Monday, December 28, 2009

Comparing Hiring Odds Now And In The 1990s Recession

The ABA Journal has an article entitled "When the Detour Becomes the Destination
How 5 grads survived a recession—and how you can too".  The article gives several examples of lawyers that launched their careers during the last legal recession during the early 1990s.  The article is an attempt to be inspirational and give hope to those law students that are struggling to find jobs during the current recession.  That's a sentiment that I applaud.  However, I don't think a straight comparison of the early 1990s recession with the current recession paints an accurate picture of the employment situation - and that does a disservice to current law students and those considering entering law school.  We take a more detailed look at the assumptions and likely outcomes below.

First, we note that the early 1990s recession only lasted eight months - from July 1990 to March 1991.  That's shorter and milder than the typical recession.  Conversely, the current economic downturn is generally regarded as beginning in December 2007 - which means that it's been going on for 24 months now.  That's already 3 times the length of the 1990s recession.  The current recession is also much more severe in terms of overall job loss and stock market decline.

Next, as cited in the ABA's article, during the 1990s recession employment after graduation fell from 92.2% in 1987 to 83.4% in 1993 - that's a significant 9% decline.  However, even these employment numbers paint an inaccurate picture.  For example, when a regular person reads that 83.4% of law school graduates were employed after graduation, they typically assume that the graduates were employed - AS LAWYERS.  Unfortunately, that's not the case here as we will explore more below.

In this regard, at the bottom of the article is a handy chart provided by NALP that lists percentages "employed legal full time" and "jobs in law firms". We note that "employed legal full time" is "any full-time job in a legal field."  Are you forced to work as a paralegal?  Are you working for the law school?  These would probably count.  Further, as we have previously noted here, even NALPs numbers are most likely biased higher by reporting bias.  That is, NALP relies on voluntary disclosure, and if someone is embarrassed about not having a job then they just don't send in the form and they are not counted and don't appear in the statistics.

To me, the most important number to track in this chart is the percent hired by law firms.  We note that the number peaks in 1988 at 64.3%, but by the worst part of the depression in 1994 the percent hired by law firms has declined to 55%.

However, one telling tidbit of data is that by 2008 - BEFORE the most recent recession and its huge impact on employment -the percent hired by law firms had only risen to 56.2%.  Yes, you read that right - even BEFORE the most recent recession, about HALF of the law school class did not get a job in a law firm. 

Also, we note that from 1993 -1995 about 30% of the law students didn't even get a full-time job in the legal field.

What's The Impact?
The early 1990s recession was mild, but even with only a mild recession, about 30% of law students were not able to obtain a full-time legal job, and only about half were able to get a job in a law firm. 

However, the current recession is much deeper, consequently I would not be surprised to see the percentage of law graduates working in a full-time legal job fall to 50%, and the percentage working in a law firm decline to 35%.

A comparison of the declines brought about by the mild 1990s recession seems to bear this out.  We note that due to the 1990s recession the percentage working in a legal field declined from 84.5 in 1988 to 69.6 in 1994, a difference of 15.5%.

Conversely, in 2008 the percentage working in a legal field was 74.7%.  Applying the percentage decline from the 1990s recession of 15.5% yields a result of only 59.2% of graduates working full time in a legal career.  However, we note that the current recession is much worse than the 1990s recession.  Consequently, this number is likely to be far too optimistic.

What's the best number?  Well, even though the current recession has lasted three times as long, I don;t think tripling the 15.5% decline is right.  That would result in only 28.2% of law students obtaining a full-time legal related job.  That seems too low.

One interesting aspect that would be good to check is whether there was the tremendous influx of law students in the early 1990s like we are having now.  That is, as you know, right now law school applications are way, way up - as high as 62% in some cases.  Also, there was a recent 20% increase in people taking the LSAT.  Conversely, what was the activity during the 1990 recession?  If law students went even crazier than now, then maybe we will not see as much of a decline.  However, if potential law students in 1990 did not jump on the law school bandwagon as much as potential law students are now, then maybe the decline that we will see now will be even greater.

Regardless, if you are thinking of going to law school right now, please be aware that even under the most optimistic scenario only about 59.2% of law students will get a full-time legal job at graduation.  Further, a less optimistic projection may push the percentage to only 50%, or even below.  Even worse, employment in law firms is likely to only be around 40%.

