Epilogue 7: Recessionaires cont’d.

In July 2009 I discussed the cratering of the job market for young lawyers:

My prediction (and I will be happy if I turn out to be wrong) is that the legal job market is looking at a lengthy and painful retrenchment that will last beyond the end of the recession at large. The basic issue is that the supply of attorneys is outstripping demand.

According to this story in today’s Wall St Journal, not much has changed:

Alex Barnett spent 14 years as an attorney ... But after getting laid off by two firms in the spring of 2008, he began prepping for a different kind of spotlight: He launched a career in stand-up comedy.

Facing a tough job market, many lawyers struggling to find work ... are re-examining their roles and testing the waters in other fields. Some are attempting to stay in the industry by taking temporary work as contract lawyers—low-profile, lower-paying positions that often involve more routine work, according to consultants and industry experts. Others are becoming accountants, consultants or teachers.

“Quite frankly a significant number of lawyers are simply moving out of the profession, just looking to do completely different things,” says Jerry Kowalski, a law-firm consultant based in New York and Washington, D.C. “The overall picture is the huge oversupply of lawyers.”

Since the recession is technically over, I guess that means, once again: you heard it here first.

It also means, unfortunately, that all the advice I gave you in 2009 about suffering through the job market still holds, maybe most of all #1: If you’re thinking about going to law school, think harder.

And you really do need to do your own thinking, because law schools want your business. They will not put your well-being ahead of theirs. I continue to get fliers in the mail from UCLA law school about new-student recruiting events. I continue to read stories about how UCLA and other law schools are increasing tuition. (For instance, UCLA law tuition for the coming year (2010-11) is over $40K for residents and over $50K for nonresidents. That’s a 60% increase in the three years since I graduated.)

If American homeowners got into trouble by treating their homes as ATMs, it’s hard for me not to think that law schools are sailing into similar trouble by relying on the apparently endless flow of new students (paying higher prices) to prop up their finances.

You could say that UCLA is a special case, because it’s a state school and it’s had to respond to cuts in government funding. Fair enough, but let’s face it—every school is doing it. Here in LA, USC law school’s tuition for the coming year is nearly $45K; Loyola is over $41K; and Southwestern is nearly $39K. Law students are not paying more for prestige; they are just paying more.

So if my warning wasn’t clear enough before, let me put a finer point on it.

The idea that a law degree is “versatile” or “valuable in many fields” is a self-serving urban legend propagated by people who run law schools. The only job that requires a JD is being a lawyer. As to other jobs, though a law degree might help you in the pure sense of “make you a better-educated, more well-rounded person”, it will not help you in the economic sense of “provide a net positive return on investment”.

To keep the student inflow at the right levels, my impression is that law schools have been pitching themselves less as professional schools and more as finishing schools for young adults with good college GPAs. So far, it’s working. The result is that students are graduating, getting the same jobs they would’ve gotten without their law degree, but now they have $150K+ in loans to pay back. (By the way, any competitive advantage attributable to a JD outside the legal market shrinks as the supply of JDs increases.)

In essence, the law schools are pumping up an existing bubble economy of JDs, processing as many students as possible without considering the long-term effects on the labor market.

And just as the real-estate bubble couldn’t inflate forever, neither can the JD bubble. But the popping has been slower than the real-estate bubble, because unlike homeowners—who had to directly handle the consequences of sinking home equity—law schools are insulated from immediate consequences. By the time a student realizes their JD was a bad investment, they’re long gone.

Eventually, the terrible conditions for lawyers in the job market have to translate into reduced applications. Don’t they? To go back to the top of this post: lawyers are seeking supplementary careers in stand-up comedy? How many stories like this do potential law students have to read before the light goes on? One of the major reasons people drift into law school is because it’s perceived as a safe career choice. If the safety factor is plummeting while tuition is rocketing, how is it still a worthwhile investment?

For as long as there have been lawyers, there have been lawyers trying to talk people out of going to law school, so I worry that the answer to most of my questions is “Shut up, you cranky curmudgeon”. Hope springs eternal. Everyone who applies to law school does so thinking that the odds don’t apply to them. Law school students, perhaps, are not rational actors in the economic sense.

That’s too bad, because everything else about the job market for lawyers in the last three years has unfolded pretty much straight out of the Econ 101 playbook. I hate to be a naysayer, really I do. Before I went to law school in 2004, I made a relatively dispassionate assessment of the costs and risks, and compared being a lawyer to other options available then. But if I were making that same assessment in 2010, there’s no way I would pick law school.

Let me be clear that I’m not griping about the profession at large. Law is an important field; lawyers do important work; being a lawyer can be rewarding. All this remains true. My argument against lawyering simply has to do with the crumpling of the basic economic model that has sustained the profession to date.

Finally, a few thoughts from Justice Antonin Scalia, who raised some points in 2009 that I agree with and that law-school applicants should take seriously:

Well, you know, two chiefs ago, Chief Justice Burger, used to complain about the low quality of counsel. I used to have just the opposite reaction. I used to be disappointed that so many of the best minds in the country were being devoted to this enterprise.

I mean there’d be a, you know, a defense or public defender from Podunk, you know, and this woman is really brilliant, you know. Why isn’t she out inventing the automobile or, you know, doing something productive for this society?

I mean lawyers, after all, don’t produce anything. They enable other people to produce and to go on with their lives efficiently and in an atmosphere of freedom. That’s important, but it doesn’t put food on the table and there have to be other people who are doing that. And I worry that we are devoting too many of our very best minds to this enterprise.

20 Jul 10

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matthewb @ ucla
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