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A Tale of Three Houses
April 24th, 2014 / By Deborah J. Merritt
My husband and I recently signed a contract to purchase a new house. As we arrange inspections (fingers crossed) and interview movers, I’ve been reflecting on the changing role of lawyers in residential real estate purchases. During my three decades as a homeowner, that role has steadily diminished. Here’s my tale of three transactions over three decades.
House One: The Customized Contract
We bought our first home in 1984, using a custom-crafted contract. Our contract, in fact, was about as customized as they come. As recent law graduates, with parent lawyers urging us on, my husband and I delighted in drafting our dream contract.
We loved our contract, but the sellers’ lawyer was dismayed. He had quoted the sellers a flat fee, assuming he could use his own preferred contract. Our diligence (or hubris) required him to devote extra hours to merging our work product with his. He probably lost money on the representation; I doubt that the sellers were interested in such a custom-tailored contract. Still, this was an era in which many lawyers proudly drafted their own contracts, then negotiated with opposing counsel about which language to use.
House Two: The Standardized Contract
By 1995, when we bought our second home, my husband and I had lost our appetite for contract drafting. Other buyers felt the same; standard contracts were common. We hired a lawyer to represent us, but paid a very modest fee for the representation. With a standard contract, there was relatively little for the lawyer to do. She reviewed the property survey and attended the closing on our behalf, but we didn’t need any customized legal advice.
House Three: No Lawyer Needed?
When we bid on a house last week, our realtor gave us a form contract developed by the local bar association. My husband and I were impressed with the document: it covers all essential points and strikes a fair balance between buyer and seller. Having a form contract allowed us to focus on key points of the offer, rather than worrying about drafting language.
After striking a deal with this well-worded contract, my husband and I wondered whether we needed to hire a lawyer at all. The realtors, title company, and bank all seem to have everything in hand. We asked a trusted friend–another lawyer–whether she thought we needed a lawyer to protect our interests. She responded that, especially if a bank participates in the transaction, she didn’t think either buyer or seller needs a personal lawyer these days. Her own daughter (a scientist, rather than lawyer) recently purchased a house without retaining a lawyer.
Lessons for Lawyers
Our experience as home buyers traces the path described by Richard Susskind in his widely read book, The End of Lawyers?. Thirty years ago, we (acting as our own lawyers) produced a customized contract to purchase a home. By 1995, the legal services supporting a home purchase were standardized: we paid a lawyer a set fee to perform prescribed tasks in connection with a standard contract.
Today, the same service has become a commodity: excellent form contracts are available without even consulting a lawyer. Other workers–realtors, bankers, and title agents–implement the process without ongoing guidance from a lawyer. It seems that in a growing number of transactions, neither buyer nor seller will hire a lawyer. Lawyers will continue to represent banks, advise title companies, and refine the standard contract, but those tasks will employ far fewer lawyers than old-fashioned real estate sales did. It’s not the end of lawyers, but it’s certainly a contraction of the market.
Law as a Reasonably Priced Luxury Good?
My story has a final twist: Although we probably don’t need a lawyer to represent us in this home purchase, my husband and I decided to hire one. More than thirty years out of law school, we know just enough to be dangerous. Neither of us specialize in real estate transactions or any related area. Rather than torment ourselves by reviewing all of the documents (which we know we’ll do), we decided to hire a real estate lawyer to do that work for us.
We’re delighted with that decision. Our lawyer is bright, hardworking, and knowledgeable. He responds quickly to email or phone requests. So far he has recommended a reputable home inspector, reviewed the title documents, caught several errors in those documents (including an arithmetic one), found a record related to our title, and answered all of our rather naive questions. We’re relieved to rely upon him rather than realtors and google searches.
I’m acutely aware, however, that we’re purchasing these legal services as a type of luxury good. The cost is reasonable–less than $1,000–but that’s more than many buyers would pay for this type of comfort. Even buyers who could afford the tab might purchase a different discretionary good. We like legal services, but I suspect many buyers would prefer a new widescreen tv, season tickets for their favorite sports team, or other indulgences.
The bottom line for residential real estate lawyers is sobering. Many buyers and sellers no longer need these services; they will rely upon form contracts and other professionals. Clients like us may still purchase services, but that market is small. To attract those niche clients, prices will have to be reasonable and service will have to be very client-focused. Otherwise, potential clients will spend their money on different discretionary goods.
Transparency Review in Advance of New Law School Jobs Data
April 4th, 2014 / By Kyle McEntee
Since 1974, the National Association for Law Placement has surveyed ABA-approved law school graduates with the help of roughly 200 schools and a nod from the ABA. NALP’s annual survey asks graduates to describe their jobs, their employers, how and when they obtained the positions, and their starting salaries. (More details here and here.)
NALP checks the data for discrepancies and produces statistical reports of post-graduation employment outcomes for each law school. NALP must keep these “NALP reports” confidential, but individual schools may publish their reports.
NALP Reports
Before the law school transparency movement, law schools did not publish NALP reports online for prospective students and others to see. Instead, these detailed, immensely useful reports occupied dusty filing cabinets. I recall when my organization first requested these reports from law schools, several career services deans told me they did not know where they were.
Though publishing a NALP report carries zero cost, skeptics doubted we’d succeed: “However worthy the effort, I doubt that this group will have much success ….” We obtained just 34 NALP reports from the initial request, but that number grew to 54 reports just a few months later after a handful of LST initiatives.