Please carefully evaluate whether it is worth accumulating the huge mountain of debt required to pay for law school when the prospects of a full-time job in the legal field at graduation are so minimal.  Even if attending law school is a life-long dream for you, you may wish to delay your entry date to a time when supply and demand are more in balance.  Good luck!


  1. Read my blog for more about the current legal landscape

  2. interesting expansion on that article.
    you just see so many of your classmates headed to law school and your the only one not going, just doesn't seem right.
    i guess it's a type of herd mentality and you are trying to break it because you look out ahead and realize it's a slaughter house. I know a few people that went to NYU and did journalism. They are so screwed, i don't even know how anyone could afford going to NYU for any type of non-engineering job

  3. law is 4 losers - The scenario you describe on your site is chilling, but all too common. I would advise everyone thinking of going to law school to read your site. You might be a little over-negative, but in light of the constant bombardment of over-optimism and misinformation that is provided to potential law students your site provides a valuable balance. I would hope that your site would encourage a potential law student to take a new and fresh look at their desire to go to law school and to do some serious consideration and investigation of their potential career path and whether law is for them.

  4. 11:54 - I certainly agree that there is a tremendous herd mentality when it comes to law school - and to undergrad as you note. I think that one other problem is that there is still some belief that schools are acting in part in the best interests of their students - "in loco parentis" used to be how they were expected to act. Conversely, law schools especially seem to have shifted to a more "business" model where students are "sold" and the law school disclaims responsibility for the student's success or failure. Pursuant to your undergrad journalism example, charging students $160K for a degree that makes an average of about $25K to start does not seem like it is in the best interests of the student. If schools are going to rise to their ethical standards - if they are really going to practice what they preach about ethics - then it is time to step up and start acting in loco parentis - in the best interests of the students. Conversely, if the schools would prefer to operate as a business, then maybe it is time to put their advertising claims under the microscope of the FTC's advertising regulations. It is disingenuous of the schools to claim to be acting in the student's best interests while not doing so and to either fail to provide information or provide stilted information.

  5. MP,

    Lemmings don't let the fact that they got a 151 on the LSAT discourage them from attending law school and "making something of themselves."

    But, you have third tier commodes like Albany claiming 94% employment within 9 months.

    And places like Albany are more than happy to let you in, at the oh-so-affordable cost of $38,900 per year.

  6. Hi Nando! I like the quotes you put around "making something of themselves" - I think that you are emphasising that what the law school is selling is the "status" of the law degree rather than a clear tangible financial advantage. Sadly, that is all too common these days. From reading your blog, I think that you might respond to the concept of going to law school to make something of yourself by saying something like - "Oh, it will certainly make something of you - - most likely roadkill!" Unfortunately, you would not be wrong in many situations.

    I am not familiar with Albany, but the statistics you highlight seem like they may be questionable. They seem to encourage the observer to believe that 94% are hired as attorneys, which we know is not likely. The chart that you reference does not specifically break out full time, part-time, legal vs. non-legal, and number no responding. That is information that an observer really needs to know in order to truly make an informed decision.

  7. Hi Managing Partner,

    I was wondering what your thoughts are on two particular issues, not exactly related to lawyer finances.

    1. Do you think there will be any additional demand for lawyer positions as a result of increased regulations by the federal or state governments in the Healthcare Sector; the Finance sector; and environmental regulations? While I was in law school, I was a part-time clerk doing random things related to Sarbannes-Oxley, and I'm pretty sure my job wouldn't have existed if that particular legislation didn't occur. Do you think there will be any additional demand on the government side to create and/or implement new regulations? Do you think that would also spur the target industries (healthcare, finance, perhaps manufacturing and utilities that pollute) to also have a higher demand for attorneys in order to comply and/or resist the govt regulations and bureaucracies?

