#2 Supply - How Many Law Students Will Graduate in 2017 & 2018?

Last May, more students graduated from law school than ever before.  By 2017, the number of students graduating from law school will be at their lowest level since the late 1970’s.  This is really good news for students entering law school in 2014.

Predicting the number of graduates in any given year requires consideration of two numbers:  the number of students who enrolledl three years prior, and the number who will graduate in the target year.

How Many Students Will Enroll in 2014 and 2015? 

How many students will enroll?  No less an expert than Paul Campos has estimated that 35,000 students will enroll in law school in 2014 (http://www.lawyersgunsmoneyblog.com/2013/12/law-school-applications-continue-their-steep-decline).   Although he’s likely off by a few thousand, he’s definitely in the ballpark.  The math behind the prediction is pretty straightforward.  We know from LSAC data that about 54,000 people will apply to law school.  From there we can use past data to estimate what percentage of those 54,000 applicants will attend law school.  As you can see from the table below, from this fact we can get a fairly good estimate of how many of those applicants will actually end up in a law school classroom:

	2007	2008	2009	2010	2011	2012	2013	2014   (est.)	2015     (est.)
National   Applicants	82,800	82,000	85,600	87,500	78,900	67,700	59,400	54,855	52,112
National   Matriculants	49,100	49,400	51,600	52,488	48,700	44,500	39,675	38,399	36,478
Percent   Enrollment	59%	60%	60%	60%	62%	66%	67%	70%	70%

(see www.lsac.org/members/data/lsac-volume-summary  (password required)).   

You’ll note that I had to estimate the percentage of students who will enroll in 2014 and 2015.  I chose 70% in consideration of the trend of increasing percentage enrolling from 2007-2013.  This increase presumably reflects the higher percentage of students gaining admission to at least one law school. 

How Many Students Will Graduate in 2017 & 2018?

The next step is to estimate how many of those 38,399/36,478 students will graduate three years later.  From 2007 to 2013, the percentage of JD’s matriculating from the entering class has varied from 86%-91%.  For example, the 2008 national entering class consisted of 49,400 students.  Three years later in 2011, 44,258 students graduated, or 90% of the original entering class.  With this data, it’s pretty easy to provide a good estimate of how many students will graduate in 2017:  33,791 (choosing an 88% graduation rate).  Predicting 2018 is a bit trickier since we don’t have applicant data for next year.  However, we do have LSAT test taker data which shows we should probably expect about another 5% decline, leaving an estimate of 32,100.

How Does This Compare with Historical Data?

According to the ABA, 46,478 JD’s were awarded in the United States in 2013.  That’s the largest number of law school graduates in American history.   With an estimated 33,791 students graduating in 2017, that will be the lowest number of law school graduates since 1978.

1978!!! 

see http://www.americanbar.org/content/dam/aba/administrative/legal_education_and_admissions_to_the_bar/statistics/enrollment_degrees_awarded.authcheckdam.pdf

From 46,478 students graduating in 2013 to 33,791 in 2017 marks a very large decline in the supply of law school graduates entering the labor market. 

I want to emphasize that these are not crazy, pie-in-the-sky estimates.  These are very similar, in fact slightly more conservative, than those posted by Paul Campos. 

Next week, I will turn to the demand side by looking at the number of full-time, long-term JD required and JD advantage positions available to students in 2017 and 2018. 

Update #1:

I'm reluctant to respond to the comments in piecemeal fashion as I don't want to get too deep in the weeds.  Not to mention that this is an extremely busy time of year in the admissions office and my first priority is responding to the forty to fifty e-mails I receive per day.  But there are some good (and some not so good) comments and questions here that I'll try to address before post #3.  Maybe this weekend or early next week.

I will respond to one question, since it's pretty specific.

@Spenny asked how I arrived at my estimate of a 5% applicant decline for the 2015 entering class.    Admittedly it's tough to know for sure what the next cycle will bring in terms of application numbers.  The main data we have are LSAT test taker numbers.  While not the most effective predictor, they can at least give us a sense of where the market is headed.  According to LSAC, October 2013 was down 10.9%, December 2014 was down 6.2%, and February was up 1.1%.  However, we've been told that December was adversely affected by weather, with a number of people scheduled for December rescheduling for February.  Based on this data, 5% seemed like a fair guess estimate.

Update #2:

@CBR - good point.  As CBR points out, India has more law school graduates than the U.S.  I have updated the post accordingly. 

