Top Law Schools

This is something I'm seriously trying to understand.

So...before the recession, the legal economy was in a boom phase right? Then, when the recession hit in 2008 we had a massive loss of jobs across the board in all sectors of the economy and the world of law was affected as well. Certainly law jobs tied to the mortgage/sub-prime industry were likely affected right?

My question is whether those recession lost jobs represented jobs that were lost as part of the "natural" ebbs and flows and ups and downs of the economy and will eventually come back or if those lost jobs (at least some of them?) were part of deeper structural shifts in the economy and may never come back? For example, were a large portion of legal jobs that were lost tied into the sub-prime/mortgage industry and consequently not expected to return, because that industry (presumably and if I understand it correctly) was in a false bubble?

Is there any consensus in the legal world about this?

The consensus is that some is structural and some cyclical. Personally, I'd say about 65-35 in favor of structural.

You ask a good question, but it implicates many different things you need to think about.

First, what "lost legal jobs" are you talking about? The NLJ 250 shrank 7% from 133,723 at its peak in 2008 to 124,161 at its trough in 2010. We're back up to 126,293 for 2011. At this rate we'll be back to the 2008 peak in another 3-4 years. However, that's not necessarily the interesting statistic as a pre-law. What you're interested in is hiring, which is the derivative of headcount. Hiring in the NLJ 250 dropped by more than half during the recession. Hiring is a function of headcount growth and attrition. With ~125,000 attorneys, the 1.7% growth rate of 2010-2011 represents 2,125 new positions. The 4.6% average growth rate between 2005-2008 represents 5,750 new positions. At the same time, attrition is lower, because fewer attorneys are leaving for in-house, government, etc. How long will hiring stay depressed? Probably for a long time. NJ 250 headcount growth rate is going to stay low for an indefinite period because of productivity improvements from technology, and attrition will stay low because governments will face budget problems for the foreseeable future.

I don't think you're seeing dramatic structural changes in big law, because let's face it the field fluctuated all of 7% between its boom peak and its bust low, but I do think improvements in technology as well as a a continued soft economy will keep hiring at current lower levels.

Second, you have to think about what it means for those jobs to "come back." Even if we go back to 2008 levels of hiring, the vast majority of law students are still not getting jobs at big firms. The open secret here is that most law schools have been bad investments for many years--it's just that in the great recession it's all coming to light. If and when hiring does go back to pre-recession levels, which is a long ways away, the major change you'll see is that people in T14 schools will have more secure job prospects. The vast majority of law students won't really be better off than they are now, because they weren't really that much better off before the recession.

The T30s were hurt nearly as much as the T14s were. For example, in 2008 Notre Dame placed over 40% in objectively desirable outcomes (NLJ250 + Article III clerkships). It is now probably less than 20%. Maybe even lower than that.

How many new lawyers are staying at their jobs for more than 3 years as compared to those who would leave after 2-3 years in the good times?

I don't have any statistics because I have only begun to see that law school is more of a gamble than I previously thought, but couldn't lawyers keeping their jobs for longer and then law firms not having to hire to cover turnover play a factor as well?

the question isn't if the lost legal jobs will come back, but when.
(and, more importantly, at what point will hiring be back in boom)

dingbat wrote:the question isn't if the lost legal jobs will come back, but when.
(and, more importantly, at what point will hiring be back in boom)

Not necessarily. As stated above, many of the jobs were lost due to structural changes in the legal market, so they won't be coming back.

ajax wrote:

dingbat wrote:the question isn't if the lost legal jobs will come back, but when.
(and, more importantly, at what point will hiring be back in boom)

Not necessarily. As stated above, many of the jobs were lost due to structural changes in the legal market, so they won't be coming back.

