Paul L. Caron
Dean


Wednesday, July 20, 2016

Grads Of Mid- And Low-Tier Law Schools Hang Out Their Shingles To Survive In Brutal Job Market

AttyNational Law Journal, In Tight Job Market, New Law Grads Boldly Hang a Shingle:

Let’s face it, the Big Law life isn’t for everyone. Some 4.4 percent of law school graduates—or about 1,900 each year—launch their own firms, according to the National Association for Law Placement, which last ran the numbers in 2014.

In talking to young lawyers who went into business for themselves during the past few years, Law.com found that some had no choice: They couldn’t find a place at a law firm, where hiring from top-tier schools has improved since the recession but generally not from lower-ranked schools. Some of the recent graduates we talked to did find a law firm job; they didn’t like it. Others were realizing ambitions—they preferred the flexibility and autonomy of running their own practices, plus the close interaction with clients.

The solo career choice is not easy, they said, but added that practice incubators, which provide office space and support for young solos, can ease the pain. The lawyers we spoke to were virtually unanimous in their advice to others contemplating law school: Think carefully and understand what you’re in for, both during your legal education and when launching a career. Questions and answers have been edited for clarity and length.

https://taxprof.typepad.com/taxprof_blog/2016/07/grads-of-mid-and-low-tier-law-schools-hang-out-their-shingles-to-survive-in-brutal-job-market.html

Legal Education | Permalink

Comments

This actually makes a lot of sense in light of the strong earnings of solo practitioners over the last two decades. Census Bureau data shows that solo practitioners earn on average about $165,000 a year. Over the last 15 years they have stayed comfortably ahead of inflation thus undermining claims that a structural tsunami has destroyed the legal profession. No doubt earnings early in the career cycle are low and building up a practice is a challenge but the long run data support this kind of career path relative to life without a JD.

Posted by: Anon | Jul 20, 2016 11:06:29 AM

Average income for solo practitioners (who number about 350,000 souls), regardless of age or practice experience: $49,000 http://career.virginia.edu/blog/2015/jul/upside-legal-professions-crisis

Average starting salaries for four-year graduates of the class of 2015: $50,651. http://www.naceweb.org/s11182015/starting-salary-class-2015.aspx

I think that speaks for itself.

Posted by: Unemployed Northeastern | Jul 20, 2016 11:15:41 AM

That data - much beloved by the scam bloggers - is based on income self-reported to the IRS. There is a double bias to such data - those who self report incomes have a tendency to estimate downwards which also works in the favor of the scam bloggers. Census data is considered more reliable. It is also consistent with the results reported by the BLS/DOL.

Posted by: Anon | Jul 20, 2016 2:49:23 PM

[Citations missing, as they are for "Anon's" absurdly risible contention a few threads back that failing the bar 2 or 3 times isn't the end of the world - go tell that to NACIQI, if you even know what NACIQI is and why they essentially hold the Sword of Damocles over law schools at the moment].

Posted by: Unemployed Northeastern | Jul 20, 2016 3:55:37 PM

Like starting your own business. Rule of thumb is six months' worth of living expenses to tide you over until the business starts making money. Not so easy when you have $200,000 in law school debt and Aunt Sallie Mae breathing down your back!!

Posted by: Old Ruster from JD Junkyard | Jul 20, 2016 6:04:27 PM

http://www.bls.gov/oes/current/oes231011.htm

BLS Occupational Employment Statistics are based on mailed semi-annual surveys of establishments. The establishments sampled are drawn from state unemployment insurance files. Since many solo practitioners do not employ a secretary or paralegal, they do not make unemployment insurance payments and are not pulled into the survey sample. And solo practitioners with enough business to employ staff likely earn substantially more than those who don't. The survey responses also only represent 57.9 of total national employment in the May 2015 three year panel. Arguably, the IRS data is a more comprehensive sample. As for reporting bias, I’m not sure why anyone who intentionally under-reports to the IRS would accurately report their income to the BLS - or even bother responding.

I don’t see a breakdown for solo-practitioners or by firm size in the published BLS data, but it does indicate the median for all lawyers is $115,820 and the average is $136,260. The $165,000 number you claim would place the average solo-practitioner in the top-third of all lawyers. Where do your numbers come from?

The National Law Journal article is also specifically discussing recent graduates of low-tier law schools. Solo practice is challenging even for experienced lawyers who graduated from elite law schools who previously worked in firms, government, or public interest organizations. Imagine having no experience, no reputation, no referrals, and a lot of debt. Let’s be honest, the odds of success for these recent graduates in solo practice is very low.

And it’s that time of the year. The bar exam is next week. The pass rate this year is expected to continue to decline, particularly with low-tier law schools.

Posted by: Hopelessly Unemployed | Jul 20, 2016 7:21:23 PM

" As for reporting bias, I’m not sure why anyone who intentionally under-reports to the IRS would accurately report their income to the BLS - or even bother responding."

It does seem to strain the bounds of credibility to argue that solo practitioners are more likely to lie to the IRS, which is a crime.

