Law School--the Bomb
There aren't many developments in the legal industry that literally bowl you over--okay, the demise of Dewey & LeBoeuf was a fast-paced shocker. Hearing over the last few months questions about the future viability of one or another well-respected law school has been another.
Let's review the bidding in that part of the legal field:
Unprepared to Practice. There have been plenty of commentators complaining for quite some time about the failure of law schools to adequately prepare their graduates for the practice of law. The proof of the pudding is the refusal by sophisticated clients to have first and second year lawyers assigned to their matters, at least at full freight.
But the inevitability of some restructuring of the law-school-to-law-job trajectory has become more evident because of the economic and industry changes hurtling along over the last few years.
Too Many Wannabe Lawyers. According to Economic Modeling Specialists Inc., more than twice as many people passed the bar in 2010-- over 54,000--than there were legal jobs. The NALP reported that about 85.6% of 2011 law grads got jobs by February 2012, the lowest rate since 1996 and down from a peak of 92% in 2007, BUT "almost a third of the graduates known to be employed were not working in a legal position that required passing the bar exam." Some law schools are particularly famous for graduating people unable to find a legal job.
In Spite of Which Law School Tuition Continues to Rise. The slowdown in jobs hasn't stopped law schools from raising their tuition even faster than other academic institutions, with the cost of attending a private university law school currently averaging over $40,000 @ year.
As Does Young Lawyer Debt. Law School Transparency projects that the average debt owed by law school students will be over $200,00 for the class of 2016 and significantly over that for many law students graduating in 2017 and beyond.
Even Though Those With Law Jobs Won't Make Enough. There are of course some pretty big salaries in BigLaw (with several firms having opted to match Cravath's recent announcement of hefty year-end bonuses), but the odds of being hired into that elite group are remarkably small. Of the over 200 law schools that Law School Transparency tracks, only 1/8th had more than 20% of their graduates go to law firms with more than 100 lawyers (not quite up to BigLaw, but an indication of higher salaries nonetheless), and only another 1/8th had more than 10% do so, leaving fully 3/4ths of law schools with less than 10% of graduates placed in "big firms." And of those, approximately 1/3rd of the law schools paced 1% or less of their graduates in those firms.
The rest of the placements were to small firms, public service and clerkships. Not the stuff of big salaries. So without those BigLaw salaries, there is a good chance those young graduates won't be making enough to pay off that law school debt. "Nearly half of 2010 graduates made between $40,000 and $65,000," according to the NALP, with an unspecified amount making less. Law school students who graduated in 2010 earned $84,111 on average during their first year, down 10% from 2009. The more relevant number, though, is the median salary of the 41.5% of graduates whose salaries were reported: $63,000, which means that nearly 80% of the class did not report a salary of as much as $63,000. According to economists, $75,000 is the estimated salary necessary to service $150,000 of debt and still eat.
Betting On Up? But More Likely Out. Even those who manage to get a reasonably good-paying law job are up against some hefty odds against making partner. First they have to get past the attrition rate--people who can't or don't want to cut it who have historically left at a rate of 20% a year--and then they have to confront the fact that equity partnerships are few and far between with baby-boomers holding on by their fingernails and firm finances making it hard to grow. Finally, they have the prospect of suffering from higher than average distress--mental, physical and social--than is registered by practitioners of other professions. A nice nightcap to the whole career cocktail.
Suing Isn't Really an Option. Unfortunately for lawyers, the lawsuits that have been filed against law schools for fraud and deception in their student body and placement numbers have yet to win, even though there have been some visible scoldings. But that doesn't mean that law schools are not suffering.
"The number of applicants per law school is projected to reach a record low [in 2012]... . [C]ontrary to popular belief, the number of applicants did not grow nearly as much due to the financial meltdown as in previous recessions, and more profoundly, the 2011 and 2012 application years break the counter cyclical trend of law school applications. People who normally would've applied to law school are either choosing other graduate-level programs or none at all instead of law school. This is an unprecedented event facing the legal academy, and it is very likely to continue.
The real question is at what point law programs will start retrenching by excusing staff, cutting salaries, and reducing tuition, or when universities begin shutting them down."
In addition to applications being down dramatically for the last few years, bar pass rates are now significantly lower at a number of law schools, perhaps reflecting a less rigorous admissions process, and further damaging those schools' reputations.
So law schools are confronting the scenario of raising tuitions once again, cutting back on faculty and facilities so as to reduce the rise of tuition, or throwing in the towel.
What is astounding is the number that are considering throwing in the towel--some in the top echelons of law schools.
You might check with your alma mater.
Law People Management, Inc.
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