Constitutional Daily

Founding Principles

The Tenure Paradox - Robot pimp

Slap on the Wrist for "Non-Consensual Sex" - Lampshade, Esq.

Intelligence: The Gathering - Graphic and Gratuitous

Grads are the New Illegals - Robot Pimp

Meet Entitlement Eric - Robot Pimp

Wherein I Solve World Peace - Lampshade, Esq.

A Necessary Delusion - Shadow Hand

Do you even need to shave overhead? - Lawyerlite

LSAT Jenga - Publius Picasso

http://www.constitutionaldaily.com/index.php?option=com_content&view=article&id=1573:legal-reasoning-redux-5&catid=38:there-and-never-back-again&Itemid=65

Time, Place, and Manner

...Should have some links here or something.

Banner

"ABC's Zimmerman trial reporters Tienabeso and Gutman are incompetent, dishonest hack charlatans who should be convicted of murder," Acclaimed Law Blog Says

E-mail Print PDF

Everyone else is talking about George Zimmerman and Trayvon Martin, so we'll do it too. We're going to take a different angle though and discuss journalism ethics. Sorry, no discussion about the facts, or how the prosecution didn't prove its case, or the Sixth Amendment issue in the judge grilling Zimmerman and at one point not allowing him to confer with counsel, or the other Sixth Amendment issue in allowing him to face a charge that was added only at the end and thus he wasn't given the opportunity to defend against. None of that stuff. We're also going to skip the low hanging journalism ethics fruit of discussing how the news media focuses on sensationalism and generally opines on legal matters without one iota of legal expertise.

Instead of all that, we're going for the less sexy topic of how to ethically construct a news headline. In looking through Google News stories, we came across this headline from ABC News:

"George Zimmerman Is A 'Liar' Who Should Be Convicted Of Murder, Prosecutor Says."

We'll sidestep the issue that this makes absolutely not sense and should be "George Zimmerman is a murderer who should be convicted of murder." The problem we want to highlight is more subtle than that. It's the placement of the phrase "Prosecutor Says." Compare the original to a different structure:

"Prosecutor Says George Zimmerman Is A 'Liar' Who Should Be Convicted Of Murder."

The former treats the claims about Zimmerman as a fact, with the prosecutor as the source for the claim; the latter reads as reporting the highly biased statement of a prosecutor.

Intelligent minds will read the two statements the same, but as we all know, the majority of Americans aren't that intelligent, and probably won't even read to the end of the first version of the headline. And by "we all know" I mean "including ABC's Seni Tienabeso and Matt Gutman." Maybe Tienabeso and Gutman are just incompetent. Maybe someone else is responsible for the headlines. Or maybe they do think Zimmerman is a liar who should be convicted of murder, but rather than expressing that view on the editorial pages where it belongs, they decided to report their opinions as fact.

 

And just to make our headline truthful: ABC's Zimmerman trial reporters Tienabeso and Gutman are incompetent, dishonest hack charlatans who should be convicted of murder.

The PAYE Tax Bomb Doomsday

E-mail Print PDF

We're going to have a little fun analyzing the tax implications of PAYE. This is all a bit back of the envelope, so some of the math is simplified, but we think it gets pretty close to the mark.

A recent graduate who starts his legal career earning $50,000 and sees annual raises of 3% will have an average salary of $70,152 over the next 20 years. If that same student also graduates with the average debt of $125,000 at 6.8% interest, he would ordinarily pay $953 a month if on a 20 year repayment plan. Under the new Pay As You Earn (PAYE) plan, he will only have to pay $441 a month. However, his $125,000 of debt generates $6800 of interest ever year, or $708 per month. The $441 monthly PAYE payment does not cover the interest, causing his debt to increase by $267 a month. At the end of the 20 year repayment period, his debt will have grown to $189,080. That is the amount that will be forgiven under PAYE.

Enter the tax man.

