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NALP and the JD Advantage
April 7th, 2013 / By Deborah J. Merritt
With contraction of the legal job market, law schools are touting “JD Advantage” jobs for graduates. According to NALP, the National Association for Law Placement, these are “jobs that do not require bar passage, an active law license, or involve practicing law in the traditional sense.” Instead, JD Advantage jobs are positions in which “a JD provides an advantage in obtaining or performing the job.”
NALP is now helping law schools promote these JD Advantage positions to prospective students. The organization has created a new webpage, What Is the JD Advantage?, as part of its Prelaw Portal. The page enthusiastically advises prospective law students: “It turns out that the JD degree prepares you for a variety of exciting jobs and careers. While many law school graduates go on to practice law, many others go on to play leadership roles in a variety of settings. Many law school graduates obtain positions for which Bar Passage, or even a JD, is not required, but their legal training is deemed to be an advantage or even necessary in the workplace. As the saying goes ‘you can do almost anything with a law degree!'”
The page then offers videos of five recent law graduates who are happily pursuing JD Advantage positions. The featured jobs are desirable ones: two of the graduates are Presidential Management Fellows; one is a communications director for a U.S. Congressman; one is a senior human resources manager; and the fifth is a vice president of the National Alliance for Public Charter Schools. The graduates speak glowingly of their work and endorse the versatility of a law degree. Each video opens with the slogan: “you can do anything with a law degree.”
This is feel-good stuff designed to promote law school attendance. Some educators might dismiss the webpage as harmless puffery. We all know that it’s not possible to do “anything” with a law degree. Law school graduates can’t practice medicine, pilot planes, speak Urdu, or do hundreds of other things without training separately in those fields. And there are many things one can do with a law degree (sell coffee, scrub floors, go to prison), that most graduates prefer not to do.
Law schools, however, shouldn’t dismiss this webpage as puffery; they should demand that NALP take the page down. The page omits material, negative information about JD Advantage positions–information that NALP itself collects and has readily available. Rather than share the negative data through its Prelaw Portal, or elsewhere on its public website, NALP shelters most of that information in its annual Jobs and JDs book. Few prospective students know about that publication–or would spend the $90 that NALP charges for a copy.
At the same time that NALP omits material information from its “JD Advantage” webpage, the organization reassures prospective students that NALP is “the premier resource for information on legal employment and recruiting,” and that it is able to “provide comprehensive information” on topics related to entry-level jobs secured by law graduates. NALP, in other words, is trading on its reputation as an impartial data collection agency while providing biased information to prospective law students. Even worse, NALP must know that the information on its site is incomplete and overly rosy. Law schools shouldn’t tolerate this type of behavior from an organization that represents us.
What NALP Knows
NALP has four types of data that undermine the unalloyed enthusiasm of its “JD Advantage” webpage. First, and most important, NALP knows that many law graduates in these positions are actively seeking other work. Graduates with jobs that require bar passage, in contrast, are much less likely to be shopping for other work.
As part of its annual employment survey, NALP asks every law graduate to “indicate whether you are seeking a job other than the one described here.” To my knowledge, aggregate responses to this question appear nowhere on NALP’s website; they appear only in NALP’s Jobs and JDs report. Those reports consistently show that graduates with JD Advantage jobs (or “JD Preferred” ones, as NALP used to label this category) are much more likely to be seeking other work than are graduates in “Bar Passage Required” positions.
In 2001, for example, just 6.7% of law grads with Bar Passage Required jobs were seeking other work nine months after graduation; a full third (33.3%) of graduates in JD Preferred positions were doing so. The figures were similar in 2004: 8.5% of graduates in Bar Passage Required jobs were seeking other work, while 37.0% of those in JD Preferred positions were doing so. The same was true in 2007: only 8.7% of graduates in Bar Passage Required jobs were still on the job market, while 37.7% of those with JD Preferred positions were actively seeking work.
For the most recent year, 2011, graduates in both categories were less satisfied with their nine-month positiions. Even among graduates with jobs requiring bar passage, 16.5% were actively looking for other jobs. But a whopping 46.8% of graduates in JD Advantage jobs were looking for other work. Almost half of all graduates with “JD Advantage” jobs were dissatisfied enough to still be on the job market–just nine months after law school graduation. That fact belies the “you can do anything” cheerfulness of NALP’s JD Advantage pitch to prelaw students.
Second, NALP knows that contemporary JD Advantage jobs are much more likely than lawyering ones to be part-time. For the Class of 2011, 21.0% of JD Advantage jobs were part-time; just 8.0% of Bar Passage Required jobs fell in that category. A diligent searcher could find this information on NALP’s general website, but not on its JD Advantage webpage.
Third, NALP knows that a similarly high percentage of JD Advantage jobs are short-term temporary ones. A recent ABA Report shows that 25.2% of all JD Advantage jobs secured by the Class of 2011 were short-term positions. Just 9.7% of jobs requiring bar passage, in contrast, were temporary ones. NALP collects similar information about the short-term nature of JD Advantage jobs, but does not report it, either on the JD Advantage webpage or elsewhere on its site.
