More On What Matters Most (Or, Paging Dr. Pangloss)

Change is hard.  Big changes are underway in the economics of the legal profession, and they are driving equally big changes in legal education.  These changes have imposed genuinely tragic hardships, most immediately and directly on the aspiring lawyers trapped in their cross-currents.  Those who entered law school in 2005 and later implicitly or explicitly made rational (or as time went on, at least not entirely irrational) assumptions that the legal economy would continue, mutatis mutandis, as it had for the last forty years or more, an endlessly rising tide lifting even the leakier and more crudely-finished boats.  Sadly, and through little fault of their own, they were wrong, and at great personal cost—in time, in money and in life plans gone awry.

Change is scary.  The fear is palpable among those speaking to current circumstances out of the academy, and has produced the two results that such fear predictably spawns:  Rank denial and frank hysteria.  Neither is merited.  Today, prompted by yesterday’s much-downloaded op-ed in the New York Times, I speak to the Panglossians; my next post in this space will address the Pandemoniasts.

My message to Dr. Pangloss is simple:  Stop and think.  Please.  You can’t whistle “Don’t Worry, Be Happy” loud enough to drown out the anxiety that is prompting this forced insouciance.  And you are wasting valuable time and energy not only denying the existence of important questions you ought to be addressing, but potentially confusing others who will make errors they could have avoided and lose opportunities they could have claimed. 

Those of you who remember my post on “What Matters Most (in legal ed these days)” (and blessings be upon you if you do) will recall that I suggested that by far the most salient feature of the legal education landscape today is that there are too many law graduates and too few law jobs.  The Panglossians deny that this is true, or argue that it doesn’t matter if it is.  In doing so, they depend almost entirely on wishful thinking masquerading as empirical assertion.  While we would all be very interested in any meaningful empirical evidence supporting the Panglossian view, I haven’t seen any to date.  And I have seen lots to the contrary.

Some of the Panglossian commentary is downright meanspirited, and takes the basic form that there are in fact lots of law jobs out there, but recent graduates are too lazy, too stupid, too greedy, or too ill-prepared by their law schools to claim them.  When any evidence of the existence of this sea of unclaimed jobs is offered, it is generally either the fact that there is substantial unmet need for legal services among the poor and middle class; or that Nolo Press and Legal Zoom are still in business.  Let’s be clear:  There are now tens of thousands of unemployed or underemployed recent law graduates out there dying to make some use of their legal education.  If they could make a living starting a practice at very low rates, they would do so.  That’s how labor markets work.  But as I have commented in this space previously, the poor are poor because they have no money; and the middle class have very little disposable income to devote to legal services not covered by insurance or contingent fees.  As for Nolo Press and Legal Zoom, they are successful in the marketplace precisely because they offer very basic legal services at prices that are cheaper than virtually any practitioner can manage to charge and continue to eat regularly.  Even still, there are plenty of ads for dirt-cheap flat-fee incorporations and uncontested divorces in your local yellow pages.  The low-price market is saturated.  Stop blaming the victims of a rapid and significant contraction in the entry-level legal job market for something they didn’t create and can’t overcome—which is what you're doing if you deny there are significantly too few law jobs, whether you do it by attacking recent law grads directly or by the tactics I turn to now.

Many Panglossian apologists suggest that everything is still just fine because a law degree has innumerable profitable uses beyond qualifying its recipient to get a license to practice.  An example can be found in a well-respected law professor’s comment on Dan Filler’s recent post on the plummeting numbers of LSAT takers.  This argument takes a range of forms that range from the (always unsupported) assertion that “lots” of the speaker’s graduates get “wonderful” jobs that make great use of a law degree but don’t require a law license, to the (equally unsupported) assertions that a law degree is ideal preparation for any line of work, a thoughtful life, the vicissitudes of holy matrimony, Monty Python’s Argument Clinic, or the searching examination that can be expected from St. Peter when the matriculant finally reaches the pearly gates.