Update #3: 

@JM.  Ok, I said I would try to avoid addressing specific comments, but this is one is particularly absurd and irksome.  You won't count as positive outcomes attorney positions with law firms of fewer than 10 attorneys?  Have you ever been to Kansas?  I doubt it.  Because if you had, you would have likely seen numerous county seats and small towns with law offices with fewer than ten attorneys.  Which is great, because while many of our students are looking to practice in large cities at big law firms, we also have a fair number of students who came to law school expressly for the purpose of practicing in towns like Garden City, Hutchinson, Salina and Manhattan (the one in Kansas).  In a similar vein, you don't count full-time, long-term government positions as positive outcomes? Why on earth wouldn't you?  Many, many students are interested in exactly that type of outcome.  If there were 100 government lawyer jobs available to KU Law students, I think we'd fill them in a heartbeat.  And that's even if 100 NLJ 250 jobs were available.  They're typically great jobs and a wonderful way to begin a legal career.    

Update #4

Thanks to Grant McLoughlin who caught an error in my post.  I should have said that 2013 saw the most law school graduates than ever before.  I've corrected the sentence accordingly as there will be fewer graduates in 2014 than last year.  I'm surprised the rest of you missed it! 

Update #5

@JM  -  Volunteer positions are not counted in employment statistics. All twenty of our students reported as being employed in full-time, long-term JD required government positions are working in paid positions of at least thirty-five hours per week with a term of at least one year.   So there's that.

As for your comment about people working in firms of less than ten attorneys, how do you know that our students aren't making enough to cover their debt load?  Did you ask them how much they borrowed for law school?  If they received scholarships?  How much they're earning?  Are they enrolled in loan repayment programs? Have they taken advantage of rural area loan repayment plans?  Do they have a spouse that contributes income?  The fact of the matter is that one reason some students choose KU Law is because we have relatively low tuition rates.  More than half of our students also receive some form of scholarship.  For students with debt, the average debt at graduation is less than $80,000.  (29th best in the nation!).  Not only that, but the cost of living is low in Kansas, particularly in rural areas.   So it is quite feasible to make a salary of $40,000 - $60,000 and live a nice, middle class life.   That's not to say there aren't more lucrative outcomes for attorneys at these firms.   Between agriculture, oil and gas, and the day to day legal needs of a community, there's a fair amount of money to be made outside of urban areas like Kansas City (or Denver, Phoenix, etc.).   But I guess you hadn't thought about that when you made your "analysis" of our employment data.  Or more likely, that kind of information didn't match your predisposed views.  Much better to ignore it and just make blanket assumptions (all government jobs are phony volunteer jobs; all new graduates working at small firms are in debt shackles).  Wouldn't want the facts to get in the way of a good rant.

For lack of space, I didn't even mention the fact that for some reason you count federal clerkships as "decent" outcomes, but not state clerkships.  That's another weird conclusion.  Well, maybe not so weird if your goal was just to slant and obfuscate to make a law school look bad, rather than actually try to assess whether that law school, KU in this case, is actually providing positive outcomes for our students.  Really, if you're going to make obnoxious assertions like only 50 KU students found "decent" employment, try backing it up with something a little stronger than what you've provided.  Otherwise, people might think you are being dishonest in your discourse.

Update #6

I think we've heard a sufficient variety of views on the first few posts, so comments are closed.  I look forward to hearing from everyone when post #3 goes up either this weekend, or early next week.  Professor Tamanaha - I'll respond to your comment first.

 

 

 

Comments

[Former Editor]

As part of your analysis next week, could you differentiate between the number of "JD advantaged" jobs that do not represent underemployment for someone with a JD (e.g., a Congressional Staffer or Corporate Compliance Officer) from those that are underemployment for someone with a JD (e.g., entry level HR Staff person)? If you are going to include the "JD advantaged" numbers as part of your case for going to law school, those groups are very differently situated upon graduation and probably shouldn't be considered equivalent.

[Jojo]

Malarky!

Look, pal, you can toss around the 1978 figure or (1978!!!) figure all you want, but the fact remains that the run up is of recent vintage.

Clicking on the americanbar.org link reveals something interesting. While the 1978!!! citation is an attention-grabber, in 1998 (1998!) only 2,500 more students enrolled in law schools than did so in 1978! So, supply was pretty steady from the disco age until the late 90s to early 2000s.

Last year there were just shy of 25,000 real jobs in law. Let's assume your 2018 estimate is correct, and 32,100 people graduate from law school. That leaves an oversupply of only 7,100 if the jobs don't increase. In other words, 1 in 4 graduates who attend law school and borrow $200,000 in money still won't have any sort of FT, LT job in law. Those aren't good numbers, they are bad numbers. They are just less bad than the current numbers. You realize that there is a difference between "good" and "less bad"?

[not right]

And not only that, but of course you still need to consider the hordes of out-of-work law grads who are still competing for jobs. These people haven't magically disappeared, as much as you would like them to.

