Seto: Is the Sky Really Falling in Legal Education?

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.