#3 Scenarios: Supply/Demand by 2017-2018

Enough conversation, let’s break out the charts and graphs.

First, a few essential notes:

1)      Law graduate data from 2001-2013 is from the ABA

2)      Law graduate data from 2014-2018 is based on the estimates presented in Post #2 (here)

3)      Employment data from  2001-2013 is based on NALP data

4)      Employment data from 2012-2018 excludes school funded positions (insufficient data available for 2001-2011)

5)      Employment data from 2001-2018 only includes JD required and JD advantage positions

6)      Employment data from 2001-2006 includes part-time and short-term employment as NALP reports did not separate employment by permanency

7)      Employment data from 2007-2018 only includes full-time, long-term positions

8)      Employment data from 2014-2018 takes 2013 data as a base:

1. Charts #1 and #2 assume zero growth for JD required positions
2. Chart #3 assumes there will be a 16% increase in JD required positions from 2014 to 2018; this reflects 3% annual employment growth
3. Chart #4 assumes there will be a 16% decrease in JD required positions from 2014 to 2018; this reflects 3.5% annual employment decline
4. In all four charts, due to the difficulty in estimating JD Advantage employment, it is assumed JD Advantage employment stays flat
5. Chart #2 only counts JD Advantage positions to be worth half those of JD Required positions

9)    These are just four scenarios.  I could generate thirty of these if you'd like, but they'd all look pretty similar (and this posting would require a lot of scrolling).   Except for Graph #4, which presents a scenario where the job market declines by the same proportion as it did during the worst economic downturn since the 1930's, they all show the "gap" between supply and demand mostly disappearing by 2017-2018.  In fact, if you pull through the data a hundred different (reasonable) ways, you'll find the same conclusion almost every time - the job market for law grads looks very favorable by the time this year's entering class graduates in 2017.  I'll have more on this in post #4.    

10)  Before commenting that I've included school funded or part-time or short-term positions, please re-read rules 1-9.

Now on to the charts!

Graph #1 – Jobs for Law Grads from 2001 to 2018
(zero growth chart)

 

Graph #2 – Jobs for Law Grads from 2001 to 2018 Discounting JD Advantage at 50%
(JD Advantage at 50%)
(zero growth chart)

 

Graphs #3 and #4 predict what will happen if the employment situation improves or declines during the next five years.  Between 2001 and 2013, the largest five year increase for long-term, full-time bar pass required employment was 14% from 2002-2006.  The largest five year decrease was 17% from 2007-2011.   By using a 3% annual growth rate in Chart #3, the chart shows the employment data if the job market nearly matches its best performance in the past dozen years.  By using a 3.5% annual negative growth rate in Chart#4, the chart shows the employment data if the job market nearly matches its worst performance in the past dozen years. 

Graph #3 – Jobs for Law Grads from 2001 to 2018
(assumes 3% annual growth for bar pass required jobs from 2013-2018)

 

Graph #4 – Jobs for Law Grads from 2001 to 2018
(assumes 3.5% annual decline for bar pass required jobs from 2013-2018)

 

 Update #1 
Many commenters have made the not unreasonable argument that if I was wrong about future employment in 2008-2009, then why should I be believed now. 

My response is twofold.  First,  in 2008 I was a junior admissions person still learning about all the different resources available.  I didn't know a NALP from a LSAC, let alone have an understanding of the underlying data related to employment outcomes.  Second, in the pre-transparency era there was not nearly as much information available as there is today.  Compiling the data for this project reminded me of this, as information on part-time/full-time employment, funded employment and other categories were not always available.  The pre-2011 data that was available was not presented in easily sortable files.  It took me many hours to go through individual employment reports to compile the data that comprises the charts above.  Simply put, I wasn't as informed as I am now, and the relevant data was not nearly as available as today. 

So, while it's a fair argument to make, I think consideration should be given to the fact that we've all come a long way in attaining a better understanding of the legal employment market.

