Bill Henderson (Indiana), Supply of Law Graduates Is Shrinking, But So Is Demand:
The ABA just released 10-months out employment data for the class of 2016. The percentages of grads employed in full-time/long term Bar Passage Required and JD Advantage jobs is up (72.5% compared to 70.1% in 2015). However, the total number of these jobs is down (28,029 to 26,923).
Is this good news for law schools? Not really. The employment percentage is up only because the number of law grads is dropping faster than the number of jobs. But both numbers — grads (supply) and jobs (demand) — are declining. A true recovery would show the opposite.
The graph above reveals a dramatic drop in the number of law grads. The green bars reflect historical data. The orange bars are projections for the next three years based on incoming 1L classes that have already enrolled. (Based on a 10-year historical average, 90.1% of entering 1Ls receive a JD three years later.) Between 2013 and 2019, the size of graduating classes will drop 28.0%.
This may be the bottom of the trough, as the number of projected graduates is essentially identical for ’18 and ’19 (33,667 versus 33,658). Yet, it would be mistake to assume that things are headed back to normal. We have to go back to 1978 to find graduating classes this small. At that time, the US population totaled 223 million people. Since then, we’ve added another 100 million people.
A population gain that large should translate into a lot more divorces, wills, contract disputes, DUIs, and personal injury claims, etc. And likely it has. But it may be the case that a growing proportion of these legal problems cannot be cost-effectively solved by lawyers. ...
The chart below reflects employment outcomes (i.e., demand for new law graduates) since the ABA stepped into its new role as collector and disseminator of high-quality market information.
The key takeaway is that the entry-level market for law grads remains very soft. Of the six reporting years, 2016 had the fewest number of FTLT Bar Passage Required or JD Advantage jobs. ...
I created Legal Evolution because I became convinced that the biggest problem facing the legal profession and legal education was stagnant legal productivity. Stagnant productivity is bad because it means that solving legal problems is becoming, in a relative sense, more expensive over time. Thus, as practical matter, fewer people and businesses can afford to hire a lawyer to solve a legal problem. Those are the economic forces driving the green/orange chart above.
The problem of legal productivity will be recurring theme here. But a brief, concrete illustration is especially helpful for this post, as there is a systemic breakdown occurring in the practice of law. This is a substantial root cause of underemployed law grads, flagging starting salaries, and lower law school enrollments.