Just How Bad Off Are Law School Graduates?

Faced with a dismal job market, the legal profession may be undergoing fundamental change

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Arizona State University’s law school is attacking head on the growing problem of law school graduates — who are in the fifth year of a near-depression-level job market — not being able to find work. It plans to open its own nonprofit law firm, as the New York Times recently reported, with the goal of keeping 30 recent graduates off the unemployment rolls. Law schools have also been offering public interest fellowships to help recent graduates get a foothold in the legal market — and creating incubators to train solo practitioners.

But all of this law-school work-making is raising some fundamental questions about whether there are broader forces at work that are permanently altering the legal profession.

It may seem far off today, but it was not long ago that the good times were rolling for lawyers. In 2007, 91.2% of law school graduates got jobs and salaries were soaring. After the 2008 meltdown, the employment rate was far lower — and the quality of jobs a lot worse. In 2009, just 65.4% of law school graduates got jobs for which they needed to pass the bar.

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A grim sport has emerged of exchanging stories about just how bad things are. Many lawyers are stuck doing tedious, document-intensive contract work for as little as $25 an hour — not the worst job in the world, certainly, but not what many of them envisioned when they spent three years of their lives and $150,000 to get a law degree.

And there are plenty of worse jobs.  “Above the Law,” a website that follows the grim legal market closely, reported one listing on Boston College Law School’s job site that offered an annual salary of just $10,000 which “Above the Law” insisted the firm “had to have known” was “below minimum wage.”

And it gets worse still. There are a surprising number of job postings for lawyers that offer no salary at all, including government law jobs. That raises the question — as one headline put it — “Would You Work as a Federal Prosecutor — For Free?”

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Being unemployed — or working at minimum wage — is rough in the best of circumstances. But it is especially crippling for students who get out of school with six-figure debts that are not dischargeable in bankruptcy. The average debt load for law school graduates is now over $100,000 — and at some schools, it tops $150,000.

There are two views about the current bad times in the legal profession. One holds that it is a temporary setback, caused by the Great Recession, and that when the economy comes back, so will demand for lawyers. In fact, there have been some modest signs of an upturn in the legal job market.

The more pessimistic view is that the market will never recover: that as a result of globalization, it has become easier for law firms and companies to outsource legal assignments to places like India, where foreign lawyers will work for a fraction of what an American lawyer would earn. There are also new technologies that are putting lawyers out of work — including software that can do tedious document-review projects that used to require an actual human.

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And there is a third source of downward pressure: as in many industries, corporations and other legal clients are increasingly intent with doing more with less. They are insisting on fewer billable hours, and smaller bills, and that translates into fewer, and lower-paid, lawyers.

Prospective law students are already responding to the dismal job market. Applications to law school are expected to hit a 30-year low this year — down as much as 38% from 2010. Some law schools have responded by shrinking their class sizes, and there have been predictions that in the not-too-distant future some lower-ranked law schools might have to close entirely. Perhaps the job market will recover and lawyers will make up the ground they lost, but if the slide continues the result will be a significantly scaled-down profession. Because the one law even lawyers cannot get around is supply and demand.