I return to the mysteries of law-firm economics after a hiatus to attend to three speaking engagements and complete the academic term (in other words, as an excuse to interrupt grading my Contracts exams). A belated shout-out to my colleagues Anne Klinefelter and Andrew Chin, and to the editorial board and staff of the North Carolina Law Review, for an exceptionally well conceived and executed Symposium on Social Media (which was one of those speaking engagements)--watch for the Symposium issue of the NC L. Rev. coming this spring for some refreshingly novel and interesting takes on what is elsewhere becoming an overworked topic. (You won't see a paper from me in that issue. My topic at the conference, legal ethics in the social media environment, has already been admirably well explored in print and online by others.)
I want to stress how much these issues of practice economics actually matter to legal educators. Virtually all of our students attend law school with the general aim of practicing law. A great many end up in private law firms, large or small, or (usually a bit later in their careers) in corporate law departments. The demand for lawyers in such positions (that is, for individual and corporate legal services) fundamentally affects our students' prospects for gainful employment.
A bit more specifically, the overall demand for such services affects the overall availability of legal employment, and the distribution of that demand across different categories of work affects the availability of different kinds of legal jobs. Thus when, as now, there is a significant contraction in at least one portion of the private sector--and here I'm referring to the large number of BigLaw layoffs in 2009 and 2010, and the contemporaneous and continuing substantial reduction in the rates of new hiring at larger firms--recent graduates with strong conventional qualifications who previously filled those BigLaw positions are now competing, and vigorously, for positions in smaller firms and government for which there was previously less such competition.
Put somewhat differently, there are fewer law jobs for recent graduates, and appreciably fewer such jobs at the higher end of the pay scale. It's hardly rocket science to suggest that this affects the economic value of a law degree: From behind the proverbial veil of ignorance, a student's chances of securing a job that supports the cost of three years' tuition, living expenses and forgone income and work experience are substantially less today than they were five years ago.
This is by no means the whole story, of course. Some prospective law students have far brighter economic prospects ex ante than others. And economics is certainly not the only reason why people consider law school (though we have empirical data confirming the common-sense apprehension that a substantial number do weigh it as a substantial factor in their decision).
But if the economic value of a law degree is falling overall (and I suggest to you that it is irresponsible to imagine otherwise), in a rational market you can expect fewer people to pay the rising cost to obtain it. It is far too early to say "I told you so," but there have been double-digit decreases in law-school applications across the board this year over last (though we must bear in mind that last year saw record increases in law-school applications and LSAT administrations as college seniors confronted a horrific job market with an effort to settle into a three-year holding pattern).
This is having some obvious effects on the legal academy. The ability of law schools to continue to charge high tuitions--and continue to pay their faculties salaries far higher than those typical in the arts and sciences--depends on making the end product (the law degree) worth it. Since many universities share in their law schools' economic surpluses, the universities care too. Legal employers have been complaining about the utility of the education with which their entry-level employees arrive for well over a generation, but for the first time in memory it would be fair to say that many law schools are listening, and questioning their mission.
One thing I am NOT suggesting is that legal employers know exactly what they need, and how we could be supplying it. I'll try to explore in future posts why things are nowhere near this simple. But that leaves everything up for grabs: What questions should we be asking, and how should we be seeking the answers? This is an obviously difficult inquiry, and I will try to suggest in future posts that it's even harder than it seems. But make no mistake: we are near the front end of a period that I believe will prove to be the most fraught with rapid change that the American legal profession has ever seen.
What a great time to be a part of things!