What Happened To the Class of 2010?

Deborah Jones Merritt has just posted a new piece on SSRN (as well as a related blog post) that’s well worth looking at for anyone interested in the state of the legal job marketplace – and the implications for law schools.

Taking advantage of the wealth of information now publicly available on the internet, Merritt conducted a down and dirty longitudinal study of those admitted to the Ohio bar in 2010, when the full impact of the recession had hit legal hiring.

She finds that job outcomes nearly five years out are poor.  She compares the 2010 Ohio figures with the 2000 national figures from the After The JD study, and finds that those who started out in Ohio in the midst of a recession in 2010 were in worse shape four and a half years out than the national cohort of those who started out in the 2000 recession.

From that, combined with a look at the changing structure of the legal marketplace, she draws a bigger – and undoubtedly more controversial – conclusion, which is that the contrast most likely is explained by the changing structure of the legal services marketplace, where US lawyer jobs are being replaced by everything from outsourcing to software. Put differently, she concludes that her Ohio figures provide data to support the claim that structural change is depressing job prospects for young lawyers.

Last but perhaps not least, she digs in to what this implies for law schools.

Merritt’s methodology is both clever and simple – in today’s world, job information can be found on the internet from a variety of sources. Those actively admitted to the Ohio bar are required to provide their employment information to the licensing authority; beyond that, sources such as LinkedIn and law firm web sites provide more detailed information on almost everyone engaged in practice.

As she notes, this method has its limitations. Her method provides no information on income or job satisfaction. Not everyone is traceable via the internet, and it is theoretically possible, however unlikely, that young lawyers of a generation that grew up online might have brick and mortar practices with no online footprint. More likely, her method may overstate job outcomes – young lawyers may present part time jobs in ways that make them seem full time, and may take a good long while to post job terminations. Law students who did not pass the bar – a small but not insignificant group, and perhaps poised to grow larger as admission standards slip – are not included at all.

There also is an obvious limitation in trying to draw conclusions about national trends from a study of one state. As states go, Ohio is as representative as any. It provides a home to large firms such as Jones Day, but it is not dominated by one big city market. Rural and small town lawyers fit into the mix. An argument could be made that its rust belt location skews results, an argument best answered by similar studies in other states.

What Merritt finds is that things started badly for the class of 2010, and, unlike in prior recessions, did not get much better. At a national level, nine months after graduation less than forty percent of graduates held jobs in law firms, barely two thirds held jobs that required a law license, and ten percent were altogether unemployed.

Four and a half years after graduation, Merritt finds, things have not rebounded, at least in the state of Ohio. One fifth of the 2010 cohort work in jobs that require no law license. Just shy of 50 percent were in private practice, but of those almost one fifth (9.1 percent of the total) were in solo practice, a category that, like consultants, includes some thriving professionals as well as some not so fully employed.  Just under 15 percent were in legal jobs in government, and eight percent in legal jobs in business. Just over eighteen percent were in jobs not requiring a law license – and while she didn’t uncover any law graduate barristas, the ‘business’ jobs held by some graduates suggest to her that the category is not just fanciful. More than six percent were unemployed.

Merritt compares these outcomes to the results of the 2000 graduates tracked by the After the JD study, and finds that the 2010 class did less well at rebounding from a poor start. For example, the percentage employed in law firms for the 2000 cohort was at 48.7 percent nationally at the same time, compared to only 39.5 percent for the 2010 cohort. Of those in private practice, they skew toward smaller firms and solo practice compared to the 2000 cohort. Another sign of employment stress is that job changes for this cohort are much more frequent than prior national averages.

Merritt concludes – with caveats - that the outcomes for 2010 signal a structural change in legal employment. The lack of recovery comparable to the 2000 graduates, the decline in law firm unemployment, the percentage altogether out of legal employment, all signal to Merritt that a structural change is probably underway. She doesn’t ignore the possibility that the most recent recession was just deeper or recovery slower, but concludes in light of a shifting legal services marketplace that her results probably reflect a structural change in the market.

Those who would argue with Merritt’s conclusions need to take into account her review of the changing legal services marketplace. The positioning of lawyers as competitors for legal services business has changed since 2000, and Merritt relies on this along with her Ohio data in concluding that her 2010 lawyers were not just facing a tough economy.

If she’s right that recent graduates are already suffering from a structural change in the market, arguments and studies that assume that the current value of a law degree matches historical norms require adjustment. While I'm in the structural change is happening camp, I’m not prepared to say that the evidence the market has changed is conclusive -- but Merritt’s data suggests it may have passed the point where structural change can be assumed away.