 

Comments

[Jojo]

Steve,

A couple of comments:

1. You should exclude solos from the data too. That's not a real JD required job for a recent graduate, and certainly not one that all but a handful of lawyers nationwide are in a position to undertake as a baby lawyer.

2. Can you post the numbers in your charts to show the gaps between graduates and jobs projected out? It's tough to tell from the graphs.

[Former Editor]

Just so I'm clear, the only one of these scenarios that does not leave several thousand students out in the cold (even out of JD Advantage jobs), is the one that predicts 16% sector growth over four years? How do you square the 16% growth prediction with the 10.7% ten year growth prediction from the BLS?

[Matt Bodie]

I think Steve's point is that the "law graduates" line has always been somewhat above the employment bars, even in the better times of the early 2000s. The distance between the line and the bars is smaller in 2018 than any other time, even under the worst assumptions (graph #4). But as he points out, these are all assumptions about what will happen.

[JM]

Steven, I am sure that your central point is correct. Law grads in three years will have an easier time finding a legal job. Even more so ten years from now, when there will be 20,000 grads/year.

You still haven't addressed the problem with law school. The problem is debt. Again, the problem is debt. What good is a $50k/year job with no benefits when you have $180k in debt?

I get that KU is better than most schools on the tuition front. However, most propsective students don't want to move to Kansas or a similar rural state for three years, nevermind a lifetime. Most schools are in major cities on the coasts. They charge huge tuition, and they will continue to face grave danger even if they place 100% of their class in FT/LT legal jobs so long as they require incurring over $150k (or even $80k) to attend.

[anon]

The Mountain labor’d, groaning loud,

On which a num’rous gaping crowd

Of noodles came to see the sight,

When, lo! a mouse was brought to light!

This tale’s for men of swagg’ring cast,

Whose threats, voluminous and vast,

With all their verse and all their prose,

Can make but little on’t, that we know.

THE FABLES OF PHAEDRUS

[solopreneur]

Jojo: How is a solo practitioner job not a JD required one for a recent graduate? Recent graduates start solo practices every year and some become wildly successful, especially those smart enough to get a senior attorney as a mentor and join associations of attorneys in their practice areas where they can better learn their craft. Indeed, some law students go to law school with the specific purpose of starting their own practice. The ability to own your own business with ready and waiting customers as soon as you pass the bar is a plus.

[John Thompson]

"(T)he job market for law grads looks very favorable by the time this year's entering class graduates in 2017."

No. It looks as though 80% or more of a graduating class is likely to have full-time employment in a job that requires bar passage or where a JD is presumed to confer an advantage in hiring, instead of 50% to 60%. Compared to 40% of a graduating class having no meaningful opportunity to practice law, 20% seems like a vast improvement - but only if you aren't one of the 20%, most of whom will presumably pay full freight.

For most, the balance of salaries to student debt will remain unfavorable. A significant number of jobs that are full-time and require bar passage are not necessarily good outcomes, except in comparison to unemployment or retail (e.g., document review, solo practice, eat-what-you-kill partnerships of 2-10 recent JDs trying to feed themselves while learning to practice law, term-limited clerking positions that do not lead to other jobs). A significant number of JD-advantage positions will be little better-compensated than what the JD could have gotten with only a BA (e.g., claims adjustment). While some schools have actually reduced their sticker cost, most have continued to raise sticker cost at several multiples of inflation; it is correct to say that sticker cost and effective tuition are not the same, but it is equally correct to say that these schools are likely to continue leveraging the ignorance of their worst prospects to pay for reductions in tuition for their best ones.

And this wonderful alignment of production and market absorption is only possible because of reduction in class sizes that happened only because of a smaller pool of LSAT takers and the effect of one's median LSAT on one's U.S. News rank. If 120,000 people take the LSAT next year, then the class of 2019 will be just as large as the classes of 2009 or 2010, to the obvious and foreseeable detriment of many of the class of 2019's graduates. Unfortunately, I doubt that consideration or ABA oversight (LOL) would stop the average law school dean from expanding his school's class size once again.

