Versus how many graduates?

My last post examined the number of entry-level lawyering jobs available during each year of the last decade. How many graduates of ABA law schools competed for those jobs? And how many law students lost out in the job lottery? Answering those questions takes two steps, because NALP does not gather job information about every graduate of an accredited law school. Before 2010, some schools did not report data to NALP. And, both before and after that date, participating schools fail to obtain information about some graduates.

How many jobs?

I posted earlier this week about the Bureau of Labor Statistics' sobering job projections for lawyers. You can find those posts here and here. Let's look now at the employment situation from the other side: The jobs actually found by graduating JDs in recent years.

NALP gathers information each year about the jobs law graduates take. The statistics are woefully inadequate with respect to salaries, but they offer a fairly good snapshot of jobs actually taken. LawProf has been over much of this ground before, but I thought it was worth revisiting in light of the BLS projections and other pessimistic news about the labor market. During the last 10 years, here are the number of law graduates from NALP-member schools who found jobs requiring bar admission by nine months after graduation:

Paying your dues

One indication of the extent to which the legal elites are either oblivious to the economic circumstances of a large percentage of lawyers, or, more invidiously, are exploiting those circumstances to reduce potential competition, is how much it continues to cost to become and remain a member of a state bar, and how difficult it is to get any kind of waiver for these costs.

Here's a letter I got recently from a New York lawyer.  (When reading this, keep in mind that New York's top court decided recently to impose a mandatory pro bono requirement on people seeking admission to the New York bar).

Prof. Campos,

Today, I had an amusing experience with our state bar.  I work in New York City on a variety of weird jobs that I find as a new solo wandering blindly, representing lots of misdemeanor defendants.  This week, I got a job drafting entertainment contracts and demand letters for an adult film director as a sort of makeshift "in-house" counsel (don't ask).  The regular assignments from this new business relationship, even though outside of my regular field of practice, will allow me to stop being enrolled in Medicaid for the first time since I started law school.

So, as someone who lives with in-laws and still qualifies for Medicaid, I called the New York State Bar Association to apply for tuition assistance.  After filling out a detailed form and answering many questions during a phone call that made me feel humiliated, the state bar only gave me $50 off of the $300-$500 it will cost for me to complete this year's CLE requirements. I will have to spend the same amount of money next year, as I will not qualify for the online video stuff at the cheap rates until after two years.

So, the bar forces us to pay $750 a year just to stay in good standing and charges another $300-$500 a year for classes taught by lawyers picking money for speaking fees and the products they sell (computer programs, legal forms, strategy books, blah blah).  The state bar pretends to offer help to new lawyers in six-figure debt, but this is just a scam as well.

This issue may seem somewhat small or inconsequential when compared to the rest of the law school scam, but I find it representative of the larger problem of an out-of-touch generation adding more financial burden to those who cannot bear it.  Interestingly, my husband thinks that this is all by design to keep competition, especially from solo practitioners, to a minimum by pricing them out. 

Bottom line: in New York State, I qualify for Medicaid, but I do not qualify for even one free CLE seminar. 

I wonder what Chief Judge (and career government bureaucrat) Jonathan Lippman, author of the mandatory pro bono requirement, would think about the last line of that letter?   According to Lippman, J., "if you want the privilege and honor of practicing law in New York, you're going to have to demonstrate that you're committed to our values."  And what again are those exactly, your Honor?

Jobs update:   Nationally, the legal sector lost 1,400 jobs between July and August.
 

More bad news from the BLS

Updated Below

I posted earlier this week about the Bureau of Labor Statistics projections for attorney job openings. To recap briefly, the BLS projects only 218,800 openings between 2010 and 2020--or 21,880 openings per year. Accredited law schools are currently producing about 45,000 JDs per year, more than twice the number of available jobs. Even if schools cut enrollment by 20%, a relatively dramatic move, we will finish the decade with more than 200,000 JDs who can't find jobs as lawyers.

But that's just the beginning of the bad news. Those 218,800 projected jobs are not all full-time, secure jobs with good salaries and benefits. The BLS counts all positions--part-time, full-time, temporary, or permanent--as "jobs." (I confirmed that fact directly with a helpful BLS staff member.) Notably for the legal profession, the projected openings include individuals who will open solo practices.

Wait a minute: How can the BLS estimate how many desperate lawyers will hang out their own shingles? If new solos count as people who have filled "job openings," then won't the number of "openings" rise to match the number of law graduates?

No--and the answer demonstrates an important point about the BLS projections. Economists don't project job openings based on what people want to do in the workplace; that type of wishful thinking belongs to 0Ls. The BLS uses macroeconomic models, together with appropriate inputs, to project how many job openings the economy will support in each occupation.

