Attorney Mark Greenbaum has a widely quoted column in the LA Times arguing that there is a glut of lawyers in the marketplace, and that the American Bar Association should combat this trend by reducing the number of accredited law schools:
Remember the old joke about 20,000 lawyers at the bottom of the sea being “a good start”? Well, in an interesting twist, thousands of lawyers now find themselves drowning in the unemployment line as the legal sector is being badly saturated with attorneys.
Part of the problem can be traced to the American Bar Assn., which continues to allow unneeded new schools to open and refuses to properly regulate the schools, many of which release numbers that paint an overly rosy picture of employment prospects for their recent graduates. There is a finite number of jobs for lawyers, and this continual flood of graduates only suppresses wages. Because the ABA has repeatedly signaled its unwillingness to adapt to this changing reality, the federal government should consider taking steps to stop the rapid flow of attorneys into a marketplace that cannot sustain them.
From 2004 through 2008, the field grew less than 1% per year on average, going from 735,000 people making a living as attorneys to just 760,000, with the Bureau of Labor Statistics postulating that the field will grow at the same rate through 2016. Taking into account retirements, deaths and that the bureau’s data is pre-recession, the number of new positions is likely to be fewer than 30,000 per year. That is far fewer than what’s needed to accommodate the 45,000 juris doctors graduating from U.S. law schools each year….
The U.S. Department of Education should strip the ABA of its accreditor status and give the authority to an organization that is free of conflicts of interest, such as the Assn. of American Law Schools or a new group. Although the AALS is made up of law schools, it is an independent, nonprofit, academic — not professional — group, which could be expected to maintain the viability and status of the profession, properly regulate law schools, curtail the opening of new programs and perhaps even shut down unneeded schools.
I. The Data on Lawyers’ Wages.
Pity the poor lawyers whose wages are being “suppressed.” Based on Greenbaum’s account, one might think that many lawyers are scraping to get by at best. According to the Labor Department, however, the median annual salary of lawyers was over $110,000 in 2008, and even lawyers at the 25th percentile of pay in the profession made some $74,000 per year. Despite the recession (which began just before 2008), this is up slightly up in inflation-adjusted terms compared to the median in 2000 ($88,000, which translates to about $109,000 in 2008 dollars). Note that these are median salaries, not means, so the figures aren’t being inflated by the very high pay of a few elite lawyers at the top of the distribution.
Even if lawyers’ pay were to go down significantly, they would still be near the top of the income distribution, and would still be making more money than liberal arts graduates without science, engineering, or math skills could earn in most other fields. Obviously, the present recession has lowered wages and increased unemployment among lawyers. But the same can be said for virtually every other profession. The bottom line is that most lawyers are extremely well off, and don’t need any special government assistance to prop up their incomes.
II. The Demand and Supply of Lawyers is Not Fixed.
Greenbaum’s argument also relies on several economic fallacies. First, he assumes that the number of jobs for lawyers is fixed and insensitive to price. In reality, of course, an increasing number of lawyers will, other things equal, lead to a decline in pay, which in turn would lead to increased hiring. Of course, other things may not be equal. After all, the demand for lawyers is driven by the scope and complexity of law. Given the growth of government, the expansion of regulation of many types, and the increasing complexity of most areas of law, it is likely that the clients will have more need of legal services over time. Thus, it’s possible that the number of lawyers could increase significantly even as lawyer pay continues to rise.
Greenbaum’s second error is his implicit assumption that potential law school applicants are indifferent to expected costs and benefits. If the return to legal education drops, it is likely that fewer people will apply to law school, and some current lawyers will leave the profession. As with most other fields, market prices give people roughly accurate information on the demand and supply of labor. There is no need for the ABA or the federal government to try to regulate the supply of lawyers. Market competition will do that (and would do an even better job if not for the legal restrictions on entry into the profession discussed below). Indeed, ABA or federal government planners will probably do a far worse job than the market in trying to determine how many lawyers we need. Central planning of the legal profession is likely to encounter the same information problems that bedevil other types of central planning.
