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Math is hard

[ 42 ] July 9, 2012 |

math

They say people go to law school because they’re not good at math.

BLS estimate of total employment in the legal sector, June 2011: 1,111,200

BLS estimate of total employment in the legal sector, June 2012: 1,119,700

Total increase in employment in the legal sector, year to year: 8,500

BLS estimate of percentage of employees in legal sector who are attorneys: 65.8%

65.8% of 8,500 = 5,593 (This assumes perhaps optimistically that the growth in the legal sector was not disproportionately among support personnel rather than attorneys).

BLS current estimate of annual outflow from the legal profession: 13,840 Update: This refers to outflow of attorneys.

13,840 + 5,593 = 19,433.

Total 2011 graduates of ABA law schools reported to have full-time long-term employment requiring bar admission in February 2012: About 22,632. (This is out of approximately 44,200 total graduates, approximately 93% of which had a known employment status. It does not include approximately 8000 graduates of non-ABA accredited law schools).

Close enough for government work? Maybe, especially when you consider that the latter figure is pumped up by a couple of thousand fake law school-funded jobs, many of which were structured to be categorized as full-time long-term employment requiring bar admission. The ABA’s estimate is also inflated by another 1300 or so 2011 grads who listed themselves in solo practices.

It can’t be said enough, so I’m going to say it again: The American legal profession is currently generating about 20,000 new jobs for lawyers each year. Roughly two-thirds of these are products of outflow from the profession, while the rest represent actual growth. This means ABA schools are graduating roughly 2.2 graduates per year for every available legal job.

The average educational debt upon graduation of the 90% of people currently enrolled in law school who have educational debt is going to be about $150,000. The average interest on that debt is going to be about 7.4%. This will require monthly payments of $1,774 for ten years or $1,100 for twenty-five years to service at the contractual rate.

The majority of current law school graduates are not going to have real legal careers, and the majority of the minority who will have legal careers are not going to earn enough money in those careers to service the debt the average law graduate is now incurring.

Despite all this the system remains in place, for the time being, for two reasons:

(a) Because government loans subsidize and amplify predictable cognitive errors, due to optimism and confirmation biases, committed by law students who continue to enter a system that will produce, on average, a sharply negative return for those who enter it.

(b) Because self-interest, institutional inertia, and regulatory capture ensure that those who profit from the system will do nothing to alter its basic structure until a combination of economic, political, and social pressure forces them to do so.

That pressure is now building. Those who are in a position to do so can increase that pressure by repeating, as many times as necessary, the basic economic facts underlying what has become an unsustainable system.

Comments (42)

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  1. “This means ABA schools are graduating roughly 2.2 graduates per year for every available legal job.”
    Really? 22,632/19,433 = 1.165 .
    Better say: 3,200 legal graduates, or 16.5%, or one in six, will never work as lawyers.

  2. John says:

    You know what would have helped make clear your point in this post? Giving us the number of law school graduates each year. Without that number, this post is meaningless. Are we supposed to just know this?

    • Paul Campos says:

      Updated to include. BTW I’m not even counting several thousand grads each year from non-accredited law schools (most of which are in California, which doesn’t require people to have a degree from an ABA school to take the bar).

      • Amanda in the South Bay says:

        Yeah, here in CA there are lots of law schools that are accredited by the Cal Bar, but not the ABA-which for all practical purposes means those graduates are limited to jobs in CA, and I bet dollars to doughnuts that there’s tough competition with graduates of real law schools. What a shitty investment to go to one of those schools.

        • John says:

          A fair number of the ABA accredited law schools have got to be pretty awful investments, too. Examples haphazardly collected from the wikipedia article that lists American law schools: the Cumberland School of Law at Samford University, the Thomas Good Jones School of Law at Faulkner University, the California Western School of Law, the Golden Gate University School of Law, the Southwestern University School of Law, the Thomas Jefferson School of Law, the Western State University College of Law, Whittier Law School, Quinnipiac University School of Law, the Barry University School of Law, the Florida Coastal School of Law, the Shepard Broad Law Center at Nova Southeastern University, the Ave Maria School of Law, two different schools called the John Marshall Law School (on in Georgia, one in Illinois), the Salmon P. Chase College of Law at Northern Kentucky University, etc. etc. etc. etc.

