Why the Value of Credentials Rise When an Industry Declines
Following the conclusion of their studies, many fresh law graduates apply to state and federal clerkships with the hopes of serving directly under a judge in preparation for a lucrative career. But how do these prestigious appointments impact law graduates’ earnings over the course of their careers?
The number of law graduates has been steadily declining over the past decade. In fact, Law School Transparency – an advocacy group focusing on the legal profession – reports that the number of law school applicants has decreased by as much as 23% since 2010. However, as graduating cohorts have shrunk, the share of graduates working clerkships has grown by over a third, with no signs of slowing down.
As the legal industry continues to shrink, the payoff to signaling one’s abilities and excellence appears to be growing, as those with clerkships in their background continue to be more highly paid compared to their peers.
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Taking up a clerkship after graduating law school is an investment to one’s career. While graduates earn a little less during their clerkship initially, they quickly overtake their peers and continue to outpace their counterparts over the course of their career.
The rise in the share of law graduates taking up clerkships coincides with an increasing return to clerkships. For example, among graduates of the class of 2010, clerks who left the courthouse for private practice earned 10% more than their colleagues without clerkship experience. In contrast, for the graduating class of 2020, this salary differential widened to more than 20%.
As the legal industry continues to shrink, the payoff to signaling one’s abilities and excellence appears to be growing, as those with clerkships in their background continue to be more highly remunerated compared to their peers. If one wants to have a successful career in law, it seems that clerkships are an increasingly effective way to secure one’s place in the legal profession.
- The share of law school graduates working in clerkships has risen considerably over the past decade.
- Graduates with clerkship experience outearn their peers within a few years, and continue to do so throughout their career.
- The clerkship premium has grown significantly in the last decade.