RECESSION PANIC MEGAPOST: Bad economy threads go here! Forum

[SisterRayVU]

I thought I was sure law school is where I belonged but this recession thread is scaring me. I am quite confident I can get into a top 6 school but I may end up with some student debt afterwards. I am pretty sure being a lawyer is what I want to do with my life, but at the same time I don't want to be taking any huge risks. Any advice? I'm a freshman in college right now.

You are only a freshman, you knock out that 4.0 or as close to it as possible and then make sure you hit the high 170's on your LSAT, you have plenty of time to watch what the economy does in the meantime.

Even if the economy starts booming again and it's not a jobless recovery (which it probably will be) the legal market specifically will still be a losing bet for the majority of prospective law students.

Not for the people who can go to a good school. Yeah it's a problem for the majority of potential students, agreed. But OP obviously thinks his chances of a top school are pretty good.

[afitouri]

The legal market is a bubble in terms of the supply of labor. Right now, there is an over supply of legal laborers.

Why?

Because of two things. One is student loans, and the other is a lack of information.

Student loans allow, but do not force, tuition to rise. They allow tuition to rise to infinity, because they're the safest loan since people cannot declare bankruptcy against them. There is almost no risk and so why wouldn't the government or any other organization loan you the money? It's a perfect profit-mill.

Now, you say, "even though people are supplying the loans, no one is forcing people to take the loans." This is where the lies come in. The ABA reports (or allows?) flagrantly erroneous employment data, which is usually outdated. There is no way HYS honestly have 99% employment rates after the first year of graduation. That's just stupid. But, there is no accurate data, on any of them. People have no data other than this 99%, 97% etc bull to go off of. So, they see it, and they say "Gee whiz! Unemployment across the nation is close to 10%, and closer to 20% amongst young adults, but if I go to law school I'm almost guaranteed to have a job right away! And an extremely high paying one at that! And my family will be proud and my friends will be jealous!"

So, they get the loan, and go to law school. And they become a lawyer and find out that the information was false and that they can't declare bankruptcy on their debt, and they don't find a job. They find this out *after* they've already gone to school.

For those of you who studied economics, you know that one of the pillars of capitalism is the idea of "perfect information." The farther we are from perfect competition and perfect information, the more unhealthy our markets will be. And in this case, the information is so grossly imperfect that it is destroying this market.

[HarlandBassett]

i wouldnt say it's imperfect information. it's more information asymmetry.

also, these last 3 or so years, the legal scam has been exposed and anyone going to law school half-assed is going to get their ass handed to them.

[briviere]

i wouldnt say it's imperfect information. it's more information asymmetry.

also, these last 3 or so years, the legal scam has been exposed and anyone going to law school half-assed is going to get their ass handed to them.

two things:
1. Wouldn't it be both imperfect and asymmetrical? The former because prospective law applicants do not have access to sample representativeness data and method TTTs (and other schools as well) are using to produce their dubious employment figures. The latter (more precisely) because the schools clearly know that their numbers are BS and many of their recent grads are struggling and choose not to relay that info.

2. Is there any informal nomenclature that exists to differentiate grads of TTTs from say the 1-50 schools? I assume such a term must exist, and if it doesn't it will soon.

[ahduth]

The "economy" is not the main problem, and it's unfortunate that TLS moves posts concerning the job market to a "bad economy" thread because it gives the wrong idea. The problem with the legal market is it's in a state of correction after a long-term bubble. Even if the economy starts booming again and it's not a jobless recovery (which it probably will be) the legal market specifically will still be a losing bet for the majority of prospective law students.

I simply disagree.

Here's the problem. A lot of people here don't know anything about economics. What makes you say that the legal market was a bubble?

You're talking about a difference between structural and cyclical unemployment, but to me, there is not much to suggest that the problem is structural. Really, given the track record of law to continue to divide into new fields and only complicate, I would say that the long-term future of the legal market is probably similar to what it always has been.

What is affecting the structural balance of the legal market, precisely? Doc review? Temp agencies? Technology changes? I don't see any of that as being a real problem.