III. The ABA Seeks to Reduce the Number of Lawyers, not Increase it.
Finally, Greenbaum contends that the ABA has a “conflict of interest” that leads it to accredit too many law schools. The truth is the exact opposite. The ABA is an interest group representing lawyers. Like members of other professions, lawyers have an incentive to limit entry into their field in order restrict competition and increase their own pay. To say that the ABA has an interest in increasing the number of lawyers is much like saying that UAW workers at GM and Ford have an interest in increasing the number of imported Japanese cars. And indeed, the ABA imposes dubious accreditation requirements that make it very hard to start new law schools. At the state level, bar associations restrict entry into the profession by forcing would-be lawyers to pass bar exams that test enormous amounts of information that most lawyers don’t actually need to know to do their jobs. It’s also worth mentioning that the ABA and state bar associations artificially reduce the number of lawyers by requiring lawyers to spend 3 years at an ABA-accredited law school in the first place. Many lawyers could probably perform reasonably well even after just one or two years of legal education, or after an apprenticeship with a firm. The latter was the standard path into the legal profession in the 19th and early 20th century. Abraham Lincoln was one of many who entered the profession by that route, even though he had almost no formal education of any kind.
For very similar reasons, Greenbaum is wrong to assume that the AALS is free of conflicts of interest. After all, the AALS is an organization composed of existing law schools, most of which don’t want to see new competitors enter the industry.
Far from accrediting too many law schools, the ABA and state bar associations are running a cartel system that has the effect of driving up the cost of legal services. The poor especially often find it difficult to pay for basic legal services.
It’s understandable that lawyers would like to reduce competition in their field so that their pay might go up. People in most other professions probably feel the same way. The rest of us, however, should take a skeptical view of such special pleading (actually, the rest of you, since I’m a lawyer myself).
CONFLICT OF INTEREST WATCH: I’m sure someone will argue that I’m just saying this because, as a law professor, it’s in my interest for people to believe that going to law school is a good deal. Maybe so. But note that I advocate several reforms that are definitely not in the interest of law professors, such as allowing people to join the profession through apprenticeships, eliminating the legal requirement of spending 3 years in law school, and so on. More broadly, I favor greatly reducing scope and complexity of American law, which cuts against the longterm interests of both lawyers and law professors. As I argued back in October, the best way to safely reduce the number of lawyers is to reduce the number of laws.
Adam B. says:
There’s a basic flaw in his analysis; not every law school graduate with a J.D. wants to practice law. Many end up in business, consulting or academia (among other fields).
January 9, 2010, 6:45 amOctavian says:
Assuming arguendo that there is a glut of lawyers in the market place, there will never be a glut of COMPETENT lawyers in the market place.
January 9, 2010, 7:23 amgeokstr says:
I don’t think we’ve reached that point yet. I’m reminded of the story of the first lawyer in a small town starving for business, and then a second one moved in, and now they both have more work than they can handle.
And, by some strange coincidence, the complexity of the law is driven by the scope of the laws written by…lawyers.
And, based on a post a couple days ago, they’ve apparently found a perfect, politically correct means to do so, by denying the politically incorrect ones the ability to get licensed.
You guys are in the perfect catbird’s position. You can generate your own demand by having your compatriots in the legislatures write more incomprehensible and likely unnecessary laws, and the left gets the added bonus of being able to stop anyone with differing worldviews from being in on the game.
And you wonder why lawyers rank near the bottom in the public’s perceptions of their ethics? Interestingly, there are a number of categories made up mostly of lawyers that were ranked the same as or even lower than the generic “lawyer” category; state and local officeholders, congress, and lobbyists.
January 9, 2010, 7:38 amjcm says:
All around the world law is a undergraduate school with 4 or 5 years not a graduated school. There are deviations from the model like Italy with 7 years and the law school open only to the nepotes but ..
January 9, 2010, 7:47 amShag from Brookline says:
Are California’s fiscal problems in any way connected to the proliferation of law schools in that state over the past few decades? Without ABA accreditation, most of the graduates probably stayed in CA after passing the bar.
January 9, 2010, 8:11 amkdackson says:
Why is it that the first time a market imbalance appears, liberals rush to some kind of “regulation”.
And wouldn’t the ABA be violating some sort of anti-trust law by artificially limiting the number of lawyers – effectively colluding to keep prices high?
