IMPROVING PROSPECTS — BUT FOR WHOM?

Life is just a matter of perspective. For example, here’s some apparently good news:

– The legal sector added 1,500 jobs in April.

– Ashby Jones at the Wall Street Journal Law Blog cited a recent article in The Guardian for the proposition that the U.K. might actually have a shortage of lawyers next year. Could the U.S. be far behind?

– NALP’s Executive Director James Leipold noted that, along with an overall attorney employment rate of 88.3% for the class of 2009, “the most recent recruitment cycle showed signs of a small bounce in the recruiting activity of law firms, a sign that better economic times likely lie ahead.”

Now consider each headline a bit differently:

– “Legal sector” isn’t limited to attorneys; more than 44,000 new law school graduates hit the market every year.

The Guardian article relies solely on a report from the College of Law that has an interest in encouraging applications to its program for prospective solicitors. More than one comment to the initial report expressed angry skepticism about the College’s short-term motives. Where have I heard that before?

Meanwhile, the Bureau of Labor Statistics projects that, for the entire ten-year period from 2008 to 2018, net U.S. attorney employment will increase by only 100,000. Even if all aging attorneys retired as they turned 65, there aren’t enough of them to make room for all the newbies. In 1970, for example, law schools awarded only about one-third of the number of JDs conferred in 2010.

– To his credit, NALP’s Leipold went behind the 88% employment rate for the class of 2009. The resulting caveats are significant.

First, the percentage employed are graduates “for whom employment status was known.” Who’s excluded? Who knows?

Second, nearly 25 percent of all reported jobs were temporary; more than 10 percent were part-time.

Third, only 70 percent “held jobs for which a J.D. was required.” Unfortunately, law schools don’t offer tuition refunds (or relief from student loans) for education that was unnecessary for their graduates’ actual employment opportunities. That doesn’t surprise me. (See “Law School Deception.”)

Finally, more than 20 percent of employed graduates from the class of 2009 “were still looking for work.” Beneath the veneer of superficially good news — having a job — career dissatisfaction continues to eat away at too many of the profession’s best and brightest in yet another generation.

That doesn’t mean people shouldn’t go to law school. It means that they should think carefully about it first, starting with this question: why do I want to be a lawyer and will the reality of the job match my expectations?

Turning the employment subject toward big law leads to one more lesson on perspective.

A day after the Ashby Jones and James Leipold articles, the WSJ‘s Nathan Koppel summarized big law’s continuing job-shedding: the NLJ 250 lost another 3,000 in 2010, bringing their total decrease since 2008 to 9,500. They may be hiring some new associates, but they’re getting rid of many more.

NALP expects to release its 2010 employment data in May. But every big law leader knows that May’s true importance lies in a much more significant event: annual publication of the Am Law 100. For some partners, pre-release anxiety is palpable, if not paralyzing.

This year, average equity partner profits for the Am Law 100 went up by over 8% — to almost $1.4 million. For context, that surpasses 2007, which was the peak of an uninterrupted five-year PPP run-up. Pretty stunning for an economy that remains difficult for so many. Gross revenues increased as overall headcount dropped by almost 3%. More revenues from fewer attorneys meant more billables — mislabeled as higher “productivity” in big law terms — for the chosen. (See “The Misery Index.”) As jobs remained scarce and associate hours climbed, equity partner earnings continued their ascent.

How much is enough? For some people, the answer will always be more; short-term metrics that maximize current PPP guide their way. Life is easy when deceptively objective numbers make solutions simple, reflection unnecessary, and the long-term someone else’s problem. It’s just a matter of perspective.

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3 thoughts on “IMPROVING PROSPECTS — BUT FOR WHOM?

  1. Lies, damn lies and statistics! Another compelling read, Steve. I wonder what has happened to all the satellite offices that so many firms opened in the boom. I keep hearing about wholesale shifts of groups from one place to another.

  2. As always, Steve, an excellent post, and quite thought provoking when contemplating the future for the profession as a whole and certainly for the legions of young men and women currently in law school.

    The issue of reported metrics is something we all need to take far more seriously at every level: We know, as you point out, that many of the NALP reports are misleading because of, among other things, the “caveats” tucked away in its reports, as you mentioned.

    Last week’s New York Times piece concerning the “vanishing merit scholarships,” (http://kowalskiandassociatesblog.com/2011/05/02/the-new-york-times-exposes-another-law-school-shell-game-the-vanishing-merit-scholarship/ ) is a rather bleak indictment of the efforts by some law schools to game their own numbers in order to hype their standing in the annual US News & World Reports annual law school ranking.

    And few cognoscenti actually look forward to the Spring release of the AmLaw rankings – other than the carnival-like atmosphere it often provokes – since we all know so well that the reported PPEP and PPP metrics have little or no merit in determining a firm’s actual profitability (http://kowalskiandassociatesblog.com/2011/05/09/the-dummy%e2%80%99s-guide-to-forensic-analysis-of-law-firm-financial-accounting-and-reporting-while-leaving-the-ppp-in-the-commode/ ).

    Fidelity to accuracy, honest, full and fair disclosure of material facts, which are the hallmarks of our profession, have slipped in too many quarters and too often, sadly to the detriment of those who thought they could reasonably rely on the information provided to them.
    As you said, “Life is easy when deceptively objective numbers make solutions simple, reflection unnecessary, and the long-term someone else’s problem. It’s just a matter of perspective.” But, I would suggest, we owe a duty to consider the perspective of the thousands of recent law school graduates who have not yet been able to find employment, the tens of thousands who will be graduating over the coming decade who will similarly be unlikely to find employment, the 9,500 BigLaw lawyers who lost their jobs in the recent cycle and the members of the three law firms that have shuttered their doors thus far this year. It is the perspective of this vast group we are obligated to consider.

    Jerry Kowalski

  3. I suspect that a lot of the PPP increase is just fewer equity partners. Particularly at some firms. RPL is more indicative, but even that I wonder might have to do with less churn and other factors not necessarily indicative of brightening firm prospects.

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