For the class of 2011, 68 schools published a NALP report until our annual Transparency Index, which grew the number of participating schools to 85. Prospective students and interested readers were even more fortunate for the class of 2012. To date, 108 schools—that’s 55% of possible schools—made their NALP reports public.
If you’re interested in viewing the data we gathered from these NALP reports, please head over to the LST Score Reports. We indicate on school profiles whether a school has decided to withhold information from the public. You can also view a list of the schools publishing NALP reports for the classes of 2010, 2011, and 2012 in our NALP Report Database. Note that we now have access to 60 2010 reports, 94 2011 reports, and 108 2012 reports.
Actual Law School Transparency
Law schools deserve a lot of credit for increasingly living up to proclamations in favor of transparency. So too do prospective students, current students, and alumni for demanding information. We accomplished actual transparency without formal legal requests, though we also believe it’s time that the non-participating schools subject to open record laws be ushered into the era of transparency.
Law school opacity harms not only the reputation of the schools who do not participate, but of the legal education system at large. Law schools are tasked with training the legal professionals of the future. They hold students to honor codes, require them to attend a class on professional responsibility and ethics, and send them into a profession where they must uphold the values of that profession on a daily basis. However, when it comes to their own conduct, too many schools take a position that the minimal level of integrity required to maintain ABA accreditation is good enough. Our hope is that schools who value their academic and social leadership roles will go beyond the bare minimum—and do so without sticks and carrots from LST.
Class of 2013 Employment Data and NALP Reports
Next week, the ABA will publish much of the class of 2013 employment data it collected from law schools in accordance with recently-refined accreditation requirements. Many law schools are already publishing information above and beyond the ABA requirements, and we hope these schools continue this positive practice later this summer when they receive their class of 2013 reports from NALP.
If your school does not yet publish what it has at its fingertips, ask why and explain how inaction is unprincipled, prevents informed decision-making by applicants, and harms the school and profession’s reputation. Our profession needs affordable, transparent, and fair entry. It starts with something as simple as law schools doing the obvious.
Contracting with the Feds
February 3rd, 2014 / By Deborah J. Merritt
Today’s National Law Journal has an interesting story about the federal government’s cuts to contracts with private lawyers. The story interested me for three reasons.
Who Knew?
First, I never realized that the federal government spent so much to purchase private legal services. In 2013, the feds spent more than half a billion dollars on outside legal services, with the money flowing to more than 1900 private contractors. That’s a small fraction of the total market for legal services, but it’s more than pocket change. I hadn’t realized that, in addition to hiring its own lawyers, the federal government spends significant money to hire private lawyers.
Shrinking Pie
Unfortunately, the feds–like so many other legal clients–are spending less for their outside legal services. In 2009, the federal government disbursed more than $682 million for legal services. The total climbed in 2010 to more than $714 million, but has fallen steadily since that peak. For 2013, the total was just over $542 million–a 24% decline. This is the second point that struck me: our graduates face, not only decreased hiring by federal agencies, but less outside spending by those agencies. This is a federal “counter-stimulus” to the legal market.
Lawyers Make Up a Small Part of Legal Services
Perhaps most daunting, government dollars for “legal services” go primarily to contractors that provide law-related services, not to law firms or individual lawyers. Of the $542 million that the government spent in 2013, only $54 million went to law firms or solo practitioners. More than 90% of the money spent on outside legal services went to “legal service” providers that assisted with asset forfeiture, e-discovery, and other law-related tasks.
Those companies undoubtedly employ some lawyers. The composition of services purchased by the federal government, however, is yet another reminder that a growing number of non-lawyers provide law-related services. I have no problem with that shift; three years of formal legal education are not necessary to perform many tasks related to interpretation, application, and enforcement of the law. The government’s contracting figures, however, are yet another reminder of that reality. This is the third, and perhaps most important, lesson we can draw from the National Law Journal‘s report.
Fighting Hierarchies in Hiring
January 19th, 2014 / By Deborah J. Merritt
Law students quickly learn the hierarchies that govern the legal profession. Top employers, especially in BigLaw, prefer students from elite law schools. High class rank, law review membership, previous work experience, and personal connections matter, but the status of a student’s degree sends a strong workplace signal.
We deplore this fact in academia, and many employers rue the practice as well. Over time, employers have learned that graduates of the elite schools aren’t necessarily the best lawyers. Still, the preference continues. Just as no one ever got fired for buying IBM, no one will lose face for hiring graduates of Harvard, Yale, or Stanford law schools.
But now one BigLaw firm has decided to fight back–against its own biases. Clifford Chance, a global law firm headquartered in London, has devised three novel hiring practices. All three techniques aim to widen the firm’s talent pool by reducing its dependence on lawyers trained at Oxford, Cambridge, and other elite institutions. The Clifford Chance innovations are smart hiring practices: perhaps we can persuade U.S. firms and other legal employers to follow them.
Credit for All Work Experience
Clifford Chance has started explicitly scoring candidates’ work experience. That experience includes law-related work, as well as positions “working full-time in retail to cover the cost of tuition fees.” The firm has not released details on how it counts the latter positions, but it is promising that recruiters explicitly focus on this work. Rather than gloss over the assorted jobs that low-income students perform to pay their way through school, the firm will acknowledge the necessity of this work–and perhaps even recognize some of the skills learned through tuition-supporting jobs.
CV-Blind Final Interviews
Even more intriguing, Clifford Chance has adopted a system of CV-blind final interviews. Staff members conducting these interviews don’t know which law school each candidate attended; they know only the candidate’s name.
