New Study on the State of the Entry-Level Law-Jobs Market and its Implications (Part I: Where the Job Market for New Law Graduates is Today)

I’ve posted on SSRN a draft of my new study of the entry-level Law-Jobs market and its implications.  You can find the draft here.  It’s a followup to my earlier study on the job market, published in the middle of the Great Recession’s aftermath in 2014.  I presented an earlier draft of the new paper last spring at Florida International’s Summit on the Future of Legal Education and Entry to the Profession.  That conference was ably organized by Scott Norberg and generously co-sponsored by LSAC.  The paper will appear later this year in the Symposium Issue of the FIU Law Review devoted to the Summit.

Rather than imposing one long post on those interested, I thought I would break a discussion of the findings into four parts, posted over the next week or two.  This Part will discuss the current state of the entry-level Law-Jobs market.  Subsequent posts will discuss (ii) the entry-level placements the ABA calls “JD-Advantage”; (iii) predictions regarding future trends in entry-level employment for new law graduates; and (iv) the implications for the legal academy of where the job market is and where it’s going.

So where are we these days?  I’ll fill you in after the jump.

After a lengthy and precipitous drop that began after 2007, the number of strongly law-grounded entry-level jobs obtained by new law graduates within ten months of graduation finally appears to have levelled out.  (For reasons explained thoroughly in the two papers linked to above, I count as “Law Jobs” Bar Passage Required placements other than as a solo practitioner that are not school-funded.)  Specifically, following a big tumble from 2007-2011 and a slight uptick that proved to be just a “dead-cat bounce” in 2012-2013, the number of Law Jobs was down year-over-year for the classes of 2014 (-7.7%), 2015 (-6.1%), and 2016 (-2.6%).  It was effectively flat in 2017 (+0.8%).  Overall, the number of Law Jobs is 25.7% lower for the Class of 2017 than it was for the Class of 2007, and remains at levels not seen since the early 1990s.

Why, then, you may well ask, is there persistent talk of the entry-level job market’s purported improvement, and even suggestions that it is “hot”?  (NALP, to its credit, has been more nuanced than the industry press.)  Well, the percentage of new graduates obtaining a Law Job has risen steadily since 2011.  And how can the portion of the graduating class getting a Law Job increase while the number of Law Jobs falls?  Easy:  The number of students graduating law school has been falling faster than the number of Law Jobs.  Here’s a picture:

In other words, because there are so many fewer graduates chasing the reduced number of Law Jobs today, more of those graduates are succeeding.  But there are still many thousands fewer Law Jobs today than there were ten years ago.

You may be wondering whether there have been changes in the relative share of the entry-level Law-Jobs market occupied by the different types of employers.  (I was.)  The answer is that there has been relatively little change in the balance among sectors, with three interesting exceptions.

No employer sector offers more Law Jobs today than it did ten years ago.  Non-law-firm entry-level Law-Job hiring has remained relatively flat in all sectors (other than the sudden dip experienced by nearly every sector of the hiring market when the economy crashed in 2008-2009):

(The above graph tracks entry-level hiring for Law Jobs only, so it does not count (for example) the graduates working for a for-profit business other than as a lawyer, or those working in Academia other than as a law professor or law librarian.  The number of entry-level Law Jobs in Academia each year is so small that it is not graphed.  The study does count all full-time, long-term Judicial Clerkships as Law Jobs.)

As for law-firm hiring, two sectors have shrunk significantly less than the others—the smallest firms (2-10 lawyers) and the largest ones (501+ lawyers)--while entry-level hiring by Large Firms (50-500 lawyers) has shrunk more than the rest:

As the graph shows, Small Firms currently hire more new graduates than any other employer (currently about 21% of all Law Jobs and about 14% of the graduating class), though their hiring rate is falling gently.  Very Large Firms is the only group whose entry-level hiring is currently growing at any significant pace (currently about 19% of all Law Jobs, and about 12.5% of the graduating class). 

Why?  Quite probably because Small-Firm hiring has generally been less sensitive to cyclical influences, but these firms have long represented a significant portion of the practicing bar.  Very Large Firms, on the other hand, are more cyclically sensitive but are currently enjoying a strong economy.  These firms need to continue significant rates of entry-level hiring to preserve their “footprint” across the many offices they maintain in the face of what has historically been high levels of attrition among junior lawyers.  Very Large Firms may also be the last bastion of the “leveraged” economic and practice model, meaning maintaining a pyramid-shaped demographic with large numbers of junior lawyers and high turnover at the bottom.  

Large Firms (51-500 lawyers), by contrast, are hiring fewer new associates than ever as clients insist on larger and larger amounts of routinized legal process work (the gathering and organizing of documents and information) being performed much more inexpensively in-house (“insourcing”), by third-party outsourcers (“outsourcing”), or by lower-paid, lower-rate non-associates in outside law firms (“downsourcing”).  They tend to compete with Very Large Firms these days by discounting their rates and doing more with less.

