Law schools are manufacturing more lawyers than America needs, and law students aren't happy about it.

Commentary about business and finance.
Oct. 27 2010 4:14 PM

A Case of Supply v. Demand

Law schools are manufacturing more lawyers than America needs, and law students aren't happy about it.

Is law school not all it's cracked up to be?Click image to expand.
Is law school not all it's cracked up to be?

During the recession, the logic was ubiquitous: The economy is terrible—better to wait it out! It is a three-year fast track to a remunerative, respectable career! It's not just learning a subject—it's learning how to think! Law school, always the safe choice, became a more popular choice. Between 2007 and 2009, the number of LSAT takers climbed 20.5 percent. Law school applications increased in turn.

But now a number of recent or current law students are saying—or screaming—that they made a mistake. They went to law school, they say, and now they're underemployed or jobless, in debt, and three years older. And statistics show that the evidence is more than anecdotal.

One Boston College Law School third-year—miraculously, still anonymous—begged for his tuition back in exchange for a promise to drop out without a degree, in an open letter to his dean published earlier this month. "This will benefit both of us," he argues. "On the one hand, I will be free to return to the teaching career I left to come here. I'll be able to provide for my family without the crushing weight of my law school loans. On the other hand, this will help BC Law go up in the rankings, since you will not have to report my unemployment at graduation to US News. This will present no loss to me, only gain: in today's job market, a J.D. seems to be more of a liability than an asset."

He is one of dozens of law students who have gone public, very public, to chastise the schools they elected to attend for leaving them older and poorer. One popular medium is the "scam blog," where indebted, unemployed attorneys accuse law schools of being little better than tuition-sucking diploma mills. (Sample blog title: Shilling Me Softly.) The author of one popular, if histrionic, such blog describes his law school as a Ponzi scheme.

Others have taken, perhaps inevitably, to the courts. Kenneth Desornes, for instance, named his law school in his bankruptcy filing. He asks the school to "[a]dmit that your business knew or should have known that Plaintiff would be in no position to repay those loans."

The students might be litigious—no surprise there—and overwrought. But they've got a point. The demand for lawyers has fallen off a cliff, both due to the short-term crisis of the recession and long-term changes to the industry, and is only starting to rebound. The lawyers that do have jobs are making less than they used to. At the same time, universities seeking revenue have tacked on law schools, minting more lawyers every year.

That has caused some concern among lawyers who think the accrediting organization, the American Bar Association, is doing the profession a disservice by approving so many new schools. (Contrast that with medical schools. They come with much higher startup costs and tend not to be money-makers. Relatively few students get medical degrees every year, and demand far outstrips supply.)

The job market for lawyers is terrible, full stop—and that hits young lawyers, without professional track records and in need of training, worst. Though the National Association for Law Placement, an industry nonprofit group, reports that employment for the class of 2009 was 88.3 percent, about a quarter of those jobs were temporary gigs, without the salaries needed by most new lawyers to pay off crushing debts. Another 10 percent were part-time. And thousands of jobs were actually fellowships or grants provided by the new lawyers' law schools.

The big firms that make up about 28 percent of recent grads' employment slashed their associate programs in 2009 and 2010, rescinding offers to thousands and deferring the start dates of thousands more. Worse, the profession as a whole shrunk: The number of people employed in legal services hit an all-time high of 1.196 million in June 2007. It currently stands at 1.103 million. That means the number of law jobs has dwindled by about 7.8 percent. In comparison, the total number of jobs has fallen about 5.4 percent over the same period.

At the same time, the law schools—the supply side of the equation—have not stopped growing. Law schools awarded 43,588 J.D.s last year, up 11.5 percent since 2000, though there was technically negative demand for lawyers. And the American Bar Association's list of approved law schools now numbers 200, an increase of 9 percent in the last decade. Those newer law schools have a much shakier track record of helping new lawyers get work, but they don't necessarily cost less than their older, more established counterparts.

But what of those high salaries for the lawyers who do get jobs? After all, big law schools report that the average graduate is still making in the high five figures for entry-level work. The problem is those statistics are what lawyers might call hearsay. For one, law schools report their own salary-at-graduation data to organizations like NALP and magazines like U.S. News and World Report, collecting it from student surveys. But, NALP notes, there is an obvious bias problem. Students don't bother telling their law school what they are making unless they are making a lot. So the figure is probably too high, and either way is not a scientific measure.

Another point is that prospective law students usually look at average pay at graduation. But the average hides substantial inequality: There are the jobs at white-shoe firms that pay about $160,000 per year to recent graduates, and then there are the rest of jobs, which generally pay between $45,000 and $60,000. Almost no salaries are near the median or the average. They are clustered at the bottom, with fewer high earners, many of whom come from a handful of super-elite law schools, up at the top. That means that most students do not meet the break-even salary—the starting salary that would make law school tuition a good investment, estimated at around $65,000.

Students simply "cannot earn enough income after graduation to support the debt they incur," wrote Richard Matasar, the dean of New York Law School, in 2005. "Even those making the highest salaries find that the debt that they have accumulated while in school may tax them for years."

Still, the harsh realities of being a young lawyer have not stopped thousands from enrolling in law school during the recession. Veritas Prep, a graduate school admissions consulting firm, found in a recent survey that four in five prospective applicants still plan to apply to law school even if "a significant number of law school graduates were unable to find jobs in their desired fields." Only 4 percent were dissuaded.

So does that just mean a continued oversupply of lawyers, dragging down their own median salaries and dealing with their heavy debt burdens while a few lucky associates make it to the corporate big leagues? Not necessarily.

David McGowan of University of San Diego and Bernard Burk of the Center for Corporate Governance at Stanford argue that trend cannot continue. Prospective students will recognize that law school can be a bad deal, and one way or another is not a sure thing. Applications will slowly drop off. The marquee law schools will be fine. But some of the newer, lower-ranked law schools will end up shutting down—meaning fewer lawyers, and the vindication, if not the employment, of all of those scam-blog authors.

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Annie Lowrey is a contributing editor for New York magazine. She can be reached at annie.lowrey@gmail.com.