Saturday, September 4, 2010

What Supply and Demand Means for Law Students - Part 3

In this part, we continue our investigation of supply and demand in the legal profession and its impact on the hiring odds for law students  - Part 1 is here. Part 2 is here. In this part I will contrast the current supply-and-demand impacted hiring odds with the previous situation in 2003 when the pendulum was in the opposite direction.

(Continuing from Part 2)

Those 2003 times are long gone now - the supply and demand equation has swung back the other way.  Now there are far, far more law students than available jobs.  (Thankfully, we seem to have reached equilibrium with "number of lawyers" vs. "amount of client work" so we can mostly stop with layoffs now.)  Using our average first-year hire GPA model, right now I would put it at about 3.7-3.8, which is the highest that I have ever seen it - or that anyone I have spoken to has ever seen. 

Take heed of the impact of the previous economy on law firms - when they felt the adverse impact, they tried lots of programs to minimize the impact (raises, appearance of caring), but there was very little success.  You are now seeing the converse with regard to law students.  As you would imagine, much of the language that law firms were subjected to as far as solutions to how to solve their problems were very similar to what law students get today.  For example:
  1. "You just have to reach out to them" was told to law firms then and you can hear the echo in the advice that law students are given to "just network more."  In 2003, it was people who were selling consulting services to law firms who were saying the mantra - now it is law schools that are selling legal services to law students.  It was BS then - market forces were primarily to blame - but law firms are big boys and if they were dumb enough to swallow it, then they should bear the cost.  However, law students are young and naive and should not be treated in the same fashion.
  2. The increase in pay to new lawyers to attract them at that time is now countered with a shift in that law students and new lawyers are willing to work for free or cheap.
  3. "Offer a better work-life balance" was told to law firms then, but "don't expect work-life balance" is the mantra today.  They are really just points on the work-life balance continuum, the position of which point is pretty much dictated by the supply-and-demand.
  4. Also, take a look at the recent efforts of law schools to inflate their grades to make their students more attractive and contrast it with law firms previously raising their salaries - it's not going to have much impact because everyone is doing it.
The bottom line is that people going to law school need to understand that the supply-and-demand curve has really stacked the deck against them at this time.  This is a fundamental economic factor - it is not something that you can "wish away" by responding by "well, I will study harder" or the like when I mention it to you!  This is not something that will vanish if you just "believe in yourself and work hard."  God help you - for many I just want to shake them.  I want to chalk it up to the insanities of childhood in recent years of giving trophies to everyone who competes, which programs kids to have absolutely the wrong impression of the real world - that they just have to try and there will be a trophy.  In the real world, if 20 people are competing and there is one trophy, then there will be 19 losers.  And the odds are that one of the losers will be you - or even me if I were stupid enough to compete in such a situation where the supply-and-demand were so out of whack.  Losing would not mean that you (or I) were not a good person or not good at competing - it would just mean that someone else was slightly better that day.  I might compete in such a contest for fun, but there is no way I would bet my life on it - nor would I even bet the $200K it costs for law school.

Quite frankly, right now is the worst time that I have ever seen to go to law school.  If I were presented with the option to go to law school today, I most likely would not go - certainly not if I failed to get a scholarhsip that ensured that I would graduate without significant debt.  Like the contest example above, for every 100 competitors, there are only 38 (or fewer) trophies.  It is really not a smart move to pay $200K to get in the race right now with those odds.  I know that potential law students have all kinds of confidence in themselves and think that they are the best, but so does everybody else - and I think that if you really took a step back you would realize that your confidence in yourself and the outcome is not warranted.  There really is not that much to distinguish you from your peers.  I know that you have been programmed from birth with miscues that are now conspiring against you to push you to go to law school, but PLEASE, PLEASE take a step back, read up on the impact of supply and demand, and get over yourself.  Your future self will thank you.

Continue this discussion in Part 4 here.


  1. "Using our average first-year hire GPA model, right now I would put it at about 3.7-3.8, which is the highest that I have ever seen it - or that anyone I have spoken to has ever seen."

    I concur. Setting aside "grade inflation," we are not interviewing students with 3.3-3.5 averages because there is a flood of students with better averages/class ranks.

  2. 9:33 - Thanks for the comment! It's amazing and a little frightening how high the bar is right now.

  3. The ABA should reduce the number of law school admission slots by a third. This is especially true after they supported the outsourcing of legal work overseaes and most of the first year associate work dried up.

  4. 2:10 - I definitely agree that it would be best if the total number of law students decreased by a third. However, the ABA would appear to run into some anti-trust concerns if they attempted to dictate this change. I recall that the ABA already had a run-in several years back with the Justice Department with regard to its oversight of law schools. One thing that the ABA could do as part of its mission of advancing the profession is to help people considering going to law school get more accurate information about the lack of available opportunities. The information currently available is clearly spun by those in the process with a financial interest and there is no capacity to audit the information for compliance. Also, the information should not be directly collected by those with a direct financial interest in biasing the info (law schools). Second, assuming that this info in collected and clearly reflects that a great percentage of graduates are being charged $150K for a non-existant or over-sold opportunity the ABA may wish to consider a recommendation to Congress that the total amount of student loan dollars made available to any one law school be based on the placement outcome at the law school. For example, if one law school is placing 70% of their students in solid, full-time jobs, then federal student loans will be extended to 70% of its incoming class. Conversely, if another law school is only placing 20% of its graduates, then federal student loans will only be available for 20% of its incoming class. Just a thought.

    With regard to the ABA supporting outsourcing of legal work, I was also disappointed. However, the primary focus of my disappointment was even broader. Specifically, the ABA is now seemingly advocating that legal work be performed by those without verifiably accurate legal training and beyond the authority of the ABA to oversee and regulate - which is really not in the best interests of clients. In a very real sense, it may now be easier for a person to do legal work for a US client when that person is outside the US and has a lower level of training than that demanded by the ABA in the US - which is really not a condition that we want to allow.

    I also agree with you that outsourcing is one reason that some of the first-year positions went away. However, I view it as a smaller-percentage reason far, far behind the impact of the economy.