The firm hopes that this approach will eliminate unconscious attitudes that might bias interviewers in favor of applicants from elite schools. Rather than assume that an Oxford graduate is more sophisticated, articulate, or intelligent than one from a lesser school, the interviewers judge the candidates based on their words and manner.
The CV-blind approach reduces the halo effect created by elite school attendance. Employers can weigh the substance of an applicant’s academic record (including the nature of the school attended) during screening stages of the employment process. There is no compelling reason for interviewers to know the applicant’s school when judging the interpersonal skills displayed during an interview.
Eliminating academic pedigree from final interviews does have one drawback: It reduces the opportunity for firms to recruit candidates based on common bonds. Interviewers will no longer be able to reminisce with candidates about favored (or dreaded) professors and classes. Candidates may come away from these interviews feeling a less personal connection to the prospective employer.
These very connections, however, give elite-school graduates yet another advantage in the hiring process. If a firm has hired primarily elite-school graduates, students from lesser schools will feel less connection with their interviewers. Those students, in fact, may feel more comfortable in interviews where no one’s alma mater plays a role.
Intelligent Aid
Clifford Chance’s most ambitious program is its Intelligent Aid competition. Each year the firm fills twenty of its summer slots with students chosen through this process. The students submit a 500-word essay on a designated topic, then defend their ideas orally before a panel of judges. The twenty best competitors obtain summer jobs; the top competitor also receives a £5,000 scholarship and £1,000 to give a favorite charity.
Intelligent Aid has become a major pipeline for students aspiring to work at Clifford Chance; the competition fills half of all openings in the firm’s summer program.
Outcomes
Clifford Chance’s innovations seem to be working. Last year the firm hired lawyers from forty-one different schools. That number represents almost a thirty percent increase from the number of schools represented the previous year.
The firm has also succeeded in attracting more first-generation students to its ranks. The Intelligent Aid program yielded one-third more of those students than the traditional hiring route did.
Clifford Chance is betting that its innovations will yield a better group of lawyers than conventional hiring practices have done. The firm isn’t running a charity for students enrolled at non-elite universities; it’s seeking the best possible workers. So far, the results suggest that it’s both possible and productive to combat elitism in hiring.
Why Can’t We Support More Lawyers?
January 15th, 2014 / By Deborah J. Merritt
I wrote recently about the discouraging labor market projections published by the Bureau of Labor Statistics. BLS has–once again–lowered its estimate of the number of new lawyers that the U.S. economy will absorb over the next decade.
Why is BLS so bearish about job prospects for lawyers? The agency devotes an issue of its flagship publication, the Monthly Labor Review to the methodology and trends that underlie its workplace projections. Here are some of the forces that are restraining job growth for lawyers.
The Great Recession
The BLS economists open by noting that the “length and nature of the recession have left lasting scars on the economy.” Recovery has taken longer than even pessimists predicted: Although the Great Recession ended more than four years ago, growth in GDP remains slow.
Unfortunately, BLS predicts that “growth will continue to be slower than was originally hoped.” Robust growth often follows a downturn, but the last recession contributed to a “new normal” in which GDP will grow only about 2.6% per year. That’s better than growth rates during the last few years, which have witnessed growth of only 2.1% annually, but it falls well below earlier growth rates. Between 1992 and 2002, GDP grew 3.4% annually. BLS does not expect that type of growth to return any time during the next decade.
The effects of the Great Recession, in other words, have become structural rather than simply cyclical. This was not an ordinary downturn with a robust rebound. The impacts are lasting. They will dissipate some day, for law as well as other occupations, but that “some day” is still more than a decade in the future.
Decreased Labor Force Participation
The shock of the Great Recession distracted many of us from an economic malaise that has been building quietly over the last twelve years: a declining percentage of our adult population is participating in the workforce. To determine labor force participation, BLS calculates the number of adults (age 16 or older) who are employed or looking for work. That number, divided by the total number of non-institutionalized civilians, yields the labor force participation rate.
In 1947, when BLS started tracking this economic indicator, 58.3% of the adult population was in the workforce. That percentage rose and fell modestly over the next two decades. After 1970, as both women and baby boomers entered the workforce, the participation rate rose steadily–reaching a high of 67.1% that persisted from 1997-2001.
Since 2001, however, labor force participation has been falling noticeably. By 2012, the percentage had dropped to 63.7%, a participation rate that was last recorded in 1979. BLS projects that the rate will continue to fall over the next decade, reaching 61.6% by 2022.
A decline in labor force participation might seem like good news for job seekers: fewer participants means less competition for existing jobs. The negative effects of decreased labor force participation, however, far outweigh any benefits. Declining workforce participation has at least three negative effects:
1. Fewer workers means less productivity. GDP will grow slowly over the next decade partly because of our decreased labor force participation.
2. Declining workforce participation also means fewer people with income to spend on goods and services. Households with a single worker have less disposable income than households with two or more workers.
3. The declining labor force participation rate, finally, means that each worker will support more non-workers. Workers won’t be purchasing goods and services just for themselves; they’ll also be paying both taxes and private money to support the elderly, children, and others who cannot work. In 2012, our economic dependency ratio was 102: For every 100 people in the workforce, there were 102 people supported by the workers. That ratio will climb over the next decade, reaching 106.5 by 2022.
