TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

A Member of the Law Professor Blogs Network

Friday, July 1, 2011

Seto: Is the Sky Really Falling in Legal Education?

Seto Theodore Seto (Loyola-L.A.) responds to my earlier posts (NY Times: The Lawyer Surplus, State by State; Tamanaha: The Coming Crunch for Law Schools):

Brian Tamanaha's recent blog on Balkinization, The Coming Crunch for Law Schools, echoes the doomsday rhetoric of many current observers of legal education.

Brian notes a recent New York Times study that finds that law schools are producing about twice as many graduates as "new lawyer positions" projected by the Bureau of Labor Statistics. He further notes that between 1990 and 2008, law faculties have gotten bigger, expanding by 47.76% between 1990 and 2008. Finally, he notes that law school applications are falling, suggesting that "Schools would be prudent to anticipate a cumulative drop in applications of perhaps a third from their high." He concludes: "Tough times are ahead."

In the short run, the Great Recession has made the job market for law graduates very tough. The resulting doomsday rhetoric has almost certainly contributed to the decline in law school applications. I am not yet persuaded, however, that the problems legal education faces today are long-term and structural, rather than a natural consequence of the business cycle.

Let's begin with fundamentals. Between 1990 and 2008 (the period Brian analyzes), the number of law graduates increased by 21.90%. The US population increased by 21.94% over that same period. As a result, the number of law graduates per capita actually declined slightly, by -0.05%. This suggests that unless the amount of legal work per capita has declined, US law schools are not graduating too many students. If so, as the economy recovers the job market for law graduates should recover as well. When it does, law school applications should rise again.

The New York Times study may be misleading. If law schools are producing more graduates than "new lawyer positions" (however BLS defines that category) now, they were probably doing much the same in 1990. The mismatch that the New York Times (not BLS) identifies may simply be a function of the fact that law graduates often use their degrees in jobs that are not license-required, and have done so for decades. Unfortunately, the New York Times study is not longitudinal, and therefore does not tell us whether the purported mismatch is any worse today than it was 20 years ago. The Bureau of Labor Statistics itself projects that employment of lawyers will grow 13% between 2008 and 2018, about as fast as the average for all occupations. Growth at that rate over 18 years (e.g., from 1990 to 2008) would have resulted in total growth in legal employment of 23.4% -- MORE than the increase in the number of law graduates over the 1990 to 2008 period. In other words, the BLS projection implies that the job market may support an even more rapid expansion of the number of law graduates over the next decade than it did over the period Brian analyzes.

Brian's focus on the growth in the size of law faculties seems be intended to suggest that faculty hiring is creating a structural problem that will come back to haunt law schools. What he does not show is that total faculty compensation has gone up at the same rate. My guess is that a large portion of the increase in faculty body counts reflects law schools' recent emphasis on clinical education. Clinical professors are typically paid substantially less than tenured or tenure-track faculty. The 47.76% increase in body counts therefore probably does not reflect a corresponding increase in cost. It is not clear that even tenured/tenure-track salaries have kept pace with corresponding salaries in the private sector. Real GDP per capita increased by 64.66% over the same period, nominal GDP per capita (which would correspond roughly to salaries in dollars) by 129.36%. To keep up, if you were paid $80,000 in 1990, you should be paid $183,488 today. Are you? Brian's suggestion is further undercut by the financial data law schools submit to the ABA. Between 1998-1999 and 2008-2009 (the period as to which I have access to the relevant data), the percentage of average law school direct expenditures comprised of instructional and administrative compensation fell from 64.30% to 58.55%. That's right, FELL. If there's a structural problem, it's not that law schools are spending too much on faculty.

Is the sky falling? I don't know. But I will need more than Brian's and the New York Times' numbers before I run for cover.

For more, see Larry Ribstein (Illinois), Law Schools as Borscht.

Update: For Brian Tamanaha's response, see The Crunch Is Coming for Law Schools.

http://taxprof.typepad.com/taxprof_blog/2011/07/seto-.html

Legal Education | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341c4eab53ef01538f8e45fa970b

Listed below are links to weblogs that reference Seto: Is the Sky Really Falling in Legal Education?:

Comments

I don't think that Mr. Seto will have to run for cover, at least for a long time as he seems well entrenched. But what about the students? Weren't they Tamanaha's primary focus?