Again, you can get the full draft, replete with charts, graphs, and more extended discussion, here.

Next time, I’ll discuss “JD-Advantage” placements and what I think they tell us about the future of the profession.  Stay tuned.

--Bernie

Comments

[anon]

I'm sure you remember the series of posts on this website, a few years ago, that predicated that the present would be the best market in history: and that therefore, the best time to enroll in law school was back then, when those bold claims were made.

Do you believe there should be any accountability for, for example, a person who made these claims to induce persons to enroll in his law school, despite howls of protest that such claims about the best time in history to enroll in law school were suspect, if not worse.

[anon]

here's a little sample of the pitch, from 2014:

"Why am I telling you this? Because I want prospective law students to know that this time I mean it. Enroll today or you will miss out on what might be a once-in-a-lifetime opportunity. Namely, the chance to graduate from law school in 2017-2018, which will likely be one of the best times ever to graduate from law school."

[anon]

Here was the kicker, on the "Demand" side:

"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."

[Matt]

"Do you believe there should be any accountability..."

What would "accountability" look like here to you, anon? It's hard to evaluate the question without knowing this.

[Anon2]

Accountability should be to name and shame the scammer (Barker? Recruiter?) and to acknowledge that those in the legal educational industrial complex are biased (consciously or unconsciously) towards feeding the beast even at the expense of foreseeably poor student outcomes.

[Bernie Burk]

Anon, Your quotations do ring a bell, but only faintly. Can you remind us where they came from? And do you remember others?

--Bernie

[anon]

Bernie

This website.

For a start, all you need to do is search for "enroll" in the search box.

I would think we would all remember the lengthy debates about these and similar statements.

As for accountability, Matt, I would hesitate to start prescribing the consequences. I would start by asking the question above: if these statements were made by any person whose duties involved admissions, to induce students to enroll, what level of scrutiny would be appropriate?

If regular readers of the FL - perhaps some who participated in such debates -- don't remember the debates on this site, that went on for months, about these (and other like) statements (by others, as well), all I can say is that memories must be growing shockingly short.

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

I remember the debate, in which the tactics of certain people, including the person quoted by anon became shockingly nasty.

Earlier in the debate I made the point, that the graphs bear out, that law schools, seen as an industry, was over-capacity by 100%, i.e., that only halving the number of graduates would stabilise the profession. Your graphs bear that point out. The thing that drove a certain law professor into a rage was the second point that costs needed to halve, and that this meant that the number of faculty needed to halve and many law schools needed to close. So far only a few have closed.... so....

I'd also point out that the US is not the only legal market with a shocking overproduction problem. In the in 2017-18, 26,655 UK students applied to law courses leading to a qualifying undergraduate level in England and Wales, out of whom 18,850 UK students were accepted on to courses (it was around 25k a few years ago) - probably a few thousand more in Scotland and Northern Ireland with 3-5,000 seeking to do qualifying post-graduate diplomas. A qualifying degree/diploma is the pre-requisite to going on the train as a solicitor or barrister - but training places are about 3-5,000 p.a. So the UK is producing around 5 to 10 times as many people with qualifying degrees/diplomas as can ever have a chance of becoming practicing lawyers (and the Republic of Ireland graduates compete in the same market.)

Other places I'm familiar with, Germany, France, Belgium, Spain and Italy are not much better, though in the latter three you also need to take account of the impact of nepotism/enchufismo/raccomandazione which means that in reality, many of the students will not get a chance to practice law if they are not from a legal/political family. In Japan it is different in that there are a host of actual legal tracks beyond being a bengoshi and most law graduates - 90% plus don't even try to enter legal training, but join corporations.

In short, the US has a problem with overproduction of law graduates, but it is not a problem limited to the US - it seems global in developed countries.

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

I'd add that Bernie - it would be interesting if you'd cover off in your paper at least a little of how other large economies deal with the overproduction of law graduates.

The "undergraduate" argument has a weakness - I can't see my firm hiring an entry level lawyer who didn't have a STEM or similar degree and in reality, many firms in the UK appear to prefer those whose undergraduate degree was in a subject other than law as being more rounded and ultimately better lawyers.

[anon]

Let's not forget this oldie but goodie, from these very pages:

"August 20, 2014

The Coming Lawyer Shortage

In this post, I will argue that within a few years there will be a shortage of entry-level lawyers. Law school enrollments have dropped so much that the demand for new lawyers will far exceed the supply of law school graduates. In a relatively short time, we will have gone from an environment where employers received hundreds of resumes for every open position to one where employers might not receive any resumes at all ….

[W]e can say with virtual certainly that the class of 2017 will graduate into the best entry-level job market in recent memory.

... In just a few years, there will not be enough entry level lawyers to meet basic demand.”

What's the verdict here, Bernie? How accurate were these predictions?