Starting Pay for New JDs is Trending Down

NALP (National Association for Law Placement) issued a press release on the employment and salaries secured by the graduates of the class of 2010. It is not a happy picture, which should come as no surprise.

They had earlier reported (in June) that 50.9% of the 2010 grads had jobs compared to 55.9% of the 2009 class. And more of the jobs are in smaller firms than in earlier-graduating classes. As we will see, this tends to depress the salaries. Part-time jobs make up about 11% of the jobs reported to NALP overall of the jobs requiring bar passage. But part-time jobs are especially prevalent in the academic sector and public interest sector, for jobs requiring bar passage. Only 68.4% of the class of 2010 reported to NALP that they had obtained jobs for which bar passage was required by the time of this report, and only 64% had full time employment in jobs requiring bar passage. 27% of the jobs were temporary, including judicial clerkships. Excluding clerkships, the percent of recent grads holding temporary jobs requiring bar passage is 19%.

2009

Nat'l.
Median $72,000

Nat'l
Mean $93,454

2010

Nat'l
Median $63,000 (down ~13%)



Nat'l.
Mean $84,111 (down ~10%)


* All figures for those reporting full time work. Note that there is a large discrepancy between large firm salaries, which tend to cluster between $145-160,000 and small firm and other salaries, which cluster around $40-65,000. This means that there are very few salaries that actually fall anywhere near the mean or median points. They should actually skip this national overall analysis and just do the separate analysis for large firm rates and small firm and alternate practice rates, I think!

By type of work:

Law firm:

2009

Nat'l.
Median $130,000

2010

Nat'l
Median $104,000 (down ~20%)


Adjusted
Mean

2010

$93,748 (they did not include the 2009 figure)

Virtually no change from last year for public service & government salaries. So most of the downward pressure on the salaries is coming in the law firm market.

I recommend reading the short report in full, though it is not happy news.

Prof. writes about "scambloggers" reshaping legal education

The angry law students and recent graduates, disillusioned by the terrible job market have been much covered by the legal press and blogs like Above the Law, and the ABA Journal online. Their blogs like Third Tier Reality, Law School Transparency, and the Temporary Attorney, Lawyers Against the Law School Scam, Subprime JD, and many more have been noted at law schools and the ABA alike.
The ABA reports on law professor Lucille Jewel of John Marshall Law School in At;anta who has an article in the latest issue of the Minnesota Journal of Law, Science and Technology (vol. 12, issue 1, Winter, 2011), You're Doing it Wrong: How the Anti-Law School Scam Blogging Movement Can Shape the Legal Profession, at page 239-278. Prof. Jewel argues that the acid tone of the proliferating blogs by angry students and graduates is having a slow but powerful effect changing the law schools and the ABA which accredits law schools. The blogs raise the problem of an oversupply of lawyers in the job market, the exorbitant expense of legal education, and a lack of transparency in how law schools report and publicize post-J.D. employment data. Deans and administrators are reacting to the criticism.


Meanwhile, Prof. Bill Henderson of Indiana University has been studying the job market for some time and has come up with an article in the
ABA Journal and online that considers whether the changes in the legal marketplace were happening before the economic meltdown, and are part of a paradigm shift. Henderson has graphs showing big shifts from employment in law firms to more demand for legal services from low to middle income people who cannot afford the traditional law firm model, whether big or small firm. Henderson compares legal services to many other industries: architecture, newpapers, insurance, securities, and accounting to consider ways in which this business (which so few of us have really thought of as an industry) needs to change in order to take advantage of the new marketplace.

I keep telling students that in some ways, this meltdown actually is like a big forest that has had a tornado rip through. it leaves huge swathes of space open for a different kind of growth. If they are willing to think differently about delivery of services, there is a huge demand for services that is unmet. People who have connections in their community through ethnicity, religion, sports organizations, dog walking or any sort of connections, or who are willing to make those connections, can build a constituency and have word of mouth advertising. Attorneys who do good work for a fair price will find a market. But to make a business model that can be scaled and replicated into a larger group than just a one or two person office, you need to think very creatively about how to break apart and re-deliver the pieces of what have been done in traditional offices.

Look at the Henderson article for some provocative ideas.

Surfeit of Lawyers?

The New York Times Economix Blog reports today on the number of lawyers passing the bar per state, compared to the number of openings for lawyers in existing firms, and whether that amounted to a surplus or shortage. They created a nifty chart, including hourly wages for the 2009 bars. They conclude that the most over-lawyered states, in order:

New York
California
New Jersey
Illinois
Massachusetts
Pennsylvania

There is a fairly sharp drop down to the next states below these, if you are tracking the surpluses. There are a few places where the production of lawyers is not so far out of line with the demand. And you must keep in mind that not all those who pass the bar are looking to take jobs advertised with law firms. There are people who want to work in academe, business, finance, health care with a JD degree and have the bar behind them. And there are a number who take the bar exam planning to hang out their own shingle or work in a small firm or who already have a job in hand. But, it is a disturbing analysis, especially when you look at the overall total for the nation: In 2009, we produced 27,269 more lawyers who passed state bar exams than there were advertised positions for.