NALP, finally, knows that JD Advantage jobs pay less than ones requiring bar passage–and that holders of JD Advantage jobs are less likely to report their salaries. The difference in reported salaries is relatively small: the median for JD Advantage positions was $59,000 in 2011 while that for Bar Passage Required ones was $61,500. More significant, only 33.8% of JD Advantage workers reported their salaries–compared to 57.3% of graduates holding jobs that required bar passage. As NALP itself recognizes, reported salaries skew high. The dramatic under-reporting of JD Advantage salaries suggests significantly lower pay in that sector.
These four facts raise concerns about the desirability of JD Advantage jobs. Prospective students should know these facts, especially the fact about the number of JD Advantage job-holders who are still seeking other work. NALP should know better than to publish cherry-picked videos and cheery claims without disclosing the information it possesses about these “do anything” jobs.
What NALP Doesn’t Know
It’s very troubling that NALP is promoting JD Advantage positions without disclosing the key information it possesses about those jobs. Equally disturbing, NALP is pushing these positions despite its lack of essential information about this job sector. When I first saw NALP’s JD Advantage webpage, I assumed that the organization had gathered data about the full range of jobs labeled “JD Advantage.” I thought, for example, that NALP would know how many of those jobs are Presidential Management Fellowships, how many are compliance positions, how many are paralegal spots, and how many are primary school teaching positions. That type of information would give NALP some basis for promoting JD Advantage jobs as desirable ones–or at least for giving prospective students information about their different options.
After corresponding with NALP’s staff, however, I discovered that NALP does not know what kind of jobs appear in the JD Advantage category–much less the percentage of each type of job. NALP relies exclusively on graduates and law schools to categorize their jobs as “Bar Passage Required,” “JD Advantage,” “Other Professional,” or “Non-Professional.” When NALP tells prospective students that they “can do almost anything with a law degree,” NALP doesn’t know what graduates with JD Advantage, Professional, or Non-Professional positions really are doing with their degrees.
This strikes me as even more irresponsible than NALP’s omission of the facts it knows about JD Advantage positions. If NALP–or individual law schools–want to promote JD Advantage jobs, then we should collect more information about those jobs. How many of our graduates are Presidential Management Fellows and how many are paralegals? Are the graduates in HR positions doing advanced work, or are they taking jobs that are available to college graduates? If NALP or its member schools believe that JD Advantage jobs are important to the future of legal education, then we should collect and publish honest information about those positions. Without that information, statements that “you can do anything with a law degree” aren’t just glib–they’re disingenuous.
First 2012 Employment Postings
March 18th, 2013 / By Deborah J. Merritt
Kudos to the William S. Boyd School of Law at the University of Nevada-Las Vegas for posting employment information about its Class of 2012. I look forward to other schools following suit.
US News and Employment Outcomes
March 12th, 2013 / By Deborah J. Merritt
Over the last two years, pressure has mounted for more transparent information about the jobs that law school graduates obtain. US News traditionally used very coarse measures of employment, most recently focusing on the percentage of graduates who reported any type of job nine months after graduation. Those nine-month employment rates included part-time jobs, temporary positions, and employment with little relationship to a law degree. A part-time sales clerk at Macy’s was just as “employed” as a law firm associate on the partnership track.
This measure allowed law schools to claim very high employment rates, both in the US News tables and in their own promotional materials. The dazzling nine-month percentages–97%, 98%, 99%!–implied that law school was still a sure road to secure, professional, and well paid employment. Applicants had to seek other information, often buried in complex websites, to understand how many of those “employed” graduates were working in part-time, short-term jobs–sometimes funded by the law schools themselves.
We’ve made progress over the last year. Law School Transparency led the way by publishing more detailed job information about every ABA-accredited law school. The ABA followed suit by requesting more nuanced information from law schools and publishing that data. The ABA also revised its accreditation standards to insist that law schools disclose more complete information to students. But still, those tables in US News, with all of those high employment rates, were very, very appealing.
Today US News joined the push for more accurate employment information. The 2014 rankings include a new measure of employment outcomes. US News now weights jobs according to whether they are JD-related, part-time or full-time, and short-term or long-term. The online magazine is not disclosing the full formula, but notes that “[f]ull weight was given for graduates who had a full-time job lasting at least a year where bar passage was required or a J.D. degree was an advantage.” At the other end of the spectrum, “[t]he lowest weight applied to jobs categorized as both part-time and short-term.”
Perhaps most important, US News has published for each law school the percentage of its 2011 graduates who obtained jobs falling into the first category–jobs that were full-time, long-term, and related to the JD. Those percentages are available, free of charge, for all law school applicants to ponder.
The results aren’t pretty. At the top eight schools, more than 90% of graduates are still finding full-time, long-term jobs that use their law degrees. Some of those jobs may not justify the cost of attendance, and we might still wonder about some of the graduates who didn’t obtain full-time, long-term, law-related work within nine months of graduation. But law-related employment rates of 90% or more might justify three years of expensive, intensive professional education.
Outside the elite eight, however, job outcomes plummet sharply. Berkeley and Michigan, two premiere public schools, tie for ninth place in the new ranking. Yet only 82.6% and 85.8% of their graduates, respectively, found full-time, long-term employment for which the JD conferred an advantage. Conversely, by nine months after graduation, 14-17% of their graduates were still marking time in part-time, short-term, or non-legal positions. Those aren’t outcomes for which students should pay top tuition dollars.