So what is it? Over-supply? Well, that isn't structural, that is market. What happens is that wages will adjust and I think that we're seeing the response to over-supply now. The pendulum is going to swing backwards. That's the market.


No, I think that the problem really, actually, in all honesty, is the market.

The ABA disagrees. http://www.abajournal.com/magazine/arti ... digm_shift

(God I love posting that article.)

[Strange]

is it safer to assume the economy will get worse Rather than get better?

Conventional wisdom here seems to be legal hiring will probably either plateau or slightly improve. I don't follow the news much anymore but with the recent events in Europe and possible further economic slowdown can we expect legal hiring to get even worse by the time this year's 0L's are ready to reach OCI? For example biglaw hiring in T14 dipping down to 30%?

[z0rk]

ABA president says law graduates should have known better: http://blogs.wsj.com/law/2012/01/05/aba ... mlawblog_t

[HarlandBassett]

risk factors that i'm monitoring before going to LS

- European debt crisis
- slowdown in BRIC nations (especially China and Brazil)
- the external pressure on ABA to change (not really a pressure)
- the debate on whether 3 or 2 years of LS is necessary
- BigLaw compensation trends (the more overt move to Contract and Staff Attorneys; moving away from lockstep class compensation)
- the tuition bubble and federal subsidized loans
- the housing fallout and its continuous drag on the US economy (i.e. large shadow inventory, baby boomers retiring, etc)
- other

[Jante05]

Has anyone considered getting a JD and not practice law but use the degree to advance in current job?

[cloudhidden]

risk factors that i'm monitoring before going to LS

- European debt crisis
- slowdown in BRIC nations (especially China and Brazil)
- the external pressure on ABA to change (not really a pressure)
- the debate on whether 3 or 2 years of LS is necessary
- BigLaw compensation trends (the more overt move to Contract and Staff Attorneys; moving away from lockstep class compensation)
- the tuition bubble and federal subsidized loans
- the housing fallout and its continuous drag on the US economy (i.e. large shadow inventory, baby boomers retiring, etc)
- other

It seems that people on TLS have put a lot of faith in the gradual growth in the economy. Bu anyone who enters law school in the coming year must consider what the market might entail in two years. I hope beyond hope that it continues to recover, however marginally. Yet I have yet to find that point debated to the extent it should, besides the whole structural v. cyclical change argument. I hope to see more posts where risk factors and potential positives are introduced and intelligently discussed.

[HarlandBassett]

France Loses AAA Credit Rating, S.&P. Says

By LIZ ALDERMAN
Published: January 13, 2012

PARIS — Standard & Poor’s Corp. on Friday stripped France of its sterling credit rating, cut Portugal’s credit to junk status and downgraded Italy’s debt by two steps in a wide-ranging action revision of European countries caught in the euro crisis.

http://www.nytimes.com/2012/01/14/busin ... nted=print

[HarlandBassett]

9 eurozone nations downgraded by S&P
http://money.cnn.com/2012/01/13/markets ... downgrade/

[mcv123]

according to http://www.onetonline.org lawyers have a bright occupational outlook.

Every Bright Outlook occupation matches at least one of the following criteria:

Projected to grow much faster than average (employment increase of 20% or more) over the period 2008-2018
Projected to have 100,000 or more job openings over the period 2008-2018
New & Emerging occupation in a high growth industry

Growth and job openings source: Bureau of Labor Statistics external site 2008-2018 employment projections. Projected growth represents the estimated change in total employment over the projections period (2008-2018). Projected job openings represent openings due to growth and replacement.

if you trust the government then law should be ok to enter. personally, my aunt has advised me to become a paralegal first and not consider going to law school until at least fall 2013 and preferably fall 2014. she is a corporate attorney, so i assume she has some idea of what she is talking about. you can never really know though.

[cloudhidden]

according to http://www.onetonline.org lawyers have a bright occupational outlook.

