Too many law schools and too many lawyers

Dan Slater "argues that there are too many places at too many law schools":

As firms begin an industrywide overhaul, which has entailed slashing jobs and reconsidering hidebound inefficiencies like the lockstep salary, students will compete for half as many $160,000-a-year jobs this year as they did last. According to the National Association for Legal Career Professionals, the 2008 recruiting season marked “what is likely to be the beginning of a weaker legal employment market that may last for a number of years.”

Meanwhile, as job opportunities abate, law school matriculation rates rise unchecked. Each year, the number of students who enroll at one of 200 law schools approved by the American Bar Association inches closer to 50,000.

I wrote about this problem a while back, arguing that law was a mature business whose long term demand for new lawyers was likely to have stabilized at a level below that of the ever-increasing supply of lawyers.

The post-war expansion of the regulatory state, the opening of the courthouse doors to new claims during the warren Court era, and the litigation explosion provided an exogenous shock that caused demand for lawyers to rise rapidly. Following a fairly standard s-curve model, the demand for lawyers grew faster than the population and economic expansion would have predicted, driven by the aftermath of those shocks. Over the last couple of decades, however, the market for lawyers has adapted to those shocks. Because there have been no comparable major exogenous shocks affecting the demand for lawyers, the market has matured. We would therefore predict that growth in the demand for lawyers would slow until it reaches a level that can be sustained by population and economic growth. ...

If law in fact is a mature industry, we face a problem of systemic oversupply. The rate at which demand for new lawyers grows has permanently leveled off. Economic recovery will help, but it will not change the fundamental structural changes in the market for lawyers.

Unfortunately, the growth in the number of law schools and size of entering classes at many law schools was premised on the assumption that the demand for lawyers would continue to rise at the high rate characteristic of the period, say, 1960-1990. Because that growth rate was artificially high due to the exogenous shocks of the preceding decades, the number of law schools and large law school class sizes no longer make sense. Indeed, if law schools continue to grow in number and size at their current rate, the gap between demand for new lawyers and the number of new lawyers will continue to rise every year.

The solution is obvious, although how we can find the ability and the will to do it is not. We have to reduce the number of law schools. Just like GM has to close plants because of over-capacity, we in the law have to close some of our "factories."

(If I had my way, we'd start by killing off UC Irvine's new and utterly unnecessary law school.)

I have no idea who would lead this charge or how they would accomplish it. No individual school would be willing to fall on its sword for the good of the whole. Nor is there any collective law czar with the power or will to do anything. Certainly, the American Bar Association isn't going to help, as Slater observes:

The American Bar Association, which continues to approve law schools with impunity and with no end in sight, bears complicity in creating this mess. Yet a spokeswoman, citing antitrust concerns, says the A.B.A. takes no position on the optimal number of lawyers or law schools.

I guess we'll have to trust the market. Once word filters out to pre-law students about the state of the job market, maybe they'll start looking elsewhere. If admission applicants drop enough, maybe some of the bottom tier of schools will have to close for lack of qualified applicants. (Or maybe they'll just admit unqualified applicants.)

Don't get me wrong. Society still needs lawyers and we still need law schools. We just don't need as many as the American legal academy now produces. Until the problem is fixed, students--especially at the bottom tier schools--are going to struggle to find jobs. Worse yet, as they look for work, we might see an uptick in frivolous litigation. As Ezra Klein observed:

If we're overproducing lawyers, though, there's going to be a pernicious Say's Law effect, wherein the oversupply of lawyers begins creating its own demand (of lawsuits). 

So everybody has an interest in finding a solution.

(HT: Caron)

Comments

[wcz]

I know of a very intelligent young lady who cancelled her LSAT last month after taking a long time to think about the current legal market. She would make a great attorney, but she has seen the same trends as noted in the above post and made a decision I can't argue with. One has to assume that she isn't the only intelligent prospective attorney out there who has made this decision, and so it can be argued that perhaps a significant cross section of quality potential law students will not be going to law school. Their places will be taken by a generally less-qualified group who will be destined to graduate into an even worse legal employment market, with an even higher student loan burden that the classes before them, (unless someone knows of a school that has actually CUT tuition). Should we really be surprised when these people graduate and start filing frivolous law suits or literally chasing ambulances?

