NALP Numbers

June 20th, 2013 / By Deborah J. Merritt

NALP, the National Association for Law Placement, has released selected findings about employment for the Class of 2012. The findings and accompanying press release don’t tell us much more than the ABA data published in late March, but there are a few interesting nuggets. Here are my top ten take-aways from the NALP data.

1. Law school leads to unemployment. I’m sorry to put that so bluntly, but it’s true. Even after adopting a very generous definition of employment–one that includes any work for pay, whatever the nature of the work, the number of hours worked per week, and the permanence (or lack thereof) of the position–only 84.7% of graduates from ABA-accredited schools were employed nine months after graduation. Almost one in six graduates had no job at all nine months after graduation? That statistic is beyond embarrassing.

Some of those graduates were enrolled in other degree programs, and some reported that they were not seeking work. Neither of those categories, however, should offer much comfort to law schools or prospective students. It’s true that yet another degree (say an LLM in tax or an MBA) may lead to employment, but those degrees add still more time and money to a student’s JD investment. Graduates who are unemployed and not seeking work, meanwhile, often are studying for the February bar exam–sometimes after failing on their first attempt. Again, this is not a comforting prospect for students considering law school.

Even if we exclude both of those categories, moreover, 10.7% of 2012 graduates–more than one in every ten–was completely unemployed and actively seeking work in February 2013. The national unemployment rate that month was just 7.7%. Even among 25-to-29-year olds, a group that faces higher than average unemployment, the most recent reported unemployment rate (for 2012) was 8.9%. Recent graduates of ABA-accredited law schools are more likely to be unemployed than other workers their age–most of whom have far less education.

2. Nine months is a long time. When responding to these dismal nine-month statistics, law schools encourage graduates to consider the long term. Humans, however, have this annoying need to eat, stay warm, and obtain health care in the present. Most of us would be pretty unhappy if we were laid off and it took more than nine months to find another job. How would we buy food, pay our rent, and purchase prescriptions during those months? For new graduates it’s even worse. They don’t have the savings that more senior workers may have as a cushion for unemployment; nor can they draw unemployment compensation. On the contrary, they need to start repaying their hefty law school loans six months after graduation.

When we read nine-month statistics, we should bear those facts in mind. Sure, the unemployed graduates may eventually find work. But most of them already withdrew from the workforce for three years of law school; borrowed heavily to fund those years; borrowed still more to support three months of bar study; sustained themselves (somehow) for another six months; and have been hearing from their loan repayment companies for three months. If ten percent are still unemployed and seeking work the February after graduation, what are they living on?

3. If you want to practice law, the outlook is even worse. Buried in the NALP releases, you’ll discover that only 58.3% of graduates secured a full-time job that required bar admission and would last at least a year. Even that estimate is a little high because NALP excludes from its calculation over 1000 graduates whose employment status was unknown. Three years of law school, three months of bar study, six months of job hunting, and more than two out of every five law graduates still has not found steady, full-time legal work. If you think those two wanted JD Advantage jobs, read on.

4. Many of the jobs are stopgap employment. Almost a quarter of 2012 graduates with jobs in February 2013 were actively looking for other work. The percentage of dissatisfied workers was particularly high among those with JD Advantage positions: forty-three percent of them were seeking another job. JD Advantage positions offer attractive career options for some graduates, but for many they are simply a way to pay the bills while continuing the hunt for a legal job.

5. NALP won’t tell you want you want to know. When the ABA reported similar employment statistics in March, it led with the information that most readers want to know: “Law schools reported that 56.2 percent of graduates of the class of 2012 were employed in long-term, full-time positions where bar passage was required.” The ABA’s press release followed up with the percentage of graduates in long-term, full-time JD Advantage positions (9.5%) and offered comparisons to 2011 for both figures. Bottom line: Nine months after graduation, about two-thirds of 2012 graduates had full-time, steady employment related to their JD.

You won’t find that key information in either of the two reports that NALP released today. You can dig out the first of those statistics (the percentage of the class holding full-time, long-term jobs that required bar admission), but it’s buried at the bottom of the second page of the Selected Findings. You won’t find the second statistic (the percentage of full-time, long-term JD Advantage jobs) anywhere; NALP reports only a more general percentage (including temporary and part-time jobs) for that category.

NALP’s Executive Director, James Leipold, laments disclosing even that much. He tells us that the percentage of full-time, long-term jobs requiring bar passage “is certainly not a fair measure of the value of a legal education or the return on investment, or even a fair measure of the success of a particular graduating class in the marketplace.” Apparently forgetting the ABA’s attention to this employment measure, Leipold dismisses it as “the focus of so much of the media scrutiny of legal education.”