I would be delighted to see any empirical evidence supporting these assertions, but unfortunately there isn’t any of which I’m aware.  Recent ABA employment outcome statistics devote a segregated category, called “JD Advantaged,” to jobs that do not require a law degree but for which the degree “provides a demonstrable advantage in obtaining or performing the job.”  This is an overinclusive definition, because what we really ought to be looking for are the jobs for which a JD provides a sufficiently substantial advantage in hiring, retention or advancement that the holder’s investment in the degree is justified.  After all, the fact that you get a job after graduating from law school, even one to which your legal knowledge is somehow relevant, does not necessarily mean that the job made the time and tuition worth it—especially if that job does not require a law license or even a law degree.  But in all events, what the ABA employment statistics show is that this “JD Advantaged” category of jobs is, for most schools, a small proportion of what anyone might call placement success.  Moreover, the number of such jobs for a law school’s graduates is significantly negatively correlated with that school’s prestige as measured by its US News ranking.  In other words, at the schools where graduates have the most employment options, they choose significantly fewer of these “wonderful” jobs, further suggesting that they are second-best (or considerably worse) outcomes.  As for the argument that law school somehow makes you so much better at everything that it’s worth whatever someone wants to charge you for it, I assume that requires no further discussion.

Finally, a few words about yesterday’s New York Times op-ed from the new dean at Case Western, unapologetically entitled “Law School Is Worth the Money.”  There are several postings already online pointing out astonishing deficiencies in this Panglossian effort’s coherence and empirical support (which I borrow from as well as add to below; three pretty devastating ones are here, here and here), but I want to dwell briefly on two particularly egregious examples. 

The op-ed argues that things are actually good for law grads today because the median law-job salary figure for 2011 graduates is $61,500.  But unless you look closely, you won’t see that this is the median salary only among those who actually have law jobs in the first place.  (The op-ed, and I, rely on statistics from NALP.)  In other words, the op-ed’s median salary number doesn’t appear to take into account the pay (if any) of those graduates who have no law job, or no job at all.  All told, that median is based on only the 36% of 2011 graduates who both had law jobs and reported their salaries.  And what that means is that only 18% of the class of 2011 (half of the 36% on which the median is based) were confirmed to have had JD-required jobs that paid more than $61,500.  In other words, the data on which the op-ed relies show that a randomly selected 2011 law grad had less than a one-in-five chance of getting a job as a lawyer that paid more than the $61,500 "median" salary that the op-ed offers as proof of a prospective law grad’s excellent prospects.

Similarly, the op-ed makes a great deal out of a comparison between a percentage of graduates who took jobs in private firms in 1998 (55%) vs. 2011 (50%), arguing that this shows that things are only a little worse now than they were at another time law-firm hiring was a relatively low portion of all law hiring.  It fails to mention that the cited fraction is not the portion of all graduates who got private firm jobs, but rather only the percentage of students who got law jobs in the first place and whose jobs were at private firms. And according to NALP, a much greater percentage of law graduates in 1998 got full-time law jobs in the first place (something like 80% of all graduates, or perhaps more depending on how you count), while approximately 55% of all 2011 graduates got jobs requiring a law degree.  In fact only 41% of law grads whose employment outcomes were reported to NALP got jobs at law firms.  And some of those jobs—after three years and $200,000 worth of law school!—apparently were as secretaries, paralegals or clerks, or were only part-time.  Take those out along with cases where a new grad is practicing as a solo (which is “getting a job” in name only), and less than 30% of the class of 2011 whose employment outcomes are known were employed at private law firms nine months after graduation.  So this statistic compares most of an apple with a very thin slice of orange. (Not to mention that it is a meaningless thing to worry about in the first place, as there are many excellent law jobs in government and nonprofits, and many low-salary and low-satisfaction jobs in private law firms.)