Further down the list, the outcomes are even more bleak. Minnesota and Washington University in St. Louis round out the top twenty law schools with a tie for nineteenth place. Yet nine months after graduation, only two thirds (66.3% and 66.6%) of the graduates from these schools were working in long-term, full-time jobs related to the JD. A full third of each class failed to achieve employment that used their expensive and hard-won degrees.
The percentages vary after that, climbing as high as 88.0% (for George Washington) and falling as low as 23.6% (Whittier). Over the next few days, bloggers will analyze the factors that contributed to higher employment rates (school-funded positions, geography, a large percentage of JD Advantage jobs) and those that produced lower outcomes. No amount of analysis, however, can conceal the overall pattern. No school outside the top eight placed more than 90% of its graduates in full-time, long-term, law-related work. Only 13 schools, including that top eight, exceeded the 85% mark. And only 34 schools, out of the 195 supplying employment information, managed to place as many as three-quarters of their graduates in a full-time, long-term, law-related job within nine months of graduation.
The new employment measure devised by US News is far from perfect. Its greatest flaw lies in equating all “JD Advantage” jobs with positions requiring bar admission. Statistics gathered by NALP show that law graduates are far less satisfied with JD Advantage jobs than with ones requiring a law license. Among 2011 graduates, 46.8% of those in JD Advantage jobs were still seeking other employment; just 16.5% of those in bar-admission-required jobs were doing so. Those statistics appear only in NALP’s Jobs and JDs book, and they do not distinguish full-time, long-term jobs from part-time, short-term ones, but I will ask NALP if they can provide more information on those distinctions.
Even more worrisome, I don’t believe that any organization audits the claims that graduates and law schools make about which jobs carry the “JD Advantage” tag. NALP counts the jobs reported in that category but, apparently, does not ask schools to identify the positions that count as “JD Advantage.” Nor, to my knowledge, does the ABA or US News. Does a job as a court assignment clerk count as a “JD Advantage” position? What about a job as a middle school social studies teacher? Or one as a bail agent, debt collector, or police officer? I can imagine a JD assisting workers in any of these fields–but the jobs are ones that the majority of job holders perform quite well without the training or expense of a JD.
These are issues that we need to address very soon, both for purposes of the US News ranking scheme and with respect to the information that law schools provide their applicants. But for now, the generous definition of “employed,” which includes any job carrying the “JD Advantage” label, makes the outcomes reported by US News especially troubling. Even allowing for a very liberal definition of law-related jobs, even including all of those “alternative” careers that schools have touted, law schools are leaving a remarkably large percentage of their graduates without jobs that use their degrees. Short-term and part-time jobs are not good outcomes for students who have spent over $100,000–often borrowed at high interest rates–for a legal education. Neither are jobs unrelated to the JD, ones for which schools don’t even dare claim a “JD advantage.”
Prospective students and law schools need to take note of these outcomes and take them seriously to heart. If we can’t provide even solid “JD Advantage” jobs to a substantial number of our graduates, then the value of our degree is in serious question.
Captive Firms and Jobs
March 9th, 2013 / By Deborah J. Merritt
Kyle McEntee, my co-moderator here at the Cafe, and Kevin Outterson, Chair of the Strategic Planning Committee at the Boston University School of Law raise some important issues about law school firms. I want to thank Kevin in particular for sharing his views and letter to the ABA Section of Legal Education with us.
I agree completely with Kevin and Kyle that we need to guard against post-graduate law schools becoming just another way for schools to pump up employment statistics at the nine-month reporting mark. Some law schools already hire a significant percentage of their own graduates in short-term positions to achieve that result. Currently, the most common jobs in that category seem to be research assistance for the schools’ professors, fellowships at government or public interest agencies (with a small stipend from the school), and school-subsidized work with private employers. These positions achieve some laudable results: they provide a small amount of financial relief to heavily indebted graduates and, in some cases, help grads land more permanent positions. But there is little doubt that law schools also maintain these programs to improve their employment figures.
I’m less worried than Kevin that post-graduate law firms will worsen that trend. These law firms require much more time, effort, and expense to create than the positions described above. Why would a school go to those lengths when it can already report graduates as employed simply by funding low-paid research positions with the school’s professors? At worst, the post-graduate law firm positions will achieve the same reporting results but with more practice-oriented opportunities for graduates. The law school firms also seem to promise more lasting and remunerative employment; Arizona State’s new firm will employ graduates for up to three years. That type of commitment allows a more genuine opportunity to develop practice expertise and a client base than the short-term, part-time fellowships that some law schools currently offer.
We do need to remain vigilant about how law schools report their graduates’ jobs. The ABA’s decision to collect and report information about school-funded jobs was an important step; that information now appears on a special site maintained by the Section on Legal Education. The Section also requires schools to disclose this information on their own websites, using a worksheet designed by the section. Law School Transparency recently documented which schools are complying with that requirement.
