June 8, 2011
When Adam McDonald graduated from Detroit Mercy Law school in 2007, his goal was to start his own criminal defense law firm. But with payments on his six-figure college loans looming, he knew he didn’t have much time to start generating a case load. Seven months after starting his business the recession hit. New clients became scarce, and his existing clients were giving him fewer and fewer billable hours.
“I wasn’t necessarily averse to living hand-to-mouth,” explained McDonald, 28. “[But] it was a very kill-what-you-eat mentality. There were months when I was making thousands and months I was making hundreds of dollars.”
Then his college loan came due. Unwilling to fall behind and tarnish his credit rating, McDonald felt there were easier and better ways to make money. So when a promising employment opportunity selling credit card processing machines to businesses came along (which would neither require nor utilize his expensive law degree), he snapped it up.
Since the 2008 economic crisis and historic recession, a law degree, even from the top schools, is no longer a ticket to a good job and six-figure salary. While only a fraction of all new attorneys are walking away from the profession, many have had to take lesser-paying jobs with less status and fringe benefits. Close to 30 percent of lawyers expect to graduate with more than $120,000 in debt. Another 15 percent said they would owe more than $100,000, according to Yahoo News.
The class of 2010 has been especially hard hit: fully one-third of all law school graduates are not practicing law, and about half found jobs in private practice. The National Association for Legal Professionals says graduates have faced the worst job market since the mid -nineties. In fact, legal occupations will add the fewest new jobs among all professional and related subgroups over the decade, increasing by about 188,400, according to Bureau of Labor Statistics overview of 2008 to 2018.
There are 200 American Bar Association-approved law schools in the U.S., up from 182 schools in 2000. Total enrollment is also up over the last 10 years from 132,464 students in 2000 to 154,549 in 2010, according to the American Bar Association. Of those students, 38,157 were awarded J.D.’s or LL.B’s in 2000, 44,004 in 2010. Despite the economic crisis, law school demand is up.
And though law graduates are having more difficulty finding jobs out of school, the median salary for all lawyers has for the most part continued to rise, according to data over the last 10 years from the Bureau of Labor Statistics.
In 2010, the average median salary for a lawyer was $112,760, down just slightly from 2009, at $113,240, but higher than what it was during the worst of the recession in 2008 -- $110,590.
The latest available data from the law class of 2009 shows the mean starting salary for law graduates are $85,198. The NALP surveyed 19,513 law graduates, with 34 percent reporting a starting salary of $40,000 to $65,000.
Legal office employment hit a peak in 2004 of just over 1.1million jobs, but after the financial collapse the number of jobs fell by nearly 134,000, according to Indiana University law professor William Henderson. He also found the proportion of entry-level jobs has shrunk roughly 10 to 12 percent in the last year alone, with the number of high level jobs either declining or remaining stagnant.
It’s part of what Henderson deems a legal sea change, an oversaturated market where clients are more willing to test out non-traditional law firms that provide services at a cheaper price by utilizing technological advances in systems engineering and project management. Economist Paul Krugman, in a recent column in The New York Times wrote about high level jobs being replaced by technology. He said, "Computers, it turns out, can quickly analyze millions of documents, cheaply performing a task that used to require armies of lawyers and paralegals. In this case, then, technological progress is actually reducing the demand for highly educated workers." For many, those "associate" jobs were the first step to becoming a partner in a law firm.
The most significant changes in the legal profession include:
- A dramatic drop in opportunities for young lawyers to get on the partner track at major and medium sized law firms.
- The downsizing of well-established firms through less hiring of new law graduates. In fact, the median class size of summer programs among law firms dropped to four after being at six for most years since 2001, according to NALP.
- Clients using computer programs to do a lot of their own legal research, to cut down on research billing from law firms.
- The time to reach partnership in law firms continues to steadily grow.
- Law firms continue to become even more selective in their hiring process, making it even harder for law graduates from tier two, three, and four law schools to find jobs.
“The industry is reshaping -- it’s being turned into a much more process driven profession,” Henderson says.
Matthew Mallow, a former partner at the powerhouse New York law firm Skadden, Arps for 28 years before he retired earlier this month, says even his firm cut back and hired fewer summer class and third year students following the crash. “I know of no big law firm that reacted to the 2008 crisis by lowering salaries … The way they responded was by reducing the number of lawyers,” said Mallow, "in part because the volume of work went down.”
Some firms are not only shedding jobs but also creating lesser-paying, entry-level positions that do not put young lawyers on the partner track. The positions pay significantly less than traditional assistant jobs, usually around $60,000, but they also don’t force lawyers to put in a burdensome amount of annual billable hours. While such jobs enable a cheaper and more flexible lifestyle, it is also career dead end – these lawyers will never make partner.
For Willie Noveck, a 28-year-old law student at Loyola University, the recession has come to represent a losing battle. He says that finding a job has become such a challenge that he might go back to school for a master’s in social work. “I would love to just get out of law school and do something for myself,” said Noveck, who is among the top five in his class, “but I think that’s basically impossible. And if it’s not impossible it’s extremely difficult and you need an amazing game plan to do it.”
Robert Nelson, director of the American Bar Foundation and professor of sociology at Northwestern University, is somewhat more optimistic: “Students will have to adapt to be more entrepreneurial, but it’s certainly not a dead end profession.” Nelson acknowledges that even law students who graduate from highly selective schools expecting to immediately land high paying jobs may have to scale back those expectations – but it doesn’t mean they won’t eventually get where they want to be.
Nelson added, “There are some people who would have been snapped up three years ago who will now have to wait and either pursue other options or try to develop different paths that lead them back into their preferred destination.”
Student Debt: Heavier Burdens, Narrower Career Choices (The Fiscal Times)
Rising Tuition + Student Loans = Education Bubble (The Fiscal Times)
More Small Banks Offering Student Loans (The Fiscal Times)