THE LAWYER BUBBLE

Case Western Reserve Law School Dean Lawrence E. Mitchell’s recent op-ed in the New York Times proves that, like many law school deans, he is living in a bubble. Indeed, the views he expresses are one reason that I wrote THE LAWYER BUBBLE – A Profession in Crisiswhich Basic Books will publish in April 2013. (Another reason is the troubling transformation of most big law firms, but that’s for another day.)

Mitchell’s spirited defense in “Law School Is Worth the Money” concludes that the “overwrought atmosphere has created irrationalities that prevent talented students from realizing their ambitions.” Apparently, he thinks everyone should just calm down, ignore facts, and keep pushing naive undergraduates into law schools, without regard to what will happen to them thereafter. He’s wrong.

Employment

Mitchell argues that a legal career is no worse choice than any other because the job market is bad in many industries. He notes that the Bureau of Labor Statistics projects growth in the number of lawyers’ jobs from 2010 to 2020 at 10 percent — about as fast as the average for all occupations.

Here’s the thing: that 10 percent growth is for the entire ten years from 2010 to 2020 – a total net increase in the number of lawyer jobs of 73,600. And that number is down from a 2008 BLS estimate of 98,500. As 44,000 new law graduates hit the market each year, law schools are pumping out enough new attorneys for a decade every two years.

Other studies factoring in attrition suggest that, given the mismatch between supply and demand, there might be law jobs for about half of all graduates over the next 10 years. Case Western Reserve, where Mitchell is dean, is typical of mid-range law schools: it’s a fine institution, but according to the ABA, nine months after graduation, only 94 of the 201-member class of 2011 had full-time long-term job requiring bar passage.

Excessive tuition

With respect to the cost of a legal education, Mitchell says that “one report shows that tuition at private law schools has increased 160 percent from 1985 to 2011.” He doesn’t identify his source, but according to the ABA, median private law school tuition in 1985 was $7,385. In 2011, it was $39,496 — a more than 400 percent increase. The rate of increase for resident public law school tuition was far greater. Assuming that he’s adjusting for constant dollars, that’s still a whopping increase.

Then Mitchell compares legal education with medical schools where, even by his calculations, tuition has increased less (63 percent since 1985). But he excuses law school excesses by arguing that medical schools began the period with average tuition four times higher. That’s a false equivalence.

It should cost far less to train a lawyer than a doctor — as it did in 1985. But today it doesn’t. Why not? Because law schools have become cash cows, returning as much as 30 percent of tuition revenues to their universities. Moreover, pandering to U.S. News ranking criteria encourages law school expenditures without regard to value added. Federally guaranteed student loans fuel the system in ways that relieve law schools from meaningful accountability as they glut the market.

Debt

Mitchell dismisses the fact that average law school debt exceeds $125,000 with the cavalier assertion that “the average lawyer’s salary exceeds that number. You’d consider a home mortgage at that ratio to be pretty sweet.” He notes that attorneys’ average starting salaries have increased 125 percent since 1985.

Unfortunately, the average includes only those who actually have lawyer jobs, and it doesn’t consider the fact that, as Above the Law’s Elie Mystal emphasizes often, the average masks the bimodal distribution of attorney income. Thanks to the skewing effect of big law firm compensation (where only 15 percent of lawyers practice), most lawyers earn far less than the industry average. Moreover, median starting salaries for new attorneys have been dropping like a rock — from $72,000 to $60,000 since 2009. Meanwhile, law school tuition keeps going the other way.

Mitchell’s real complaint is probably that prospective law students are finally beginning to see the legal world more clearly and, at long last, the results may be showing up in reduced applications to schools below the top tier. But he need not worry because ongoing market distortions make equilibrium far, far away. In 2012, almost 70,000 prospective lawyers applied for almost 50,000 law school spots — even though there may be legal jobs for only half of them.

Armed with complete information about the challenges and rewards of a legal career, the best and the brightest future lawyers will still enter the profession. They’ll incur six-figure debt that can’t be discharged in bankruptcy because they’ll conclude that the investment is worth the risk — but they’ll consider the risk. Making an informed decision requires them to separate facts from magical thinking. For that, they’re on their own because, as Dean Mitchell reveals, most deans don’t — or won’t.

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3 thoughts on “THE LAWYER BUBBLE

  1. Very good observations. The med school comparison to which the Dean resorts is nonsense. First, doctors (at least primary care) are very much in demand. Second, it costs a fortune to equip and run a med school; all a law school needs is some desks and practitioners who want to be adjuncts. I graduated from a Top 10 school (Boalt Hall at UC) at the inception of the boom of 70′s – 80′s and there were kids in my class who had to work awfully hard to find a good job. Plainly there are fine lawyers from all sorts of schools but kids are being taken for a ride.

  2. I agree with most of your points, but regarding the 10% growth over a decade compared with the number of new lawyers graduating each year, wouldn’t you need to back out the number of lawyers retiring from the law each year?

    The AMA has long worked hard to control the number of doctors graduating. The ABA has never had that approach. So we have too many people graduating with legal degrees, and with the economic downturn, a lot more of them, are not getting legal jobs. The market may take care of that over time through supply and demand, but there is pain.

    I’m really not a complete pessimist about law school or the practice of law. I still meet young people who view some part of the law as something they are really interested in learning, and are not going to law school just for the money. And I like my practice. But if you can’t get into a good law school, or if you have to borrow a lot of money to go, then you need to think long and hard about whether it is a good choice for you.

    • Thanks, Arthur,
      In the paragraph immediately following my discussion of the BLS’s 10% number, I mentioned an estimate that takes into account attorney retirements. Along with other projected attrition, retirements increase estimated legal jobs significantly — to about half of current graduates. (Otherwise, it would be only 16% — 73,600 divided by 10 years = 7,360/year compared to 44,000 law school graduates each year.) That second estimate is consistent with the 55% employment rate already reported for the class of 2011. Thanks for your continuing attention to — and insightful comments on my musings.

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