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After taking the LSAT, the Law School Admissions Council sends you a report that includes your LSAT scaled score that ranges from 120 to 180, as well as your LSAT percentile. Unlike the LSAT scaled score, the LSAT percentile does not measure the number of questions that you answered correctly on the LSAT. It is an indicator of how well you performed on the LSAT relative to other test takers who took the LSAT in the last three years. Your LSAT percentile indicates the percentage of students who have scores lower than your score over the last 3 years. For example, for students who received a 180 scaled score, the percentile rank is 99.9%. That means that 99.9% of all test takers in the relevant time period scored lower than 180. Another way to look at it is if your LSAT score is in the 75th percentile, you have performed better than 75% of the students who took the LSAT in the past 3 years.
So, why does your LSAT percentile matter? The LSAT percentile is a piece of information, when added to your scaled score, that helps give law schools a more complete picture of your admissibility. The LSAT percentile puts your LSAT scaled score in a context. Receiving a score of 170 on the LSAT appears to be an excellent score. However, if the vast majority of students receive a 170, then a 170 really is an average score. However, if a 170 LSAT score is in the 90th percentile, meaning that 90% of students received lower LSAT scores, then it is clear that a 170 is a much better than average score.
While all law schools review every aspect of a candidate's application: GPA, LSAT, essay, experience, etc., each law school also has a range of ideal or acceptable LSAT scores and LSAT percentiles that they believe are accurate predictors of success at that particular school. Upon reviewing a school's published admissions profile, candidates will have an idea as to the likelihood of whether or not they will be accepted to a particular law school based on the objective criteria of their LSAT percentile, along with the LSAT score and GPA.
Of course the goal of all students is to perform well on the LSAT. Whether you end up with a score of 180 or 150, whether your percentile rank is 99 or 75, you will be able to put together a realistic list of law schools to which to apply. You will have a good idea as to which schools will likely accept you, which schools are "reaches," and which schools are "backups." This will help you to intelligently allocate your resources-- both time and money-- to completing applications that will likely produce positive results.