This partial transparency is an important step, but there is still room for many abuses. Deans, for example, can ask alumni to hire graduates for a short period surrounding the employment date. Those graduates will register as “employed, short-term,” on either a part- or full-time basis. The jobs can be fleeting and low paid; since NALP collects salary information only about jobs that last a year or more, the school runs no risk of lowering its salary figures. As long as the alum, rather than the school, funds the graduate, the job won’t appear in the “school funded” column.
We need to figure out ways to deal with this type of data manipulation. One approach, which I’ve followed in my own research, is to count only full-time, permanent jobs. My point here is that, however we address this problem (and I agree that it is a major one), I think the problem exists independently of post-graduate law firms. At worst, these firms may fall in the same category as law-school-funded jobs, temporary arrangements with alumni, and other contemporaneous tricks of the trade–but with better experiences and pay for graduates.
A more serious concern raised by Kyle is that law school firms will temporarily mask the real problem, that schools are graduating more lawyers than the economy can support. If post-graduate law firms take work from other practitioners or legal aid organizations, then we are simply shuffling work around. Some graduates will help start-up companies through ASU’s new law firm, but established firms will hire fewer associates. We will all fool ourselves for a few more years that there is enough work for the graduates we’re producing.
As the previous paragraph indicates, there is a self correcting mechanism for that problem. If law school affiliated law firms take jobs from local practitioners, those practitioners will hire fewer graduates (as well as fewer part-time students during law school). Law schools don’t generate legal business (unless their professors start suing one another, divorcing their spouses, and redrafting their wills on a monthly basis), so a cannibal firm will affect other opportunities for graduates.
Schools establishing firms, of courses, may hope that those firms will seize jobs from graduates of other law schools. That may, in fact, happen. If a law school creates a firm that provides excellent training, and partners with its alumni in an appropriate way, the school’s alumni may obtain a local market advantage. In addition to hiring lawyers who have completed residencies at the law school firm, local employers may favor students and immediate grads of that school over students and graduates of competing law schools. The school with the affiliated firm, after all, will have demonstrated a commitment to developing more sophisticated practitioners–and it will be working directly with alumni to achieve that result.
If this competitive motive drives creation of law school firms, I can’t fault the schools. Tight markets spur competition, and I’m sure every law school in the country puts the interests of its graduates above those of other schools. Competition, furthermore, can create winning ideas. If law school firms do provide better training and networking opportunities than other types of temporary employment, then the alumni of those schools deserve to find favor.
I think, though, that law school firms hold potential beyond a zero-sum competition among law schools. A major reason for the mismatch between the number of lawyers (too many) and the amount of legal services provided in our society (too few) is that lawyers are terrible managers. There is a growing literature on our poor management skills, which I will discuss at greater length in other posts. Suffice it to say here that we teach almost nothing in law school about the most efficient ways to structure legal services, we produce almost no scholarship on that issue, and our graduates often remain clueless on those matters.
For too long, lawyers have viewed every legal issue as a sui generis one requiring customized legal research and analysis. And who can blame them? We educate lawyers primarily through appellate opinions that present novel issues of law. Why wouldn’t they structure their law practices to follow the assumptions of novelty, time-intensive analysis, and clients whose needs will lead eventually to a path-breaking Supreme Court decision?
The real promise of law school firms lies in developing new ways to manage law practices. Legal educators, of course, are poorly suited to do that on their own. But if interested educators work with groups of alumni, they may be able to create structures that reach new client bases. Services such as Rocketlawyer and LegalForce have already developed some of the tools–not just online systems and client-friendly software (although those are important), but new methods of managing legal problems.
Law school firms have this potential, I believe, because they are new institutions. When designing an organization from scratch, it’s easier to break old forms. Most law schools also sit in the middle of a huge untapped client base: University faculty and staff. University staff, from office associates and custodians to nurses and groundkeepers, are the mid-income Americans who struggle to find legal services. They earn too much to qualify for legal aid; they don’t earn nearly enough to afford traditional legal services. But what if there were an office, bearing the trusted brand of the University’s own affiliation, that could help those staff fight foreclosures, deal with evictions, navigate divorces, create child custody arrangements, defend criminal charges (against the staff member or, say, a wayward teenager), and handle the dozens of other brushes with the law that occur during a lifetime? If we could find ways to tap that market economically, we would broaden access to legal services as well as employment opportunities.
But, and this is a big BUT, none of that will address the excessive cost of legal education. Serving middle class Americans with legal issues is an important policy objective; so is broadening the services to the woefully served poor. Serving those markets, however, will not service the debt that law graduates carry today. If we want to make legal education and the legal profession work, we need to bring down the cost of legal education, make that education more professionally relevant, and give applicants the transparent information they need to make informed decisions about the scope of professional opportunities. Law school firms can be a step in the right direction by developing new mechanisms for delivering legal services, making legal educators more aware of those mechanisms, and improving the professional training of lawyers (not just through the firms themselves but through integration with the school’s earlier education). None of that will matter, however, if we can’t break the chokehold of high tuition.
Describing “Law School Firm” Jobs
March 8th, 2013 / By Kyle McEntee
Professor Kevin Outterson sent me a letter (below) he wrote today to Barry Currier, Interim Consultant on Legal Education at the ABA Section of Legal Education. In this letter, Outterson describes his concerns about law school-funded law firms.
