Is There a ‘Lawyer Bubble’?

The legal profession is facing some fundamental changes, and one former big-firm partner is sounding the alarm

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A new book by a former litigator at Kirkland & Ellis, one of the nation’s largest law firms, has delivered a frisson to the already rattled legal profession. In The Lawyer Bubble: A Profession in Crisis, Steven J. Harper argues that legal jobs are disappearing not because of short-term economic fluctuations but because of powerful long-term trends. The word bubble is an overstatement — it is hard to believe that the legal profession will end in the sort of high-speed implosion that subprime mortgages did. But the legal profession is facing some fundamental changes, and Harper deserves credit for sounding the alarm.

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Harper begins his case with a basic and troubling set of facts: roughly 45,000 law students graduate each year with an average of more than $100,000 in debt — and only about half of them will find long-term, full-time jobs that require a legal degree. Even for graduates who get law jobs, he argues, the legal world is changing fast. Law firms that once prized professionalism and collegiality, he says, are increasingly operating like typical bean-counting businesses. And many law graduates are finding work only as “contract attorneys,” which often means doing document-review drudgery for low pay.

The decline in the market for lawyers is being driven by an array of forces. For some time now, but particularly since the economic downturn of 2008, corporate clients have been less willing to sign off on hefty legal bills. They have increasingly been balking at the top hourly rates of $1,000 that some partners charge — and at costly expenses, ranging from air travel to sushi dinners to copying charges.

And as a result of globalization, an increasing share of American legal work — particularly more by-the-numbers assignments, like document review — is being shipped overseas. Lawyers in India and other lower-wage markets are willing to do the work for a fraction of what American law firms would charge. Taking away even more of this work: newly sophisticated legal software that can do “document review” and other tasks for which lawyers were once needed.

(MORE: Just How Bad Off Are Law-School Graduates?)

The legal market is without question soft these days. Last June, the Association for Legal Career Professionals released a grim placement report stating that only 65.4% of law-school graduates had found jobs for which it was necessary to pass a state bar exam — down from 74.7% in 2008. And the Internet is full of first-hand accounts of law-school graduates who say that their law degree has not helped them get a law job — and, worse still, those who report that their degree has actually hurt their job prospects, since some employers now tell them they are overqualified for nonlegal positions.

Harper, who retired as a partner in 2008, argues that the profession’s leaders are a big part of the problem. He contends that big-firm managers are too focused on maximizing profits for the biggest, most rainmaking partners — at the expense of junior lawyers and the long-term interest of the firm. And he faults law-school deans for putting the interests and salaries of law professors ahead of the interests of their underemployed, debt-laden students.

Harper’s book has been warmly received in many parts of the mainstream media and the blogosphere, but the profession’s defenders have also been speaking out. Writing in the Wall Street Journal recently, New York University law professor Richard Epstein accuses Harper of giving undue attention to a few big law firms that have gone belly-up in recent years — and ignoring that “the vast majority of big law firms have avoided this grisly fate.” And he takes umbrage at Harper’s broadsides at legal education, insisting that the sort of sophisticated and costly doctrinal training law schools provide is needed now more than ever.

It also helps that the number of new lawyers may finally be starting to decline. Applications to law schools are down sharply — plunging 38% just since 2010 — hitting a 30-year low. To keep the quality of students from falling, law schools have been cutting class sizes, and there are predictions that some of the weakest law schools may begin to shut down. Slowly, the supply of lawyers is likely to dwindle toward the demand for lawyers.

Harper’s big-picture argument is undoubtedly correct, and it is a real cause for concern. Bar associations and legal academics have begun talking about how the profession should adapt — discussions that are long overdue. The biggest problem with The Lawyer Bubble is not the warning it is sounding but its title; unlike tulips and other speculative bubbles in the past, lawyers will always be a necessity not a fad. But then, The Very, Very Challenging Job Market for Lawyers doesn’t have the same ring to it.

39 comments
StephanieMatsuoka
StephanieMatsuoka

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oldhippy
oldhippy

It appears the old joke about 1000,000 lawyers on a sinking boat in the Pacific Ocean is a good start toward solving the problem will have to be changed (at 45,000  per years x XX years) to about 4,000,000 lawyers on a boat sinking in the Indian Ocean will help solve the problem.

Leftcoastrocky
Leftcoastrocky

Do we need more Wall Street MBA's designing new ways to package financial instruments?  (toxic derivatives)

Leftcoastrocky
Leftcoastrocky

The bottom 30 ranked law schools should be closed.