Posted by: Twbb | Jul 20, 2016 8:53:25 PM

"Arguably, the IRS data is a more comprehensive sample. As for reporting bias, I’m not sure why anyone who intentionally under-reports to the IRS would accurately report their income to the BLS - or even bother responding."

On reporting bias see:

http://darp.lse.ac.uk/papersdb/Slemrod_(JEP07).pdf

http://www.gao.gov/assets/300/295119.html
http://www.gao.gov/products/GAO-09-815

GAO suggests 57% underreporting for sole proprietors generally.

On value of Census data, see:

http://leiterlawschool.typepad.com/leiter/2016/06/how-to-count-choosing-the-right-data-source-michael-simkovic.html

Paul Campos slandered Steve Diamond when he uncritically relied on Ben Barton's solo practitioner incomes data which is inaccurate (apparently Barton misunderstood the IRS data).

Posted by: Anon | Jul 20, 2016 9:26:32 PM

All those words and you still didn't provide an actual citation for your claimed $165k solo practitioner salary. This despite multiple other posters asking for it. How telling. And a random smear against a professor who is not in this thread. Keep it classy, Anon.

Posted by: Unemployed Northeastern | Jul 20, 2016 10:13:39 PM

I understand the syllogism you are proposing: Solo practitioners are sole proprietors. Sole proprietors under-report income. Therefore, solo practitioners under-report income.

Assuming solo practitioners under-report income, you suggest a substantial amount of under-reported income. The difference in average sole practitioner income that you cite ($165,000) and the amount derived from the IRS data ($49,000) is $116,000. That difference is more than the BLS median income estimate for all lawyers ($115,820). Where does your number come from?

Having recently participated in the American Community Survey, I am familiar with both the Census American Community Survey (ACS) and Current Population Survey (CPS) questions.

ACS Questions: http://www.census.gov/acs/www/about/why-we-ask-each-question/

The ACS does not ask the size of your employer. It does ask you whether you are self-employed or an employee. But many, including the IRS, consider partners in a partnership to be self-employed rather than employees. So even if you isolate ACS data by occupation and class of worker, it will not accurately reflect the income of sole practitioners. A self-employed lawyer may be a new graduate sole practitioner or a senior partner at Skadden.

CPS Questions: http://www.census.gov/programs-surveys/cps/technical-documentation/questionnaires.html

The CPS data presents the same problems as the ACS data. It does not ask the size of the employer, so a self-employed lawyer does not necessarily correspond to a sole practitioner. You would have to do additional research into the employer to determine if the respondent is truly a sole practitioner.

BLS Questions: http://www.bls.gov/respondents/oes/forms.htm

The BLS OES Survey is an establishment survey, so includes all employees, occupations, and incomes at a specific entity. You can discern sole practitioners from the data. But as mentioned previously, the survey sample is based on unemployment insurance files. That would naturally exclude solo practitioners without any employees, which is a significant number of lawyers and likely excludes those with the lower incomes.

I’m not familiar with the IRS data analysis, but I still contend that people who under-report to the IRS would also under-report to the Census - if they even bother to respond. What would cause them to lie in one instance but tell the truth in the other?

You previously claimed the average solo practitioner earned $165,000. Where does your number come from?

Posted by: Hopelessly Unemployed | Jul 21, 2016 1:15:57 AM

Has Steve Diamond explained the fates of the 70 2015 santa clara graduates completely unemployed 10 months after graduation from his very expensive school? 70 graduates out of 219, that’s 32% of the 2015 santa clara class with no form of employment 10 months after graduating from Steve Diamond’s shimmering tower of a school. Those folks are just anecdotes, however. Their suffering is no concern when considering the collective good that law schools do for their staff and administrators. . . I mean students.

Perhaps the S&M wage premium just hasn’t kicked in yet, and once it does boy will I be sorry I ever questioned the law school status quo.

Posted by: terry malloy | Jul 21, 2016 3:35:56 AM

@Terry Malloy,

Didn't you know that long-term unemployment, just like failing the bar multiple times, has zero negative effects on job prospects? Employers totally prefer week-old bread over loaves fresh from the oven! /sarc

Posted by: Unemployed Northeastern | Jul 21, 2016 8:10:54 AM

Campos claims that solo practitioners salaries have fallen but the data he relies on appears to be not in fact for lawyers but for "legal services" which includes other job classifications in addition to lawyers (such as notaries who are less well paid).

That data has a number of other problems including being only business income not including possibly separately reported personal income and it also appears to be based on net earnings so is dependent on how deductions are used by the filer.

The more reliable census data (ACS) says self employed unincorporated "lawyers" earned 165K in 2014.

Posted by: Anon | Jul 21, 2016 9:12:35 AM

Unemployment rates at lower ranked schools do not contradict the evidence of Simkovic and McIntyre's research showing that even among lower ranked schools there is a lifetime earnings premium when one has a J.D. relative to life with just a B.A.

Posted by: Anon | Jul 21, 2016 9:15:12 AM

"Unemployment rates at lower ranked schools do not contradict the evidence of Simkovic and McIntyre's research showing that even among lower ranked schools there is a lifetime earnings premium when one has a J.D. relative to life with just a B.A."

