Friday, September 3, 2010

What Supply and Demand Means For Law Students - Part 1

It seems as if one reason that law school still remains attractive to potential law students today is that they really don't understand supply and demand - and what it means for their careers.  But then, how could they?  They have not had much experience with supply and demand and its impact.  Their experience has been to try to get into a great school, but if they fail, then they can typically still get into a decent school.  They still end up having a good experience, but maybe not the best.  I think that some students subconsciously apply this methodology to their decision to go to law school.  They think that they will try to get into a top firm, but if they are unsuccessful, then some lower paid firm will certainly offer them an opportunity.

I think that the potential law student's prior experience also may be a reason why potential law students are so resistant to listening to the advice of recent grads - quite simply, the experience of the recent grads with the job market does not square with the experience of the law students with regard to school admission.  We will take a deeper look at this below.  Also, although I was going to try to focus on shorter posts, it seems like when I find I have something to say, I like to state it completely.  Consequently, I am going to break this discussion into three parts.

First, I think that the potential law students fail to realize that there is a big difference between when someone is selling you a product vs. when someone is paying you to work.  When they are considering law school, they need to realize that they are being sold something - an education.  They are a customer.  I think that it gets confusing to them because law school involves work on their part - just like the legal job would - and that grades seem to feel like a reward for work just like a salary would.

However, a law school can just continue to expand its class size - unlike a law firm, in which the ability of the firm to hire any new associated is limited by the firm's ability to get work, which is in turn limited by the total amount of work the firm has.  This can play out very differently for a specific economic situation.  For example, in a bad economy more people are interested in going to law school - the law school effectively has more customers.  However, just the opposite is true with a law firm - in a bad economy, there are fewer people who want to buy its services.  More specifically, it's not just that the return on business models of the law school and the law firm are somewhat decoupled from each other - they are actually inverted in how they respond to the economy!

Second, it is pretty widely recognized that although there are about 45,000 new lawyers graduating every year, there are really only about 30,000 new jobs every year.  This means that for about a third of the class it doesn't matter how well they do - there just are no jobs available for them!  It's not a question of "getting a higher GPA" or "studying harder" or "network more" - these things might help you be in the upper 2/3rds, but it still does not change the fact that the bottom 1/3 is going to be out of luck.  Period.

Third, even for those that claw their way into the upper 2/3s they are typically not getting a job they want, as we have previously discussed here, only about 39% of law school graduates are getting a job that they are satisfied with.  What is really interesting here and exposes the weakness of the NALP statistics is that although only about 30,000 legal jobs were created for approximately 45,000 graduates, the NALP statistics still report a 94% employment rate.  Something very fishy is going on and the NALP statistics are likely far, far too high.

Continue this discussion in Part 2 here.

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