It will likely be better. It is not likely to be so much better that the average U.S. law school's pre-2008 business model will be sustainable.

[Former Editor]

I think that the issue with using solos is, ultimately, that many onlookers don't trust the law schools to report that figure correctly. The ABA instructions require that the solo category "applies to a graduate who has truly established his or her own solo practice. It does not apply to a graduate who is unemployed, but who may be willing to take an occasional client while still seeking employment." If we trust law schools to limit reporting in that category to those who are starting a solo practice because they want to, not because its an unemployment stop-gap (as my reading of the instructions requires), then there is no problem with including them in the statistics.

[Nathan]

Chart #3 seems like the most likely outcome to me. Maybe a little on the high side, but not unreasonable. But I see two holes in the analysis so far.

1) How do the vast number of unemployed and underemployed law graduates affect the gains we expect for the c/o 2018. I mean, the US economy is the best example of how just keeping up with population growth isn't enough to assure a strong job market after a recession.

2) But before I jump on the 2018 bandwagon, I think we need to see the salary picture. The Great Recession killed a lot of $160k jobs. Only a fraction have come back. Is the salary distribution similar to what we had in the glory days? At least from my vantage point, the answer is a 'no.' We're hiring fewer SAs. Corporations have become a lot more demanding on the cost side and we've definitely seen a lot of work move in-house. I'm happy to be persuaded otherwise by data.

Even if the optistic scenario plays out, I do worry that law schools will move to take a big cut of the gains by raising tuition.

[anon]

STEVEN FREEDMAN PROVES THAT LAW SCHOOL HAS NEVER BEEN A BETTER INVESTMENT

Enroll Today! Why 2017-2018 Will Be a Fantastic Time to Graduate from Law School.

This won't matter to all the hysterical scam-bloggers, because they never pay attention to facts, but Steven Freedman, Ass't Admissions Director at the Kansas University Law School, has just backed up his claim that “supply/demand gap … won’t persist [in 2017-2018]”

“It will change significantly for the better,” said Mr. Freedman. “How do I know this?,” he asked. “Because [I] know that the gap will almost entirely disappear by 2017-2018.”

Notwithstanding hectoring by a horde of “scam bloggers” who want nothing positive for legal education and simply wish to close all US law schools, Mr. Freedman has answered the calumny that broke out after his bold statements. He has presented a mountain of evidence upon which he bases his stated knowledge about the legal market in 2017-2018.

Cyber-miscreants can never be satisfied, but Mr. Freedman has contributed greatly to “knowledge generation” about the market for attorneys in 2017-2018.

Some who entered law school in 2009 have been reminded of Mr. Freedman’s advice that he thought the legal employment market would recover by 2011-2012. But, at present, Mr. Freedman's knowledge is based on solid and irrefutable evidence that is far more persuasive.

[CHS]

Scam bloggers want to "close all US law schools"? I had not thought they had gone that far...

[Stan]

While 2018 is looking awful bright, more bad news for present day:

http://abovethelaw.com/2014/04/which-biglaw-firm-is-rescinding-offers/

[anon]

Mr. Freedman’s “knowledge” about the market for attorneys in 2017-2018 is based, it seems, almost exclusively on NALP data ("Employment data from 2001-2013 is based on NALP data.")

So, let’s see what the Executive Director of the NALP has stated over the past few years. Does he claim that the “supply/demand gap … won’t persist [in 2017-2018] … [it] will almost entirely disappear by 2017-2018”?