Posted by: Shag from Brookline | Jul 1, 2011 6:40:18 AM

Oh my, I agree with Ted Seto once again, "one of us is changing or maybe we both stopped trying" (Carole King)

Posted by: mike livingston | Jul 1, 2011 9:30:19 AM

This from a guy that teaches at a school with one of the highest forced first year attrition rates of the U.S. News top 100 (some of those forced out held, and lost merit aid to attend the dump);

This from a guy that teaches at a school where a mere 65% or so of its students graduate with jobs, and of those, many are not full time positions that pay a wage that can support the preposterous 43k a year tuition that pay Seto's bills.

Oh, I'm quite sure you aren't running...But anyone thinking of paying a dime to attend schools like yours should run, and that's really the point of all this...And thanks for pointing out that you are insulated from the realities of this misery.

Stop while you are ahead Mr. Seto.

Posted by: Loyola '05 | Jul 1, 2011 3:05:24 PM

On the increase in profs side, does that include adjuncts? if not, wow. adjuncts are paid token amounts for the privilege of teaching at a law school. more than just a handful of courses are taught by adjuncts (there is an Adjunct Prof Blog as part of the Law Prof Blog Network). and it seems as though many schools are using adjuncts more than they did in the early 90's.

This is not to say law schools aren't charging too much, deceiving students with employment stats (how many employed, how much paid, and how they are employed), and admitted too many students (more students = more money).

The market is overs saturated. The ABA should adopt some version of the Medical School Model. Medical schools do not just enroll unlimited amounts of students and new ones aren't popping up year after year.

Posted by: tax guy | Jul 1, 2011 5:52:03 PM

One possibility is that we HAVE been overproducing lawyers for a long time, but in the red-hot economy before the recession, nobody noticed because lower-tier law graduates got non-law-but-still-pretty-good jobs anyway, so who was complaining?

Posted by: John Bragg | Jul 2, 2011 9:24:22 AM

Shouldn't added productivity also be factored into this? We should expect our lawyers to become more productive, not to maintain the same level of productivity.
Therefore, we shouldn't peg the growth of the legal labor force to the growth of the population.

Posted by: Half Canadian | Jul 2, 2011 11:22:17 AM

As a proxy for the kind of jobs that financially justify the massive investment in time and money that law school requires, I think it is useful to use the cumulative number of lawyers employed by the National Law Journal's "Top 250" firms.

By my count (http://pdfserver.amlaw.com/nlj/NLJ250_Poster2011.pdf) the Top 250 firms in the country currently employ approximately 124,000 lawyers, down about 10,000 in the last two years.

Per the ABA (http://www.americanbar.org/content/dam/aba/migrated/marketresearch/PublicDocuments/Lawyer_Demographics.authcheckdam.pdf) there were approximately 1.18 *million* lawyers licensed in 2008.

Or nearly *ten times* the number of lawyers in the Top 250 firms.

Per the National Association of Legal Professionals (NALP - http://www.nalp.org/uploads/NatlSummaryChartClassof09.pdf), approximately 44,000 students graduate from law school *each* year.

If this rate is sustained for 40 years (mirroring the 40 yr career of a 25 yr old who works until 65), then a "steady state" of approx. 1.76 *million* lawyers will be out there.

Compared to about 125,000 jobs that actually pay the high salaries that the law schools encourage/mislead applicants to believe that *almost all* law school grads receive...

...otherwise, who in their right mind would take on the huge debt required to attend law school?

Not the ocean of solo lawyers, government lawyers, and utterly unemployed lawyers that actually exist, and who are crippled by their law school debts.

But this 90% of the "profession" have already had their financial lives destroyed by the law schools.

So, about 10% of law school grads live the "dream" (including 80 hour weeks...) and 90% live the debt nightmare.

Soon to be 93%. Some of whom will surely be suicides.

What an honourable profession, safeguarded by even more honourable institutions...

Posted by: sca721 | Jul 2, 2011 1:18:27 PM