January 9, 2010, 8:21 amT. Gracchus says:
Is the use of “median salary” rather than “median income” intentional? A significant portion of lawyers do not receive any salary – e.g., solos, partners. (My guess is that it is a slip.) What is the mean income?
January 9, 2010, 8:37 amKenB says:
Geokstr says
I will concede that most lawyers’ writing is poor and unnecessarily complicated. But the only writing I regularly see that is poorer is that of nonlawyers trying to write legal documents. If what my clients produce is a guide to what we could expect, God help us if nonlawyers started writing the laws.
January 9, 2010, 9:31 amCornellian says:
According to the Labor Department, however, the median annual salary of lawyers was over $110,000 in 2008, and even lawyers at the 25th percentile of pay in the profession made some $74,000 per year.
From the point of view of someone thinking about law school, the better scale of measurement would be the income of people with law degrees, since a significant percentage of law graduates will end up not practicing law.
I don’t think it’s the role of the ABA or the government to place an arbitrary cap on the number of JDs issued every year, but I also don’t think law schools should be free to lie with impunity about the prospects their students have to recoup their investment in the degree.
January 9, 2010, 10:07 amBiolawguy says:
Anecdotally I just have a hard time believing those salary figures aren’t somehow misleading…I know too many law school classmates who are paid SO much lower. Not to mention many who never even found law jobs at all, and had to resort to something else! (I was fortunate in that my legal education was mainly supplemental to other pursuits, so I’m in the category of the first commenter here.)
Secondly, I don’t favor government restrictions, but I do favor:
1) Educating people about how bad the legal market is for so many graduates (esp. depending on school tier & legal specialty), and
2) Cracking down big time on the misleading/false job-placement statistics by some law schools.
January 9, 2010, 10:09 amEricPWJohnson says:
I have heard this argument from time to time concerning just about every profession from Medical (too many generalist and no specialists) CPA’s (In Louisiana they changed the requirements for accountants 3 times while I was in school) and a “certification test” for engineers that has always been bandied about.
The amount of professional labor hours in the legal field has been decreased by the availability of more sensitive case search software which basically replaced medium size law firms reliance on senior partners. New Associates could research more thoroughly and much faster than someone with more experience.
This computerization has also affected the enginnering field and the medical lab field as well.
January 9, 2010, 10:28 amTwirip says:
Well said. Too many libertarian lawyers seem oblivious to the fact that they work in something very like an old-fashioned guild system.
January 9, 2010, 10:42 ambyomtov says:
Cornellian and Biolawguy both have it right.
Discussing the median income of lawyers introduces a huge selection bias. You might as well base a decision on whether to pursue a baseball career on the income of major league players. What you want is the median income of law school graduates. For those who do not practice law you also need to know how much they would have made had they not gone to law school – what the incremental value of the J.D. is.
And if you want the market to solve the problem – and I share your opposition to govt action – it would obviously be a big help if the law schools made more accurate data on placement, salaries, etc. available. Markets don’t work well in the absence of information.
January 9, 2010, 11:04 amI'm a lawyer -- not a whiner says:
The LA Times op-ed was easily one of the stupidist things I’d read in a long while.
1) It is unusual to say that the availability of a consumer good should be limited specifically so that the providers can make more money — especially when the providers seem to be doing pretty well in the grand scheme of things. If you’re going to make that argument, then you have to at least show that there’s not such terrible harm from reducing the consumer good’s availability.
a) For law, one of the common complaints is that lawyers’ aid is the reverse of what this author is saying. The common complaint is that legal assistance in civil cases — particularly employment cases, landlord-tenant cases, public benefits cases, and family/divorce cases — is insufficiently available. For instance, the Chief Justice of the California and New Hampshire Supreme Courts just wrote an op-ed arguing for some public funding for civil lawyers and arguing to allow lawyers to take discrete parts of cases in order to make assistance more available. Some scholars have also argued for allowing paralegals to do more tasks (without a lawyer’s assistance) so that people can have at least some assistance.
