No, It's Still Not a Good Time to Apply to Law School

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Matt Leichter

In mid-December, the ABA Section of Legal Education publicized the number of first-year students for the fall of 2013—39,675. The decline in 1Ls since the 2012-13 academic year exceeded 10 percent—the biggest one-year drop since the early 1950s. Meanwhile, the average number of 1Ls per law school reached its lowest level since 1968.

Thanks to these developments, some writers argue, legal education is becoming a fairer deal, and savvy applicants who buck the downward trend will be rewarded. While it's certainly true that generous merit scholarships enable prospective law students to pay less for a legal education now than they would have a few years ago, there are still many compelling reasons to believe the benefits of law school still don't outweigh its costs—and won't for the foreseeable future.

The ABA Journal recently reported on the most rigorous analysis of the applicant decline's impact on potential job opportunities for future law school graduates. In the article, Appalachian School of Law professor Paula Marie Young shared a dialogue on the subject with Professor Deborah Jones Merritt of The Ohio State University Moritz College of Law. Using National Association of Law Placement (NALP) and ABA data, Young maintained that by 2015 or 2016, the number of ABA law school graduates will equalize with the number of lawyer job openings. Merritt asserted that Young misread the ABA's graduate data, and the more accurate equilibrium estimate is 2021. The discussion then shifted to whether "JD Advantage" jobs should really count in these calculations and whether positions classified as "full-time" fairly represent indefinite career jobs because they only need to last one year to count.

It's not fruitful to rehash the entire back-and-forth in detail, and while I generally agree with Merritt's line of thinking, there are additional points worth considering that may make even 2021 an overly optimistic estimate.

First of all, bar authorities license a few thousand lawyers (some foreign) each year who do not attend ABA-accredited law schools, raising the number of lawyers looking for work.

Second, there are thousands, if not tens of thousands of underemployed lawyers, out there competing for each new job opening. A target equilibrium comparing graduates to jobs effectively writes off the careers of all previous law school graduates—not something people applying to law school would want to see happen to themselves after graduation if they miscalculated.

Third, although it's not invalid to use NALP or ABA jobs data, it should be noted that the Bureau of Labor Statistics (BLS) just released its own employment projection for the 2012 to 2022 period. The news is mostly bad. On the plus side, the BLS found 31,600 lawyer jobs were created between 2010 and 2012 (the total now stands at 759,800). On the minus side, the number of employed lawyers is only back to where it was in 2008.

As for the government's projections, the news is only bad. In 2002, the BLS predicted there would be 53,200 more lawyers employed in 2012 than there actually were. Looking ahead to 2022, the bureau expects only 196,500 lawyer jobs to be created by growth and replacement. This figure divides to 19,650 lawyer jobs created per year nationwide, a reduced rate from previous years due to a decline in the rate at which lawyers exit the profession.

Here is my estimate of the cumulative number of law graduates and licensed lawyers over the previous 35 years compared to the current number of employed lawyers and active and resident attorneys.
 


(Sources: BLS Current Population Survey (CPS), Employment Projections (EMP), & Monthly Labor Review, ABA, Official Guide (2001-03 editions), The National Conference of Bar Examiners, and author's calculations)

It's not just the improving graduates-to-jobs ratio that is making observers bullish on law school. In a Forbes article titled, " Why Now Is a Good Time to Apply to Law School," University of Washington School of Law professor Ryan Calo emphasizes the benefits of the smaller applicant pool, argues that waves of lawyers will retire soon, and claims that clients' growing unwillingness to patronize large firms and a technological transformation won't, as pessimists maintain, reduce demand for legal services.

Calo's first two arguments are addressed above, but the third is not supported by the available evidence. As I've demonstrated before, Bureau of Economic Analysis data show that the legal sector has in fact, uniquely failed to rebound with the rest of economy.

Although I'm not a big law-ologist—and Calo may be right that the "death of big law" may have a minimal effect on the profession—I do know how the government measures the effects technology is having on private law practice. The more capital equipment is able to perform tasks formerly handled by humans, the greater the industry's labor productivity, which the BLS prefers to measure in output per labor hour. For the legal sector, technology's effect has been surprisingly negligible over the past 25 years: Astonishingly, workers in the legal sector produce no more than they did in the early 1990s. Even worse, since the Great Recession and the Disappointing Recovery, the productivity of these workers has actually declined, meaning it takes more time to produce the same amount of legal work than it did in the past. Compared to 2007, the legal sector produced nearly 10 percent less per hour worked in 2011.


(Source: BLS Multifactor Productivity Tables.)

An optimist like Calo might see this as good news: Inefficiency means more jobs for graduates. But this is small solace for four reasons.

(1) Stagnant productivity corresponds to stagnant wages, which is particularly notable because the overall economy has become much more productive since the late 1980s. If these trends continue (or worsen) the implication is that many ambitious, intelligent would-be lawyers would be better utilized in other fields.

(2) Although capital productivity in the legal sector has grown rapidly, it still accounts for a small fraction of the total inputs into legal services. That suggests technology's impact in the legal sector is being dwarfed by increasingly deadweight workers. It's unclear who these workers might be, but the positions they occupy are probably not open to many entry-level lawyers.

(3) Because the legal sector is the largest purchaser of law school graduates' labor, the wage levels it offers influence law graduates' incomes in other fields, especially government and nonprofits. If legal sector productivity remains stagnant, then law graduates' wages will remain stagnant generally. If technology does revolutionize the field, then more law grads will be competing for fewer non-legal sector jobs, even if they pay more.

(4) These productivity problems would be mitigated if bar authorities reduced the licensing requirements for lawyers, but they still seem resolutely committed to maintaining and even enhancing the costly, inefficient post-baccalaureate legal education system. For example, the New York City Bar Association recently released its task force report on the plight of new lawyers [ PDF], and it predictably took the same supply-side stance as many of its peers. Besides ignoring empirical evidence of lawyer overproduction, the city bar's recommendations were biased in favor of encouraging law schools to better train students for practice, as though doing so would create demand for their labor. Necessary licensing reforms still appear a long way off, creating burdens for law students, not bar authorities.

The impact of technology (or lack thereof) isn't the only future concern prospective lawyers should focus on. Widespread poverty among the nation's broader population also bodes ill for the profession's fortunes. Since about 2000, earnings for young Americans have dropped in real terms.



(Source: Census Bureau Personal Income Tables.)

Many young people are out of the workforce, and the BLS predicts that young people's participation in the labor force will continue to decline over the next decade. To make things worse, the New York Federal Reserve Board reported that in 2012 for the first time in more than a decade, if ever, young people with student loan debt (a the majority of that age cohort) were less likely to have mortgage or auto debt than those without student loan debt.

A generation of Americans maturing into a lifetime of chronic underemployment and debt will not be able to afford homes, start families, open businesses, or discharge their student loans. Lawyers who would normally serve them in "small law" matters like estate and business planning will increasingly struggle to find clients. Prospective law students have little reason to compete with them.

Law school optimists are undeniably right that many people finishing law school in 2017 will pay less for their educations than their recent, underemployed predecessors did. It's also certain that law school will continue to be a prerequisite for some of the most prestigious positions in society, such as the judiciary. However, a host of other data points indicate that the profession law school applicants hope to enter won't provide the long-term, career-spanning employment that justifies three extra years of education. They would be wiser to walk by.

Matt Leichter is a writer living in Brooklyn, New York. He received his dual degree in law and international affairs from Marquette University. He operates The Law School Tuition Bubble, which archives, chronicles, and analyzes the deteriorating American legal education system. It is also a platform for higher education, student debt, and fiscal reform.
 

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