The PAYE forgiveness will be a taxable event. With his 3% raises, his final salary at the 20 year mark is $90,305, but he’ll be facing taxes as if he earned $279,385. His federal income tax burden on the $90k salary would have been $18,579. The PAYE tax bomb adds another $57,749. The PAYE forgiveness has removed only 46.2% of his debt. That’s some nice relief, but good luck paying the IRS $76k on a $90k salary.

As many critics of PAYE have noted, the system is being abused by schools that treat it not as relief for indebted students but a subsidy for the school. By decoupling repayment amounts from debt loads, students have far less incentive to worry about actual debt amounts. That would encourage schools to raise tuition even more rapidly than they already are as students become even less price sensitive. But in the sake of fairness, we’re going to assume they raise tuition only at the rates they have been. The average increase in student debt loads from 2009 to 2010 and from 2010 to 2011 was 16.9%. (This is higher than the rate of tuition increases because tuition is growing faster than 0L cash on hand.) For these purposes, we’ll assume jobs paying $50k now will increase their starting pay by 3% every year.

Five years from now, that $50k job will be paying $58,000, the average salary over 20 years will be $77,377, and that student will have graduated with $272,900 of debt.

PAYE will require $501 a month, normal repayment would be $2083, and the annual interest the debt accrues is $18,557, meaning after making a PAYE payment, the grad’s debt will grow by $1045 a month.

In 20 years time, when the outstanding debt is forgiven, it will have grown to $523,804. At that point, our mid-career lawyer is now earning $104,754 and would normally owe the federal government $22,624. The PAYE tax bomb adds another $206,673. Our grad now owes 75.7% of his original loan amount, and nearly double his annual salary. PAYE is offering him very little relief.

In fact, if he lived in California, Hawaii or Oregon, the state income taxes on top of the federal taxes would cause him to owe an amount greater than his original debt.

Now you may be thinking that yes, the total debt may be the same, but he owes it 20 years in the future, and with inflation that number means a lot less. Owed $273k 20 years from now is like owing only $151k now.

Sure, that's true. But our grad didn't simply move his debt into the future. He also paid $501 a month for that privilege, or just over $120,000 total. We didn't double check the numbers, but we're pretty sure 151 + 120 is really close to 273. Blah blah blah, inflation, blah blah, and he's actually paid more than his initial debt load. PAYE has offered no real relief at all.

So, if you want to see at what point in time the combination of the PAYE debt bomb and rapidly increasing initial debt loads will cause PAYE to offer no meaningful debt relief (just a time-delayed debt burden), look no further than the present.

But didn't we say those were the numbers for 5 years from now? Sure. But we were also looking only at the average debt load, not the most students might have. There are already 9 schools with a total cost of attendance exceeding $273,000, and if you add in the average (not even the high end) undergrad debt of $27,000, there are 36 law schools that could put you well past the PAYE doomsday point.

Egypt's Little Coup, Part Deux

E-mail Print PDF

The Egyptian military couldn't just wait one more day before removing President Mohamed Morsi. No, they had to do it on July 3rd, rather than waiting until July 4th. Sure, picking that date would have been seen as obvious pandering to the Americans, but you know what Americans respond to more than anything else? Obvious pandering.

Egypt just couldn't wait though, and now $1.5 billion in aid money is on the line. By statute, foreign aid is cut off to countries "whose duly elected leader of government is deposed by decree or military coup." While many members of Congress (and just people with common sense) are demanding that the aid money stop because the military deposed Mohamed Morsi, the Obama administration has held off on calling the revolt a coup under the novel legal theory that they don't have to follow the law if they don't say the magic words. [ForeignPolicy.com]

The law doesn't say that aid is cut off if the President declares there was a coup. That may have been the better way of drafting it, in order to allow some flexibility and recognition that global politics can be unpredictable. But, that's not what the law says. All that matters is if there actually is a coup. The Egyptian ambassador has argued there was not a military coup because the military is not ruling, but that's irrelevant for our laws -- what counts is how the duly elected leader was deposed, not who comes in after him. The military kicked Morsi out, and that is on its face a military coup.

