in this country have seen an initial surge in law school applications as people decide to make themselves more employable with advanced degrees, followed by a slump in applications as the legal job market became tougher.

The wrinkle this time is the cost of law school has far outpaced the rate of inflation.

From 2001 to 2010, the average amount borrowed annually by law students for their three-year degrees increased 50 percent, according to the American Bar Association. This past academic year, law students borrowed an average of $68,827 for public educations and $106,249 for private educations.

Tuition at the three Connecticut law schools is $50,750 per year for Yale, $42,740 for Quinnipiac, and $21,500 in-state and $44,400 out-of-state for UConn.

After three years, that leaves a new lawyer with the equivalent of a new home to pay off through the course of their career, with interest.

Jeff White, associate at Hartford law firm Robinson & Cole and chairman of the Connecticut Bar Association Young Lawyer Section, graduated UConn in 2003 with a significant amount of debt. Because UConn’s tuition was significantly lower, he financed it using only government loans, not the private loans with higher interest many law students must succumb to.

“I ended up getting a great education, but I did it at a reasonable price,” White said.

After eight years of paying down his student loans, which also include his undergraduate years, White estimates he has another 10 years or more of making payments. He is on a 25-year payment plan, but hopes to increase his payments as his salary increases in the future.

“It is just another payment you pay like a utility payment or a car payment,” White said. “It isn’t going to break you, but, on the other hand, it is going to be there for a long time.”

This high amount of debt leaves new lawyers with few options when starting out. They need to start paying down the debt almost immediately to keep the interest from compounding the problem.

“You end up being a little less selective,” said Jonathan Shapiro, partner at Middletown’s Shapiro Law Offices LLC and vice-chairman of the CBA Young Lawyers Section. “You end up going down a path that you might not have wanted to.”

Law school debt increases the cost of legal services. As lawyers repay loans, firms must compensate to meet their loan and cost-of-living demands. Law school debt essentially means a lawyer must make $200,000 or more above what the holder of a bachelor’s degree will make over a lifetime, to have the investment break even.

That’s what makes UConn an attractive option to Connecticut residents, said Karen Lynn DeMeola, UConn School of Law assistant dean for admissions and student finance. Students save on tuition, and if they are close enough to home, they can live with their parents.

“The difference with this year’s applicants is that money plays a significant role in where they choose to go. More students are choosing the cheaper option,” DeMeola said. “I really feel more pressure from the applicants this year to provide ways to make the costs cheaper.”

For Cantor, in-state tuition was not only the path to lower loans, but to her dream job as well. Because she stayed in Connecticut, she built a network of contacts she wouldn’t have had if she’d gone to the University of Florida, which was her second choice.

After taking the bar exam, Cantor e-mailed an old contact — Beth Alquist, chair of the intellectual property department at Day Pitney — inviting her to lunch. Less than two weeks later, Day Pitney sent Cantor the formal job offer.

“Coming out of law school, you are going to have some loans to deal with, so they might as well be lower,” Cantor said.