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i-banking or law

ChrisayChrisay Registered User Posts: 28 New Member
edited July 2007 in Law School
I am entering my junior year in college and I am starting to study for the LSAT. However, I am wondering if is worth it to go to law school. All of the top investment banks come to my campus and I might have the opportunity to get into one of them right away. Is it worth it to go to law school if you can get into a top investment bank right out of undergrad???
Post edited by Chrisay on

Replies to: i-banking or law

  • cartera45cartera45 Registered User Posts: 12,452 Senior Member
    That depends on whether you want to practice law or be an investment banker. I know that sounds flip, but do you have any idea which you would rather do?
  • brassmonkeybrassmonkey Registered User Posts: 1,491 Senior Member
    Why would you want to go to law school if you eventually want to work in an investment bank?
  • Milton RoarkMilton Roark Registered User Posts: 397 Member
    Assuming you like both fields equally, go with I-banking. You will work long-hours in both fields (assuming you plan on going into big law after law school). If you go into I-banking rather than law you will drop three years of an intense work-schedule. With law, you'll have to work yourself at law school (perhaps not as intensely as in I-banking) and you will still have to plug in long-hours to prove yourself once you graduate into a higher level firm (assuming that you would want to go to a higher level firm). If you go into I-banking you’ll be plugging long hours in the three years you would be at law school and moving closer towards a higher salary and possibly an early retirement.. You also won’t have to worry about debt as much and that means that you can start investing for an early retirement (or a Porsche, or a house). The opportunity cost of law school is not worth it in this case.
    Equation Format: Assume Early Retirement requires some amount of wealth (represented by the variable RW). To reach this take your income(I) minus your debt load (D) and times it by your MPS (marginal propensity to save) and you eventually figure out how many years (Y) you would need to work in order to retire early (or something like a house). RW=Y x MPS(I-D). Generally speaking investment bankers make more than corporate lawyers (with exception). Assume that RW= 1,000,000. Lets also assume that the new I-banker will make 250,000 and the new corporate lawyer 150,000. We’ll put the MPS at .4 (Forty percent of income is saved). We’ll factor the debt load as zero for the I-banker and 15,000 dollars for the lawyer. This debt burden will be phased out after ten years. Therefore, the equations are as follows
    I-Banker: 1,000,000 = Y x .4(250,000-0). The I-banker with would then have roughly 100,000 dollars of her income put into some kind of savings each year (and we'll leave out the effect good investment would have on that money). The Lawyers Equation would be 1,000,000 = Y x .4(150,000-15,000). The lawyer would have 54,000 dollars to save yearly. After ten years the lawyer would have accumulated 540,000 dollars in their savings and the law school debt would be theoretically gone. Their equation would then be (RW-540,000= 460,000,000 = Y x .4 (150,000). They could then invest 60,000 dollars a year into early retirement (assuming their MPS stays the same). 460,000/60,000 = 7.67. Combine this with the years the lawyer spent paying off their debt and the number of years is 17.67. Then you have to add the three years with zero income (law school) it took to get the job in the first place. That equals out to roughly 20.67 years spent working vs. the 10 years the I-banker spent to gain the prescribed Early Retirement Wealth amount. Granted, this model doesn't consider taxation; however, pay in the financial fields is more flexible than in the legal fields (although that is changing somewhat). There are other limitations on the model but the general point is that in I-banking you will be able to retire earlier. If you worked the schedule of that lawyer you would be more likely to burn out and be less able to enjoy your early retirement or something of the like. In short, I-banking will benefit you more from the standpoint of wealth and the ability to stop working earlier in life. If you like law more, then this entire equation and the post as well is "gravy."
  • ChrisayChrisay Registered User Posts: 28 New Member
    Im not sure though!! If I went to law school I def would not be an i-banker. I want to have a life though too. If I was a lawyer I would want to work in a big firm in a city other than New York (something smaller). Does being a lawyer consist of having a better lifestyle?
  • jonrijonri Registered User Posts: 7,160 Senior Member
    Look, nobody can answer this question for you. The thing to do is to try to get an internship next summer with an IB firm. After the summer, you'll be in a better position to know whether you like IB enough to make a career of it--or at least stick to it for a few years. If you do like it well enough to do it for a couple of years, then do that after college. If you enjoy it, don't look back. If you hate it, you may still want to consider law school.

    PS: There are even jobs other than IB and law out there in the world.
  • cantsaythatidocantsaythatido Registered User Posts: 107 Junior Member
    Are you aware that the two professions have completely different JOB DESCRIPTIONS? You need to factor in how you will handle doing the actual work involved with each profession, before making any mathematical calculations.
  • Milton RoarkMilton Roark Registered User Posts: 397 Member
    "You need to factor in how you will handle doing the actual work involved with each profession before making any mathematical calculations." I'm guessing you are talking to the OP. In the event that you are not, the model assumes that one likes and handles each job equally well. However, I do agree that if you can find a way (like an internship) to "discover" I-banking then go for it. If you want to have a life, big law and i-banking are definately not the careers to look into (at least for the first few years). I-bankers can start out with 100 hour weeks. New lawyers at big firms start out working long hours as well. (However, if you save your money you can work the long hours and then take a more laid back schedule later in life. That would let you establish a career and then have a life. )
  • cartera45cartera45 Registered User Posts: 12,452 Senior Member
    Several of my friends have kids who have gone into i-banking and they do not have lives other than work. Well some of them do but it is in between the hours or midnight and 2am and they look like they are 40 instead of in their 20s. Young associates at big law firms work very long hours too and are sometimes on a very short leash with partners, but I don't think mose have i-banking hours.
  • WildflowerWildflower Registered User Posts: 1,254 Senior Member
    look, the joke on the street is: BigLaw lawyers are I-Bankers who couldn't do math. Take it or leave it, hours are similar if not worse and the pay is lower, although more stable.

    As for having a lifestyle and feeling good about yourself, try a non-profit. That's what I am doing. :)
  • GreybeardGreybeard Registered User Posts: 2,355 Senior Member
    It's unlikely that you'll be making a decision between going to law school, and accepting an offer from an i-bank. If you find yourself in that position, though, go with the one that floats your boat.
  • mj93mj93 - Posts: 3,601 Senior Member
    If you don't go to a prestigious college, it'd be very difficult to break into I-banking.
  • WildflowerWildflower Registered User Posts: 1,254 Senior Member
    "It's unlikely that you'll be making a decision between going to law school, and accepting an offer from an i-bank. If you find yourself in that position, though, go with the one that floats your boat."

    I'd say go to law school in a hard beat, but that's what floats my boat. Don't be an analyst at an I-bank...if you still want to do I-banking after having invested in yourself (i.e. elite law degree, top 3 or so) then become an associate at an I-bank (...not at a law firm)...there you can at least find joy in oppressing the analyst who chose I-banking instead of law school (...trust me on that one, it'll be worth it, hehe).

    read Robert Rubin's book: In an Uncertain World, then ask Sakky for his thoughts. :)

    good luck.
This discussion has been closed.