In 2012:
"I am often asked if there are signs that the entry-level job market is recovering," noted NALP Executive Director James Leipold. "Certainly the employment outcomes data for the Class of 2011 document a very distressed job market. This class may represent the bottom of the employment curve for this economic cycle. Our fall recruiting data from the last two years indicate that at least recruiting activity for the Classes of 2012 and 2013 increased, if somewhat modestly. Absent another significant national or international economic setback, I would expect to see some aspects of the employment profile for the next two classes begin to inch up, though there is nothing to indicate a rapid recovery or a likely return to pre-recession employment levels any time in the near future.”

In 2013:
“The employment picture remains decidedly mixed," noted NALP Executive Director James Leipold. "However, with the Class of 2012 we see the beginning of a rebounding private practice sector, particularly at large law firms, and, with that, we see some rebounding salary numbers. However, we still see very high unemployment and underemployment, and there are no indications that the employment situation will return to anything like what it was before the recession. … As class sizes come down over time and the legal employment market stabilizes somewhat, I would expect to continue to see modest improvements in the job market in the near and medium term future," concluded Leipold.”

And then, as reported in the Wall Street Journal on April 11, 2014,
“We’re not going back to 2006 anytime soon,” Mr. Leipold, said Thursday at the group’s annual conference in Seattle, according to the National Law Journal. According to the story: The sector shed 60,000 jobs during 2008 and 2009, and only 15,000 of those positions have returned, he said. Nearly 9 percent of associates at U.S. law firms were laid off in 2009 and some of them are still trying to make their ways back into fulltime law firm work.”

It is difficult to determine from Mr. Freedman’s pictures, but it appears that his Scenario #3, the “scenario” that best supports his claimed “knowledge” that “supply/demand gap … will almost entirely disappear by 2017-2018” shows the highest employment levels in nearly two decades. Moreover, Freedman’s "employment data from 2007-2018” [sic] “includes [only] full-time, long-term positions."

Noted also: there are so many tweaks and adjustments possible here that the scant "rules" presented cannot hope to capture. For example, according to the NALP: “Figures compiled by NALP differ slightly from those released … by the American Bar Association (ABA) for several reasons. The most important of these is that the ABA calculates its percentages based on the entire class, including those for whom employment status is not known. The expansion of the base to include all graduates will by definition lower all the percentages. For example, the 195 schools reporting to NALP included almost 1,100 graduates for whom employment status was unknown.” How this and other factors affects the "knowledge" presented here is unexplained.

[Jojo]

Steve,

As you know, today is Kansas' first deposit deadline for the Class of 2017. Are you observing a decline in deposits, and if so, by how much from last year?

[Steven Freedman (KU Law)]

@Jojo. We've had a pretty significant increase since last year. Not sure that's relevant to the posts here, but I like to brag when I'm having a good year, so why not. We'll announce our preliminary, unofficial data in late August when the class is seated.

[Jojo]

Steve, congrats. As you can tell from my posts, I'm very skeptical of the entire law school industry and obviously dislike forecasts of the overall market. Schools like Kansas, however, serve a real need and are less expensive than so many others. T14 and big publics will be the last ones to fall in my humble opinion, and will be most capable of doing the adapting and cost-cutting to save legal education.

It does not surprise me at all that Kansas had a good year. I suspect, on the other hand, that we'll see the expensive coastal private schools get creamed, and rightly so.

[Steven Freedman (KU Law)]

@anon You are correct that NALP and the ABA report different data for the numbers of law graduates. For example, in 2007 NALP reported 43,518 graduates, with employment data for 41,707. That same year the ABA reported 43,920 graduates. Or in 2009 when NALP reported 44,000 graduates with data from 42,330, a year in which the ABA reported 43,587 graduates. Now I could have fudged the data by trying to estimate what percentage of the roughly 2,000 unreported employment outcomes represented FT LT bar req'd or JD advantage positions. I think that would be fair, but I chose to err on the side of using conservative figures. Instead I chose to be cautious and conservative by choosing the less advantageous data. As for ABA vs. NALP, using ABA data makes sense because the ABA is the agency that compiles the official data in this area [note: I posted a different statement here briefly and then took it down when I realized that the ABA does not consistently report a higher number, as I had thought. It's not that important as a cursory comparison suggests the ABA and NALP report pretty similar graduate data].

