How many new positions for lawyers will be created, via the combination of economic growth and currently employed lawyers leaving the profession altogether? The Bureau of Labor Statistics estimates the number as being about 244,000. (A state by state analysis of the relationship between lawyers and legal jobs put the number at closer to 195,000, but we'll assume the higher figure). That's a 300,000-lawyer surplus added to the current surplus.
This daunting figure does need to be reduced a bit, by a couple of factors.
First, let's assume that only 30% of graduates from from non-accredited schools end up getting legal jobs (it's striking how invisible these people are in the usual discussions of the state of the legal market, given that there are dozens of such schools in California alone). That removes 30,000 jobs from the equation, leaving 214,000 jobs for 450,000 ABA law school grads. However, not all ABA law school grads eventually pass a state bar exam. The median bar passage rate for first time takers of state bar exams who are graduates of ABA schools is about 86%, and if we assume half of those who take the bar more than once eventually pass it, that means about 7% of ABA law school grads never pass (this is an interesting subtopic that deserves a separate post). So that would mean about 420,000 new licensed attorneys from ABA-accredited schools would be available for 214,000 jobs.
But we need to make one more adjustment, since not every new legal job in the American market will be taken by a graduate of an American law school. I'm not aware of any figures regarding how many foreign lawyers per year successfully enter the American market, but let's assume that American law school grads get 98% of new American legal jobs. That assumption has the virtue of producing an exact two to one ratio between new licensed ABA law school graduates and new legal jobs over the course of the next decade(420,000 barred graduates of ABA schools, 210,000 new legal jobs).
This doesn't mean, however, that 50% of ABA law school grads who pass the bar over the next decade will get legal jobs, since there are at this moment about 575,000 people in the USA of working age who have law degrees from ABA law schools who aren't currently employed as attorneys. Of course the vast majority of these people have by this point left the legal employment world permanently, but some of them are currently unemployed lawyers who are going to take some of the new legal jobs created over the course of the next decade. This is a major variable in any analysis of how many jobs are going to be available for new attorneys: as recent law graduates can tell you, current "entry level" legal jobs often end up getting filled by currently unemployed lawyers with several years of experience practicing law, while other, new explicitly non-entry level jobs end up getting filled not by currently employed attorneys changing positions, but by unemployed lawyers with excellent resumes and a willingness to work for significantly reduced wages.
In other words, a significant percentage of "new" legal jobs are not going to be filled by new lawyers. This will not affect the overall legal (un)employment rate for people with law degrees, but it will push up the unemployment rate for new barred graduates of ABA law schools to well above the 50% predicted by a crude comparison of the number of such graduates and the number of legal jobs.
Meanwhile, how much law school debt will these new graduates be carrying? (Note this doesn't include other educational debt, or consumer debt). The good folks at Law School Tuition Bubble have taken the trouble to calculate the answer to that precise question:
It appears legal education has been one of America’s winning industries for the last twenty years, posting an estimated 6.8% annualized growth rate in terms of debt revenue alone, though that’s a slight overestimate due to the relatively greater number of graduates between 2001 and 2009. In the future, total annual graduate law school debt will double by the end of the decade (~$6.8 billion/year), and this is a conservative estimate because many public law schools are rapidly “privatizing” by going off state subsidies. Continued high unemployment will encourage this process for those public law schools that aren’t leaving the state dole whole hog, such as Minnesota and Arizona State. Public law schools will supplement subsidy shortfalls with tuition increases and a handful of alumni donations. This will add $50.6 billion onto around 500,000 future law graduates’ shoulders. In 2010, the total average debt for graduates who took on debt was $90,959. At current graduation rates, in 2020, of 54,536 graduates, 45,625 will take on debt, and their total average debt will be $149,120 ($114,801 for public school grads; $173,161 for private grads).(Note LSTB is being a bit less conservative than I am, since I assume no growth whatsoever in ABA-accredited law school graduate numbers over the next decade).
Now, what will be the average salary of the 210,000 new law jobs that will be filled by a cohort of employees which, by the end of the decade, will feature a greater than 50% legal unemployment rate and an average of $150,000 in law school debt alone? (It should be unnecessary to point out that these are not conditions that put employees in a strong position in regard to negotiating the terms of their employment). In 2010, according to NALP, the median starting salary of ABA law school grads who got full time jobs and reported their salaries (this group includes considerably less than half of all graduates) was $63,000. So if we assume a 10% annual growth rate in entry level salaries and a doubling of the rate at which the American economy is producing legal jobs everything should be just fine.*
*A footnote: according to one commentator there's a "methodological flaw" in this sort of analysis, in that I'm "claiming the fact that many law school alums do not work in law is evidence that law school employment outcomes are not good." I acknowledge that this sort of analysis assumes that the vast majority of people who go to law school go in order to become lawyers, and that it doesn't make sense for anyone who isn't independently wealthy to rack up six figures of law school debt for any reason other than in an attempt to enter the legal profession.