One other frankly bizarre assertion in the Times needs brief mention.  The op-ed argues that, even if entry-level hiring is at historic lows relative to number of graduates (which is likely the case even though the rest of the piece apparently tries to suggest otherwise), that doesn’t matter because first jobs don’t matter; it’s the subsequent positions that the law degree assertedly allows you to obtain later in life that really matter.  Of course, we have no longitudinal data on the future job prospects of initially unemployed or underemployed law graduates because there has never been anything close to so many at once before.  But does anyone seriously believe these folks are going to get a great second or third legal job without ever having had a first one?  Or that any discriminating legal employer is going to see two years of flipping burgers, stocking store shelves or selling jeans as good preparation for law practice?

I could go on, but others already have.  If a student turned in a paper with arguments like these in a class I was teaching on the legal profession, I know what grade I would give it.  I encourage you to draw your own conclusions.

I close this post by reiterating my initial point:  While none of this proves that the sky is as clear and cloudless as the Panglossian deniers would have you believe, none of it proves the sky is falling either.  The Pandemoniast view I will discuss next time is, in my view, just as overwrought and undersupported as the Panglossian one.  In the meantime, it’s time for the “Don’t Worry, Be Happy” crowd to impose on themselves the commitment to thoughtful and honest data-driven argument that I hope and assume they regularly urge on their students.  Dr. Pangloss, heed thyself. 

 --Bernie

Comments

[Bill Henderson]

Bernie, This is a serious reply to the Mitchell op-ed. Your career history makes you an especially credible person to speak to these issues. You look at these arguments through a litigator's eye. And you experienced these changes in the profession first hand. I am glad you are involved. Bill H.

[John Nelson]

There is plenty of legal need out there for the lawyers being produced today by law schools. Anyone who does not see this does not work with the members of their community who regularly need legal advice but cannot afford attorneys.

Which comes down to the real issues about law schools. Law schools fail to prepare students for the changing legal market. This is worse at the top-tier schools who have too long been dependent on large and mid-size law firms to hire their students and provide 3-5 years of training in practice post-law school.

In comparison, many second and third-tierUSNWR schools have smaller percentages of their students facing the problems of their top-tier brethren. This is because these schools have routinely served smaller markets and had to emphasize either smaller law firm placement, public law placement, or preparing students for solo practice.

How are law schools failing students? There are two big ways this is happening. First, law schools often do not guide students in understanding what the practice of law will be like when they graduate. Many schools have clinical programs which can provide valuable skills to their students, but many students do not understand some of the fundamentals of legal practice (or why they need to learn these fundamentals in law school).

This includes basics in contract drafting, drafting a basic will, drafting a complaint and answer, drafting and responding to discovery, how to file litigation-related documents, how to manage themselves in a courtroom setting, and more. Add to this the lack of courses in most schools which get into the nitty gritty of solo practice — finding malpractice insurance, setting up an office, technology needed for a law practice, the basics of marketing, working as an independent contractor for larger firms to help pay bills, etc — and you have students who are not typically prepared to hang out a shingle right out of law school.

Secondly, student debt handicaps graduates. It is absolutely incorrect that there are too many lawyers. There are not enough affordable lawyers. Otherwise, sites like LegalZoom and RocketLawyer would not exist.

Student debt handicaps students in trying to find a way to serve these underserved markets. Student debt models are based on older compensation models which are no longer the reality. Most students doing legal work in many legal markets are doing so as independent contractors with 1099 status, or they have their own firms.

The good students can end up making more than their compatriots working within firms. However, those first few years get very dicey when you also have student loan commitments of anywhere from $500 to $2500 a month. Add to that rent, overhead, and other necessary expenses and a new solo or small firm lawyer with profit sharing needs revenue of anywhere from $5,000 to $8,000 a month to make it. These revenues are possible if one plays their cards right, but usually won't appear for a year or two.

The idea that there is a disconnect between the value of a legal degree and opportunities in the legal market in the above post is correct. There is a disconnect. However, the root of the problem is not as simplistic as argued.

There are not too many attorneys. There are too few affordable attorneys. And one reason many attorneys are not affordable is the student debt load carried by recent graduates.