Obama has apparently adopted the Adam Savage philosophy of government:

I reject your reality and substitute my own.

 

Ever heard of "the rule of law, not of men"? That's the exact position being rejected when the government says it's will supersedes the law. It's the rule of Obama, not of law. And that's the exact attitude that got Morsi in trouble in the first place. He was elected in a (relatively) free and open election, and then suspended the government and ruled as a dictator.

Obama hasn't gone quite that far, but it does seem to be the direction our nation is slowly headed in. Every two or four years there will be chants of "elections have consequences," and while that might on its face be a harmless statement, what many people mean is "we won and should get to rule by decree until the next election."

Egypt's turmoil should serve as a reminder that elections are not democracy. Democracy is what you do after the elections. You're elected to the government, not to be the government.

Anyone in DC Want a Free Law Library?

E-mail Print PDF

A law firm located near Dupont Circle in Washington DC is giving away a thousand books from its library. [Click the image below for a link to the ad.]

 

You can get F.2d 500-999 and F. Supp. 2d 294-797 and create for yourself ...well, a very incomplete library that probably won't do you a great deal of good as a lawyer. Except, there is one use we can think of.

Are you a new lawyer in a solo practice or just partnered up with a couple other recent grads? Does your office reflect your meager capital investment? Then consider going down to this guy's office and picking up 200 or more books (200 is the minimum you can take). Then get some inexpensive bookcases and line the walls of your office with some fancy looking books.

Sure your practice doesn't really make use of them and the sets are incomplete, but do you think clients know that? Nope. Clients will just see a whole lot of law books and assume you must know a whole lot of laws, or at least do well enough for your clients to be able to afford all those books. Clients might not know what's in them, and we don't either, but we sure know they cost a lot.

[Alternatively, if you're a law school looking to boost its rank, remember that US News counts the total number of volumes in your library. Here's 1000 free books to help nudge your score up a little bit. There's definitely some schools in DC that could use the help. ...Lookin' at you, American University Washington College of Law.]

Page 9 of 340

Philadelphia Lawyer, Unfiltered

The finest blend of analysis, advice, and fury on the internet. Sour mash, oak barrel aged, published at cask strength.

 


Most Recent Article:

In Defense of Risk (Happy Fourth of July)


All Articles from The Philadelphia Lawyer

Author Profile

The Robot Pimp

An in depth look at the emerging intersection of law, behavioral economics, and robots.


Most Recent Article:

The Tenure Paradox


All Articles from The Robot Pimp

Author Profile

Practice Makes Putrid

Legal practice would be all rainbows and buttercups, if it weren't for the clients, and opposing counsel, and co-counsel, and judges, and the law.


Most Recent Article:

Eat Mor Fiv Freedums


All Articles from The Namby Pamby

Author Profile

Gin and Glannon's

As Shadow Hand suffers through law school, the rest of us get a little Schadenfreude.


Most Recent Article:

I Just Work Here


All Articles From Shadow Hand

Author Profile

Irresistible Impulse

Dr. Rob Dobrenski's daring expedition into the psychology of lawyers and the law. (Not a substitute for a life well lived.)


Most Recent Article:

You're Not a Failure, You're a Narcissist


All Articles from Dr. Rob

Author Profile

Graphic and Gratuitous

Sometimes cartoons are the highest form of communication. Those times are known as "most of the time."


Most Recent Cartoons:

Intelligence: The Gathering


All Cartoons

There And Never Back Again

Defunct Big Law attorney BL1Y shares his misadventures as a writer who accidentally went to law school.

 


Most Recent Article:

JD vs MFA


All Articles from BL1Y

Author Profile

Lampshade, Esquire

We're dealing with some technical difficulties here. Hold up a minute.


All Articles From Lampshade, Esq.

Staff Infections

News, humor, and other non-billables from our underpaid, uncredited, unsexy staff.

 


News Articles

Smaller News Bits

Large Numbers of Law

Mixed Bag of Lawesome

Reviews

Scofflaw Multistate Bar Review

Lawyerlite