b) This doesn’t mean that there aren’t lawyers practicing in the underserved areas. It means that their prices are too high, so the target populations can’t afford them. The classic response to prices that are too high is to increase supply. If you’re going to argue for the opposite — reduced supply — then you have to at least address the effect on underserved demand.
c) The dental analogy is particularly perverse. Public health experts seem to agree that there are far too few dentists in the U.S., and that as a result, public health is dramatically compromised. Dentist incomes have skyrocketed. But the poor are largely without dental services. Constriction in the number of dentists mean that there are very, very few dentists willing to accept Medicaide dental rates. And private rates are simply unaffordable for many. That means untreated dental problems. Remember the case of the young child in Maryland who died of a brain infection because his dental abscess went untreated? All the handwringing over that case shows that restricting supply is a particularly stupid way to deal with not enough supply!
2) There’s a parallel problem with the author’s argument that law school spaces should be restricted, because law school costs so much. If law school costs too much, the smartest answer is to allow more law schools to open up, allow them to escape from some of the ABA’s more artificial credentialling requirements (such as law library volumes, which are irrelevant in the digital age; and full-time faculty percentages), and let them charge less.
3) Finally, as commentors above observed, the author doesn’t understand the elasticity of supply in the market of people who are already lawyers. Lawyers very frequently leave and rejoin the profession. They leave for business, or for other professions, or to devote themselves to family. And they rejoin when they want. If lawyers aren’t earning enough, then more practicing lawyers will go into, say, real estate, education (I don’t mean legal education — that’s too small a field to affect the market — but lawyers do become schoolteachers), or nonprofits, or they’ll become stay-at-home moms & dads.
It never ceases to amaze me how lawyers think that they should be exempt from laws — such as laws against restraints on competition — that lawyers think should regulate the rest of the world. If Greenbaum thinks he doesn’t make enough money as a lawyer, then let him find another field the market values more — don’t restrict everyone else’s access to law.
January 9, 2010, 11:09 amA. Zarkov says:
Allow student loans to be dischargeable in bankruptcy. If law school is a bad investment in the sense that most graduates will have difficulty paying back their loans, then ultimately the high default rate will induce banks to stop making these loans. The government is at least partly responsible for the excessive number of graduates by protecting the banks.
January 9, 2010, 11:13 amLarryA says:
Everyone who sells a product makes claims about it. Caveat emptor.
It would do more good to change the government perception that people need four-year degrees to be useful citizens.
January 9, 2010, 11:13 amMartyA says:
How can there be too many lawyers? The federal government will be the employer of last resort for those the market can not employ. And, we will need them on Obama’s death panels in the rationing of health care to counter the ACORNers who may not be able to read or count.
January 9, 2010, 11:18 amA. Zarkov says:
“The classic response to prices that are too high is to increase supply.”
Isn’t the classic response lower prices? If I put a good up for sale and get no takers, shouldn’t I lower my price? Prices are an important signal in an economy as to what and and how much people want. One alternative is the Soviet Gosplan approach where committee sets production amounts and prices. This did not work out very well in practice and resulted in horrible misallocations of resources.
January 9, 2010, 11:26 amAllan Walstad says:
In general, where supply is restricted by government-enforced monopolistic accrediting associations, the libertarian response would be to eliminate the government enforcement of the monopoly. (Licensing requirements would similarly be a target for erasure.) In law, since cases are brought before government courts, it may be fairly argued that the government has a proper interest in making sure the courts (a limited, tax-financed resource) are used effectively; hence, a government-enforced credentialing system. I wonder to what extent the court system can be privatized? Are there not private arbitration institutions whose judgments are contractually enforceable? Are there unnecessary stumbling blocks to the more extensive utilization of private services? The private firms can determine for themselves the credentials they are willing to accept. Their economic success or failure in a competitive market would depend on their reputations, and those reputations would likely be established in large part through reviews and ratings by other firms that would spring up for that purpose.
January 9, 2010, 11:58 amI'm a lawyer -- not a whiner says:
Response to A Zarkov
Sorry – I should have said that the classic response to prices that are too high is to allow supply to increase by the addition of marginally lower-priced providers. That is, allow people to enter the market (with the expectation that they’ll enter and charge less). If there’s no increase in supply, then there’s no reason to think anyone will lower their price. Lawyers clearing the market at current prices have no incentive to lower their own prices.