This ratio, notably, is far from the highest one that our population has supported. In 1975, when women still faced employment roadblocks and most baby boomers were still in school, our economic dependency ratio was 126. That ratio, however, steadily decreased during the late twentieth century, falling as low as 91.7 in 1992. Decreasing dependency fostered growth during the late twentieth century; now the trend has reversed.
The Bottom Line
BLS predicts that the long-term effects of the Great Recession, combined with our changing demographics, will impose significant restraints on the economy. Consumers will have less money to spend on goods and services, especially on those that are discretionary.
Lawyers and legal educators tend to think of legal services as essential rather than discretionary, but consumers clearly think otherwise. That is particularly true for middle-class individuals, a group that many law schools and recent graduates hope to attract as new clients.
Historically, middle-income consumers have been reluctant to pay going rates for legal services. Technology and more efficient practice management may now allow us to deliver services at lower rates to these consumers; that’s a noble goal that we should pursue as aggressively as possible. This prospective client base, however, is a moving target. With slow economic growth and more dependents to support, these individuals will have even less money to spend on legal services than they did in earlier decades. We will have to make legal services very efficient and very economical to attract considerable business.
We also have to be realistic about the fact that consumers choose among goods and services. Even the largest corporate clients have budgets; they prefer to spend their profits on executive compensation, developing new products, and opening new markets than on legal bills. For small businesses and individuals, budgets are even tighter. People will almost always buy food, shelter, and health care before they purchase legal services. Many of them may also prefer iPhones, internet connections, and football tickets above legal advice. The BLS projections incorporate, not what people would buy in an ideal world, but the mix of goods and services they are likely to purchase under projected economic conditions.
The constraints sketched here don’t touch on the special factors that are reducing demand for legal services. Those include technology, increasing competition in a profession that once benefited from substantial economic protection, and new management practices. Those structural changes are affecting our industry in particular ways. Meanwhile, we face the same structural changes (lasting impact of the Great Recession and changing demographics) that affect the economy as a whole. This is an era of slower growth and increased dependency–both significant dampers on the economy.
Practice Projections: 2014
January 13th, 2014 / By Deborah J. Merritt
Hildebrandt Consulting and Citi Private Bank have just released their 2014 Client Advisory for law firms. The annual Advisory, which draws upon surveys of law firms and interviews with managing partners, focuses primarily on BigLaw (although some smaller firms respond to the survey). The Advisory also relies upon self reports from firms, rather than independently collected data, which can decrease accuracy. Still, the Advisory offers a useful perspective on key trends in law practice. I summarize below the highlights with greatest importance for legal educators.
The Past Is Past
Very few people, I think, still believe that law practice will soon return to the heady days of 2002-2007. For those who do, Hildebrandt and Citi Private Bank offer yet another rebuttal: “we do not project a return to pre-2008 levels of performance,” the Advisory announces on its first page. “We believe that we have witnessed a fundamental shift in the market for legal services, resulting in a changed and more muted demand environment for law firms.”
Later, the report offers concrete figures. Demand for law firm services grew 4.4% annually between 2002 and 2007, then dropped sharply from 2007 through 2009. For the last four years, demand has been flat. Going forward, Hildebrandt and Citi Private Bank predict “much more modest growth” than before 2008. Demand will grow over the coming years, but quite slowly.
For law schools, these predictions offer further confirmation that we can’t expect BigLaw hiring to rebound to pre-recession levels. Conditions at those firms have improved since the dark days of 2009 and 2010, but associate hiring is unlikely to grow beyond where it stands today. In addition to offering fewer plum positions to our graduates, this BigLaw contraction will continue to create cascade effects in the market as more graduates seek positions in government, public interest, or smaller firms.
The Present: Lower Cost Lawyers
Since the recession, law firms have greatly increased their use of contract lawyers, staff attorneys, and outsourcing companies. This year’s Advisory devotes considerable attention to that trend, noting the rise of “lower cost lawyers” at most firms. 82% of the law firm managers who responded to the Citi survey acknowledged that they use temporary or contract lawyers to support their work. 70% acknowledged that they hire lower cost, non-partner track lawyers at their firm. Hildebrandt and Citi recognize these practices “as a permanent shift in the legal staffing model.”
Notably, the Advisory offers insight into the trends that have made this shift possible. Technology allows senior lawyers to supervise temporary and contract workers more easily; software also supports quicker training of those lawyers. Project management skills have become more common in law firms; those skills allow lawyers to organize large teams of temporary workers more readily. Excess capacity in the labor market, finally, provides a steady stream of lawyers willing to work in temporary or lower paid positions.
Law firms are not the only organizations hiring lawyers at lower wages. Hildebrandt and Citi point out that corporate clients are pursuing the same path on their own. Some corporations are hiring more in-house lawyers than they did in the past, realizing that they can pay those lawyers less than they would pay law firms for the same services. Corporate clients are also sending some of their routine legal work to alternative providers, bypassing law firms entirely.
The Future: Sunshine and Shadows
The Advisory concludes on an optimistic note. Its authors believe that the US economy has stabilized and “the economic outlook in 2014 has improved from the past few years.” Conditions abroad are also improving. As a result, Hildebrandt and Citi predict that “law firm profits will grow around 5 percent in 2014.”
This brighter outlook, however, casts shadows that will capture many of our graduates. Those profits depend largely on “a laser focus on efficiencies.” Firms, in other words, will continue to use contract workers, lower paid staff attorneys, and outsourcing firms. These practices have become essential to support partner profits. At the same time, firms are tightly controlling the number of equity partners and starting to prune income partners from their ranks.
