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S&P Rates Law Schools; Plus New York Law Grads Outperform Market

Vivia Chen

April 17, 2013

PiggyBank © Michael Nivelet - Fotolia.comHere's what's happening in the law school scene:

Best way to invest in legal education (hint: don't matriculate). Are law school ventures no longer the reliable little piggy banks they once were?

Maybe so. Standard & Poor's bond rating agency just downgraded Albany Law School's rating from "positive" to "stable" because of dropping enrollment (the 132-ranked law school declined 14 percent in two years). According to the Albany Times Union, schools like Albany that aren't part of a large university are more at risk financially:

Law schools that are part of a larger university or university system were better able to absorb losses of the last few years. Schools tied to a university also can better attract students amid the shrinking market in the future because they are more able to offer bigger financial aid packages.

Despite declining enrollment for law schools generally, though, S&P is still pretty bullish about Albany. Reports the Times Union:

"We believe that over the outlook's two-year period, Albany Law School will likely maintain its financial resources at current levels, continue to generate surpluses on a full-accrual basis, and stabilize student enrollment," Standard & Poor's credit analyst Emily Avila said in a statement.

In other words, sooner or later, suckers will return and take on obscene amounts of student debt for a law degree from a mediocre law school. Just be patient.

In fact, S&P is downgrading very few stand-alone bottom-tier law schools. As the ABA Blog notes, only Thomas Jefferson School of Law in San Diego (it is unranked) got a downgraded rating (to a BB/negative rating), after it incurred $133 million in debt. But even then, S&P notes, "the school had a history of operating surpluses and a dean who was professionalizing the institution."

Overall, S&P seems to suggest that these schools are stable investments—even if they are so low on the academic totem pole that they aren't even ranked. For instance, New York Law School got an A-/stable and Thomas M. Cooley Law School a BBB/stable.

So there's little correlation between the reputation of a law school and its long-term viability. A school can crank out legions of unemployed graduates and still be considered a solid business proposition. How many consumer products can pass that test?

New York law grads beat the national market—barely. I think you have to look hard to find the silver lining, but here goes: Of the nearly 5,000 graduates last year from New York State's 15 law schools, six in 10 found full-time, permanent jobs requiring bar passage by February 15,  reports The New York Law Journal. But that 59.8 percent rate for New York grads was better than the national rate of 56.2 percent.

And you can pretty much guess which New York schools did well by their graduates: 93.4 percent at Columbia Law School and 91.1 percent at NYU School of Law. The NYLJ also notes that "Cornell Law School sent 85.8 percent of its graduates to those jobs."

All good news, except for this sobering fact: "Most New York schools succeeded in placing only about half of their graduates" in permanent jobs requiring the bar. At Brooklyn Law, only 48.7 percent of  2012 graduates got such coveted jobs; at New York Law School, the figure was 40 percent, which, the NYLJ notes, is "an improvement over 35.5 percent of 515 graduates for the class of 2011."

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The Careerist takes an inside look at how lawyers shape their careers and manage their lives. The blog aims to dissect developments in the profession, provide useful information and advice, and give lawyers a platform to voice their views. The goal is to provide a fresh, provocative take on the state of lawyering.

About Vivia Chen

Vivia Chen

Vivia Chen, The Careerist's chief blogger, has been covering the business and culture of law firms for a decade. A former corporate lawyer, Chen is fascinated by those who thrive (as well as those who don't) in the legal profession. Her take: Success in the law (and life) doesn't always travel a linear path. If you have topics you'd like to discuss or information to share, contact her: [email protected]

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