BobJan
BobJan

yahhhhhhhhhhhh! Maybe in a couple of hundred years there won't be any more lawyers and then maybe the Congress could be run the way it should be. Remember, at any given time in court one lawyer wins and one lawyer loses but the irony is that they both get paid the same. So in the law profession it does pay to be a loser.

justplncate
justplncate

20 years ago I read an aritcle stating that there were over 1 million law school graduates.  How many more have been minted in the interim?  Even if 30% have retired and 20% never take or pass the bar, that still is likely to 600,000 plus.  A ridiculously high proportion of the population!  The bubbly has been with us for decades.  And it has given us a plethora or frivilous and bogus law suits to keep these lawyers (and their egos) fed.

What will be next "new" revelation you have for us? Rain is wet?

ChikuMisra
ChikuMisra

Of course there are waaaay too many of these bloodsucking, ambulance chasing slimeys. That is why it is said of one thousand lawyers at the bottom of the ocean, that it is a good start.

Disclaimer: I am not advocating (no pun intended) throwing lawyers into the ocean. I am not liable or culpable in any manner or form for someone misinterpreting my joke, made purely in jest, as an incitement to harm any individual regardless of his profession or professional aspirations. This joke has no relation to any person, living or dead, and any resemblance to any joke told earlier which resulted in unfortunate circumstances, is unintended and purely coincidental.

MichaelBrennan
MichaelBrennan

Having dealt with the legal system, I think this bubble is deserved.  Lawyers are not worth the rates that they were charging they are a necessary evil.  They work for their own profit and gain, not for their client.  Unfortunately this is so common in the profession that I am disgusted to call it a profession.  Lawyers need to pick sides, fight for their client and win.  Not figure out ways for the oposing litigators to have financial gain.  I find this system to be bloated, stupid and wasteful.  If Lawyers really wanted to do good, they should act like the indsutrialists.  Fight for what is right and people will respect you.  Fight to earn more money and people will find ways to get rid of you..

notLostInSpace
notLostInSpace

This is not a lawyer problem.  It is a white collar/middle class/professional problem.  We are being outsourced for cheaper label and technology helps lesser paid people close the gap.  Full time professors replaced by adjuncts and on line services.  ATM's, kiosks, internet replacing clerks (some of whom are middle class, with loads of experience and the ability to solve problems).   And like so many other things, the internet has legal advice on it for free, why pay a lawyer?  Yes, its a crap shoot, just like the free medical advice and free financial advice.  But in many ways, paying the professional gave you the same results.  So depressing. 

DeweySayenoff
DeweySayenoff

When our country was founded, most of the members of congress were tradesmen or merchants of some kind.  Today, most of them are lawyers.  And look at where the country is today.

Although I understand the pain for the people who go to school and can't get a job, the sad fact is that this country doesn't need more lawyers - in congress our out of it.  It needs more tradesmen and merchants.

dklloyd
dklloyd

So many of the brightest minds have been drawn into Law and Finance,often to their(and our) detriment while their talents could be better used in other areas with more personal satisfaction and social value while their money and buying power have been drained by the tuition and expenses of these pursuits.

JenniferBonin
JenniferBonin

Let's not forget a significant part of this: the reason colleges are willing to train so many more lawyers than society needs.  Why do they do this?  Because LAW SCHOOLS EARN MONEY.  They're one of the bigger money-makers for most large universities.  So what reason do university leaders have to reduce either tuition or their number of graduates?  If the students are willing to regularly go $100,000 in debt, the schools (even public schools with excellent reputations) are happy to take their money.  It's kind of sad, really -- as most of the young lawyers I know (those with jobs and without) will attest to.

BobShafer
BobShafer

I think a big part of the problem has to do with Technology, with the Internet you can now do much of the research that Lawyers use to do at a fraction of the cost and a tenth of the time.  Like all professions if you can do more with less then you need fewer people.

maxinerwb
maxinerwb

I really have no use for lawyers.   I avoid dealing with them as much as I can.  I especially detest defense lawyers, they try every trick in the book to get someone off.  And most of the time, these pieces of human garbage are guilty.  You do not have to get them off, make them accept responsibility and plead guilty because a major share of those charged are definitely guilty.  Stop and think about it.  There aren't that many innocent people jailed otherwise the news would be coming out of the woodwork with all those people who weren't guilty.  As I recall, I don't here that much about innocent people being freed.  Putting innocent people in jail is not all that common, of course with Obozo at the helm, that may change.

vstillwell
vstillwell

This is happening in accounting and other white collar fields as well. You would think Americans would demand a more equitable balance in the great global economy. Countless Indians and Chinese do jobs Americans used to do in America for Americans, and, yet, very few Americans do jobs Chinese or Indians did for Indians and the Chinese in India and China. It's a pretty crappy pay off for American workers. But, hey, we get to buy cheap junk at Walmart and get to deal with Jerry from India on the phone whenever we need to call customer service. 

SDN
SDN

This has become an issue in parts of Canada too. In Ontario, the Bar Association is looking at the idea of a 5th year of law school to increase the attrition rate of law students. The number of law grads has been increasing here for a long time to the point where there is a major oversupply of grads.