Thursday, January 17, 2013
[L]et’s all be clear that there is in fact loads of misery in the post-law-school world. There are literally tens of thousands of recent law-school graduates who made six-figure investments in their legal educations, many of them incurring huge nondischargeable loans to do so, who cannot find full-time, long-term employment making any substantial use of what they paid so dearly in time and treasure to acquire. This distress is by no means evenly distributed across the graduates of all law schools, but it is having real and significant effects at almost all of them, including many very well and thoughtfully administered institutions such as the one where I am fortunate to work. This is nothing short of tragic, and of course it has to be addressed to reduce the numbers of future victims of this misfortune. (And we should never forget that prospective reform of the kind currently under discussion in many quarters does little for those already caught in the riptide of the shrinking law-job market. Disaster relief for those already swept out to sea will be the subject of a future post, and is something we should all be thinking about as well.)
That’s why I’ve argued that What Matters Most right now is that there are not enough law jobs for the recent and imminent law grads entering the workforce: Responding to precisely these circumstances, the relevant markets are already bringing powerful forces to bear. What happens when you make more of something (here, entry-level lawyers) than the market wants? Supply contracts and price falls until the market clears. And that’s exactly what’s going on right now. Law-school applications are down precipitously again this year (hat-tip to Dan Filler for the latest numbers) as more prospective law students conclude that the investment of time and money in a JD is not justified. The first-year class that started this past fall is smaller than the previous year’s by at least 10% at roughly half the accredited law schools in the United States. Many schools will shrink, and some will simply fail when they cannot attract enough of what they consider the right kind of applicants. Similarly, price competition among law schools for desirable matriculants is already increasing, right now mostly in the form of price-discounting through offers of financial aid, but with a few institutions freezing and reportedly considering reducing their tuitions.
Judging from the oversupply revealed by the employment numbers gathered and disseminated by the ABA Section on Legal Education, my relatively unscientific guess is that we can expect the number of seats in accredited law schools to shrink somewhere between 20% and 40% from its high in the class entering in the fall of 2010. My equally unscientific guess is that we can expect to see the reduction fairly quickly (on an academic timescale)—perhaps within the next 3-5 years.
This correction, which is obviously substantial, will create more dislocation and hardship. That is deeply regrettable. Students at institutions forced to close will have their studies disrupted, and perhaps terminated (with concomitant loss of their investment) if they cannot find an institution willing to accept them as transfers. The faculty and staff of those failed institutions will lose their jobs, and finding similar jobs elsewhere will be very difficult as many of the schools remaining downsize their own faculty and staff to serve reduced student bodies. (The difficulties I am hearing about from very accomplished and talented applicants for law-teaching jobs this year are just a small harbinger of things to come.) Schools that choose to compete by reducing price, either by selective awards of financial aid that allow them to price-discriminate more effectively, or by reducing nominal tuition rates across the board, will undoubtedly require their faculties to teach more and get paid less.
These hardships will not fall equally on every law school. The really interesting questions are which schools are going to be most quickly and profoundly affected and why. I have some thoughts about that, which I’ll share in a post soon to come. Readers’ predictions in the Comments are solicited. In the meantime, some schools are embracing the inevitable proactively (props to Dean Frank Wu at Hastings, for example, who decided last spring to reduce his census by 20% even though he could still fill 100% of his existing seats, thus seizing the opportunity to manage into and through the change), while others will undoubtedly be dragged down in price or numbers kicking and screaming (and denying and denying some more).
Those in the Schadenfreude brigade who take some joy in these prospects should be ashamed. When markets contract, many people suffer. But is this the end of the world as we know it? Is “the system” going to “collapse”? Don’t be ridiculous.
The legal profession is still an indispensable handmaiden to the American economy. Even with a deeply depressed economy and critical structural changes reducing the staffing and pricing of legal services, there are still countless disputes of all kinds to be resolved, still deals to be done, and more regulations than ever to comply with. There is an interesting debate to be had about whether, in the medium or longer term, the traditional model of conventionally defined legal services provided by guild-licensed professionals will survive (Gillian Hadfield and Richard Susskind, among others, think—with apologies to Prof. Hadfield for oversimplifying her complex and nuanced views—perhaps not). But right now, and for the foreseeable future, there is no responsible argument that every law degree is “worthless” or that “the system” is on the verge of “collapse.” Over 23,000 of the law students who graduated in 2011 had long-term, full-time jobs requiring a law license within nine months, and some modest (and I stress “modest”) complement on top of that found work towards which their law degrees made a real and significant difference. That’s a lot fewer than the 43,000+ who graduated that year, and some of those who succeeded in the job market are making only a marginal living. Those are very significant problems that have resulted in real and serious loss, disruption and pain to many thousands of disappointed graduates. But to suggest that soon no one will be attending law school because there are, or will be, no economically viable entry-level law jobs is absurd.