Outterson makes one point that I find particularly interesting. If we think of these firms as post-grad clinics, where the employees are more like glorified interns, then it’s odd to consider these graduates employed in any sense that credits the school with positive job outcomes.
In my experience, the ABA–both its professional staff and members of the Council of the Section of Legal Education–is reticent to judge jobs as good or bad, real or fake. Generally, I agree with this; judging job quality too generally can pose problems because prospective students are diverse in their needs and desires. But Outterson’s point seems different. It’s like counting a graduate as employed at graduation because, on a certain day, a student was working at an in-school clinic.
Granted, these graduates will be paid, so they’re not much different than today’s school-funded jobs. (Although the pay appears better.) But is this putting permanent lipstick on a pig? School-funded jobs are a trend, especially at the richer schools, because law schools graduate too many students. Far more people want substantive legal work that sets them up for a legal career than can. Law school firms may solve the twiddling-thumbs problem faced by unemployed law school graduates, but they may also serve as an alternative to adjusting enrollment to sane levels.
While we cannot be confident that schools are not motivated by appearances (U.S. News or otherwise), we can be confident that the ABA is in a position to dictate what U.S. News uses in its methodology for employment data. With rare exception, U.S. News will not ask schools questions that the ABA does not ask on its annual questionnaire. If the ABA finds merit in Outterson’s suggestions, it should and can effectively act.
Dear Barry,
I read with dismay in the New York Times yesterday about the plans at some law schools to create and fund “law firms” that will exclusively employ their graduates. These are not “law firms,” but are more like post-grad clinics — internships in a law school post-grad clinic that charges fees on a sliding scale.The unspoken assumption is that these students will be counted as employed at graduation for ABA and US News purposes. Does anyone doubt that if these internships were not counted, the enthusiasm for these programs would evaporate? Whether funded directly through the law school or indirectly through the alumni association, one goal here is to boost employment numbers artificially.
I strongly support the need to reform law school, especially the third year. The list of potential reforms from the Coalition of Concerned Colleagues is an excellent place to start. Real internships at real employers can be an outstanding career boost. Law schools posing as law firms will be an expensive travesty.
If the ABA fails to act immediately, US News may handsomely reward the sponsors of these programs. Law schools focusing on real jobs for their students will be hurt by comparison.
Best wishes,
Kevin Outterson
Boston University School of Law
Rising Student Debt
March 6th, 2013 / By Deborah J. Merritt
Student debt has risen to unprecedented levels. The total approached a trillion dollars by the end of 2012, and the figure continues to rise steeply. According to a recent report from the Federal Reserve Bank of New York, student loans were the only type of household debt that continued to rise throughout the Great Recession.
Mortgage debt, which currently totals eight trillion dollars, still overshadows debt from student loans. But student debt now constitutes the second largest category of consumer debt, drawing the attention of economic forecasters.
Student debt provokes concern, not only because of its size, but because of increasing delinquency rates. Student loans now lead all other categories of consumer debt on non-payment: 11.7% of student loans are at least 90 days delinquent. Delinquency rates for student loans, furthermore, show a sharp upward trend (p. 9), while those for other types of household debt are declining.
Even those figures underestimate the looming shadow of student debt. As the Federal Reserve Report notes in footnote 2 of its report, “delinquency rates for student loans are likely to understate actual delinquency rates because almost half of these loans are currently in grace periods, in deferment, or in forebearance and therefore temporarily not in the repayment cycle.” The delinquency rate for student loans that have actually entered repayment is “roughly twice as high” as the 11.7% official rate. For more discussion of this issue, see this post on Liberty Street Economics, a blog authored by some of the economists working with the Federal Reserve Bank of New York.
So both student debt and delinquency rates on that debt are growing rapidly. What impact will those phenomena have on individuals and the economy? No one knows for sure, because our economy has no experience with student debt of this magnitude. The mechanics of student loans–which feature private and government lenders, deferral periods, and changing repayment plans–are also more complicated than other types of household debt.
Recent analyses by the economists at the NY Federal Reserve Bank, however, raise red flags about the impact of student debt. The economists found that “the growth in student loan balances and delinquencies was accompanied by a sharp reduction in mortgage and auto loan borrowing and other debt accumulation among younger age groups.” These declines were “greater for student loan borrowers and especially so for those with larger student loan balances,” suggesting a causal relationship. Highly indebted graduates, in other words, seem to be deferring home and car purchases. Those decisions have implications for both the individuals and the economy.
Higher education is an engine for economic growth; it enhances the productivity of most workers. But what happens to the economy when educators claim an increasing share of that productivity? The growth in student loan debt reflects dramatic increases in tuition at colleges and graduate programs. Those increases mean that educators are demanding, up front, a larger portion of the productivity gains they help students achieve. Many of today’s graduates, especially those with high professional school loans, will spend half their working lives repaying those debts. Rather than using their full productivity gains to invest in houses, cars, or the educational future of their own children, they will send a significant portion of each paycheck to their educational creditors. We don’t know yet how that shift will affect the economy, but the early returns are troubling.
Transparency Today
March 4th, 2013 / By Deborah J. Merritt
ABA Standard 509 governs the consumer information that accredited law schools provide to prospective students. The ABA Section of Legal Education and Admissions to the Bar approved changes to that standard in June 2012, and the revised standard took effect on August 6.