If legal employment has undergone structural change that depresses job prospects, the implications for law schools as we now know them are obvious. If there are fewer good long term legal jobs, there will be less demand for law graduates, which will inevitably continue to put pressure on law schools.

Merritt reprises a proposal she has made before, which is that costs can be lowered and the social purpose of law school better served by offering a first year of law school in undergraduate school. For those not going on to law school, the legal training will make them better citizens and at least partially prepared for many JD Advantage jobs. For those pursuing a full JD, the cost would be lowered by cutting the length of post graduate studies.

Merritt’s article won’t be the last word in this debate. I’m quite certain that the law school scam crowd will hail it as definitive proof that end times are near, and that those in full defensive mode will latch on to the limitations Merritt herself identifies in her approach to argue her findings away. It does add unfreighted analysis and fresh data to a discussion that too often sees only heat and ungrounded opinions. 

Comments

[rose]

Anon,
Why are you so dismissive of her work? What do you think the small firms in Ohio are paying? (This is not a rhetorical question.)

And her percentage of those working as lawyers ignores those grads who never pass the bar.

Final question, even if everything you say is true, why do you find this level of employment coupled with this level of debt acceptable?

[rose]

Wilmer Hale has its back office in Dayton Ohio. This must skew the number of staff attorneys in big law in Ohio.

[[M][@][c][K]]

It is also useful to note that Ohio has a quite astonishing number of law schools for the size of the state and its economy - 9 ABA accredited schools and is bordered by a few states with equally ludicrous numbers of law schools, i.e., PA with 8, Michigan with 5, Indiana with 4 and is not far from Illinois' 9. It therefore sits in a very over-law schooled region (but see California and Florida) and that is before you consider the seriously national schools that compete nationwide.

[anon123]

Mack - What states are under-law schooled?

[Big Bob]

Does this article or extended blog post tell us something we did not know and which is relevant? Seems like we have been talking about the employment issues for law grads for years. Why would anyone spend hours and hours adding numbers to figure out what every school knows is a problem.

A better issue is what do to about it. You can either decrease the numbers admitted (supply) or decrease the number who apply (demand). The problem is the either one has an impact on employment for law professors and that generally is where the conversation ends.

[Just saying...]

Big Bob: I would bet that Prof. Merritt felt compelled to do this because the law school establishment still denies the existence of a problem.. It is all cyclical, the scam bloggers are behind it, etc., etc.

Given that those who question the status quo are called scambloggers, I think that the "other side" needs an equally derogatory name. Any suggestions???

[[M][@][c][K]]

Just saying...

"Law Spivs" Spivs was a phrase for dodgy businessmen who sold vaguely rationed goods, typically overpriced, with unreliable claims as to their value, comparability with the brandname product, etc. Very common during WW II and rationing, they avoid actual service in the trenches looking instead to profiteer. The term Spiv is of British origin - the Oxford dictionary describes it as a man, typically a flashy dresser, who makes a living by disreputable dealings.

Big Bob - at least one pair of writers, Simkovik and McIntyre, have now published two papers purporting to show that a law degree is worth $1 million and more recently that graduating law school in a recession has only a $30,000 negative effect on a lawyer's lifetime earnings. I think Prof. Merritt's article is a needed corrective. The Law Spivs love S&M, but then it has always been referred to as la vice anglais.

[rose]

Big Bob:
Law is going through structural changes.
Also, there are very few studies of actual employment outcomes 5 or 10 years after graduation.

Students and potential students want to look beyond the initial employment numbers from 9 months out. There is virtually no data on the longer term outcomes from individual schools.

[Big Bob]

Oh, thanks. Wow, am I out of touch! I did not realize the scammers were the bad guys but now that I think about it, it makes sense. The other side are the "truthers." Are there actually really any law school truthers -- those who do not think the sky is falling or is at least lower than ever. Or are the truthers more clever so they talk about the opportunities for legal minds in gardening, the Ice Capades or cattle branding and think the future is bright?

As for for what happens in the longer run, I am not sure 5 years is much of a long run and any current applicant who needs this study to show things are grim has not been paying attention at all. I'm sorry all you law profs but I think the professor could have used her time more wisely. Unless, of course, the leg work was done by a staff of RAs.

[Ray Campbell]

It's amazing how little we actually know about legal employment - either the job outcomes for those who graduate law school, or what lawyers actually do in their day to day jobs. Even folks like me, and I was a big firm partner, only know what we did when we did it, and no one is typical. The sociological studies and surveys are relatively few, and some way out of date. This leaves the field open to folks led by their agendas, whether it is to trash law schools or to oversell the value of a legal education.