Applying those models, the BLS projects that the economy will support about 218,800 lawyer job openings during this decade. That number includes the low-paid public defenders and public interest lawyers. It includes the contract and part-time attorneys. It includes the in-house lawyers. It includes the attorneys who work for small firms, earning much less than median salaries. It also includes all of the new solo practitioners who will earn enough to tough things out in practice. Those are the 218,800 who will have lawyer jobs.

The other 200,000 or so JDs will have to find something else to do. The economy won't support more lawyers simply because lots of people want to go to law school--or because there are professors eager to teach them. There is a limit to how much consumers, businesses, and government will spend on legal services. Lawyers can urge businesses to purchase more legal advice; law professors can advise individuals to get legal help. Those exhortations are natural expressions of our economic self interest: Every producer thinks that consumers would be better off with more of the producer's product.

But it's hard to talk back to the U.S. economy. Consumers, businesses, and government want lots of things other than legal services: health care, food, homes, cars, manufacturing equipment, schools, prisons, fire departments, airlines, national defense--the list is enormous. Lawyers play a valuable role in our economy, but we're not invaluable.

The BLS projections won't be exactly right. The economy may support somewhat more than 218,800 lawyers this decade. On the other hand, it may support less; BLS projections can err in either direction. The depth of the recent recession, the slow growth in overall employment, the accelerating impact of technology, and continued unrest in the world economy suggest to me that BLS's current projections may be overly optimistic.

There's another, even more worrisome, reason why the BLS projections may overestimate the number of lawyer openings this decade. The projections include both new jobs and openings due to workforce departures. In making the latter estimates, the BLS relies upon historical data. If baby boomers work more years than their parents and older siblings did, there won't be as many job openings as BLS estimates. Ditto if more parents decide that they need two incomes to support a family, rather than choosing to have one parent withdraw from the workforce for a few years. Both of those trends seem likely to me; if either occurs to any noticeable extent, the BLS estimates of lawyer job openings will be too high. There may be more openings for babysitters (to care for those two-career children) or drivers (to ferry those aging boomers to work), but there won't be as many lawyer jobs.

But even if we put those gloomy predictions aside and assume that the BLS has correctly targeted the number of lawyer jobs, law schools are producing far too many lawyers. It is sheer arrogance to suggest that we can force the economy to create more lawyer jobs simply because our graduates are bright and eager. And it is dangerously deceptive to keep encouraging large numbers of students to go to law school because "the economy will turn around" or "there will be more jobs when you graduate."  The BLS has already assumed that the economy will turn around:  A fully turned, full-employment economy will produce 218,800 openings for lawyers this decade--leaving more than 200,000 new lawyers holding JD-sized debts and BA-sized jobs.

Update: A few comments have asked how the BLS counts temporary jobs. E.g., if 50 document reviewers work for one month on Project A, then move on to Project B, does that count as 50 openings or 100? The answer is that it depends on what the document reviewers were doing before they started Project A. If the document reviewers were already doing lawyer work of some kind, then this hypothetical includes zero new openings.

I could have made this more clear in the original post, so let me explain a little further. When the BLS projects the number of "job openings" that will occur in an occupation over the next decade, it is estimating the number of new entrants that the occupation can absorb. It is not trying to predict how many new jobs will be advertised or how many lawyers will move from one law job to another; it is only looking at how many slots will be available for new people to take.

Suppose, for example, that Microsoft increases the size of its in-house department by adding a new lawyer to its team. Microsoft consults a headhunter and hires a senior associate from Big, Big & Law firm. Big, Big & Law replaces that associate with a third-year attorney from Small law firm. Small then hires a new graduate from State U Law. Three jobs were advertised here, and three people started new work, but this is only one "job opening" in BLS terms: only one new worker moved into the lawyer occupation category.

The BLS, in other words, answers precisely the question that troubles many readers of this blog (and that should be troubling law school faculties): How many new lawyers can the U.S. economy absorb over the next decade? The answer is about 218,800--not 450,000 or even 420,000.

Slow learners

Here are quotes from a Detroit business magazine story ($$):

Some Michigan law schools will begin the 2012-13 academic year with a smaller class of incoming students.

Academic experts say a shrinking job market for entry-level attorneys is the biggest driver, but trends vary by school.

The University of Michigan Law School begins its fall semester this week with a class of 345 first-year students drawn from a pool of just over 5,000 applicants, compared with 359 enrolled from 5,422 applicants last fall, and 376 first-years from an applicant pool of 6,312 in 2010.

Wayne State University Law School began its fall semester in late August with 148 first-year students enrolled from 833 applicants, compared with 181 out of 1,123 applicants last year and 197 from 1,363 in 2010.

Dean Robert Ackerman at Wayne State said falling enrollment and applicant interest have plagued law schools nationwide and particularly in Michigan, where most of the school's applicant pool originates. He sees the trend as a mix of the recovery in Michigan's economy and the contracting market for law jobs.