The revised standard was widely publicized; indeed, it followed more than a year of lively discussion about misleading practices in the way some schools reported scholarship retention and employment rates. In response to those concerns, the revised standard includes a requirement that schools publish simple tables disclosing specified information about scholarships and jobs. The ABA provides the tables through downloadable worksheets; law schools have the applicable data readily at hand.
Given the widespread attention to Standard 509, the clear obligation of law schools to provide accurate information to potential students, and the specific worksheets offered by the ABA, quick compliance with Standard 509 should have been a breeze. By December 2012, surely every accredited law school in the country would have published the two mandatory tables.
Sadly, no. In late December and early January, two members of Law School Transparency (LST) visited the website of every ABA-accredited school, searching for the tables mandated by Standard 509. Almost two-thirds of law schools still had not posted one or both of the tables mandated by Standard 509. These schools were actively–even passionately–recruiting students for the fall of 2013. Yet they had allowed an entire semester to pass without posting the basic information about scholarship retention and employment rates that these prospective students deserve to know.
Kyle McEntee and Derek Tokaz, the Executive Director and Research Director respectively of LST, detail these disappointing results in a new paper. At the same time, they have published their findings on LST’s updated Transparency Index.
Before publishing, LST sent each law school the results of their website study. More than 100 law schools contacted LST and, over the next three weeks, Kyle and Derek counseled them on how to improve their compliance with Standard 509. As a result of these efforts, the percentage of schools failing to publish one or both of the mandatory charts has fallen from two-thirds to one-third. The online index reveals each school’s compliance status during the initial LST search (click “Winter 2013 Version”) and the school’s current status (click “Live Index”).
It’s hard to find any cheer in these numbers–other than to applaud LST for their tireless and unpaid work. Schools should have complied with the basics of Standard 509 by October 2012 at the latest. Two months is more than enough time to put readily available information into a spreadsheet and post the information on the web. How many times did non-compliant law schools update their websites between August and January? How much upbeat information did they add to attract applicants? What possibly excuses the failure to post information mandated for the benefit of those applicants? Facts about scholarship retention and employment matter to prospective students; that’s why the ABA requires their disclosure.
Missing 509 charts is just the beginning of the transparency problems that LST identified in its latest sweep of law school websites. The online index reveals still more sobering information. This report raises a serious question for law schools: If we want to provide “complete, accurate and nonmisleading” information to prospective students, and I think that most of us do, then what institutional mechanisms can we adopt to achieve that goal? Our current methods are not working well.
UTX
February 28th, 2013 / By Robert Rhee
UTX was my moment of epiphany, the “oh my” moment when cogent thought on the legal profession came in a flash. Admittedly, prior to learning of UTX (not that long ago), I didn’t really know much about the economics of the legal profession other than the obvious fact that the financial crisis of 2008-2009 must have inflicted significant pain on the industry, thus my prior assumption of only a cyclical downturn. I write this blog post for the benefit of those colleagues in the academy who may have a sense that the legal profession is having difficulties but can’t quite see the larger picture beyond anecdotes of layoffs and a very difficult hiring market. I hope to provide a concrete example of the economic stress on the legal profession, which obviously has trickle down effects on the economics of law schools and the value of the law degree. (more…)
Unemployed Lawyers
February 20th, 2013 / By Deborah J. Merritt
The Bureau of Labor Statistics (BLS) reports that only 1.4% of lawyers were unemployed in 2012. That’s an impressive figure, especially when compared to an overall unemployment rate of 7.8%. Some law schools point to our profession’s low unemployment rate as a positive reason to embrace law school. Is that a valid way to use the BLS statistic?
No, the statistic is quite misleading when recited without further context. Here is the information schools need to know–and should convey–if they want to use this statistic. First, the statistic includes only people who held a lawyering job before becoming unemployed. That’s why the BLS titles this data series a measure of “experienced unemployed persons.” The statistic does not include people who have passed the bar and are eager to work as lawyers, but who have not yet held a lawyering job. They may be unemployed, but they’re not unemployed lawyers.
Second, the statistic does not include anyone who worked for a single hour during the survey week. The occupational unemployment rates derive from the Current Population Survey (CPS), which surveys 60,000 households each month. The CPS uses a very liberal definition of “employed.” Anyone who receives pay or profit from at least an hour of work during the week is “employed.” A lawyer who was paid for a single hour of document review during the survey week may be strapped for cash and woefully under-employed, but that person is still an “employed lawyer.”
Third, the statistic does not include lawyers who have been unable to find satisfactory legal work and have taken jobs in other fields. An hour of paid work in any job counts as employment for the CPS. A laid-off law firm associate who takes a retail sales job to pay the bills is an “employed retail salesperson” not an “unemployed lawyer.” Ditto for the laid-off lawyers who have taken jobs as high school teachers, realtors, paralegals, or other workers. Even if these employees want to be lawyers, have the training to be lawyers, and would eagerly leave their jobs for a lawyering position, they don’t count as “unemployed lawyers.”