I also chose not to include students pursuing an LLM, or to exclude students who stated they were not seeking employment (typically someone starting a family). I didn't include professional positions, even though I've known a number of students who went to law school never intending to practice law and who were quite happy doing what they're doing. I didn't include students who found full-time, long-term bar pass required positions on Feb. 16 of the year they graduated, nor did I include students who started somewhere part-time until they found full-time employment just after the Feb. 15 reporting deadline. (see Ben Barros' study of Widener grads). In fact, I think my graphs likely underrepresent the positive labor market students will find in 2017-2018. But I always think it's better when analyzing data to err in the direction that doesn't support your argument, rather than the other way around.

[howveryscholarly]

Why the keen interest all the sudden in outcomes for your graduates? Could it be because *your* job, your financial future, is now on the line? How very charming. All you law professors, deans, b.s. administrators, you're all going down. 1.3 T in bad student debt, and law schools contributing a vastly disproportionate and ever-increasing chunk. You're not just disliked, you're hated. You're hated with a passion that can only come from truly being wronged, unconscionably harmed, while you unjustly enriched yourself.

Argue away. The audience that can help you keep your job by jumping on the sacrificial altar of student loan debt, neither knows you exist, nor cares you exist. See, you're not part of the recent-college-graduate "in" crowd. You will never reach the ears that recent law graduates reach, and on top of all that, God might still send you to hell for what you've done.

Have a great day. I'll be looking for you in the unemployment line.

[Steven Freedman (KU Law)]

@anon (cont'd) As for Leipold's comments, I have few reasons to question his estimate that the overall number of people working as attorneys will be stagnant. But I think he's very likely wrong about the job market for law school grads. He refers to the 45,000 net attorneys who were laid off in 2008 and 2009 and suggests they are negatively impacting the labor market. Really? It's been nearly six years, are there that many from that cohort still pounding the pavement? Or, more likely, have the vast majority of them retired or changed careers. Keep in mind that the overall employment rate for attorneys is somewhere around 97%. At the same time, he also understates the effect the coming decrease in the number of law school grads will have on the market. We're talking roughly 14,000 fewer students entering the labor market on an annual basis, a roughly 30% decline. I'd like to hear him emphasize that fact, rather than what happened six years ago.

[anon]

Howveryscholarly

As much as I might agree that there has been little or no contrition shown by the law academy, what is worse is their failure to listen to voices suggesting the underlying reasons that things have gone wrong for so many.

This series of posts has nothing to add to that debate about legal education; it is, purely and simply, designed to reassure nervous law school administrators and stimulate interest in attending law schools.

No "facts" have been presented about a future condition, and no "facts" ever can or will be presented. Moreover, Mr. Freedman's scenario three, if inherently implausible, reinforces the notion that lessons from the recent past, unfortunately, have not been learned.

But, your post simply feeds and hardens a reactionary stance on the part of legal academia. I posted a "Colbert" like comment above, and it appeared that someone actually took it seriously! You are speaking to an extremely sheltered audience with oversized and thus fragile egos, and you are speaking in very blunt and scurrilous language.

So, back off. If those who might rely on this sort of posting by Mr. Freedman aren't listening, then that is positive, no?

It just isn't productive to judge and condemn others to eternal punishment, as good as that might feel to do that.

Tell Mr. Freedman what is wrong with his analysis. Tell all of us how you would solve the crisis in legal education. If legal educators respond to changing conditions, posts like Mr. Freedman's will no longer be needed.

(Hint: If your solution is "shut it all down" see comments above. Legal education serves a need in this country, wouldn't you agree? The goal in all this should be to convince legal academia to listen and to take action to correct the status quo. Your post won't accomplish that!)