This becomes a matter of definition.
A) increased demographics resulting to increased need for legal services and therefore more jobs (can be taken for a fact)
B) "mirror image" structural changes in legal market resulting in more jobs (economy traversing from boom to recession vs economy traversing from recession to boom)
C) other structural changes resulting in more legal jobs (I can see several potential reasons here)

So I've been doing some research, and my best guess is that we bottomed out somewhere around 2004-levels of hiring, or similar to levels during the last recession. Historically, around 50% of NLJ 250 associates come from the top 50 schools. In 2007, we hit around 3,600 associates from the top 20 and 7,100 associates overall. In 2005, the first recovery year after the last recession, there were ~5,400 associate positions. In 2011, we were down to ~2,450 in the top 20. Don't have the overall data, but based on historical trends that would be about 4,900, probably a bit less because anecdotally schools outside the top 20 did worse than schools inside.

I don't think hiring is unprecedentedly bad, in the sense that I don't think NLJ 250 hiring is much if at all worse than it has been in prior recessions. So I think claims of structural change leading to permanently depressed hiring are a bit overblown. I think this recession feels worse than previous ones because tuition is 70-100% higher than it was at the beginning of the decade, and because the budget crises in the public sector have shut down PI hiring leading to more people graduating just straight-up unemployed.

See: http://www.law.georgetown.edu/academics ... rticle.pdf

Thanks Rayiner.

I'm always leery when people state structural changes without considering that it may just be cyclical changes

rayiner wrote:So I've been doing some research, and my best guess is that we bottomed out somewhere around 2004-levels of hiring, or similar to levels during the last recession. Historically, around 50% of NLJ 250 associates come from the top 50 schools. In 2007, we hit around 3,600 associates from the top 20 and 7,100 associates overall. In 2005, the first recovery year after the last recession, there were ~5,400 associate positions. In 2011, we were down to ~2,450 in the top 20. Don't have the overall data, but based on historical trends that would be about 4,900, probably a bit less because anecdotally schools outside the top 20 did worse than schools inside.

I don't think hiring is unprecedentedly bad, in the sense that I don't think NLJ 250 hiring is much if at all worse than it has been in prior recessions. So I think claims of structural change leading to permanently depressed hiring are a bit overblown. I think this recession feels worse than previous ones because tuition is 70-100% higher than it was at the beginning of the decade, and because the budget crises in the public sector have shut down PI hiring leading to more people graduating just straight-up unemployed.

See: http://www.law.georgetown.edu/academics ... rticle.pdf

Nail hit on head.

It isn't that hiring is SO MUCH WORSE, it's that when you're carrying 150K in debt instead of 30K in debt(maybe), the problems of the people who aren't getting hired just got a WHOLE LOT BIGGER.

dingbat wrote:Thanks Rayiner.

I'm always leery when people state structural changes without considering that it may just be cyclical changes

Rayiner claims, "So I think claims of structural change leading to permanently depressed hiring are a bit overblown." This is up for debate. However, your claim that "it's not a matter of if, but when employment returns" remains false given that you accept Rayiner's claim, because Rayiner is admitting at least some structural change when making the above statement.

ajax wrote:

dingbat wrote:Thanks Rayiner.

I'm always leery when people state structural changes without considering that it may just be cyclical changes

Rayiner claims structural changes are a bit overblown. This is up for debate. However, your claim that "it's not a matter of if, but when employment returns" remains false given that you accept Rayiner's claim, because Rayiner is admitting at least some structural change.

Ah, logic. Except that you're missing my point: even if there are some structural changes, that doesn't mean the jobs won't come back.

dingbat wrote:

ajax wrote:

dingbat wrote:Thanks Rayiner.

I'm always leery when people state structural changes without considering that it may just be cyclical changes

Rayiner claims structural changes are a bit overblown. This is up for debate. However, your claim that "it's not a matter of if, but when employment returns" remains false given that you accept Rayiner's claim, because Rayiner is admitting at least some structural change.

Ah, logic. Except that you're missing my point: even if there are some structural changes, that doesn't mean the jobs won't come back.

