A recent American Express Survey (results announced August 2013) compared how the Great Recession affected Generation Y (age 24-35) vs. Baby Boomer (age 48-70) entrepreneurs. Guess what? It made both groups more risk averse: “just 56% say they like taking risks, down from 72% in 2007.” We might have guessed.
Gen Y respondents also cited student debt load as another reason they’re less inclined to risk starting a business – especially straight out of school (16% did so in 2013 vs. 28% in 2007). About the same time, a Wall Street Journal article reported that “The rising mountain of student debt, recently closing in on $1.2 trillion, is forcing some entrepreneurs to abandon startup dreams.”
Average debt for undergrads is $40,000, the WSJ said, and post-grads weigh in at 55,000 – up from $40,800 10 years ago. The numbers are higher for law grads: an ABA Journal story reported that “The average 2012 law grad debt was $108,000, according to data collected by U.S. News & World Report.”
Closer to home, 39% of respondents to last year’s Colorado Lawyer Satisfaction & Salary Survey said law school debt has a significant effect (32%) or controls (7%) their career choices.
Is all that debt deterring Gen Y law firm startups? Not necessarily.
A June 2011 NBC News story profiled law grads who went solo. They did so partly in the face of a weak law job market: “since May 2008, the legal services sector has lost about 54,000 jobs, according to seasonally adjusted data from the Bureau of Labor Statistics.” As a result, “the number of recent law graduates going solo increased from 3.5 percent in 2008 to 5.5 percent in 2009, the biggest one year jump since 1982” (citing data from the National Association for Law Placement).
It’s not just the bad job market that’s fueling the startups. The AmEx story reports that Gen Y entrepreneurs take the leap primarily to pursue something they feel passionate about. Armed with that passion, they launch themselves with a characteristic can-do attitude, pushing growth though social media, rewards for repeat customers, and effective use of technology.
The new lawyer entrepreneurs are cut from the same cloth. As one of the lawyers in the NBC News story said:
“I don’t need a big copier, I don’t need a huge support staff to manage all my paperwork and I don’t need an expensive phone system. Basically I just need a laptop and cell phone and I’m off and running.”
Another caters to entrepreneurs like herself, using a virtual office and a secure client log-in system. She says this:
“There have been times when I’ve woken up in the morning and I have new clients. They’ve found me online somehow and I’ve never had any interaction with them, but now they’re my clients. It’s pretty sweet.”
And speaking of can-do attitude, one law school graduate paid off his $108,000 in law school debt in four years. His strategy? “All I had to do was put my life on the line,” he said. Not exactly what you’d normally think of as entrepreneurial, but equally innovative and focused.
Did they learn any of that in law school? We’ll talk about that next time.
To be continued.