          Does anybody graduating from these places get decent jobs? Why are they allowed to exist? It seems outrageous that the ABA gives accreditation to dozens of schools that are essentially scams.

          • Nicholas says:

            IIRC, Ave Maria grads often get jobs with very conservative smaller firms and conservative foundations, for example. Other small, low-ranked schools often have relationships with firms or industries such that students will be funneled into some sort of employment after graduation.

            The top students at many of these schools do get jobs. One of the open secrets of the law school industry is that 80% of the students at any given school are there just to be the chaff from which the top 20% are supposedly separated. Law school pedagogy is so broken, of course, that the top 20% of students at a given school aren’t necessarily more or less likely to be effective lawyers as the bottom 80%. But employers love a statistic which they can use to winnow down the number of job applicants and about which to crow to prospective clients when it comes to marketing their services.

            Only a few of the elite schools eschew class rank systems, usually by abandoning grades altogether.

            • Amanda in the South Bay says:

              I tend to doubt many of the non ABA (but Cal Bar accredited) accredited law schools have much of a pipeline to any industry or specific business here in CA.

              • Spuddie says:

                I tend to doubt many of the non ABA (but Cal Bar accredited) accredited law schools have much of a pipeline to any industry or specific business here in CA.

                They are a pipeline to the student lending, debt collection, and instant noodle industries.

      • John says:

        Thanks, much clearer now.

  3. john says:

    Please keep posting these; I wish someone had made this point to me prior to summer 2007.

    Oh well.

    • timb says:

      Yet, everyone I know is happy to say “He’s a lawyer,” despite the fact that you pay someone $40,000 to do my job inside of six months of hire and my very slowly growing salary reflects it.

      The same middle class hollowing that is happening nation-wide is also taking place in law

  4. Professor Know-It-All says:

    Because self-interest, institutional inertia, and regulatory capture ensure that those who profit from the system will do nothing to alter its basic structure until a combination of economic, political, and social pressure forces them to do so.

    It’s called economics of the marketplace.

  5. Just Dropping By says:

    This will require monthly payments of $1,774 for ten years or $1,100 for twenty-five years to service at the contractual rate.

    My $210 a month for 30 years doesn’t look so bad now.

    • Spuddie says:

      But you are hurting yourself on the interest. If you can afford to accelerate it, do so.

      Just pay more per month. The longer it get stretched out the more that comes out of your pocket in the long run. Interest on a 20 to 30 year loan can easily be greater than the amount of the original amount borrowed.

      • Malaclypse says:

        Quick and dirty, $210 monthly at 7.5% means the original debt is “only” $30K or so, so JDB is is a defferent category that most of the people Campos is writing about. But to your point, interest will be $45K of the $75K total repaid.

  6. Ken says:

    The only rational solution is to fight the new graduates in the arena to cull the numbers. As a side benefit, part of the advertising revenue can be used to reduce the survivors’ debts, and of course the debts of the losers will be wiped out.

    (Hmm, not quite up there with A Modest Proposal.)

  7. dp says:

    Shouldn’t the outflow be reduced to 65% as well? A legal secretary retiring doesn’t open up a job for a lawyer (or maybe it does in this market).

    • GFW says:

      I came to the comments to make that exact point. Also, not that it’s very important, but is it 65.8% or 65.6%? Two adjacent sentences disagree (slightly) on the fraction.

      • Paul Campos says:

        The 13,800 annual figure refers to the BLS’s projection of average attorney outflow from the profession of the course of this decade. Post updated to reflect.

  8. Seitz says:

    It would be interesting to see the point in, for example, the US News rankings where law school officially becomes a really dumb idea. I completely believe we’re generating way too many lawyers for the number of legal jobs available, but “don’t go to law school” isn’t good advice for everyone. If you can get into a top 10 law school and you really want to be a lawyer (for some reason), go for it. If you’re looking to prolong the real world for three more years and the best you can do is a 3rd tier school, you’re not making a good decision. I was a bit of mix of both. I wasn’t exactly sure why I was going to law school, but I went to a top 20 school where finding employment wasn’t impossible. I probably wouldn’t do it again, though.

    Another question for Paul: Do the numbers take into account jobs that hire JDs, or do they strictly represent jobs with law firms and other typical “lawyer” jobs? I started out of law school with a (former) big 5 accounting firm and have never actually held a legal job. About half of the new hires in this firm’s tax department were JDs. It’s probably not a significant change to the overall picture, I’d guess.