This point is particularly important because job seekers can work down, but not up, the training scale. A worker with just a high school diploma can’t practice law, but a lawyer can do many of the jobs that the high school graduate performs. Similarly, the lawyer can take many of the positions open to other college grads. This is an important part of the reason why people with advanced degrees have low unemployment rates; they usually can return to occupations that were open to them before obtaining the degree. The advanced degree may have little relevance to their employment, but they are not unemployed.
Finally, the BLS count of “unemployed lawyers” includes only individuals who have actively looked for work during the preceding four weeks. Checking newspaper ads or attending training classes doesn’t count as an active job search. This caveat is important because of the number of unemployed lawyers who become discouraged and leave the workforce entirely.
Women are a barometer of this phenomenon; if paid work is difficult to find, they may choose to care for children or other family members instead of pursuing their profession. Unfortunately for the diversity of our profession, BLS statistics show just this trend among female lawyers. In 2000, women constituted 29.8% of all employed lawyers. By 2003, despite more women graduating from law school (and disproportionately male senior lawyers departing the workforce), only 27.6% of employed lawyers were women. The 2001-03 recession pushed more female lawyers than male ones out of the workplace.
Similarly, both the percentage and absolute number of women lawyers has declined recently. After hitting an all-time high of 34.4% of the profession in 2008, the percentage of female lawyers declined to 31.1% in 2012. More than 100,000 women graduated from law school during the last five years, but there are 19,000 fewer women lawyers today than there were in 2008. I don’t know if those women have moved into other fields or out of the workforce, but they don’t show up as unemployed lawyers in the BLS statistic.
In sum, it is technically true that the unemployment rate for lawyers, according to the BLS, is just 1.4%. But that statistic is likely to give prospective law students and others a distorted view of the legal job market. The bare statistic suggests that 98.6% of people who want to practice law, and who have law licenses, are employed as lawyers. That’s clearly not the case. In fact, the same BLS data series suggests that the number of practicing lawyers declined between 2011 and 2012: There were about 1,085,000 respondents working as lawyers in 2011, but just 1,061,000 in 2012.
There are responsible ways to discuss both positive and negative aspects of the legal job market with prospective students. A responsible approach, however, gives context to statistics; it also includes both positive and negative figures that appear in the same data series.
Note: The BLS does not publish the occupational unemployment statistics on its website; that’s one indicator that the Bureau sees limited utility in these figures. But for those who want to see the data for the last ten years, I have PDF copies of the tables.
AP Study of the Economy
January 27th, 2013 / By Deborah J. Merritt
As we plan for the future, law schools wonder about general economic trends. Is the economy recovering? If so, will it create more jobs for lawyers? How soon? The Associated Press recently published a three-part series with troubling answers to those questions. You can find the three articles here:
The bottom line from this series: The economy is recovering in some ways, but technology is wiping out middle-class jobs–and is starting to chip away at higher paying jobs as well. Here are some of the facts that the AP researchers cite to support these conclusions:
** 7.5 million American jobs were lost in the Great Recession, and less than half of them have been restored. The figures, however, are even starker for middle-class jobs. Half of the jobs lost during the recession (about 3.75 million) were middle-class ones. Only 70,000 middle-class jobs have been restored.
** Technology has been cutting jobs for more than three decades. The losses started in manufacturing, but have moved aggressively into office, retail, and other service occupations.
** Top companies (those in Standard & Poor’s 500 stock index) earned one-third more profit in 2012 than they did the year before the Great Recession. But by relying on technology, those companies employ a half million fewer workers today than they did in 2007.
** Start-ups are launching with one-third fewer employees than they needed in the 1990s. Technology combined with outsourcing (which is, in turn, supported by technology) allows these companies to thrive with fewer workers. Since start-ups are a major source of new jobs in our economy, this trend is particularly disturbing.
** We are on the brink of even more dramatic workplace changes prompted by technology. Google’s self-driving cars have now logged 300,000 road miles without a single accident. What happens to the middle class when driver-less cars replace truck drivers, bus drivers, and cab drivers? What ripple effects will that technology have on commuters, insurance companies, and countless of other industries? One hint: It may be much easier to resolve insurance claims from driver-less cars because all of the data will be stored.
** Although technology creates new jobs, computers have been eliminating many more jobs than they create. For one measure of this, consider these facts: Three software giants (Apple, Google, and Facebook) together employ only 138,300 people worldwide. That’s less than a quarter of the workers (600,000) that General Motors employed during the 1970s. And GM itself produces many more cars today with only a third of its former workforce.
What do these trends mean for the future of legal employment? I explore some possibilities below.
Direct Client Loss
When we talk about demand for legal services, we often focus on large corporate clients. Those are the ones who pay the highest fees and support the most lucrative jobs for law graduates. But those clients have never supported the bulk of our graduates. According to analyses done by Harvard Law School’s Program on the Legal Profession, only 15% of U.S. lawyers worked in the 250 largest law firms–serving the biggest corporate clients–in 2007. Since 2007, of course, large law firms have downsized; the percentage of attorneys practicing for BigLaw today probably is less than 15%.
Where do other lawyers go? Some work for mid-sized firms, corporations, government, or public-interest groups, but a substantial number work alone or as members of very small firms. According to the Harvard analysis, more than a third (35%) of all lawyers work in solo practice. Those attorneys, as well as many of those practicing in the smallest firms, devote much of their effort to individual clients and small businesses.