    2. Let's presume that there is some level of increased demand for legal services due to increased regulation. Do you think that the current oversupply of attorneys has any effect or do you think perhaps the slate will be wiped clean? I have a feeling that the slate will be wiped clean and the "legacy" oversupply of attorneys won't really matter. That is, I think that even if hiring picks up, hirers will be looking to pick up attorneys from the new classes and the older classes (let's say class of '08 and '09) will be left as the "lost generation" and basically skipped over. Do you think that is a possibility? I think I've read on one of your other posts that you think the current oversupply will affect future classes in that the older attorneys will compete with the younger attorneys and the younger attorneys will be at the back of the line. Do you think it is at all possible that the reverse could be true and that the older attorneys will be skipped over?

    Sorry for the super-long post. Have a fantastic 2010!!

  8. Hi Coder Emeritus,
    Good questions. First, with regard to the potential increased need for attorneys as the result of federal regulation, I think that we may see some positions being created for attorneys, but I don't think that the total number of positions will be significant compared to the number of attorneys graduating law school. These positions also will NOT likely be going to attorneys without experience.

    As to your second question, I don't think that the 08s and 09s will be categorically skipped over by all firms. However, I think that there might be a difference in how some firms regard them. You also have to realize that the lateral market is mostly invisible and varies from city to city and with practice area.

    First question - are the 08s and 09s "laterals"? That is, do they have relevant legal experience that I would use to remove them from the general applicant pool? If so, then they are not going to be competing with the 10s and 11s. Realize that if you are a law firm, if you could have an experienced lateral or a new associate for the same price, then you are most likely going to pick the lateral. They just require less training and make you more money. In this regard, the 08s and 09s are going to be ahead of the 10s and 11s.

    Keep in mind that a sizable percentage of law firms do not hire associates right out of law school - period. They want some other firm to make the training investment and for the associate to have some track record before they hire. Of course, as their work picks up, they start hiring more laterals away from their initial firms and the initial firms start hiring more law students.

    Note: If you are an 08 or 09, you really want to do something that you can show on the resume gives you legal experience because you really want to be considered as a lateral rather than an inexperienced associate.

    However, if the 08 or 09 does NOT have relevant legal experience, then they are in the same pool as the 10s and 11s in terms of experience, but they are "out of phase" with the hiring process. That is, they are really not comparable with 1Ls and 2Ls - they are really comparable with 3Ls. However, those firms that are looking to hire 3Ls usually only look to them after the market for laterals has dried up. That is, if you want someone to start "right now", then you want a lateral - as long as you can get a good one.

    So, to go to the heart of your question, if I have a hiring decision between an older attorney that missed out on the hiring game as a 2L, but has been working part-time at a law firm and learning practice skills that I think are valuable as compared to a younger attorney without those skills, then (all other things being equal) the older attorney seems like the better bet. Conversely, if the older attorney has done nothing with the law degree for a couple years, then maybe the younger attorney is more aggressive and interested in the practice of law - and the decision probably goes to them.

    Now that I consider it, I assumed that most of the older attorneys would automatically recognize this and would thus automatically go out and get that experience. However, that may not be all that apparent to them. Thus, to the extent that a large percentage of them walk away from their law degree, you may indeed see some of the "lost generation" effect that you mention.

  9. "but has been working part-time at a law firm and learning practice skills that I think are valuable as compared to a younger attorney without those "

    I think that for BIGLAW recruiting, those practice skills are not particularly helpful and might even hurt you. BIGLAW partners know that attorneys who have had a taste of autonomy and responsibility tend to have a lot of problems adapting to life as a BIGLAW associate. Which involves constant micromanagement and an endless stream of nonsense work.

    BIGLAW has plenty of chiefs . . . the question is how many braves are needed.

    So what is a member of the "lost generation" to do? I'm not sure. In terms of BIGLAW, the stigma of having been unemployed for 2 years is probably worse than the disadvantage from having worked at a small shop.

    Still, I would say your chances of working at BIGLAW are pretty bad. Mainly you will have to hope for a severe attorney shortage like there was during the internet boom.

  10. Hi Sabril,
    Seems like we agree that one is in a better hiring position having worked for 2 years rather than being unemployed. I will also agree that the chances of an 08 grad landing a biglaw associate position right now are pretty bad - as you mention, the chances might be greater if a sudden lawyer shortage happened, but that does not seem to be on the horizon.

  11. Thanks for sharing this information on 1990 recession it will really help in feature analysis.