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May 13, 2011 1:00 PM

Improving Prospects--But for Whom?

Posted by Steven Harper

Life is just a matter of perspective. For example, here's some apparently good news:

•The legal sector added 1,500 jobs in April, The Am Law Daily reported last Friday.

•Ashby Jones at the Wall Street Journal Law Blog cited a recent article in The Guardian for the proposition that the United Kingdom might actually have a shortage of lawyers next year. Could the United States be far behind?

•NALP executive director James Leipold noted that, along with an overall attorney employment rate of 88.3 percent for the class of 2009, "the most recent recruitment cycle showed signs of a small bounce in the recruiting activity of law firms, a sign that better economic times likely lie ahead."

Now consider each headline a bit differently:

•"Legal sector" isn't limited to attorneys; more than 44,000 new law school graduates hit the market every year.

The Guardian article relies solely on a report from the privately run College of Law that has a financial interest in encouraging applications to its expensive yearlong program for prospective solicitors. More than one comment to the initial report expressed angry skepticism about the college's short-term motives. Where have I heard that before?

•Meanwhile, the Bureau of Labor Statistics projects that, for the entire ten-year period from 2008 to 2018, net U.S. attorney employment will increase by only 100,000. Even if all aging attorneys retired as they turned 65, there aren't enough of them to make room for all the newbies. In 1970, for example, law schools awarded only about one-third of the number of JDs conferred in 2010.

To his credit, NALP's Leipold went behind the 88 percent employment rate for the class of 2009. The resulting caveats are significant.

First, the percentage employed are graduates "for whom employment status was known." Who's excluded? Who knows?

Second, nearly 25 percent of all reported jobs were temporary; more than 10 percent were part-time.

Third, only 70 percent "held jobs for which a J.D. was required." Unfortunately, law schools don't offer tuition refunds (or relief from student loans) for education that was unnecessary for their graduates' actual employment opportunities. That doesn't surprise me.

Finally, more than 20 percent of employed graduates from the class of 2009 "were still looking for work." Beneath the veneer of superficially good news--having a job--career dissatisfaction continues to eat away at too many of the profession's best and brightest in yet another generation.

That doesn't mean people shouldn't go to law school. It means that they should think carefully about it first, starting with this question: why do I want to be a lawyer and will the reality of the job match my expectations?

Turning the employment subject toward large law firms leads to one more lesson on perspective.

A day after the Ashby Jones and James Leipold articles, the WSJ's Nathan Koppel summarized the continued loss of jobs at the country's largest law firms: the NLJ 250 (the largest law firms in the country, as measured by attorney head count) lost another 3,000 lawyers in 2010, bringing the total decrease since 2008 to 9,500. Law firms might be hiring some new associates, but they're getting rid of many more.

NALP expects to release its 2010 employment data in May. But every law firm leader knows that May's true importance lies in a much more significant event: the release of The American Lawyer's Am Law 100 rankings. For some partners, prerelease anxiety is palpable, if not paralyzing.

This year, average profits per partner at The Am Law 100 increased over 8 percent, to almost $1.4 million. Putting that in context, that surpasses 2007, which was the peak of an uninterrupted five-year PPP run-up. That's pretty stunning for an economy that remains difficult for so many. Gross revenue increased as overall head count dropped by almost 3 percent. More revenue from fewer attorneys meant more billables--mislabeled as higher "productivity" in big-law terms--for the chosen. As jobs remained scarce and associate hours climbed, equity partner earnings continued their ascent.

How much is enough? For some people, the answer will always be more; short-term metrics that maximize current PPP guide their way. Life is easy when deceptively objective numbers make solutions simple, reflection unnecessary, and long-term success someone else's problem.

It's just a matter of perspective.

 

Steven J. Harper is an adjunct professor at Northwestern University.  He recently retired as a partner at Kirkland & Ellis, after 30  years in private practice. His blog about the legal profession, The  Belly of the Beast, can be found at www.thebellyofthebeast.wordpress.com. A version of the column above was first published on The Belly of the Beast.

 

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Stephen, as I have noted before on these pages the economic model upon which BigLaw (schools and firms) is built isn't sustainable forever. Do you have any opinions on what might be a tipping point?

No surprise to those just graduating law school. At University of Michigan, I know several students (myself included) who are graduating without a job and several 2L's who are jobless or forced into unpaid internships. Sure, there are stipends to be had from the school, but no real employment to speak of.

Steven, the BLS does calculate the required replacement rate for attorneys leaving the profession on top of the growth rate you've provided. Between 2008 and 2018, the U.S. economy will add 240,400 lawyer jobs.

http://www.bls.gov/emp/ep_table_102.pdf

I've also calculated the overproduction rate at the state level courtesy of data provided by state governments. Their totals are 195,000 lawyer jobs between 2008 and 2018. The full analysis is in my sig.

It heartens me that some people in the profession are finally willing to discuss the overproduction problem.

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