Shouldn't law school tuition begin declining since the market is saturated and the product, a law degree, just isn't as valuable as before? Yes, I know, as long as there are enough suckers out there spending their undergraduate days dreamily watching Law and Order, the price is not going down.

Shouldn't the law schools at least have the scruples to begin instructing these hapless students on different causes of action for filing suit against their alma maters? Fraud? Negligence? Products liability? Warranty of merchantability?

I think that this is just more proof that whether you're talking a law school dean or a partner in a big firm, lawyers are one of the few species that routinely eat their young.

[Bababooey]

You're showing too little faith in the market.

Excess lawyers can become legislative aides, staffers, lobbyists and regulators that combine to make new laws** that will force companies to hire more lawyers. Or, as you said, excess lawyers can dig up existing laws and make them the basis of novel lawsuits that will have to be defended.

My dream is to form a political party whose platform is simply "We will work exclusively to repeal laws; we will never vote for a new law unless 4 are repealed"

[Peter L. Reich]

It is not necessarily the case that law schools outside the "elite" circle will suffer more from the economic downturn. As the NYT (8/25/09) points out, students at "elite" schools are often reluctant to look at public interest/sector positions. We at Whittier, a nationally non-elite though regionally superior institution, have found that we do fine with public sector placement because these entities do not tend to hire a particular "pedigree," preferring to look at the individual. We have also been quite successful at placing students in our specialty areas, and are attracting great interest with our growing focus on coastal/environmental and Latin American law.

Peter L. Reich, Professor of Law & Director, Whittier Mexico City Program, Whittier Law School, Costa Mesa, CA.

[Eric]

How many law schools/students do you think would be an appropriate number?

[J]

Whittier, regionally superior? Your school has been on ABA probation for how many years? Whittier should be one of the first schools to be shut down.

[MNO]

Perhaps ironically, Whittier is one of the few schools the ABA *has* considered shutting down in recent years. I'm sure things have stabilized since though, and, snark aside, Prof. Reich makes a good point. The vast majority of recent law grads were never competing for the dwindling number of $160K jobs in the first place, and for that matter, while law is a professional school, no school would be foolish enough to say a JD from their institution is anything more than an educational experience that qualifies one to work as an attorney, if one so chooses. If students take out mountains of loan debt, in reliance on a promise that was never made, because they haven't researched enough, that is no one's fault but their own.

But is the premise that we have all the lawyers we need even true? How often do we hear of populations of people that can't afford a lawyer, or prosecutor and public defender offices that are backlogged due to short staffing? While society may choose not to afford more of these positions, it's not as if there is too little work to go around; we've just made them a lower priority than we might choose to.

[C.E. Petit]

There's a market barrier, though, that will prevent recognition of the problem: state law licenses. Until we get individual states out of the business of establishing barriers to practice by "carpetbaggers", there will remain a real problem not with overall numbers, but with distribution of lawyers. For example:

Could Professor Bainbridge give an argument in the Delaware Chancery Court without getting special permission to do so, even if the case in question turned on one of his own articles?

[UCLA '07]

For starters, California should institute a rule only allowing someone to sit for the bar exam twice in a 5 year period. Weeding out the incompetent should sufficiently weed out excess supply.

I have no problem with someone that wants a legal education, no matter how incompetent, as long as they don't go into practice.

[dave.s.]

I think it's a big part of the problem that you can't discharge student loan debts in bankruptcy. Fix that, and lenders will actually start paying attention to whether their borrowers have reasonable prospects - bang! there go the bottom 80 law schools right off the bat.

[UCLAW '04]

Yes, we are producing too many lawyers. And a legal education will prove to be a poor investment (both monetarily and careerwise) for most youngsters who are now enrolling. But, closing law schools is not the only option; and it smacks of elitism. The core problem is that too many college grads major in English/Philosophy/History etc., and these are all degrees with even less practical value than a JD. All the BAs flock to law after realizing they are not trained for anything useful, ironically doubling down on the same overrated skillset. Useful professions such as the medical field on the other hand put insane barriors in an attempt to limit the number of professionals (why a podiatrist needs to learn organic chemisty I will never understand.) Instead of just complaining however I will offer a helpful suggestion. If all law schools failed out the bottom of each class after 1L, and turned 3L into an apprentice year instead of the useless farce it is now, it would be a step in the right direction.