I don't think there's any question that legal services is undergoing structural change. Staff attorneys, legal process outsourcers, LegalZoom, globalization, etc., are all taking market share from US lawyers. Over the horizon is the possibility of the kind of regulatory change the UK has seen, which would open the door to direct competition with more non-lawyer competitors.

What we don't really know is what impact all the structural change is having, and will have, on job prospects for young lawyers. Congress keeps passing complicated laws, and the reach of law goes deeper into day to day life all the time. There are those who argue that this guarantees an evergreen source of business for lawyers, once the unpleasantness of the recession is behind us. Others look at the shift of work to non-lawyers and even to software, or to the price pressure services like LegalZoom put on fees, and think that while legal services might continue to grow the share done by lawyers is likely to decline, with some sectors being less remunaterive than they used to be.

I'm more evidence driven than agenda driven, which is why I think Professor Merritt's study is a nice step in the right direction. She pioneers a methodology that can be replicated in any state of the union. While it has the disadvantage of not having income or satisfaction data, it has the advantage - one not shared by surveys such as After the JD - of capturing fairly close to 100 percent of the job outcomes.

If she's right that the data suggests we are already seeing job opportunities depressed by structural change, it's important. As an internet entrepreneur, I lived through the dotcom era, and I saw from brick and mortar merchants and physical magazines the kind of denial I am now seeing from law schools. Like the internet in 1997, when I got going, the newlaw competition is in its infancy, and if there will be impacts the full force of that is years away.

In my internet life, some of those brick and mortar companies did just fine. They had strong brands and adapted their business models in time. Others, not so much. For both publishing and retail sales, the business today is way different from what it was in 1997 because of the structural changes brought by the internet.

The point is, for the health of law schools along many dimensions it would be smart to know more than we do about how graduates do job wise as well as more about what they are doing. A study like this is not a waste of time; it's a brick in a wall that very much needs building.

[Deborah Merritt]

Thanks, Ray, for posting such a thoughtful and succinct review of my article. And thanks to the commenters, as well, for their input--I hope there will be even more. Here are a few thoughts to keep the discussion going.

First, and most important, what should we do about this situation? I offer several suggestions in the article. I calculate that the market is unable to support more than about 29,250 new lawyers a year in jobs that require a law license. If prospective students are willing to accept a job ratio of 85% "lawyering" jobs during the first few years after graduation, we're still admitting classes that are a bit too large. (I account for attrition and other factors in the paper.) I think law schools will have to maintain their current reduced class sizes or shrink further.

I also predict that tuition will have to remain in its current discounted rate or fall even lower. There's some worthwhile lawyering work to do, but not for the type of debt students are currently accumulating.

As Ray notes, I also suggest moving the first year of law school into the undergrad curriculum. We do a great job of teaching law in a liberal arts manner during that year, and law schools can build on that strength. Students who go into the workplace with that BA would have had a fine liberal arts education (1L plus all of their other college courses) and would have skills they could apply to law-related jobs or other lines of work.

For those who want to be licensed lawyers, we could offer a 2-year JD (with the undergrad major as a prerequisite). These 2 years would stress education for practicing law.

For students, this would mean that a law license required 6 years rather than 7 years of higher ed, and 4 of those years would be at BA prices (which helps at some schools, but not others). It would also give students a better opportunity to figure out how much they like law and to make better judgments about whether a JD is worthwhile for their career goals.

[anon]

I know it isn't as catchy as "scammer" but the word that fits is "reactionary," which is defined as a person or a set of views opposing reform.

This is a distinct and recognizable form in legal academia. As the number of persons applying to law school falls to levels not seen in decades (when there were about 25% fewer schools, btw), these persons see only blue skies and sunny days.

A law school admission director might enter this site to actually claim (it is difficult to believe that this could actually have happened) that "now" is the time to attend law school. A law professor might attempt to back up that claim. A law prof might incessantly cherry pick quotes from studies showing the dismal state of legal education to claim that all is well, alleging that "scammers" were always wrong (though, in truth, the claims that law schools were misrepresenting employment numbers have been validated time and again).

And so forth. Perhaps most egregiously, as stated above, wildly exaggerated claims about the actually quite modest claims made by S&M are touted as the gospel by reactionary members of the law school defense team (who must not have carefully read their papers and who have afforded an authority to their conclusions in light of their experience that bears some thoughtful consideration!)