Ahh logic. You stated, "It isn't when LOST legal jobs will come back, but when." Some of those LOST legal jobs are due to structural changes, and not coming back. Therefore, I didn't miss your point, but apparently you did. Now if you had stated, "It isn't when some lost legal jobs will come back, but when" then you would have a point. But you didn't.

ajax wrote:

dingbat wrote:

ajax wrote:

dingbat wrote:Thanks Rayiner.

I'm always leery when people state structural changes without considering that it may just be cyclical changes

Rayiner claims structural changes are a bit overblown. This is up for debate. However, your claim that "it's not a matter of if, but when employment returns" remains false given that you accept Rayiner's claim, because Rayiner is admitting at least some structural change.

Ah, logic. Except that you're missing my point: even if there are some structural changes, that doesn't mean the jobs won't come back.

Ahh logic. You stated, "It isn't when LOST legal jobs will come back, but when." Some of those LOST legal jobs are due to structural changes, and not coming back. Therefore, I didn't miss your point, but apparently you did. Now if you had stated, "It isn't when some lost legal jobs will come back, but when" then you would have a point. But you didn't.

I still stick with my statement that the number of legal jobs will rebound to pre ITE levels. It just might not be during our lifetime

The number of big law jobs will rebound within the next 5-10 years. The number of PI/gov jobs might not rebound for decades.

rayiner wrote:You ask a good question, but it implicates many different things you need to think about.

First, what "lost legal jobs" are you talking about? The NLJ 250 shrank 7% from 133,723 at its peak in 2008 to 124,161 at its trough in 2010. We're back up to 126,293 for 2011. At this rate we'll be back to the 2008 peak in another 3-4 years. However, that's not necessarily the interesting statistic as a pre-law. What you're interested in is hiring, which is the derivative of headcount. Hiring in the NLJ 250 dropped by more than half during the recession. Hiring is a function of headcount growth and attrition. With ~125,000 attorneys, the 1.7% growth rate of 2010-2011 represents 2,125 new positions. The 4.6% average growth rate between 2005-2008 represents 5,750 new positions. At the same time, attrition is lower, because fewer attorneys are leaving for in-house, government, etc. How long will hiring stay depressed? Probably for a long time. NJ 250 headcount growth rate is going to stay low for an indefinite period because of productivity improvements from technology, and attrition will stay low because governments will face budget problems for the foreseeable future.

I don't think you're seeing dramatic structural changes in big law, because let's face it the field fluctuated all of 7% between its boom peak and its bust low, but I do think improvements in technology as well as a a continued soft economy will keep hiring at current lower levels.

Second, you have to think about what it means for those jobs to "come back." Even if we go back to 2008 levels of hiring, the vast majority of law students are still not getting jobs at big firms. The open secret here is that most law schools have been bad investments for many years--it's just that in the great recession it's all coming to light. If and when hiring does go back to pre-recession levels, which is a long ways away, the major change you'll see is that people in T14 schools will have more secure job prospects. The vast majority of law students won't really be better off than they are now, because they weren't really that much better off before the recession.

Hi. Thank you for the detailed post.

I'm maybe slightly confused. You say that we're gaining back jobs that were lost at the trough of our recession. But you also say hiring is not up either.

How are we gaining jobs if hiring is not taking place?

Also, it seems that you're talking about biglaw hiring. How about jobs that are in government or the smaller to mid-sized law firms? Sorry, I know that's a different area, but those are important too. I know that most jobs in the legal economy are actually not biglaw, so I'm equally worried about whether the jobs outside of the big firmjs are going to be back as well.

But I thought your distinction between headcount growth vs. hiring growth was very interesting. I'm a little confused by it, but that seems very important if hiring will not be going up. That's what will affect us.

rayiner wrote: The number of big law jobs will rebound within the next 5-10 years. The number of PI/gov jobs might not rebound for decades.