[Alex Knapp]

As someone who teaches students preparing to take the LSATs and the GMAT, I've noticed a significant uptick in students who are getting joing JD/MBAs, as well as a signficant number of folks in management and small business owners who want to go to law school. None of these folks intend to practice law; they just want the legal background to improve their contracts, understand their ability to collect on invoices, understand corporate structure, etc. I don't have numbers for this type of student, but the idea that all law students become lawyers and all lawyers become litigators is awfully wrong...

[Jim C.]

An important point made above is that there *are* areas of incredible need for lawyers.

I am a public interest lawyer in a major city, one of five or six most populous, huge population of low-income people. We have three family law attorneys for a massive pool of low-income clients with serious family law problems. (Hundreds of thousands?)

No, there is no Consitutional right to a lawyer in custody, child support, divorce or civil restraining order matters, of course. First, howver, think of the adage "He who represents himself in court..." now imagine someone representing his or her self with little education, has never even been in a court, isdealing with the most emotional issues you can imagine, and in some cases the opposing party has physically beaten and terrorized you for years, and perhaps the other party has a lawyer that plays rough. Quite ridiculous conditions, really. Some pro se clients are so ovewhelmed, emotionally as well as due to the legal process, itself, and are so intimidated in court, that they can scarcely get the most basic facts out, let aolone present an adequate case. Not all lawyers take advantage of these situations, but many do, and Judge's are sympathetic to pro se people, but still.

The biggest losers, of course, are the kids involved who don't get the best results. It is also a legitimacy issue. If you were absolutely steamrolled in court, and you know the playing field was beyond even being merely tilted, how could you respect the system?

[Rod Hearne]

The average family can't afford the services of a lawyer today, and we have a crisis-level, weak services from public defenders. Perhaps, the solution is that the expectations of sky-high salaries for lawyers ought to change, making the access to legal services available to more than just the very wealthy, and larger organizations and businesses. If the laws of supply and demand apply to the legal profession more lawyers will lower costs for legal work. Why isn't that a good thing for society?

[Rusty]

WRONG! The problem isn't too many lawyers, it's the expectation of lawyers of super-high salaries. The middle class and working class need legal help more than ever. Where does it say lawyers have to be paid better than so many other professions, like teachers and policemen? If they don't want to aspire to a career where after 10 years you make $160,000 as opposed to one where you start at $160,000, they can find another profession (one where their work justifies that salary, not when they are doing document review and simple legal research).

There's something else disturbing here: what right does the government have to bar entry to a profession which is based on understanding the government's laws and court/agency procedures?

[This is a good thing (if you're not already a lawyer)]

You said: "The solution is obvious, although how we can find the ability and the will to do it is not. We have to reduce the number of law schools."

No, this is a terrible solution. It is an artificial supply constraint on the labor market, and it will result in overpaid, overworked lawyers. Our medical labor market works in this way, and as a result we pay doctors about twice as much in this country as in other developed countries, accounting for about $50 billion per year in excessive medical costs.* Yet we have 20% fewer doctors per capita than other developed countries, and the ones we have are not very happy with their long hours despite their high pay.

The reason we have so many lawyers is that despite the prospect of sub-$160,000 salaries, law is still an appealing option to many young people. The number of available lawyers should keep increasing until the forces of supply and demand settle on reasonable pricing. Good lawyers will still be able to demand a premium, and not-so-good lawyers can find other lines of work. That's how it works for just about every other skilled laborer in the country. The market for lawyers will be highly competitive, as it should be, and as a result the economy will become more efficient.

Protecting yourself from competition by erecting market barriers is an age-old temptation, but it is rarely a good idea.

* See http://www.mckinsey.com/mgi/rp/healthcare/accounting_cost_healthcare.asp

[Anonopuss]

Perhaps some of the more elite schools could limit class size, and not just at the 1L level. I understand that Columbia Law School had 100 transfer students into its second year class this fall. Obviously, this is an effort to gain the US News system, so the quality of those students doesn't count in their rankings. Presumably, those people come from lower-ranked schools, who then will take more first year students, so they are not stuck in a bind from all the transfers out. There are probably other elite schools doing this as well.

If lower ranked schools go away while higher ranked schools increase their number of graduates, you may not decrease the oversupply of lawyers, but you will decrease the prestige and marketability of a degree from an elite school.