Every Bright Outlook occupation matches at least one of the following criteria:

Projected to grow much faster than average (employment increase of 20% or more) over the period 2008-2018
Projected to have 100,000 or more job openings over the period 2008-2018
New & Emerging occupation in a high growth industry

Growth and job openings source: Bureau of Labor Statistics external site 2008-2018 employment projections. Projected growth represents the estimated change in total employment over the projections period (2008-2018). Projected job openings represent openings due to growth and replacement.

if you trust the government then law should be ok to enter. personally, my aunt has advised me to become a paralegal first and not consider going to law school until at least fall 2013 and preferably fall 2014. she is a corporate attorney, so i assume she has some idea of what she is talking about. you can never really know though.

On stand-alone, face-value this does not isolate the proposition for those considering law school. For that, one must factor in the preponderance of graduates for limited positions. The legal field isn't going anywhere, but the relative value of a degree may still suffer despite economic growth, as even experienced attorney begin to compete for the same opportunities.

[MachineLemon]

according to http://www.onetonline.org lawyers have a bright occupational outlook.

Every Bright Outlook occupation matches at least one of the following criteria:

Projected to grow much faster than average (employment increase of 20% or more) over the period 2008-2018
Projected to have 100,000 or more job openings over the period 2008-2018
New & Emerging occupation in a high growth industry

Growth and job openings source: Bureau of Labor Statistics external site 2008-2018 employment projections. Projected growth represents the estimated change in total employment over the projections period (2008-2018). Projected job openings represent openings due to growth and replacement.

if you trust the government then law should be ok to enter. personally, my aunt has advised me to become a paralegal first and not consider going to law school until at least fall 2013 and preferably fall 2014. she is a corporate attorney, so i assume she has some idea of what she is talking about. you can never really know though.

10,000+ jobs (100,000+/10) a year and 40,000+ law grads per year doesn't seem too "bright." Also, be wary of advice from attorneys. They spend their time with other (employed) attorneys, and many graduated before the recession. For them, things appear brighter than they are.

[HarlandBassett]

according to http://www.onetonline.org lawyers have a bright occupational outlook.

Every Bright Outlook occupation matches at least one of the following criteria:

Projected to grow much faster than average (employment increase of 20% or more) over the period 2008-2018
Projected to have 100,000 or more job openings over the period 2008-2018
New & Emerging occupation in a high growth industry

Growth and job openings source: Bureau of Labor Statistics external site 2008-2018 employment projections. Projected growth represents the estimated change in total employment over the projections period (2008-2018). Projected job openings represent openings due to growth and replacement.

if you trust the government then law should be ok to enter. personally, my aunt has advised me to become a paralegal first and not consider going to law school until at least fall 2013 and preferably fall 2014. she is a corporate attorney, so i assume she has some idea of what she is talking about. you can never really know though.

10,000+ jobs (100,000+/10) a year and 40,000+ law grads per year doesn't seem too "bright." Also, be wary of advice from attorneys. They spend their time with other (employed) attorneys, and many graduated before the recession. For them, things appear brighter than they are.

to piggyback your point (and this was borrowed from Nando over at Third Tier Reality)




On June 27, 2011, Catherine Rampell wrote a piece for the New York Times Economix blog, entitled “The Lawyer Surplus, State by State.” Here is a sampling, from that article:

http://economix.blogs.nytimes.com/2011/ ... -by-state/

“We’ve written before about the tough job market for recent law-school graduates. The climate is hard partly because of the weak economy, but also partly because the nation’s law schools are churning out many more lawyers than the economy needs even in the long run.

Now a few researchers have tried to quantify exactly how big that surplus is.

The numbers were crunched by Economic Modeling Specialists Inc. (also known as EMSI), a consulting company that focuses on employment data and economic analysis. The company’s calculations were based on the number of people who passed the bar exam in each state in 2009, versus an estimate of annual job Openings for Lawyers in those states. They also looked at data from the Department of Education on law school graduates each year to get another measure of the quantity of new lawyers. Estimates for the number of openings is based on data from the Bureau of Labor Statistics and the Census Bureau.