The middle class and small businesses once sustained these lawyers–more than a third of our graduates–by paying them to handle home closings, divorces, child custody disputes, criminal defense, consumer issues, wills, probate, business formation, contract issues, small claims, and workplace disputes. That work has already diminished. Middle-class clients and small businesses have balked at the high cost of legal services, turning to pro se representation and online companies like Rocket Lawyer and LegalZoom.
Further shrinkage of the middle class may decimate that group’s demand for legal services. At the same time, start-up businesses that use technology (rather than new workers) for their accounting, human resources, and other support staff, will be increasingly comfortable with online legal advice. The trends identified by the AP study bode very ill for the lawyers who serve middle-class and small-business clients.
Some of these lawyers will find work in the online companies that are seizing this sector. The genius of those companies, however, is that they are able to provide legal services with many fewer attorneys; that is why they cost less. With the middle class contracting, it is very unlikely that this client base will grow sufficiently to support even the lawyers currently serving them–much less new lawyers in the future.
Larger Economic Upheaval
Law schools and their graduates might hope that large corporate clients will take the place of middle-class and small-business clients who no longer want our services. But the experts cited by the AP study suggest that we are in the early stages of a wrenching economic shift. Our largest economic challenge isn’t housing, banks, foreign competition, or the deficit; it’s computers that replace human workers. The accelerating capacity of information technology will displace an untold number of jobs during the next decade. Consider just the dislocation that will occur from driver-less cars, a technology that may secure significant success during the next decade.
The economists interviewed by the AP researchers offered three possible scenarios for evolution of the U.S. economy in the face of continuing technological change. The most positive of these, provided by Nobel Prize winner Joseph Stiglitz, is that information technology will cause the same dramatic upheavals that the industrial revolution generated in the nineteenth and early twentieth centuries. Those dislocations could culminate in a cataclysmic collapse similar to the Great Depression. Stiglitz’s forecast is optimistic only because he sees the economy eventually returning to health, just as the U.S. and other advanced economies did after World War II. He’s clear, though, that we may remain in the current “doldrums for half a decade, for a decade, or for longer.”
Andrew McAfee, a principal research scientist at MIT’s Sloan School of Management, offers a gloomier prediction. McAfee suggests that technology will fuel the growing gap between top-paying jobs and low-skilled ones. Technology will allow a small number of workers to reap greater returns, but it will relegate an increasing number to low-paid jobs or unemployment. That’s bad for the bulk of workers, and it’s bad for the economy as well. Without a large, prosperous middle class, how will the economy keep growing?
The gloomiest prediction comes from former Treasury Secretary Lawrence Summers and software entrepreneur Martin Ford. They envision a future in which a majority of citizens cannot find productive work. Technology will produce wonderful benefits, but humans won’t be able to earn enough to consume those fruits.
Whichever scenario you prefer, the next five to ten years offer lots of economic risk. Some parts of the economy may rebound, but there is likely to be significant economic turmoil. That turmoil will keep corporate employers cautious, pushing all parts of their workforce for greater productivity at less cost. Lawyers are part of that workforce, so we’re unlikely to see any return to the boom times of corporate spending.
Legal Work
The AP series doesn’t focus on lawyers, but technology is affecting our workplaces as much as any other. A lawyer equipped with a computer, internet, electronic databases, and cell phone can work much more quickly than one with yellow pads and a row of hard bound books. For a while, lawyers were able to retain the extra profit generated by those increases in productivity. We could charge our clients more for the same minutes, because we did so much more during those minutes.
But market competition, especially the intense competition spurred by the forces outlined above, has shifted the technology bonus to the consumers of legal services. We now produce much of our legal work more quickly and efficiently–but we must offer it at the same or lower prices. With lawyers doing more in less time, we don’t need as many lawyers. The oversupply of lawyers has further pushed price competition, reinforcing the cycle.
The changes we’ve seen so far, furthermore, are just the beginning. Predictive coding is poised to replace armies of lawyers who now conduct document review. Document automation makes drafting legal instruments quicker and smarter–while requiring fewer attorneys. Richard Susskind’s latest book outlines many of the other changes that technology will bring to the legal community during the next decade.
Conclusion
General economic trends offer little refuge for lawyers or legal educators hoping for a rebound in our own job market. Middle-class clients and small businesses are likely to support fewer lawyers during the coming years. The economy as a whole faces great challenges, so corporate clients will continue to demand more value for money. And technology will do an increasing variety of legal work, displacing more lawyers.
If a computer can make a left turn against oncoming traffic, what other feats can it accomplish? You may think that it’s harder to think like a lawyer than like a driver, but consider the number of datapoints a computer must weigh to make that left-hand turn. Legal judgments depend on identifying data and recognizing patterns; computers have shown their skill at both of those tasks.
I’m not a Luddite: I love computers and all that they have done for us. I wouldn’t halt the march of technology for a minute, and I can’t wait to get one of those driver-less cars. But if we want to plan seriously for the future of law schools and the legal profession, we have to consider the trends documented in the AP study. Through the lens of history, it’s easy to see all of the changes that the industrial revolution wrought. It may be harder to see broad socio-economic forces as we live through them.
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