January 9, 2010, 11:59 amAnonymous says:
The cost of hiring a lawyer is not only a problem for the poor. In fact, I think it’s a much bigger problem for the middle class who cannot qualify for assistance but who also cannot sustain bills that often exceed their income.
We were forced into litigation over the construction of our retirement home in which we ultimately won a substantial judgment. However, during the 3 years it took to make its way through the system, we lost a good portion of our life’s savings and had to borrow against the home we virtually had to rebuild in order to get an occupancy permit. We don’t expect to see a penny, either, since anyone with the will and the resources can delay or avoid paying.
I don’t even see how or even any venue in which the problems of the middle class in litigation can be addressed.
January 9, 2010, 12:08 pmKevin! says:
How do you write a piece like this claiming that the market will resolve imbalances without acknowledging the HUGE influence of automatic federal loans? Does it really violate some libertarian axiom to acknowledge that young students will seriously overdiscount the difficulty of repaying $150K four years after making the original commitment? Isn’t it predictable that sophisticated market players (law schools) with an information imbalance will evolve to capture the source of free government funds from unsophisticated players?
Plucking out median salary for ALL lawyers is jaw-droppingly simple. Leave aside how it ignores entirely bar failures and people who decide not to take the bar (they are people too). The issue at hand is YOUNG lawyers. NALP statistics (already grossly inflated) indicate that the median salary for the class of 2007 is around $70K. This distribution is bimodal — huge spikes at 150K, but also at 35-50K. Average debt load is in the range of $50K-80K — many go up to $120-140K– at 6%. The math is straightforward, but few students do it — they are worse off economically unless they win the bimodal lottery.
Wasn’t it not long ago we had a huge law school scandal about financial aid and loan service offices cutting sweetheart deals with private loan originators? Shouldn’t it be at least a concern that the rot from institutional capture goes that much deeper?
If libertarians are serious about keeping government out, they should push for a private response in order to prevent regulatory intervention. That’s what the LA op-ed recommends with the dentist suggestion! Or, if that is too severe, why not adopt the MBA example and allow independent audits of career service results? I suppose it’s easier to argue from theory that there is no problem.
January 9, 2010, 12:18 pmPurple Kooaid says:
kdackson says:
Why is it that the first time a market imbalance appears, liberals rush to some kind of “regulation”.
And wouldn’t the ABA be violating some sort of anti-trust law by artificially limiting the number of lawyers — effectively colluding to keep prices high?
Me:
This is EXACTLY what the AAMC (american association of medical colleges) does w/ the number of docs every year. This keeps wages very high for physicians and competition down.
January 9, 2010, 12:23 pmIt doesn’t hurt that state legislatures prohibit midwives from attending births and voila—-we have a 30%cesarean rate in the US. We all pay for this increase in maternity care.
Bryan Gividen says:
I am applying to law schools for admittance next Fall. I agree with Ilya and strongly disagree with the op ed. We don’t need a number divined by the ABA, government, or some other non-omniscient being trying to figure out the optimal number of lawyers.
However, there needs to be some regulated transparency. Many undergraduate students believe that being a lawyer is synonymous with having a 6-figure paycheck. (A drastically smaller proportion also think it is synonymous with being Matlock, but we’ll let that alone right now.) From what I can tell, law schools do everything they can to feed off of this myth. Many employment statistics provided by law schools seem suspect at least. (For example, Hofstra reports their median private salary at $160,000. I could be drastically underestimating employment prospects at Hofstra, but I have doubts that they could place 140 of their students into big firm jobs in such an economy.* Of course, they point out that the numbers they have are from reporting students, but they don’t say how many are reporting or what their contact methods are. Thus, when an undergrad who is contemplating going to law school goes to a law fair, and EVERY school in the Top 100, and many past that, report their median salaries at $150,000+, these students think the job prospects are much better than they are.
In my opinion, I would like the ABA to make a uniform system of reporting, with appropriate disclosures MANDATORY anytime a school cites certain numbers.
Make the information more available and let the market adjust itself in terms of law school applicants.
