- January 22, 2021
- Posted by: Francis
- Categories: Grad Student Guides, Paying for School Guides
An area of education where ISAs have not yet been applied is law school. However, the proposed framework for a law education ISA is essentially identical to that of college and trade-school ISAs, in that a student would agree to pay a set percentage of their future earnings, for a fixed term, to an investor in exchange for that investor financing their education. Yet, while the structures are identical, there are many factors which differentiate law education ISAs from others.
The timeline for law education and training is much longer than other professions. Obtaining a law degree usually takes seven years of full-time study after graduating from high school, which includes four years of undergraduate study, and three years of law school. During their studies, law students complete coursework that touches upon constitutional law, property law, civil procedure, contracts, and writing legal documents. Upon completion of an accredited law program, graduates qualify to practice law after successfully passing the licensure examination for law, which is referred to as a state’s written bar examination.
In addition to providing a wide-ranging career field, the legal profession is considered one of the most lucrative industries in the current job market, where associates in the largest law firms in the United States start with a salary of $150,000 to $180,000, and partners in notable law firms earn average salaries in excess of $1.2 million. According to the BLS, lawyers earned a median salary of $113,530 in 2012, and received the highest average incomes when working for industries such as: Management of Companies and Enterprises ($164,270); Securities and Commodities Exchanges ($188,430); and Offices of Physicians ($235,020). Because of this, specializing in a particular field and returning to school to receive an educational background related to a specific area of law (like immigration law, civil rights law, environmental law, or intellectual property law) qualifies professionals to pursue a greater range of employment opportunities.
The BLS projects the number of job openings for lawyers to grow 4 percent from 2019 to 2029, which is as fast as average.
These factors actually make income share agreements with law students a different and safer prospect from the investor perspective when compared to those for undergraduate studies and even other graduate programs.
However, it is important to note that new graduates face strong competition for these positions as the number of law school graduates is higher than positions available at law firms. And, the variation of income levels for attorneys in different industries means the percentage of income required to be “shared” with investors will vary significantly. So, it’s important to consider what industry you may end up in.
In a similar fashion to college and trade-school ISAs, a law school ISA would define upper and lower wage boundaries and the lawyer would only share their income when within these boundaries. Considering the high starting salaries, it would be uncommon for the graduate to be under a low wage boundary which could reasonably be set around $100,000. However, if they became unemployed for any reason, they would be insulated from having to pay. The upper boundary would be much more specific to the lawyer’s specialty, but could soundly be set at around 150 percent of the average annual income for each specialty.
These factors could make law school ISAs a possible method for students to achieve an education that would have been otherwise financially unattainable, while also giving investors a reliable ROI.