What was the reasoning behind your view that PI/gov jobs would not rebound for possibly decades versus biglaw, rayiner? I found myself quite curious about this.

ajax wrote:http://insidethelawschoolscam.blogspot. ... grief.html

Thank you for the link. Quite distrubing (if true). Here was an interesting snippet of it:

"As one measure of the shift in BigLaw, Leipold observes that starting salaries of $160,000 accounted for 25% of the NALP-reported salaries in 2009--but just 14% of those salaries in 2011. If we look at the total pool of graduates (since almost all $160,000 salaries are reported), we can translate those figures to these: About 4,878 members of the Class of 2009 secured salaries of $160,000; that's 11.1% of that year's graduates. In 2011, just 2,608 graduates obtained that entry-level salary--only 5.9% of the full class. Top BigLaw salaries are almost as rare as giant pandas.

But this isn't just about BigLaw. As entry-level opportunities close in BigLaw, those graduates move into MidLaw, government, and other markets. They displace the graduates who once secured those jobs; those graduates, in turn, move down to SmallLaw, smaller government, and solo work. And all of these middle and smaller markets have experienced their own contractions.

Leipold's message is crucial because it acknowledges that BigLaw is not going to revive entry-level positions. If those positions are not coming back, then the same pressures will appear in smaller markets. Indeed the hiring effects may be more dramatic downstream because they will reflect both displaced BigLaw associates and direct market forces."

ksllaw wrote:

rayiner wrote: The number of big law jobs will rebound within the next 5-10 years. The number of PI/gov jobs might not rebound for decades.

What was the reasoning behind your view that PI/gov jobs would not rebound for possibly decades versus biglaw, rayiner?

ajax wrote:http://insidethelawschoolscam.blogspot. ... grief.html

Thanks for the link. Very distrubing (if true). Here was an interesting snippet of it:

"As one measure of the shift in BigLaw, Leipold observes that starting salaries of $160,000 accounted for 25% of the NALP-reported salaries in 2009--but just 14% of those salaries in 2011. If we look at the total pool of graduates (since almost all $160,000 salaries are reported), we can translate those figures to these: About 4,878 members of the Class of 2009 secured salaries of $160,000; that's 11.1% of that year's graduates. In 2011, just 2,608 graduates obtained that entry-level salary--only 5.9% of the full class. Top BigLaw salaries are almost as rare as giant pandas.

But this isn't just about BigLaw. As entry-level opportunities close in BigLaw, those graduates move into MidLaw, government, and other markets. They displace the graduates who once secured those jobs; those graduates, in turn, move down to SmallLaw, smaller government, and solo work. And all of these middle and smaller markets have experienced their own contractions.

Leipold's message is crucial because it acknowledges that BigLaw is not going to revive entry-level positions. If those positions are not coming back, then the same pressures will appear in smaller markets. Indeed the hiring effects may be more dramatic downstream because they will reflect both displaced BigLaw associates and direct market forces."

I haven't read the article, but the use of this excerpt in relation to this thread is misleading.

The article makes it seem worse than it is by presentation.
Put simply, both the biglaw and midlaw markets have contracted. The excerpt makes it appear that the midlaw market is hit worse but what it is saying is that students who would normally target midlaw are hit worse.
Of course mediocre students will be worse off than top students. It always has been this way. When times were good, mediocre students could get midlaw; when times are tough, not so easily. The article can't make the same comment about crappy students, because they'd be jobless regardless.

The excerpt can be summed up easily as: less good students get hit worse by the contraction than better grads.

No. Almost every market is not only going through structural changes but they are also glutted. FWIW I know of lots of attorneys with 25/30 years of experience that are struggling to get enough work in the door to keep their lights on.

.

What about outsourcing and things like automata?

I've read Legal Zoom has an IPO offering out now I think. They seem to be expanding and taking on duties that traditional lawyers would do.

I've read other threads about legal work actually gonig to India now! I was shocked, because I figured legal work would be one of the few types of work that couldn't ever be outsourced or mechanized away...