These trends mean that our graduates will continue to settle for more temporary, lower paid work than they did before 2008. They may also enjoy fewer opportunities to become income or equity partners. Jobs in law firms and elsewhere will still exist, and some of these positions may compare favorably to other opportunities for college graduates. The jobs, however, will be different than the ones we are accustomed to imagining for our students.
How Many Lawyers?
January 7th, 2014 / By Deborah J. Merritt
How many lawyers will our economy support during the next decade? As legal educators, we are often bullish about our industry. We know our graduates’ talents, and we see vast unmet needs for legal services. We also know that legal rules are more complex than ever. From those perspectives, it seems logical that demand for lawyers will increase sharply–especially as the effects of the Great Recession fade.
But our perceptions can mislead us. Most of us lack economic training; we also know little about the macroeconomic data that inform labor market forecasts. As academics, we don’t even know much about the economics of law practice. Our very position in the industry, finally, tempts us to take a rosy view of the job market.
The best source of labor market predictions, in our industry and others, remains the Bureau of Labor Statistics (BLS). Every two years, the Bureau prepares a ten-year forecast of job openings in more than 800 occupations. The Bureau uses extensive data and complex macroeconomic models to prepare those predictions. Its economists analyze the economy as a whole, accounting for demographic shifts, technological change, complex interactions among industries, and consumer purchasing power. The final projections are much more reliable than anything that armchair experts might offer.
The Bureau recently released its projections for occupational job openings over the next decade. How will the legal profession fare? The news remains depressing.
Declining Projections
In 2008, at the height of our profession’s prosperity, the BLS projected that 240,400 job openings for “lawyers” would occur in the ten years between 2008 and 2018. That estimate encompassed all jobs practicing law, including work done by solo practitioners. It also counted both jobs generated by expansion and those required for replacement. The projection did not include jobs for judges and judicial law clerks, small categories that the BLS counts separately. I return to those categories below.
Note that even this 2008 projection fell far short of the number of students graduating from U.S. law schools at the time. ABA-accredited law schools conferred 43,588 JD’s in 2008. Even if just 80% of those graduates (34,870) sought jobs as lawyers, that number far exceeded the 24,040 new lawyer jobs per year that the BLS projected at that time.
The forecasts, however, got worse. In 2010, in the wake of the recession and rapid shifts in the legal profession, the Bureau adjusted its projection downward. It estimated that in the ten years between 2010 and 2020, the economy would support only 212,000 new lawyers. That number represented an 11.8% drop in the number of openings for new lawyers.
“Well, of course,” you might think, “the economy was in a serious recession. Of course the number of job openings would decline.” Remember, though, that this projection covered an entire decade. The Bureau assumed that, even if the economy returned to full strength by 2020 (an assumption built into its models), the number of job openings for lawyers would be substantially lower over the decade than previously predicted.
Now the news has gotten even worse. In its latest projections, the Bureau has again lowered the predicted number of openings for lawyers. It now estimates that the economy will support only 196,500 new lawyers between 2012 and 2022. That’s another loss of 7.3%. Put another way: Four years ago, BLS expected the economy to support about 24,040 new lawyers per year. Now it expects only about 19,650 new lawyers per year to find jobs. That’s a loss of 18.3%.
The Bureau expects the absolute number of lawyer jobs to increase between 2012 and 2022, but the increases will be considerably smaller than previously predicted. The available openings, furthermore, won’t come close to accommodating the number of law school graduates–even if those numbers decline as anticipated.
Graduates and Openings
I previously calculated that about 36,260 students will obtain JDs from ABA-accredited law schools in 2016. Those are the students who just finished their first semester of law school and are on track to graduate. Once again, let’s assume that only 80% of them will seek jobs as lawyers–a generous allowance for JD Advantage jobs. Even if one-fifth of our graduates take jobs outside the “lawyer” category, we will still graduate 29,008 eager new lawyers in 2016.
The BLS, however, predicts that the economy will support only about 19,650 new lawyers per year. If that prediction proves correct, then lawyer jobs will exist for only two-thirds (67.7%) of the graduates seeking them–or only 54.2% of the full graduating class. Those ratios are slightly worse than the ratios for the Class of 2008, when the job market was much stronger. Even with reduced class sizes, we are losing the placement race. Graduating classes will have to shrink substantially more to approach the number of lawyering jobs that the economy is predicted to support.
Other Job Categories
As mentioned above, the BLS counts some “lawyering” jobs in categories of their own. Judges, Magistrate Judges, and Magistrates, for example, constitute a separate category from lawyers. So do judicial law clerks. Neither of these categories, however, offers much comfort for law graduates: BLS has dramatically reduced projected openings in these categories. In 2010, the Bureau estimated that the economy would support 9,600 new judges/magistrates and 6,800 judicial law clerks between 2010 and 2020. The more recent predictions have cut those numbers to just 5,200 new judges/magistrates and 2,500 new judicial law clerks over the next decade. The latter reduction is particularly notable; it may represent cuts in government budgets as well as an increase in permanent law clerks.
Adding these small categories to the estimates offered above doesn’t alter the picture much. If we include job openings for judges, magistrates, and judicial law clerks, then the BLS predicts about 20,420 new openings per year for lawyers. That number will accommodate only 56.3% of the students projected to graduate from ABA-accredited schools in 2016. (To be clear, I think it’s appropriate to include judges, magistrates, and law clerks in these projections. I omitted them in my initial calculations because the numbers are small and the BLS has redrawn these small categories over the years. For clarity, it’s easier to focus first on the primary “lawyer” category.)