What number does NALP feature instead? That overall employment rate of 84.7%, which includes non-professional jobs, part-time jobs, and temporary jobs. Apparently those jobs are a more “fair measure of the value of a legal education.”

6. Law students are subsidizing government and nonprofits. NALP observes that the percentage of government and public interest jobs “has remained relatively stable for more than 30 years, at 26-29%.” At the same time, it reports that most law-school-funded jobs lie in this sector. If the percentage of jobs has remained stable, and law schools are now funding some of those spots, then law schools are subsidizing the government and public interest work. “Law schools,” of course, means students who pay tuition to those schools. Even if schools support post-graduate fellowships with donor money, those contributions could have been used to defray tuition costs.

I’m all in favor of public service, but shouldn’t the taxpayers and charitable donors pay for that work? In the current scheme, law students are borrowing significant sums from the government, at high interest rates, so that they can pay tuition that is used to subsidize government and nonprofit employees. Call me old fashioned, but that seems like a complicated (and regressive) way to pay for needed services. Why not raise taxes on people like me, who actually earn money, rather than issue more loans to people who hope someday to earn money?

7. Don’t pay much attention to NALP’s salary figures. NALP reports some salary information, which the ABA eschews. Those tantalizing figures draw some readers to the NALP report–and hype the full $95 version it will release in August. But the salary numbers are more misleading than useful. NALP reports salary information only for graduates who hold full-time, long-term positions and who report their salaries. That’s a minority of law graduates: Last year NALP reported salaries for just 18,639 graduates, from a total class of 44,495. Reported salaries, therefore, represented just 41.9% of the class. The percentage this year is comparable.

That group, furthermore, disproportionately represents the highest salaries. As NALP itself recognizes, salaries are “disproportionately reported for those graduates working at large firms,” so median salaries are “biased upward.” Swallow any salary reports, in other words, with a tablespoon of salt.

8. After accounting for inflation, today’s reported salaries are lower than ones from the last century. Although NALP’s reported salaries skew high, they offer some guidance to salary trends over time. Unfortunately, those trends are negative. During the early nineteen nineties, the country was in recession and law firms hadn’t yet accelerated pay for new associates. The median reported salary for 1991 graduates was just $40,000. Accounting for inflation, that’s equivalent to a 2012 median salary of $67,428. The actual reported median for that class, however, was just $61,245. Even when today’s graduates land a full-time, steady job, they’re earning 9.2% less than graduates from the last century.

9. The lights of BigLaw continue to dim. NALP acknowledges the “‘new normal’ in which large firm hiring has recovered some but remains far below pre-recession highs.” The largest firms, those with more than 500 lawyers, hired more than 3,600 members of the Class of 2012, a total that modestly exceeded the number hired from the Class of 2011. Current employment, however, remains well shy of the 5,100 graduates hired from the Class of 2009. Meanwhile, a growing percentage of those BigLaw hires are staff attorneys rather than associates. These lower-status, lower-paid lawyers currently comprise 4% of new BigLaw hires, and they are “more common than just two years ago.”

Inflation, meanwhile, has eroded salaries for even the best paid associates in BigLaw. In 2000, NALP reported a median salary of $125,000 for graduates joining firms that employed more than 500 lawyers. Adjusting for inflation, that would be $166,662 for the Class of 2012. BigLaw associates won’t starve on the median $160,000 they’re actually earning, but they’re taking home less in real dollars than the associates who started at the turn of the century.

For associates joining the second tier of BigLaw, firms that employ 251-500 lawyers, the salary news is even worse. In 2000, those associates also reported a median salary of $125,000, which would translate to $166,662 today. The actual median, however, appears to be $145,000 (the same figure reported for 2011). That’s a decline of 13% in real dollars.

10. It goes almost without saying that these 2012 graduates paid much more for their law school education than students did in 1991, 2000, or almost any other year. Law school tuition has far outpaced inflation over the last three decades. It’s scant comfort to this class–or to the classes of 2010, 2011, or 2013–that heavy discounts are starting to ease tuition. These are classes that bought very high and are selling very low. There’s little that law schools can do to make the difference up to these graduates, but we shouldn’t forget the financial hardship they face. If nothing else, the tuition-jobs gap for these classes should make us commit to the boldest possible reforms of legal education.