Flying Solo

How bad is the job market for new attorneys? According to this press release from NALP, the National Association for Law Placement, the class of 2010 "faced [the] worst job market" since 1996. NALP Executive Director James Leipold stated that

The tail of the "Great Recession" is long and there are few bright spots in the employment profile for the Class of 2010 ... Most of the structural weaknesses in the job market faced by the Class of 2009 intensified for the Class of 2010 ...

The press release accompanied the "Employment for the Class of 2010--Selected Findings," which was published on June 1. The full report, Jobs & JDs: Employment and Salaries of New Law School Graduates, will be published in August. It is highly unlikely that the employment situation will be any brighter for the Class of 2011. According to Leipold,

There is likely more bad news to come ... we can expect that the overall employment rate for new law school graduates will continue to be stagnant or decline further for the Class of 2011, with the curve probably not trending upward before the employment statistics become available for the Class of 2012.

So what is the new attorney to do? Some attorneys are deciding to start solo practices, eschewing offices with high overhead and instead practicing from home with a laptop and a cell phone. NALP reports that the

[N]umber of recent law graduates going solo increased from 3.5 percent in 2008 to 5.5 percent in 2009, the biggest one year jump since 1982. ... That percentage increased to 5.7 percent of all private practice jobs for the class of 2010, the highest it's been since 1997.

This trend is discussed in a recent article which describes how new attorneys are hanging up "virtual shingles" by taking advantage of technology. One important task when setting up a solo practice is to build a website which can be used to attract clients. Blogging and social networking are also efficient ways of connecting with potential clients. Most of these attorneys are maintaining paperless offices and doing without staff support. The solo attorneys interviewed for the article were extremely dismissive of law schools and their focus on placing "graduates in government, public interest or corporate law firms." There is little to no attention paid to set up and maintain a solo practice. Even worse, according to the interviewees, is that the

[M]ajority of law schools continue to focus on how to interview for jobs or submit resumes for job postings, rather than honing the skills needed to be a successful business person.

A good resource for solo practitioners is the MyShingle blog, which describes itself as "the most comprehensive online resource for solo and small firm lawyers with thousands of blog posts and an impressive stock of free e-books, checklists and forms on starting and running a law firm." Another good resource for solo practitioners is Solo Practice University, "a subscription-based website founded in 2009 that offers video, written and audio tutorials for prospective or current solo practitioners."

I was surprised to see that the article did not mention access to legal research databases, such as Lexis and Westlaw, and less costly alternatives to them, both free and fee based. One of the best services my law school provides its graduates is free lifetime access to the law library. As a private institution, we are closed to the public, but our alumni do not have to pay the usual access fees. Many of our alumni have set up solo practices in the area, and they are coming back on campus regularly to use the library. Not only are they taking advantage of our public-access Lexis subscription, but also they are using other databases and the print collection. We have also created a research guide on free and low-cost legal resources, and this is extremely popular among both current students and alumni. It is great to see our alumni again, and to feel that we are contributing to their professional success.

Law Firms and the "Two Tier System" for Associates

The Boston Globe today ran a story originally from the New York Times about law firms setting up a "two tier" system for their associates rather than "off-shoring" jobs. The idea is that they offer one set of associates the traditional partnership track. These associates are housed at the offices in the big cities and do the large number of billable hours, and may do more complex work. There is a second set of associates now, though, with varying names. They may be called "career associates" or "permanent associates," and their offices may be in alternate cities or towns with lower cost of living. They are never going to be partners in the firm, and are not expected to work the high number of hours. They may also be doing more mundane work. The upside is that they have more time for family, or outside interests. They typically earn $50 - $65,000 in a year. There is a note of warning sounded in the article about the problems these "permanent associates" have paying off their law school loans on these salaries. And the article talks about the care the firm they feature, Orrick,Herrington and Suttcliff, is putting into managing perception: "There are no second-class citizens at Orrick."

I took a quick look around the Internet and found lots more articles in legal publications about the phenomenon. For instance, from 2009, the ABA Journal has one upbeat management-oriented article about this trend, "Are you Offering the Golden Egg or Golden Handcuffs? Alternatives to Partnership." But, by the fall of 2010, the ABA reported on a study, "Have Law Firm Structural Changes Created a Pink Ghetto?" Obviously, the flexible time of the permanent associate track may be more attractive to young women of child-bearing age. The study looks at the paucity of women in partnership ranks in multi-tier firms compared to single tier firms.

And the July, 2010 issue of The Recorder has an article that looks frankly at the costs and benefits of the structure. The author notes that while the firm pays the alternate track lawyers about half of what it pays the partnership track associates, it typically bills clients for their services at a discount only 25 - 30% less. So, the firm makes a nice profit by using the two tier system. But, the system may not be quite as profitable if looked at in the whole picture, according to this author's analysis. Apparently, the firm often must fix mistakes or re-do some of the non-partner lawyers' work in order to bring it up to the firm standard. While some of the lawyers hired for this tier are certainly the quality that would be hired for the partner tier, others may not be. And the non-partner associates are working in a separate office, in a distant city, making communication more complicated and difficult. These are some of the same problems that plague out-sourcing and off-shoring work. But the article ends with a positive note about careful implementation of the system.