According to the BLS, only three categories of law-related professionals enjoy better prospects today than they did two years ago: paralegals, title examiners, and other legal support workers. The Bureau raised projected openings in each of those fields in its latest estimates, producing a combined total of 119,600 expected openings during the next decade.
Why Won’t the Economy Support More Lawyers?
The reasons for this decline are complex. They include lasting effects of the recession, technology, new efficiencies in the provision of legal services, and changing demographics. The last factor is particularly intriguing; it is one that we in the legal academy often overlook. My next post will explore these economic change-agents in more depth.
The Value of a Degree
December 18th, 2013 / By Deborah J. Merritt
Are college graduates better off than non-graduates? If so, does value vary by the type of institution attended? How much value does a JD add to a BA? Does that value vary by institution?
Both critics and defenders of higher education have struggled with these questions. Most have recognized that we can’t measure a degree’s value solely by financial reward. We hope that higher education also improves health, autonomy, personal relationships, emotional well-being, community engagement, and other goods. But how can we measure all of those outcomes?
Now there’s an app for that.
The Gallup-Purdue Index
The Gallup Organization and Purdue University have just announced creation of the “Gallup-Purdue Index.” This index will attempt to measure both career and well-being outcomes for college graduates.
Gallup has decades of experience asking people about their financial status and well-being. The company plans to draw upon that knowledge to devise questions for the new index. Participants will answer questions about their jobs, income, educational debt, other debt, and financial management. They will also provide information on their workplace and community engagement, personal relationships, physical fitness, sense of purpose, happiness, and stress.
Gallup will start conducting its surveys in the new year, with the first results available in spring 2014. The polling company plans to survey 30,000 college graduates a year for at least five years, generating a database with responses from 150,000 individuals.
Benchmarks, Not Rankings
Notably, Gallup does not plan to release data about individual colleges or universities. Instead, it will aggregate data by category. The results, for example, could report how individuals of different races fare after graduation, how graduates of research universities compare to those of liberal arts colleges, or how outcomes vary by region of the country. These data, Gallup suggests, will create benchmarks that institutions can use to gauge their own graduates’ outcomes.
The results, however, undoubtedly will do their part to fuel competition among universities. Gallup, for example, has proposed releasing results by athletic conference. Do Big 10 graduates earn more than Pac-12 ones? Are they more happily married? If fans don’t like the BCS system, they can embrace Gallup-informed “well being” competitions among the conferences.
Although Gallup will not announce institution-specific results, colleges and universities can contract with the company for surveys of their own graduates. Each institution could then compare its results to the national benchmarks. Purdue has already asked Gallup to survey its graduates; other colleges may do the same.
What Will We Learn?
Like all social science research, the Gallup-Purdue Index will have significant limits. If Pac-12 graduates are happier than Big 10 ones, is that because of their college experiences or because they live in sunnier states? If Ivy League graduates earn more money than graduates of land-grant universities, is that because their college education was superior, their native talents were greater, their pre-college advantages were deeper, or their employers favored the Ivy League for outdated reputational reasons?
Even if we disentangle these strands and identify the colleges that produce the happiest, most successful graduates, how will we know which part of the educational experience paid off? Was it class size, particular majors, the campus environment, the football team’s success? In the social world, measurement often generates new questions rather than solid answers.
There’s also a dark side to surveys like the Gallup-Purdue Index. Users can interpret results to support their pre-existing notions: If my college fares well, I’ll tie the results to my pedagogy. If my graduates stumble, I’ll blame the weather.
There’s a danger, furthermore, that policymakers will seize upon data to construct superficial answers to complex questions. It’s unlikely that one, or even three, college attributes explain graduate well-being. Understanding the relationship between higher education and adult satisfaction will require considerable exploration. As the data generate new questions, we’ll have to commit to asking those questions–not simply settling for first-generation answers.
Indices, finally, seem to breed competition. Administrators, educators, students, and alumni will await the annual index as eagerly (and anxiously) as they anticipate the US News releases. In my worst nightmare, Gallup will update survey results weekly–just like the football rankings. We already spend far too much time on rankings and competition in higher education.
The Up Side
On the other hand, the Gallup-Purdue Index could teach us a lot about higher education. We spend a lot of time speculating about the benefits of higher education; more data could begin generating answers. Used responsibly, high-quality data could help us address essential issues: What type of education gives low-income students the best boost? How do liberal arts majors compare to STEM specialists? Are there educational innovations that will advance the progress of women and minorities in the professions?
Measurements also facilitate accountability. Now that a degree can cost more than a starter house, and now that we have the capacity to gather substantial data about outcomes, we should hold educational institutions accountable. If we can improve results for our graduates–in any facet of their lives–we should work towards that end.
What About Law Schools?
So far, the Gallup-Purdue Index will focus on college graduates. It seems, though, that law schools could get in on the act. Individual schools could commission surveys to determine whether their graduates obtain value from earning a JD. Are those law school graduates happier than college grads with no further education? Richer? More stressed? More or less involved in the community?
To make those comparisons, each law school could choose college benchmarks that match their feeder schools. Maybe a particular law school’s grads are happier and more successful than the graduates of research universities in the region, but not better off than the grads of local liberal arts colleges.
