The Bleak/Rich Job Market for Law Students

If it's in The Wall Street Journal, it has to matter (even if it doesn't, if you follow my meaning). 

So it's probably incumbent on us to offer, briefly, our thoughts on the front-page story this morning, "Hard Case:  Job Market Wanes for US Lawyers," reporting that for the great majority of law school graduates unable to land jobs with BigLaw, the prospects are bleak.  Consider:

"A slack in demand appears to be part of the problem. The legal sector, after more than tripling in inflation-adjusted growth between 1970 and 1987, has grown at an average annual inflation-adjusted rate of 1.2% since 1988, or less than half as fast as the broader economy."

And there's more bad news to spread around:

• New-JD output is growing:  In 2005-2006, 43,883 JD's were awarded, up nearly 16% from 37,909 in 2001-2002.
• There are more ABA-accredited US law schools:  196 today, up 11% since  1995.
• Student loan overhangs are growing, now averaging about $55,000 for graduates of public law schools and $85,000 for private school grads.
• For a variety of reasons (some arguably laudable, such as tort reform), solo and small-firm lawyer income has been declining in real terms for a decade or more.
• According to ABA data, there was one lawyer for every 572 Americans in 1971 but one for every 264 people by 2000.

The WSJ's Law Blog also has a companion story, and the overall tenor of the comments is a schizophrenic mix of jubilation and gratitude that the story is finally being told, contrasted with some genuine tales of disillusion and even misery.  Read them at your peril.

But to me the real story is that there's a BigLaw market and there's a non-BigLaw market.  They are two separate markets, bifurcated, that do not speak to one another.  More precisely, candidates for the first vs. the second local maximum on the curve below are drawn from entirely separate cohorts.

This is from the Empirical Legal Studies site (courtesy of my friend Prof. Bill Henderson) and shows the distribution of 22,665 salaries of full-time employed law school graduates as tracked by NALP.  The first local maximum represents about 22% of all reported salaries, in the $40-$50,000 range; the second local maximum reflects another 17% of reported salaries in the $135-$145,000 range (remember, this is 2006 data, so it predates the $160K bump.)

That is not to say law schools couldn’t do a better job of actually disclosing what happens to their graduates, which is what the front-page WSJ article expends a lot of ink on.

That, in fact, is in line with the philosophy of the US securities laws (which I love, in case you didn't know—at least pre-Sarbanes-Oxley):  “You can do anything—so long as you disclose it.”