According to this model, every state but Wisconsin and Nebraska (plus Washington, D.C.) is producing many more lawyers than it needs. (See table after the jump for full data, and additional caveats.)

In fact, across the country, there were twice as many people who passed the bar in 2009 (53,508) as there were openings (26,239). A separate estimate for the number of lawyers produced in 2009 — the number of new law-school graduates, according to the National Center for Education Statistics — also showed a surplus, although it was not quite as large (44,159 new law grads compared with 26,239 openings).”

[HarlandBassett]

from the WSJ





Law Firms Keep Squeezing Associates
By JENNIFER SMITH

Law firms are finally starting to recover from the recession, but they aren't taking their young lawyers along for the ride.

Even as profits return, cautious partners with one eye on damaged balance sheets and the other on stingy clients plan to hang onto the lean silhouettes they acquired during the downturn.

That means little relief for young associates—who took on hefty law-school loans, only to run into layoffs and stagnant pay in the years since 2008—and fewer chances for new law-school graduates to get in on the ground floor. And the elusive brass ring of partnership has grown more remote.

"What happens if Greece falls apart again?" says Greg Nitzkowski, managing partner at paul hastings llp, an international firm that has reduced entry-level hires by about a third since 2008. "We just think it's prudent to plan as if this coming year is going to be a relatively flat year.…We're not planning for a big upsurge in demand."

Conditions at law firms have stabilized since 2009, when the legal industry shed 41,900 positions, according to the Labor Department. Cuts were more moderate last year, with some 2,700 positions eliminated, and recruiters report more opportunities for experienced midlevel associates.

But many elite firms have shrunk their ranks of entry-level lawyers by as much as half from 2008, when market turmoil was at its peak. Salaries and bonuses for those associates have remained generally flat. Meanwhile, a degree at a top law school can cost $100,000 or more.

Associates at prominent law firms say some of their peers hired during the boom years are happy just to have jobs at all. "The world has changed," says a senior associate at a top firm.

During the downturn some firms pared associate ranks through layoffs and by delaying start dates for fresh law-school graduates. And many firms for routine tasks now use less-expensive alternatives to young associates, such as contract attorneys and outsourcing firms.

"Law firms basically focused a lot of head-count reductions during the recession on associate ranks, says Dan DiPietro, chairman of Citi Private Bank's law-firm group. "They feel like the associate ranks are where they want them to be."

White & Case LLP, an international law firm, plans to hire about 60 entry-level lawyers this year, compared with prerecession classes of 90 to 100.

"The efficiency of law practice has just changed dramatically in the past five years," says Bill Dantzler, a hiring partner and head of the firm's tax practice. "We don't have to have these armies of young associates. It's good for the clients, it's good for everybody."

That means reputable firms can be even more picky about whom they hire. While firms still compete for the highest-ranking graduates from Ivy League and other top law schools, it is a different story for solid candidates who lack gold-plated résumés. Students with lower class rankings or from second-tier schools who once would have made the cut "wouldn't have a prayer of getting in now," Mr. Dantzler says.

For those who do land jobs at big law firms, the hours remain grueling. In 2010 associates at firms with more than 700 lawyers billed an average of 1,859 hours—the equivalent of more than seven hours a day—according to the National Association for Law Placement.

As head counts fell, the average workload for those associates has risen 2.3% since 2007, or about 50 extra hours a year.

And the road to partnership is longer and more uncertain than in the past. Many lawyers now toil eight or even 10 years before being chosen. A decade ago, the most common partnership track took seven years. Other firms have thinned their top ranks of partners who didn't bring in enough business, making it even tougher to elbow into a spot.

Partners at several large law firms also say they don't plan to raise associate salaries, which haven't increased since 2007. December bonuses remained roughly the same as in 2010, with first-year associates at elite firms such as Cravath, Swaine & Moore LLP and Weil, Gotshal & Manges LLP getting $7,500. The most senior associates received bonuses of $37,500 to $42,500.