Equally intriguing, the ABA, NALP, or another national group could commission Gallup to conduct a survey of law school graduates nationally. How do those graduates compare to college grads without further education? Do the results depend on the type of law school, type of post-law job, or region of the country?
As legal educators, we pride ourselves on the fact that our degrees last a lifetime. Now that we have the tools to explore the extent of that impact, we should seek that knowledge.
Law School Applicants
December 11th, 2013 / By Deborah J. Merritt
LSAC has released its first report on the current crop of law school applicants. Paul Campos offers a trenchant analysis that I expand upon below. After reviewing the numbers, I explore the question that nags at so many of us: Where are all of those applicants going if not to law school?
Recent History
Paul first charts the number of applicants to ABA-accredited law schools during the last four years. Those numbers, drawn from LSAC sources, are:
Applicants for fall 2010: 87,900
Applicants for fall 2011: 78,500
Applicants for fall 2012: 67,900
Applicants for fall 2013: 59,426 (preliminary)
Many people assume that fall 2010 represents the high water mark for law school applicants, but that’s not true. As Paul noted in a similar post last year, the number of law school applicants peaked in 2004 when 100,600 individuals applied to ABA-accredited schools. Applicants fell significantly for several years after 2004, rose modestly in 2009-2010, and have plummeted for the last three years.
As noted above, we have only preliminary figures for the number of students who applied to join this year’s 1L class. In recent years, however, the final figure has not varied by more than 0.5% from the preliminary number. If the final figure for 2013 varies that much, the true number of applicants might have been as high as 59,724.
That’s a decline of 32.1% in the number of applicants between fall 2010 and fall 2013. From the 2004 peak, the decline has been a very substantial 40.6%.
Current Applicants
That brings us to this year’s applicants. LSAC reports that 14,171 individuals had submitted applications by December 6, 2013. That’s a 13.6% decrease compared to this point last year.
The admissions cycle, however, is still young. Last year, a noticeable number of students applied to law school in the late winter and early spring, perhaps responding to news reports that applicants were down and hopefuls might obtain more favorable spots or scholarships. If the same happens this year, late applicants might narrow the gap between this year and last. If so, 13.6% could overestimate the applicant drop for the current year.
Unfortunately, a more conservative method leads to an even higher projected drop in applicants. Let’s look, as Paul does, at the percentage of applicants who had submitted their applications by this point last year. According to LSAC, that figure was 28%: By December 7, 2012, 28% of the year’s eventual applicants had submitted at least one law school application.
If applicants follow the same pattern this year, then we can expect a total of 50,611 applicants by the time the admissions cycle ends in August. That’s 14.8% fewer applicants than the preliminary figure for this year (2013), and it’s 15.3% less than the final 2013 figure I projected above.
First-Year Enrollment
This is, of course, grim news for law schools. Some applicants are not qualified for admission, and others decide not to attend law school. 50,611 applicants will yield a much smaller class. I agree with Paul Campos that we may welcome no more than 35,000 first-year students to accredited law schools in Fall 2014. That’s one-third less than the number of students who enrolled in Fall 2010.
Where Are They Going?
What has happened to those law school applicants? What are they doing instead of attending law school? I can’t answer for all of them, but I can offer some suggestions. In doing that, it’s particularly important to note that interest in law school began declining in 2005–not 2011.
The last decade has witnessed the emergence of many new professional jobs, especially in computer science, health care, and engineering. Take a look at this list of new occupations that the Bureau of Labor Statistics added to its surveys in 2012.
Those brand-new occupations include several that would interest bright high school students: information security analyst, computer network architect, web developer, computer network support specialist, nurse anesthetist, nurse midwife, nurse practitioner, and genetic counselor. Those new occupations already employ more than 629,000 people–more than the number of judges, magistrates, lawyers, and judicial clerks (620,340 total) reported in the same occupational survey.
This survey includes only salaried workers, so it omits solo practitioners, law firm partners, and other self-employed lawyers. Even if we double the number of employed lawyers, however, the comparative number of jobs in these competing occupations is eye-opening.
Remember, too, that these eight categories are brand-new fields: graduates won’t face the entrenched interests, established workers, and long career ladders that new lawyers face. These jobs, moreover, only scratch the surface of alternative careers. The BLS recently added web developers to its occupation list, but it already (and separately) counts computer programmers, software developers (applications), and software developers (systems). Almost 1.3 million people hold salaried positions in one of those three categories.
Salaries for these new occupations range from comfortable to excellent. Nurse anesthetists, the highest paid category, average $154,390, well above the $130,880 average for lawyers or the $102,470 mean for judges and magistrates. The educational requirements for nurse anesthetists, notably, are similar to those for lawyers: They complete a BS in nursing as well as a 2-3 master’s program in anesthesia.
Employees in some other categories average lower salaries than lawyers, but need only a BA to enter their field. Most software developers possess only a BA. Yet the applications developers average $93,280 per year while the systems developers average $102,550. There were, by the way, more than 978,000 salaried employees in those two categories in 2012.
The lowest paying job among the ones I’ve cited is for genetic counselors. Those workers require a master’s degree and currently average only $55,820 per year. But genetics research and applications are exploding; this is one of the most intriguing, socially important, and potentially lucrative fields in the new economy. Today’s genetics counselor may advance with the field.
But That Requires Math!
We are conditioned to think of law students and STEM graduates as two different breeds. Law students notoriously dislike math, and some of them had unfortunate encounters with organic chemistry or other college science courses. This history feeds the notion that STEM careers can’t compete with law school. If students can’t do the math, they won’t qualify for these new occupations–leaving law school as their best option. Right?