[MacK]

To the above I would add the impact that declining standards for law school matriculation will have - does anyone think that the current diving LSAT scores and GPAs of new 1Ls over the next 4 years will improve the job prospects of so many?

[Former Editor]

I suspect that we are going to see an argument next week that the "JD advantaged" positions expected to be created in the next several years should be added into the total jobs available number. That would allow significant inflation of the total jobs open by adding in expected openings reflected in other BLS lines. If the lines added are narrowly cultivated (e.g., the "Compliance Officers" line is included but the rest of the "Business operations specialists" line is not) AND well qualified new graduates in the "JD advantaged" fields are factored into the pool of openings in a reasonable way (e.g., some percentage of the number of new MBAs is subtracted from the number expected open positions for "Corporate Compliance" added) it's possible that we could see a surprising and positive prediction.

I'm not counting on it, partly because I don't expect that careful an analysis to be forthcoming and partly because I just don't think the numbers will bear it out, but let's wait and see what he has to offer in that regard before jumping down Mr. Freedman's throat.

[Spenny]

I am wondering how you derived your estimate of about a 5 percent applicant decline next year?

[MacK]

I was responding to not-right.

One effect of the falling requirements for entry to law school is that graduates in the classes of 2015 and later will be less competitive, This will have a serious impact on their marketability - and on the rate at which people leave the legal profession, or return. Take for example women on the infamous "mommy track." Historically, many of these women found it hard to return to full time legal employment, in part because of competition from new law graduates ... but if the law schools start graduating a bunch of dunces, that equation will shift. So also will the up-or-out predilections of mid-size and large law firms - again they may choose to keep associates longer when faced with poorly qualified new graduates. And finally, under-employed lawyers who often were driven from the profession by the latest crop of bright-eyed and bushy tailed associates will be more likely to stay.

Meanwhile, as Campos and Merritt also pointed out, the BLS data on the number of new law jobs is in fact being steadily revised downwards.

[Stan]

Steven, please stop this. You are hurting young people in a real and tangible way. If you want to ride out your gig as an admin, I have no ill will towards you. You have to feed your family like everyone else.

I sincerely beg you to stop with these article. Don't make things worse. The data is indisputable: law school costs too much money and provides terrible outcomes that cannot be fixed through either hard work or bankruptcy proceedings.

[ZDT]

I think you also have to take into account the fact that a lot of former jobs that used to be filled by attorneys can now be filled by cheaper staff with undergraduate degrees. This is partly because of new technology, but also because corporate America discovered during the last big recession that a lot of the biglaw bills were padded by associate make-work, and that they could force those costs down substantially without losing quality.

[anon]

So far, we have from the author of these posts this:
1. Fewer people are enrolling in law school and
2. Fewer people enrolling means there will be fewer graduates a few years from now.
Yes. This is a logical conclusion. The first statement is a statement of present fact, and the second is a reasonable and logical prediction about a future condition based on present facts. These facts have been discussed on the FL in many posts.
But, as noted above, there is no mention of any causes of declining enrollment, and no mention of any need to address the consequent declining standards, dwindling revenues and the content and focus of legal education. Based on the "tease" we can expect none of that. (I'm not sure the author would choose to opine on those matters in any event.)
Next week, the author promises to "look at the number of full-time, long-term JD required and JD advantage positions available to students in 2017 and 2018."
With all due respect, here we have a legitimate concern. The author cannot do that. A line should be drawn somewhere.
Most persons trained in the law, it seems, and maybe even some holding "JD Advantaged" positions who are not, would know better than to permit the use of a website site as an vehicle to promote an investment based even in part upon any such "factual information" presented by an interested party.
Consider an investment advisor who claims to be an expert and predicts (in strong enough terms to almost rise to the level of a "statement of fact") a substantial premium in earnings over the next thirty or so years to induce the investment by a student of 200,000 or so dollars (especially an investment advisor who expressly relies on the past performance of a set of selected "comparable" investments in so doing and who might personally benefit or who works for an institution which might receive a benefit, in whole or in part, as a result of the investment).
Any concerns? How would you, as an attorney, advise the speaker, or someone relying on the "expert"?
Moreover, we need to take into consideration the fact that folks who hold a Ph.D. in economics are often wildly mistaken in predictions about the specifics of any market in three years.
The FL should issue some sort of disclaimer before posting a conceded "pitch" accompanied by a "look at the number of full-time, long-term JD required and JD advantage positions available to students in 2017 and 2018."

[Anons]

Why are folks continuing to use BLS projections when we have years of NALP data on entry-level employment? The BLS specifically warns that its projections are not meant to be used in the fashion that Campos, Merritt etc., have used them.