According to a recent report from the National Association for Law Placement, the overall employment rate for class of 2011 law school graduates is 85.6 percent, the lowest it has been since 1994. The association measures employment as of nine months after completing law school.

"Two phenomena here are converging. One is the employment situation, and the harsh reporting on the national stage about legal education. That, I think, is tied to a structural change (in the profession), and not a cyclical trend," Ackerman said . . .

LSAC director of communications Wendy Margolis said the primary reason is believed to be a weakening private-sector job market for recent law school graduates.

"The tenor of the recent articles about this (trend) is really frustrating," said Sarah Zearfoss, senior assistant dean for admissions, financial aid and career planning at UM's law school.

"I feel our students are still very enthusiastic and happy to be here, but they have made the decision in the midst of criticism -- as if friends and academic advisers wonder if they are crazy by choosing to be lawyers."

I guess some people are just incorrigible.  Let’s look at the numbers:

Estimated debt-financed cost of a law degree for the UMLS class of 2015:  $248K non-resident/$237K resident.

Percentage of the class of 2011 that had a legal job nine months after graduation (defined as full-time long term employment requiring bar admission, not counting solos, but counting two people employed by the school):  75.5%

Percentage of the class of 2011 that was employed by UMLS in the fall of 2011 in short-term “fellowships” that paid $333 per week:  20% 

Percentage of the class of 2011 that had a job with a law firm of more than ten attorneys:  38%

That’s a high stakes gamble by any reasonable reckoning.  A quarter of the class of 2011 didn’t get a real legal job of any kind.  About half of the other three quarters didn’t get jobs that come within a mile of paying a salary that allows the average grad to service his or her debt in a timely manner.  (Yes, UMLS has a “good” LRAP program, in that people in low-paying private sector jobs are eligible for it. On the other hand the program, like other LRAP programs at most top schools, has bootstrapped itself to IBR/PSLF, so that UMLS grads have their IBR and PSLF payments made for them by the school up to a certain income level. Almost all LRAP programs no longer pay what graduates actually owe on their loans, although I believe HYS still do).

Is UMLS currently worth sticker if debt-financed? Traditional analyses of debt to income ratios would conclude that it isn’t for a large majority of the class.  Now you can make an argument that UMLS is still a reasonable choice even for many students who aren’t given huge breaks on sticker, but it’s a tough argument to make -- and you have to actually make it, as opposed to engaging in the typical legal academic hand-waving about how education is priceless, prosperity is just around the corner, you could always become president of the Pittsburgh Steelers with the help of your versatile degree etc. etc.

What’s truly absurd is whinging about how all these awful people are saying mean things to our bright-eyed and bushy-tailed 1Ls (“mean things” defined as “quoting actual cost of attendance, employment, and salary numbers.”), instead of just celebrating their choice to spend a quarter million dollars to become – whoops, make that try to become! – lawyers.

The MBA option?

Something this blog hasn't discussed very much is what options people who've graduated from law school in the last few years might have.  I got an email last week that posed this question in terms of an issue (possibly pursuing an MBA degree as a way of dealing with a post-JD disaster) that I don't know anything about.  So I'm posting it here in the hope that the writer and other similarly situated people might get some useful advice from those more qualified to address the issue than I am:

Dear Professor Campos,

I'm a semi-unemployed recent law graduate.  I graduated from [Top Five Law School] in 2010, where I [won an academic award for my third year grades] and had decent grades my first two.  My undergrad was at [Ivy League School], where I double majored in [Liberal Arts Majors].  I got no-offered by a [Vault 50 firm] in the summer of 2009.  After graduating from [law school], I was set up with a temporary law school sponsored job at a law firm...  Then I was on unemployment... Then I [ended up doing] litigation [for a small firm], as a per diem attorney.  Sometimes I'm busy, but generally, I'm lucky if I can bill them 15 hours a week, at $30 per hour.  I've applied to a million different jobs, and sometimes gotten interviews, but usually not.

Since graduating in 2010, I've lived with my parents.  I have about as much debt as you'd expect.  I really want to be able to move on with my life, live like a grown-up, not be broke, and be able to be proud of my career.  I'm just not sure how.

I recently ordered test prep books for the GMAT, so that I can apply to full-time MBA programs.  I'm great at standardized tests, so even though business school admission isn't as numbers-based as law school (I wish), I think I might have a good chance of getting into a top MBA program.  But even there, there's huge risk- I know some substantial portion of the graduating class at top business schools doesn't have a job at graduation, and the typical published salaries for MBA grads are lower than a first year big law firm associate makes.  Which would matter a lot to me, because I'd have well over a quarter million dollars in debt at graduation.

