Law Students and the Credit Crunch

It is very common for discussion of the credit crunch to look at the banking sector and consider those who work in this area. However, the credit crunch and, in particular, the long term nature of the credit crunch, will have a much deeper impact on the new generation of employees, including law students. To think that the credit crunch will only impact on those who are currently working is short sighted and it is important to recognise that students of all types will feel the effect of the credit crunch, both now and in the future.

What is the Credit Crunch?

The credit crunch has numerous strands in terms of the ways in which it is going to impact on how both current and longer term financial decisions are made. In the immediate term, the credit crunch is making the fluidity of finance much more temperamental, meaning that financing any transaction, whether it is a business based transaction or borrowing money to buy a new car, is much harder.

Quite simply, the credit crunch has meant that credit, in any form, is much harder to secure. As credit becomes harder to obtain, this will have a knock on effect on other financial issues such as the property market or buying and selling businesses due to the lack of financing. Without finance, companies cannot operate; this will mean that the impact of the credit crunch is much further reaching than merely the banking sector.

Direct Impacts of the Credit Crunch

Students do not generally consider themselves to be affected by the credit crunch. This is in fact not true. Students need to pay considerable attention to the credit crunch as it is likely to have both a direct and an indirect impact on them for several years to come. In terms of direct impact, the credit crunch will reduce student loaning and financing opportunities. Immediately, the credit crunch will mean that students do not have finance readily available to support their studies. Banks do not have the same readily available cash to loan to students. This will mean that the credit crunch will immediately and directly impact on students attempting to find funding for their studies.

Many students will have to undertake part time and temporary work in order to fund their studies and the credit crunch will impact on this. As companies are struggling financially to succeed, there will be much less part time and temporary work available, making it even harder for students to survive the credit crunch.

Students will also struggle when it comes to starting permanent jobs. As the credit crunch begins to hit, a range of sectors including banking and legal sectors’ companies will be looking at consolidating their position. Many companies are being forced to consider redundancy and will not, therefore, be looking at taking on new graduate recruits. The credit crunch has slowed down everything, from property purchases to the decision to sell a business, although immediately, this may not seem to have a direct impact on law students. However, the real issue that is likely to affect law students currently is that they will be unable to find financing either through loans or sponsorships to continue their studies.

Job security, once the studies are complete, is also going to be badly affected by the credit crunch. Therefore, students need to consider with the utmost care how they are going to finance any debt that they are currently taking up.

Law Students and the Credit Crunch

All students are likely to be affected by the credit crunch. Will law students be affected any worse than other students? It seems that law students potentially will suffer more than other students, during the credit crunch. Studying law is a particularly tenuous subject when it comes to a credit crunch. Law firms and, in particular, corporate law firms rely largely on movement in the business sector. If companies are not successful, the law firms that service these businesses will also suffer. Some law firms will naturally be less affected than others. For example, when a credit crunch hits law firms that deal with financing, these companies will find that they are completing fewer tasks. However, law firms that deal with insolvency and debt issues will find that their workload increases dramatically.

Law students looking to survive the credit crunch will find that they will need to look towards firms such as those that deal with debt and insolvency, if they want to secure a job, after qualification.

Furthermore, law students will need to consider how they are going to fund their studies. With less sponsorship available, law students will have to be more self sufficient during a credit crunch, which is likely to mean more part time work and even the use of independent wealth where possible.

Long Term Credit Crunch

In the long term, law students are likely to come through the credit crunch relatively unscathed. The law and legal issues will not disappear and, therefore, there will always be a demand for new young lawyers.

It is undeniable that law students will be affected by the credit crunch, both immediately and in the long term. Immediately, the law student will find financing their studies harder than before the credit crunch took effect. In the long term, law students will have to look towards their employability. Ideally, law students should consider the types of courses that they are taking to make sure that they are looking towards law firms that are doing well during the credit crunch, for a graduate position.

For example, a law student would be wise to study areas of law relating to insolvency and employment law in order to make them more employable to firms dealing in these boom areas. The credit crunch is unlikely to be something that disappears overnight; however, it is something that is cyclical and, therefore, no law student should assume that the credit crunch will not impact on their immediate and long term prospects.

The credit crunch requires that all students take time to think about how they are going to finance their studies and what sort of role they are going to look to take up when they qualify. Planning for the credit crunch will ensure that law students are less affected by the international economic downturn that is hitting globally at the moment.