[anon]

Steve:
As you are likely aware of this, please be reminded:
What you casually state here as a "fair guess" may be cherry picked and touted as a "fact" elsewhere.
Please don't guess, Steve. This subject is too important to promise to "look at the number of full-time, long-term JD required and JD advantage positions available to students in 2017 and 2018" and then back it all up with "fair guesses."
In your position, one hopes you will take the import of your statements seriously and that means seriously considering what you say and how you say it.

[Jojo]

"Never ask a barber if you need a haircut." - Warren Buffett.

Mr. Freedman, please stop selling. Those individuals you advised in 2008 and 2009 (you know, the ones about whom you just said 'oops') are real people. They were actually hurt by this.

Let me repeat, because it seems clear that law profs and admissions deans aren't getting it. These are real people who have suffered real negative consequences and are facing daunting employment obstacles with six figures of debt. Be careful before selling your service. Even if it is not intentional, you are hurting people.

[JM]

Steve, this is your employment report for 2013:

http://www.lstscorereports.com/schools/kansas/ABA/2013/

I count about 50 decent employment outcomes. That includes law firms over 10 atty plus fed clerkships. I suppose it might be a bit higher if there are some legit govt/pubint jobs too, but i doubt it.

Anyway, for your school to have equilabrium between decent jobs and grads, it would have to enroll about 60 students per year. That means your enrollment has to drop about 40% from where it is now (104) to get to the right number.

So don't worry, we can still decline for a few years beyond 2018 before the critics call off the dogs.

[Former Editor]

Regarding the update, if there are going to be responses to comments then I, for one, would appreciate it if you would respond to Prof. Tamanaha's comment on thread #1.

[CBR]

"Heck, I think it’s safe to assume that’s the most number of law school graduates from any nation at any time in human history." That's definitely not safe to assume. India has 900 (!) law schools that on average accept 200 students per year (so an entering class of around 180,000--even with significant attrition, it's still more that the US). With advances in technology, Indian attorneys can (and are beginning to) compete to serve the U.S. market. I think hyperlinks get caught in the spamfilter, but see "Middle class Americans Reach out to Lawyers in India via Internet for Legal Aid" in the Economic Times.

[JillyfromPhilly]

Steve,

In your future posts focusing on the "demand side by looking at the number of full-time, long-term JD required and JD advantage positions available to students in 2017 and 2018," can you also address the number of those jobs which will allow a graduate to service $150,000 of student loan debt while also providing sufficient funds for everything else a financially independent person needs to pay for in the modern world? An obvious but often ignored point; just because a graduate obtains a bar required job within 9 months of graduation does not mean that law school was a wise decision. Many bar required "long term" jobs pay nowhere near the amount of money that a young professional in a mid-size/major city (where most of the law jobs are) will need to support themselves with 6 figure law school debt. The existence of Income Based Repayment and other such programs does not eliminate this issue and it should be addressed whenever someone is arguing in favor of the prospects of future law grads.

I look forward to your future posts and analysis of how the bimodal salary distribution of entry level lawyer jobs should affect prospective law students' interest in law school.

[BoredJD]

I expect that we will get a post discussing PAYE/IBR/PSLF. I hope the author acknowledges that those programs can change at any moment and that President Obama has recently shown he is willing to reform the program as applied to high debt graduate student borrowers (of which law students are probably the most extraordinary). In the current political climate, no law school employee with any respect for students should be pitching IBR/PAYE to students as business as usual.

[Former Editor]

Just to add to BoredJD, there is a recent post from Campos, based on the New America Foundation data, showing total JD Debt at more than double that of MBAs and other MAs at both the 50th ($141k) and 75th ($194k) percentiles. If the PSLF cap in the 2015 Obama budget is enacted, capping at forgiveness $57,500, every student identified in the NAF data would be effected (50th percentile and up are covered), as would probably most of the 86% of graduates carrying any debt.

[Nathan A]

All else being equal, its perfect true that enrolling in law school today is a BETTER value proposition than it is going to be for THOSE WHO ENROLLED IN 2010. I don't think there's anything to get up in arms about in the post. I mean its a nice collection of numbers, nothing else. The real action is going to be on demand side.

The one demand side plot point I'm going to be interested in is whether/how legal employers adapt to the potential supply shock. 2017/2018 will probably graduate least talented group of lawyers this country has seen in a while. Back when I was in industry, we'd automate processes as soon we feared a drop in applicants. The local community college pumping out fewer electronics technicians, for example.

So how do firms deal with decline in quality applicants? Suck it up and hire from lower ranked schools (as law professors hope)? Outsource/deploy technology? Suck up all the poor souls from the c/o of 2013, who are (on average) more talented?

If I were running my firm, I would reduce the number of associates we hire and add more young associates through the lateral ranks.