The truth is, most of us did just fine in high school math and science. If we’d wanted to be software developers or nurse anesthetists–if those jobs had even existed when many of us graduated from high school–we could have pursued those paths in college and beyond. Today’s bright high school students are equally capable of pursuing those paths, and the paths have been beckoning.
Computers, genetics, and other technologies have made science cool for today’s smartest students–in the same way that Perry Mason was cool for us. If you’re a bright 17-year-old today, do you dream of drafting a killer discovery motion or designing a killer app? Would you rather be helping a client through a divorce or through life-saving surgery? Do you want to counsel clients on avoiding foreclosure or on avoiding genetically determined risks?
Don’t get me wrong: I love the law, and I know recent graduates with good legal careers. But I also know many unhappy law school graduates and many happy scientists. if we want to address the marked decline in law school applicants, we need to understand the full scope of the current workplace.
The FTC and Piano Teachers
December 10th, 2013 / By Deborah J. Merritt
Wall Street Journal columnist Kimberley Strassel recently described the FTC’s investigation of a nonprofit association of piano teachers. According to the FTC, the Music Teachers National Association (MTNA) was supporting anti-competitive practices through its code of ethics. One provision of that code discouraged music teachers from actively recruiting students from other teachers.
Strassel recounts that MTNA assured investigators that they had never enforced this provision. The association also offered to drop the provision immediately from its code. The FTC, however, persevered in its investigation. The agency required MTNA to produce thousands of documents, including some that were two decades old. MTNA complied with these requests, but the ongoing cost of the investigation prompted it to settle. As part of a consent decree–in which MTNA admits no fault–the nonprofit agreed to appoint an antitrust compliance officer.
Here’s where lawyers and legal educators should take note: The FTC wanted MTNA to appoint a lawyer as its compliance officer, but the nonprofit explained that it couldn’t possibly afford that expense. The regulators then allowed MTNA’s executive director, Gary Ingle, to fill the compliance role. Ingle is a former music professor, choral conductor, and academic administrator with a BA, MA, and PhD in music. He completed some “additional study” at the Cumberland School of Law, but does not hold any type of law degree.
In addition to taking over the compliance position, Ingle seems to have supervised his organization’s response to the FTC’s document request. Lawyers accompanied Ingle to an initial meeting with the FTC, but the nonprofit seems to have minimized legal expense as much as possible–both during the investigation and going forward.
What’s the Moral?
Strassel tells this story as one of outrage against government overreaching–her description of the document request as a “federal colonoscopy” is particularly memorable. You may agree or disagree with that position. This looks to me like a misallocation of government resources, if not downright abuse, but I have no idea what MTNA might have been up to.
I describe the MTNA story because of what it suggests about some of today’s legal work–and about how we might adapt our degree programs and business models to serve clients like MTNA. The FTC’s investigation was a significant “legal” moment for the nonprofit: When the feds come knocking, it’s time to call your lawyer. Attorneys, however, seem to have played only a small part in the investigation; they accompanied MTNA’s executive director to his first meeting with the FTC, and perhaps represented him in other meetings. MTNA, however, handled much of the response to FTC demands, and it will conduct its own compliance work (without lawyers) going forward.
According to Strassel’s column, MTNA has an annual budget of $2 million and a staff of twelve. This is not an indigent organization; it is more akin to the small businesses that many lawyers hope to serve. It also seems that the organization would have welcomed assistance at the right price. Ingle reports that he and his staff spent “hundreds upon hundreds” of hours responding to document requests. Rather than serve as untrained document reviewers, Ingle and his team might have preferred applying their expertise to helping music teachers. The market, however, did not provide an appropriate solution for the organization.
Entrepreneurs are starting to find ways to meet needs like the one MTNA experienced. Small businesses can post discrete legal projects online, seeking bids from experienced lawyers. Businesses and nonprofits can also hire a part-time general counsel or compliance officer. Small companies may also learn that they can hire document review workers directly, without paying a mark-up to their lawyers.
Lessons for Law Schools
As legal educators, we need to get on top of these trends. For too long, law practice has consisted of expensive services and pro bono work. As a nonprofit, MTNA may even have benefited from some of the latter. But there is a vast amount of legal work between those two ends of the spectrum. We need to figure out how lawyers (and non-lawyers) are tapping that market, and how we can prepare students to serve it.
This won’t be easy. It’s not as simple as adding a few clinical courses or experiential credits to the curriculum. Nor can we simply urge our graduates and career services staff to network with nonprofits and small businesses. The type of work that MTNA needed to respond to the FTC investigation, and that it will require for its future compliance role, won’t pay the wages that JD graduates hope to earn during their early years–and that many of them need to pay off large loans. Instead, we need to rethink both the structure of our degree programs and how “lawyer” tasks interact with non-lawyer work.
One response is the layered legal education that I have proposed and that others have recommended. Another is creation of early-career work that allows JDs to develop expertise while serving clients in cost efficient ways. Some law schools are trying to create those opportunities on their own or in partnership with for-profit companies.
Neither of these approaches is cost free. Nor are they guarantees of good careers for all. We know very little about career progression in the new legal market; those tracks will take many years to unfold. Meanwhile, stories like the one about MTNA remind us that we need to keep tabs on what is happening with clients and legal providers in today’s legal market.
About Law School Cafe
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