[Bernie Burk]

Alas, Mr. Nelson's Comment succumbs to precisely the failures of logic and empirical support I bemoan in the main post. There is no evidence that tens of thousands of unemployed new lawyers can all make a living doing $50 incorporations and $100 uncontested divorces. There is no evidence that one clinical class in law school (or several, for that matter) would spell the difference between unemployment and employment for any meaningful number of law grads. There is plenty of need among the needy for legal services, but no money to pay lawyers to assist them (and the Legal Services Corporation's budget has been cut drastically over the last several years). And there is no evidence that second and third-tier law schools are more successful in placing their graduates in law jobs than top-tier schools; in fact the very voluminous and detailed evidence on this issue is overwhelmingly the opposite. Stop blaming the victims of a sudden and genuinely unexpected market transformation; it is meanspirited and terribly unfair.

--Bernie

[justme]

Here's my beef with your argument: it smells like the cyclical argument. Things are bad now, but they weren't that bad before.

I graduated from a tier 1 law school in 2000. Even way back then, a sizable chunk of my fellow classmates had a very hard time getting real legal jobs. Those that did get jobs at good law firms only lasted a few years.

The market has been very bad for very long. The oversupply of lawyers is tremendous. The recession has only proven to me just how inoculated law professors are from the realities of their graduates. I'm not saying this to besmirch anyone but to state a simple truth: The fact that you folks only now realize how bad things are speaks to how much you really still don't get it.

[Ray Campbell]

The nature of the service lawyers are required to provide - a personalized, needs-specific service based on adequate factual and legal investigation - pushes against lawyers being able to meet low end needs. While lawyers can offer limited scope services (Stephanie Kimbro has some good how to do it materials out on that) it's a non-trivial challenge to do that in a way that keeps your malpractice insurer and the state bar content. Also weighing in against low cost services are the provisions against investment in law firms by non-lawyers - this makes it difficult for law firms to do what other businesses do, which is to grow to scale, using investment in systems and replicable processes, backed by investment capital. Gillian Hadfield, who has written on this before, has a new article up arguing, consistent with her prior work, that the issue is systemic, and will require reconfiguring the laws governing legal services. (Hat tip to http://www.responsivelaw.org/index.php?option=com_lyftenbloggie&view=entry&category=blogs&id=82%3Aprofessor-hadfields-excellent-new-work-&Itemid=115; her article is at http://works.bepress.com/ghadfield/49/). I have some nits with her argument (for example, if you are going to talk about innovation and Clayton Christensen, his more recent work has moved on quite a bit from The Innovator's Dilemma, and deserves notice), but on the whole she's on track and it's well worth a look. It's a lazy mind - or one controlled by cognitive dissonance - that waves away the problems with an assumption that unemployed lawyers can solve everyone's problems by offering cheap services to the poor.

[anon]

+1 on Bernie and Ray's comments

Ordinary language:

Debt doesn't change the young lawyer's decision whether to accept less for legal work. If there were paying clients at $20/hr, then lawyers would take the work. Isn't $20 better than $0?

If poor clients can only afford to pay less than $5/hr, then the poor will never get legal help. (Lawyers can always work at Starbucks for $10/hr.) Law school could be free, but clients who can only pay $5/hr will never find lawyers.

Law & economics speak:

After graduation, the cost of legal education is a sunk cost and therefore does not affect the profit-maximizing strategy for lawyers, young or old.

Legal need is not the same thing as willingness to pay.

[John]

"Legal need is not the same thing as willingness to pay."

Excellent point, and one not noted enough.

Poor people may need more legal services, but they CANNOT pay for them. That should be obvious to all.

But also, middle class people may need more legal services, but they WILL NOT pay for them. Other things take priority -- housing, food, education, etc.

[henry]

Look forward to the day when law professors are out on the street, like their grads, forced to look for anything and everything in work. We'll see how 'versatile' that law degree is then, bucko!

[henry]

Actually this is a spot on point. Its great to rabbit on about how there's unmet demand by clients for legal services, but really the shortage is for lawyers willing to work for free. When people have to actually pay physical money for legal services, they will bitch and scream and moan. I'd love to see these law professors have to make a living in private practice for clients who. just. wont. pay. for. things.