Readers of this site know full well that the reactionary and sort of thin nature of these defenses is obvious. To respond in any manner other than to recognize that something must be done to change the status quo is silly. Persons in growing numbers are holding legal academia in disrepute and simply riding this all out - claiming in the face of contrary facts that all is well - isn't a good strategy. A simple mea culpa, combined with a pledge to do better - to do SOMETHING other than engage in dishonest denial - would solve so much of this.

But humility is not a quality that is seemingly much valued by legal academics. They are, after all, "rock stars" and "best athletes" chosen because of their vastly superior intellects and educations to enjoy a life characterized by hubris and disdain for others - others exemplified by all those evil "scammers."

[Deborah Merritt]

I posted a comment earlier, but it seems to have disappeared into the spam filter. So let me be briefer! First, thanks very much Ray for your thoughtful and succinct outline of my article. And thanks to the commenters as well; I enjoy discussion on all of these issues.

What do do now? I calculate in the article that the market can support no more than about 29,250 new lawyers (i.e., in jobs that require bar admission) per year. After accounting for attrition and other factors (such as what percentage of bar-required jobs might draw students to law school), I suggest that the current 1L class is still a bit too large. So law schools will have to stay where they are with class size or reduce further.

I also predict that schools will have to maintain their current level of effective tuition or move it still lower. The jobs available just don't line up with higher tuition and debt levels.

And, as Ray notes, I briefly sketch my idea of moving the first year of law school to the undergrad curriculum. Our approach to that year has always struck me as more liberal arts than professional; why not capitalize on that strength--and then focus a 2-year JD on professional education? This would also be considerably cheaper for students: just 6 years total to become a licensed lawyer, with more of an opportunity to assess whether the full JD is worth shooting for.

[anon]

Deborah

I like your proposal in theory, but wonder how it would actually work out.

THe first year, focused on the "core" courses (i.e., contracts, torts, prop, crim law and procedure and civil procedure) is intense and something of a "boot camp" that introduces students not only to the law, but also to the rigors of law school.

Many students decide in their first year that they made a mistake - they hate it (but can't necessarily back out, because of parental pressure, etc). Others thrive. Most just get by and move on to the upper level courses with something of a background in law school expectations.

Ideally, the next two years should be designed to serve the needs of the vast majority of law students, by preparing these students to become attorneys and not law professors (future law professors really don't need a law school designed to suit their particular needs, as they have such superior intellects, they can succeed in any milieu and will be prepared upon graduation to opine on any topic).

Preparing an undergraduate student to actually practice law, on the other hand, is a daunting task - as some law profs recognize.

Now, how would a bunch of "law" courses in the senior year of college, followed by two years in law school, better serve the need to prepare law students who attend law school to become attorneys (i.e., the needs of nearly all of them)?

[anon]

It's quite telling that law professors aren't aware that Wilmer Hale has its back offices in Dayton.

[Jojo]

The derogatory name for the other side is the law school industrial complex or the Law Debt Quislings.

[anon]

What are "back offices" and what do lawyers do in them?

[Kyle McEntee]

Debby actually interviewed the e-discovery manager from WilmerHale on LST's podcast. Check out episode #9 on lstradio.com or on iTunes

[Anon]

Yes - even law professors who genuinely care about employment outcomes seem to not know that much about actual employment options for law students. I think there needs to be some type of CLE requirement that has exposes professors to the actual state of legal practice and the "real world."

[Ray Campbell]

When I say "we" don't know as much as we should, I don't mean just law professors. I include practicing lawyers, which I once was. When I was an equity partner at a big firm, I knew what I did, a fair amount about what some of partners did, less about what others of my partners did, and very little about what someone holding the same license did when they got to work in a strip mall office five miles from the skyscraper where I sat. You can know a lot about a particular practice, and some law professors do, and yet not have a clear picture of the profession as a whole. Add time issues, and the issue is compounded - I think a lot of what I did litigation partners still do, but there are other aspects of the job that have very much changed since I moved on.

To fill in the picture takes rigorous study, regularly updated, especially given that the nature of legal work is changing. WE have anthropological/sociological studies like John Flood's of a Chicago firm, and surveys such as After the JD, but these go out of date pretty quickly. After the JD tracks 2000 graduates, and there is a fair argument that the career trajectories of more recent and future classes are likely to be quite different.

I think we could do with a few less articles parsing one Constitutional rule or another, and more like Professor Merritt's, but there are structural impediments. As you've seen in this thread, some professors view this kind of work as not real scholarship. More importantly, the students running law reviews have the same mindset. Although it would help students a lot to have more articles out there that look into the nature of the profession, you don't see many of those in law reviews, top or not so top. Professors who need to publish or perish get the message and give the student editors what they will publish.