"Most firms are hesitant to lock themselves into something they can't sustain," says Paula Alvary of consulting firm Hoffman Alvary. "While there is clear evidence that work levels are returning, they're not at prerecession levels for most firms."

Still, many people continue to pursue law as a career, not least because the median starting salary for entry-level lawyers at top New York firms is $160,000. That is nearly double the going rate in 1996, before the tech boom drove salaries skyward.

And phones are ringing again at law-firm recruiters. Junior lawyers who once clung white-knuckled to their jobs are loosening their grips and moving to corporations' law departments or to law firms where they might have better shots at making partner.

Eric Fishman in 2010 took what many colleagues then saw as a huge risk when he left one of New York's elite practices for midsize pryor cashman llp, where he hoped to get more experience running cases and building a practice.

"There was little chance many of my peers would have considered a move from a big law firm at that time," says Mr. Fishman, now a senior associate at the respected firm. "Now they're less fearful; the economy is getting better."

But the pace of such movement isn't what it was. Before the downturn, firms lost between 25% to 30% of their associates after a few years, people in the industry say. R. Bruce McLean, chairman of Akin Gump Strauss Hauer & Feld LLP, says the attrition rate at his firm is around 15% now.

"It's like lots of things in our economy," he says. "The outlook is brighter, the anxiety level is diminished, but it's not completely gone.…This is still a period of anxiety for our entire associate population. This is not what they anticipated when they started law school."

[iamrobk]

In somewhat happier news, the unemployment rate is down to 8.3%. Best it's been in 3 years. So that's something.

[HarlandBassett]

In somewhat happier news, the unemployment rate is down to 8.3%. Best it's been in 3 years. So that's something.

must be a lot of discouraged workers out there.

http://www.cliffsnotes.com/study_guide/ ... -9735.html

[beachbum]

In somewhat happier news, the unemployment rate is down to 8.3%. Best it's been in 3 years. So that's something.

must be a lot of discouraged workers out there.

http://www.cliffsnotes.com/study_guide/ ... -9735.html

http://www.bls.gov/news.release/empsit.t15.htm

[HarlandBassett]

In somewhat happier news, the unemployment rate is down to 8.3%. Best it's been in 3 years. So that's something.

must be a lot of discouraged workers out there.

http://www.cliffsnotes.com/study_guide/ ... -9735.html

http://www.bls.gov/news.release/empsit.t15.htm

--LinkRemoved--

[iamrobk]

In somewhat happier news, the unemployment rate is down to 8.3%. Best it's been in 3 years. So that's something.

must be a lot of discouraged workers out there.

http://www.cliffsnotes.com/study_guide/ ... -9735.html

Cliff notes. Really. Really.

[HarlandBassett]

[PDaddy]

The only thing I have learned from all of this is that we as law graduates need to take our destinies into our own hands and quit asking for handouts. If you can't join 'em, beat 'em. So biglaw and even boutique firms are not hiring...big deal. This is an opportunity for us to re-design the way law gets practiced. If only there was a way new law graduates could ban together in various cities and start their own "biglaw" firms - where every lawyer is a partner.

I don't know how it could be done, but if 19 year-old venture capitalists can start multibillion-dollar companies, there has to be a way for largeand small numbers of law grads to ban together en masse and start their own firms right out of the gate.

The best thing we can do is prepare ourselves to compete with the old farts from Skadden, Paul Weiss, Sidley, Kirkland Ellis, K & L Gates, Cravath, Mo-Fo, etc. The newer, hip companies run by young entreprenuers in the new green economy, as well as those from the information age, might prefer to deal with large and midsized firms full of young hip lawyers who are being mentored by semi-retired former superstar lawyers. If we can find them and get them to see the new firms as their legacies, that might be the ticket.

As a matter of fact, even companies run by elders (such as Wal Mart, etc.) are always looking for a "younger approach" to problem-solving, and may prefer to hire young guns if they prove to be reliable.

Let's stop kissing their asses. It's time for revolution...

[bk1]

ban together...ban together...