Aside from business school, I don't have many other good ideas.  I've thought about starting my own firm- probably mostly criminal defense, but I'd take whatever work I could get.  But the problems with that are: 1) I'm unsure whether I'm qualified, at least by my own standards; and 2) I know many small firms struggle to bring in enough business.  Since my biggest priorities are 1.) not be poor; 2.) move out of bedroom; and 3.) end unemployment deferment of loans, struggling to start a firm with the hope that if I'm successful I might clear $40k after a year doesn't seem like a very good option.

I'm not sure what other options I have.  Biglaw is impossible- I've tried so hard to get back in, and they just don't want me.  I feel like I'm too old and have too much debt to start any other type of graduate program, and except for premed to med school (which would take forever and leave me with an insane debt level) any other educational ideas I can think of seem riskier than business school.  So right now my plan is to keep applying for law jobs, and apply to MBA programs.  If I don't have a permanent, full-time job by summer 2013, go to business school, and if I do have such a job, I can choose between them then.

So I guess my question is: Is there something I'm missing?  Should I prepare for the GMAT and apply to MBA programs?  Or is there something else I can do with my career?

Labor day

Updated Below

In honor of Labor Day, let's revisit some data from the U.S. Bureau of Labor Statistics. LawProf has featured these numbers before, but they bear repeating. Why not mark Labor Day by sending this information to law professors and deans you know?

• The BLS estimates that between 2010 and 2020, the United States economy will provide 218,800 job openings for lawyers and judicial law clerks.  That's 21,880 openings per year.   
• The projected openings include labor force departures, as well as new jobs. The estimate, in other words, accounts for the fact that many baby boomers will leave the workforce this decade; that some parents will relinquish jobs to raise children; and that some practicing lawyers will seek other work.   
• The BLS bases its predictions on econometric models, together with continuous monitoring of the workplace. The projection of 21,880 lawyer jobs per year stems from knowledgeable labor economists; scholars should take that estimate seriously.
• BLS bases its projections on normal 10-year business cycles. In doing that, the BLS recognizes that its 2020 projections may overstate job openings. That is because "the severity of the most recent recession and the slowness of recovery to date" signal departures from the norm. 21,880 lawyer jobs per year is an optimistic estimate.

Now let's consider some statistics from the American Bar Association:

• In 2010, law schools awarded 44,004 JDs; in 2011, the number rose to 44,258; and in 2012, it was 44,495. Three years into the decade, schools have graduated 132,757 JDs--enough to fill 61% of the lawyer jobs available for the full decade.
• The class of 2013 is on track to be even larger: 52,488 first-years began law school in fall 2010. Using the graduation rate displayed by the class of 2012, at least 45,220 of our current 3Ls will claim diplomas by May. That will bring us up to 177,977 new JDs in just four years.
• Law schools cut enrollment for the class of 2014 by about 7%. Some 42,055 students are likely to graduate in 2014, bringing the five-year JD total to 220,132--already more than the 218,800 job openings predicted for the entire decade. And there are still five years to go!
• We don't know enrollment numbers yet for the class of 2015, the group that started law school this fall. Let's assume that schools cut another 13% off their peak, producing a class 20% smaller than the class of 2013.  That would add just 36,176 more JDs to the workforce in 2015.
• How many students will law schools enroll for the classes of 2016-2019?  Many will strive to enroll more than they did for the class of 2015; a 20% drop in tuition revenue is hard to stomach. But let's assume, conservatively, that overall graduation rates remain steady at 36,176 per year through 2019. 
• Even at that rate, law schools will finish the decade by graduating a total of 401,012 JDs in the classes of 2010 through 2019. That's 182,212 graduates more than the number of jobs available.  And that estimate is quite conservative. It assumes that law schools will maintain greatly reduced class sizes through 2019. It also assumes that no pre-2010 graduate will enter the legal market from unemployment or another occupation. 

This is an expensive, high-stakes game of musical chairs. What are more than 180,000 law school graduates going to do with their JDs if they can't practice law? How are they going to pay off the JD-sized debts they carry? More about that, as well as lawyer salaries, soon.

Update: LawProf reminded me about two types of lawyers omitted from these calculations: JD graduates of unaccredited schools and foreign-trained lawyers who pass U.S. bar exams. The National Conference of Bar Examiners has some data on these groups. If you check page 11 of that document, you'll see that 804 graduates of unaccredited law schools passed the bar exam in 2011, as did 1,708 graduates of foreign law schools.

I think the latter category is likely to grow over the next decade, especially if U.S. law schools attempt to prop up their budgets by offering more LLMs to foreign students. But being conservative, as I have been throughout this post, we can apply 2011's total to each year in the decade. That adds another 2,512 lawyers a year--or 25,120 for the decade--competing for 218,800 job openings.

More than 426,000 law graduates (estimated conservatively) competing for just 218,800 jobs. Next up, although this may take me a few days: What kind of jobs are these anyway? And what do they pay?