Of the six people playing russian roulette, five won 1,000$ and one died of a gunshot wound to the skull. the net benefit is clear at an avarage of #833.33 per person. Let's play!

How much suffering are you willing to accept to enrich law school administrators and professors?

The answer appears to be quite a lot.

Posted by: terry malloy | Jul 21, 2016 3:27:39 PM

"Unemployment rates at lower ranked schools do not contradict the evidence of Simkovic and McIntyre's research showing that even among lower ranked schools there is a lifetime earnings premium when one has a J.D. relative to life with just a B.A."

It shows no such thing for this generation of law school graduates, as well you know. Not to mention that S&M's law school loan assumption of $89k is basically 50% too low now. And of course the comparison of the 25th percentile law school graduate to the 25th percentile college graduate is risible, since for most of the antiquated period S&M measured, barely 50% of law school applicants were accepted anywhere. And why not compare the cost and wage of a JD to other graduate degrees? It's not as if it's a high burden to get an MBA somewhere; heck, the US produces nearly 200,000 of them per year - many of which go to liberal arts and humanities students.

Posted by: Unemployed Northeastern | Jul 21, 2016 3:48:32 PM

"the evidence of Simkovic and McIntyre's research showing that even among lower ranked schools there is a lifetime earnings premium" does not dismiss the reality that the Secretary of Education is considering yanking the ABA's accreditation powers - a more or less unprecedented punishment for a graduate school accreditor whose flock is 97-98% non-profit institutions, over concern about graduates' debt levels. And since the Department of Education is where Direct Loans come from, they know exactly how many lawyers have a "wage premium" sufficient to, you know, make their standard or extended student loan payments, versus having to claim a partial financial hardship and go on IBR, PAYE, or REPAYE. Doesn't look good, folks. Reform is coming, one way or the other.

Posted by: Unemployed Northeastern | Jul 21, 2016 3:59:36 PM

And has anyone else noticed that Anon, ostensibly a law professor, rather amusingly has confused slander and libel? Libel is written, slander is oral. Facepalm.

https://www.law.cornell.edu/wex/defamation

Posted by: Unemployed Northeastern | Jul 21, 2016 4:17:04 PM

it's a measure of the character of the scam bloggers that Unemployed is amused by such things.

Posted by: anon | Jul 21, 2016 5:16:32 PM

Terry, You forget that they may have suffered even more with just a BA.

Posted by: Anon | Jul 21, 2016 5:17:18 PM

I surmise that a particular scam blogger's unemployed (or self-defined under-employed) status might be at least in part due to the fact that he (1) spends so much time repeatedly posting the same points on numerous blogs (rather than, for example, looking for a job or working to advance in his current one), (2) is so embittered by and about law schools that I can't imagine he'd come off well in an interview or in a professional setting and (3) is still emotionally young enough that he still references the name of his alma mater as part of his moniker. (In my experience, mature, well-adjusted adults generally don't obsess so much over their alma maters: at some point, one tends to grow out of that).

Posted by: Anon | Jul 21, 2016 5:58:32 PM

It is a measure of how seriously we should take Anon's still-uncited "facts" that he doesn't know the difference between slander and libel.

Posted by: Unemployed Northeastern | Jul 21, 2016 7:34:27 PM

@Anon: more than 30% unemployed after paying for a legal education. Where is that data guy?

Posted by: terry malloy | Jul 21, 2016 8:14:43 PM

Still can't find those cites, eh, Anon? I just take my cue from that guy who wrote an 11,000 word rambling whinge to the New York Times when they had the temerity not to cite his three-year old study, and then take the time to explain exactly why they did not find it noteworthy.

Posted by: Unemployed Northeastern | Jul 21, 2016 9:38:05 PM

I realized you are reading challenged Unemployed but I have cited that 165K salary several times - including in my opening comment. US CENSUS BUREAU ACS. Note that your fellow hard case, Hopelessly Unemployed, had no trouble figuring this out. Perhaps his situation is not quite as hopeless as he thinks. At least he pays attention.

Posted by: Anon | Jul 22, 2016 4:42:24 PM

Oh dear, Anon believes that saying something is the same as citing it. How precious! Unfortunately, unsubstantiated ipse dixit statements do not have much sway with lawyers. It is completely obvious that this figure is something you pulled out of your imagination.

Posted by: Unemployed Northeastern | Jul 22, 2016 6:12:28 PM

My bad - I thought you of all people followed Brian Leiter's blog with religious fervor:

http://leiterlawschool.typepad.com/files/2016.06.22-total-personal-income-of-full-time-lawyers-from-acs-by-class-of-worker.pdf

Posted by: Anon | Jul 22, 2016 11:08:33 PM

Hey Anon, "US Census Bureau ACS says that high school dropouts make a quarter million dollars per year on average." See, it's proof! I put quotation marks around it and everything. That's how you read: a silly, anonymous poster quoting nonsense who is confused by very basic causes of action in tort law like the difference between slander and libel.

Posted by: Unemployed Northeastern | Jul 23, 2016 6:56:05 AM