I think one solution is for all schools to get together and try to proportionately limit their class sizes. I haven't researched the antitrust implications of this, but there has got to be a way to do this.

[MNPundit]

It seems insane to others, but all I have ever wanted to be is a copyright lawyer.

[Joe]

Yet another guild looking to deal with 'oversupply' by restricting entry into the club. Not enough jobs at $160k? Rather than reduce supply, I say let the price fall.

[Kurt K.]

Re Comment -Shouldn't law school tuition begin declining since the market is saturated and the product, a law degree, just isn't as valuable as before?

ACTUALLY SHOULDN'T UNDERGRADUATE COLLEGE TUITION BEGIN DECLINING AS WELL. THE MARKET IS SATURATED WITH GRADUATES WITH USELESS DEGREES. POOR BASTARDS DROWNING IN STUDENT LOAN PAYMENTS AND NO JOBS. AT LEAST FEW WELL PAYING JOBS. RIP OFF.

[Joey]

I agree with your point that UC Irvine should have been killed off; probably too late for that now. But there are lots of other schools proposed -- perhaps a first step is to kill off all of these before they get too far along:

SUNY Stony Brook
SUNY Binghamton
St. John Fisher College, in Rochester, NY
Husson College, in Bangor, Me.
Louisiana College, in Pineville
Lincoln Memorial University, in Harrowgate, Tenn.
The University of North Texas, in Denton
Wilkes University in Wilkes-Barre, Pa.
Concordia University, in Boise, Idaho
The University of New Haven, Ct.
The University of Maryland-PG County

Many of these would be state-funded, of course, which raises the issue of why taxpayer money is being used to build more law schools given the state of the market for new lawyers, and the state of state budgets.

[ERH]

Really this is a non-issue some places there's an oversupply of lawyers, DC has 12 for every person, New York 126. Some places like Arkansas have only 1 for every 500 people. So my advice if you're a laid of NYC attorney forget about making 160k, move to Arkansas and enjoy the good like

[Peter L. Reich]

I am sorry that anonymous blogger "J" has so much unjustified animosity towards Whittier Law School. The law school is fully ABA accredited, and was on probation for three years (2005-08) for below average bar passage, despite exceeding the rates of several other California ABA schools. Yet in July 2008 our bar rate exceeded that of more than half the ABA schools in the state, including UC Davis and UC Hastings. We are the oldest ABA school in Orange County and have many successful graduates, including judges on the federal and state benches. Our faculty has published in a number of top law reviews, including Penn, Texas, Vanderbilt, UCLA, USC, and Washington. As another blogger above pointed out, there are plenty of people who need lawyers but can't afford $160K a year, and although some of our recent grads make that, many are serving public needs that would be otherwise unmet.

Peter L. Reich, Professor of Law & Director, Whittier Mexico City Program, Whittier Law School, Costa Mesa, CA.

[anon]

The problem is not that there aren't enough jobs to go around for lawyers. The problem is that most legal jobs can't support the amount of loans that law students graduate with.

The cost of going to the University of Chicago is the same as going to some private TTT school. Except the Chicago grad is going to make 160k upon graduation while the the TTT student is going to make about 45-50k.

[PG]

Taxpayers' paying to train lawyers would make sense if the lawyers thus trained were obligated to work in the public interest (e.g. as public defenders, family law attorneys for low-income people, etc.). When foreign-trained physicians in the 1970s were given green cards to enter the U.S., the trade-off was that they had to practice in under-served inner cities or rural areas. (Part of why you see tiny Appalachian towns with just two or three random Asian families, all doctors.) Why not condition some of the aid given by the government in the form of student loans, grants etc. on the graduate spending a certain amount of time in public interest work? The truly private lending market (i.e. one without government guarantees or nondischargeability in bankruptcy) would still lend to students whose prospects of repayment were good. But these law schools are not educating students out of charity; they're educating them for tuition payments. Dry up some of the money supply, or at least make it depend on serving those who can't afford lawyers now, and the supply of lawyers demanding $160k salaries to repay their loans will be reduced as well.

[Kyle]

Is it fair to assume that the bottom tier of schools will be the ones to disappear? In the financial world, Lehman Brothers and Bear Stearns failed, while many of the smaller brethren are still around.