Can these technological or outsourcing trends take a significant chunk out of the U.S. legal market pie in the future?

jwinaz wrote:This is something I'm seriously trying to understand.

So...before the recession, the legal economy was in a boom phase right? Then, when the recession hit in 2008 we had a massive loss of jobs across the board in all sectors of the economy and the world of law was affected as well. Certainly law jobs tied to the mortgage/sub-prime industry were likely affected right?

My question is whether those recession lost jobs represented jobs that were lost as part of the "natural" ebbs and flows and ups and downs of the economy and will eventually come back or if those lost jobs (at least some of them?) were part of deeper structural shifts in the economy and may never come back? For example, were a large portion of legal jobs that were lost tied into the sub-prime/mortgage industry and consequently not expected to return, because that industry (presumably and if I understand it correctly) was in a false bubble?

Is there any consensus in the legal world about this?

http://insidethelawschoolscam.blogspot.com/
Paul Campos' blog today talked a little bit about some of the structurally lost jobs that won't likely return:

This is a very peculiar use of the word "demand." Big corporations have put the squeeze on BigLaw, because they've decided they will no longer subsidize the training of junior associates to do work people trained to be lawyers should do. Even more problematically for the Cravath model, they've also decided they won't pay BigLaw rates any more for essentially clerical work. So firms can't bill out a lot of what first and second year associates do, and a lot of other work that such people did is now outsourced to the document review mills and to non-lawyers.

In other words, client demand for various services that used to fatten the bottom lines of the big firms has imploded, not exploded, because it has been shifted to other service providers, or is no longer billable when performed by the firms themselves. This is a structural not a cyclical shift: it's not as if GCs are going to decide that when and if more deals are being done it'll be OK for firms to bill out monkey work at $300 an hour again.

The "overly academic training" at law schools has nothing to do with this. That's an issue about failing to train people to do legal work. The collapse in demand from BigLaw clients is a product of the realization that a large amount of work traditionally done by lawyers can be done by non-lawyers with either no loss of quality, or not enough loss to make it worthwhile to pay the added cost of having lawyers do it.

The claim about "ordinary folk" is even stranger, but it's one that's being made a lot these days by legal academics desperately searching for a raison d' paycheck. The argument goes something like this:

(1) Many people in this country who could benefit from legal services aren't getting those services because they're too expensive.

(2) Those services are too expensive because law school costs too much.

(3) If future lawyers could go to law school without incurring so much debt, they could afford to offer legal services at a price that far more people could afford to pay.

(1) is certainly true. (2) and (3) are just wrong, and obviously so.

The cost of legal services has almost nothing to do with the cost of law school. Why would it? No client cares about how much it cost you to get a law degree, which means that no client is willing to pay more for legal services because a lawyer has a lot of educational debt. This theoretical claim is confirmed by empirical observation: there are literally hundreds of thousands of lawyers in America who went to law school when it was radically cheaper than it is today, and it's not as if they charge lower rates than recent law graduates (if anything they charge on average more more, because clients will to some extent pay for experience as a proxy for competence).

There are also hundreds of thousands of people with law licenses who are barely making a living by practicing law (A 2009 survey of Alabama lawyers found that 23% of the respondents with active law licenses had an income of less than $25,000 in the previous year). Such people are charging the absolute minimum they can charge while still maintaining an ongoing business.
...

You can see link for more.

I think the whole 'ITE as the new normal' thing has been covered, but part of what hasn't been touched on is that the comfort and true 'boom' of the 2000s is also gone. Starting salaries haven't increased in however many years. Bonuses have decreased. Most importantly, the level of job security where you could stay on longer than today and land somewhere safe has evaporated. People aren't really given 12-24 months to coast and look for a new job. Sure, you may get reviews and a six month notice that you should try to look at other options and you may still get three months severance, but your exit options aren't what they used to be. Consider this type of insecurity within the context of salaries and student-loan debt.

Lost legal jobs probably won't come back. But the culture won't come back either.