Five facts

I participated yesterday in a panel discussing Affordability and Access to Legal Education at the Washington University School of Law. This panel was part of a broader symposium on "The Law School in the New Legal Environment." Here are the five facts (together with slides) that I offered during my ten minutes:

Fact one: In real dollars, the median starting salary for law school graduates is lower today than it was twenty years ago. In 1991, the median was $40,000. In 2011, it was $60,000—but that’s the equivalent of $36,330 after adjusting for inflation. Median starting salary, in other words, has declined by 9.2%.

The decline is not simply an artifact of the recent recession. This graph shows median starting salary (in red) compared to the Consumer Price Index (in light blue) for the full 20 years. As you can see, the two track one another quite closely. We've all heard about rapid rises in BigLaw salaries, but those increases did not trickle down to most law graduates. For the average graduate, salaries have risen only with inflation.

The "median" salary, moreover, is closer to the seventy-fifth percentile. Only about half of law graduates report their salaries, and the unreported salaries skew heavily to the low end of the spectrum. The salaries we see on this graph, therefore, mark the high end of starting salaries earned by about three-quarters of law graduates.

Fact two: Large numbers of law graduates cannot find full-time, permanent jobs. Here are the employment results, measured nine months after graduation, for the class of 2011 at six law schools among the top 100 schools ranked by U.S. News. To avoid playing favorites, I chose every fifteenth school on that list. That method eliminated the top fourteen schools, for which outcomes are somewhat more favorable--although far from ideal. My method then generated a quick view of outcomes at the remaining top 100 law schools.

At each of these schools, one quarter to one third of 2011 graduates were unemployed, working part-time, or working in a temporary job. Those were outcomes measured a full nine months after graduation--and among the top half of all law schools.

Applicants to these schools still talk about landing high-paid jobs in BigLaw, but here's how many really achieve that feat.  I’ve defined BigLaw generously here, to include all firms with more than 250 attorneys, not just those with more than 500 attorneys.

At each of these schools, the chance of landing a BigLaw job was less than the chance of being un- or underemployed nine months after graduation. At three of the schools in this sample, as at many others, less than 5% of the graduates got BigLaw jobs. And once again, we’re still looking at schools that rank among the top 100 nationally.

Fact three: There are not enough lawyering jobs. The top line here (in red) represents the number of JD graduates from ABA-accredited law schools during the last five years. The bottom line (in yellow) shows the number of them who, by nine months after graduation, had obtained a full-time job requiring bar admission.

The jobs included in that yellow line aren't all ones that pay stable salaries or benefits. Some of them were temporary document review positions, others represent solo practitioners. This yellow line depicts all of the full-time jobs requiring a law license that our graduates were able to find.

As you can see, accredited law schools are graduating significantly more JDs than the legal market can absorb. It is true that some JDs use their degree in other fields, but surveys suggest that most of them would rather practice law (more on that in another post soon). There just aren’t enough lawyering jobs to occupy all of our graduates.

Note that this job gap pre-dates the recession. It is getting worse, but this is no temporary setback.

Fact four: While starting salaries have stagnated, and jobs have declined, law school tuition has steadily increased. This graph shows the median starting salaries and consumer prices that I showed you before. In this version, I've added the average cost of three years' tuition at both public (in-state) and private law schools. Schools today are claiming a much greater share of the financial return that their graduates earn.

It is true that schools award more scholarships today than they did twenty years ago, but that doesn’t change the picture. In this slide, I replace tuition with the average amounts that students borrowed to finance their law school educations. I only have those numbers for the last ten years, rather than twenty, but you can see that the lines are virtually identical to the tuition lines. Law school costs much more than it did twenty years ago, and students are borrowing heavily to fund that difference.

Fact Five: The market for legal services has changed dramatically—and it will continue to change. Technology, global competition, and unbundling have reshaped the job market much more than most professors recognize. The three most important trends for our graduates are:

• The number of highly paid legal jobs has declined, and will continue to do so. The economy will always need highly skilled, highly compensated lawyers--but a high-tech, globally competitive, and unbundled profession won't support nearly as many of those lawyers as it did in the past.
• Instead, more legal jobs are modestly paid "service" positions. Some service lawyers represent individual clients in family, criminal, or other matters. These jobs provide strong personal satisfaction to some of the lawyers who take them, but they don't repay lawyers for the high cost of today's legal education. Other service lawyers perform standardized work for corporate clients: They review discovery documents or generate routine contracts. This work resembles the tasks that law firm associates used to perform, but it has been "unbundled." These service lawyers are paid less; they often work on a contract or contingent basis; and they are not being trained for more sophisticated work.
• The biggest revolution has happened quietly outside the confines of our profession. There has been a vast increase in the number of non-lawyers who do legal tasks. Most HR managers, compliance officers, and contract administrators are not lawyers; they are BA's with specialized training. Nonlawyers also represent clients before administrative agencies. All of these "law-related" workers consult occasionally with legal counsel, but they perform day-to-day tasks that lawyers might have once done.

Taken together, these trends explain why median starting salaries have stagnated while the number of lawyering jobs is falling. The trends are irreversible; we have to adapt to them, not ignore them.

The symposium audience, which included professors, deans, practitioners, judges, and clients, seemed to accept the truth of these facts--which other speakers also stressed. There was also general acknowledgement that, to quote (loosely) Wash U's Dean Kent Syverud, "we are sailing stormy seas in which many of us will get wet and some will drown." Kudos to Kent and Wash U for an excellent conference: This was yet another step on the road from denial to acceptance and action.