    • Paul Campos says:

      These numbers are for jobs that require bar admission, i.e., anything that counts in a legal sense as practicing law.

      It’s true there are a small number of jobs for which a JD is an advantage but don’t require bar admission, such as those you note.

      The flip side is that there are a large number of jobs for which a JD is a disadvantage, because most employers don’t like to hire people whom they think of as lawyers for non-legal jobs. They think they’ll leave as soon as they can get a legal job, that they’ll be PITA employees, that they’ll be too attuned to their workplace rights etc. Plus they wonder what’s “wrong” with somebody with a JD who isn’t a lawyer.

      • Sherm says:

        In addition, it takes a middle manager with intelligence and confidence to hire someone whom they perceive to be more qualified and better educated than themselves, and such persons are few and far between. Many people in management are intimidated by an applicant with a JD.

  9. JW Mason says:

    I continue to think that it is silly to do this as a guesstimate based on the legal sector, where only half of all lawyers are employed. The BLS publishes numbers of people employed as lawyers, which is what you should be looking at. Especially when it’s what you use for outflow from the profession, not the back-of-the-envelope 65% of the legal sector.

    The current estimate is for an annual net increase of 7,300 people employed as lawyers for 2010-2020. That’s pretty close to your guess, so no harm, no foul, I guess. But as you pointed out before, this does not include partners or people in solo practices, so the actual number of jobs must be larger. Of the other hand, if most of those solo practices aren’t real jobs, then your number may be more or less right…

  10. JW Mason says:

    Do the numbers take into account jobs that hire JDs, or do they strictly represent jobs with law firms and other typical “lawyer” jobs?

    Paul, for reasons best know to himself, comes up with his number of new lawyer jobs by taking 65% of the net increase in employment in the legal sector, even though half of all lawyers do not work in the legal sector. So there’s a spurious precision to his figures, which are really rough guesses. That said, the basic picture is probably right.

    • Paul Campos says:

      The BLS estimates that there were 728,000 lawyers working in the US in 2010, and those people are included in the 1.1 million people employed in the legal sector. This doesn’t include judges but does include self-employed lawyers (partners, solos) so I don’t know what you’re talking about when you say that half of all lawyers don’t work in the legal sector.

      • JW Mason says:

        What I am talking about is that of those 728,000 lawyers, only 372,000 of them work in the legal sector.

        • Paul Campos says:

          I don’t know where that number comes from but it doesn’t match up with any of the other BLS data. If there were only 372,000 lawyers in the “legal sector” (whatever that would mean) that would imply that two thirds of the growth in the legal sector consisted of non-attorney jobs, which doesn’t track at all with the BLS prediction that there will be an average growth of 7300 new attorney jobs per year this decade, i.e., a 10% increase over the course of the decade.

  11. JW Mason says:

    Paul, what I am talking about is that half of all lawyers don’t work in the legal sector.

    Legal sector is a classification of enterprises. Lawyers is a classification of persons. As it happens, there is quite a bit of overlap, but they don’t at all coincide.

    Your 1,119,700 is total employment in Legal Services. But only 372,000 of those people are lawyers. Your statement that all working lawyers in the US are included in the legal services category is mistaken. Legal services excludes not just judges, but all lawyers employed by government (approximately 120,000) as well as all lawyers employed by nonprofits and private businesses outside of legal services.

    Again, just look at this table There are only 372,000 lawyers working in the legal sector, about half the total.

    • Paul Campos says:

      OK thanks for the clarification. I think the important number here is that the BLS is projecting 21,000 new attorney jobs per year from outflow and growth. That’s less than half the number of annual ABA law school grads, plus not all new jobs will be taken by new grads, or ABA grads, or even American lawyers.

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  13. Misaki says:

    Job creation without higher government spending, inflation, or trade barriers:
    /ɯoɔ˙ʇodsƃoןq˙uɐןduoıʇɐǝɹɔqoɾ//:dʇʇɥ

    It would probably put some lawyers out of work though, which wouldn’t help anyone with debt, but that’s a short-term problem. It will also reduce the number of people entering law school so the numbers would eventually sort themselves out.

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