*Information pulled from http://law.hofstra.edu/StudentLife/CareerServices/careerservices_employment_statistics.html and the Official ABA Data for the Class Entering 2009. I know that the class entering 2009 does not correspond to that employment data, but the only info I used was the entering class size which I figure would be roughly the same over the past 5 years.
January 9, 2010, 12:24 pmTwirip says:
But we don’t have a government-enforced credentialing system. We have a legal industry enforced credentialing system. It’s as if the UAW was allowed to makes the rules for who could and could not build cars.
January 9, 2010, 12:41 pmMnZ says:
Actually, the middle class is even worse off than that. The biggest problem here is not the cost of the lawyer as it is the time involved. Most people have a high cost of their time. If you have a career, a family to support, and house/car payment to make, you are not going to sue and you are more likely to settle if you are sued.
January 9, 2010, 12:58 pmAllan Walstad says:
Twirip, I don’t think we disagree. The ABA wields power because it gets authority from the government. Similarly, the only way the UAW could make the rules for who could and could not build cars would be if its rules were enforced by government. The big gun belongs to the government.
January 9, 2010, 12:59 pmThe Jaded JD says:
The point is not that the government (or the ABA, or anyone else) should regulate attorney fees or salaries, or that government (or the ABA, or anyone else) should artificially limit the number of new lawyers or law students. The point is that prospective law school applicants have unrealistic expectations about their salaries and debt burdens. And even where their expectations are realistic about one, or the other, or both, a lot of prospective applicants (many of whom have no real-world experience because they leapt from family-subsidized college life to law school) fail to understand the impact that debt burden will have on those nominal salaries.
Thus, the preceding comment by “Kevin!” is the most valuable one on this thread: the most pertinent salary datum is the modal annual salary for newly-admitted attorneys (e.g., within the first x years of admittance). That datum needs to be compared to the modal cumulative student loan debt (including public and private debt, whether officially “student loan” or not–i.e., including living costs subsidized with credit cards and other debt sources outside the student loan amount–and including capitalized interest, particularly for those undergraduate student loans deferred during law school by students who go to there before repaying their undergraduate loans). I believe it is reasonable to require each law school to supply these data regarding their own alumni to each prospective applicant. (There will be a wide disparity between the modal-income/modal-debt values at top-tier and bottom-tier schools.)
These data are far more valuable than the percentage of graduates who found employment, or in what legal sector; that percentage tells prospective applicants nothing about how many of those “employed graduates” are able to pay their bills each month.
Moreover, when you finance a car purchase, you get a retail installment contract laying out the minimum monthly payment and the duration of those payments. If I’ve ever seen an analogous document regarding student loans, I sure don’t remember it. That information is usually only presented once the loans enter repayment, after it’s too late to do anything but recoil impotently in horror. I believe it would be reasonable to require financial aid offices to present them to law students with each year’s financial aid offer, based on the new loan offered together with all prior, unrepaid loan debt. Coupled with the school-by-school modal-salary/modal-debt data, a “retail installment contract” for student loan debt would put law students and prospective applicants on better notice about their real quality of life upon graduation. And that alone should disabuse them of their misconceptions–which is really where change needs to be made.
January 9, 2010, 1:29 pmTwirip says:
Agreed. :)
Yes. Although it’s worth noting that the government is largely run by lawyers, be they staff or politicians. I don’t have the exact figures handy but I’m sure the majority of members of Congress have graduated law school.
January 9, 2010, 1:40 pmJim G says:
Twirip:
As much time as lawyers in government (i.e., legislators, public sector lawyers, and judges) spend complaining about their salaries compared with the private sector, I wouldn’t expect them to be particularly sympathetic to increasing salaries for private-sector lawyers.
January 9, 2010, 1:47 pmTwirip says:
Revising and extending my remarks, a quick search online suggests that lawyers make up just under half of all members of Congress.
January 9, 2010, 1:48 pmDG says:
“government intervention to reduce the number of lawyers” – you mean like internment camps, forced deportation, or summary execution? Those all seem a little harsh, don’t you think?
January 9, 2010, 2:40 pmxon says:
Actually, I think that even this is insufficient. If you finally figure out, after your 2L year, that this is insanity, you have no viable exit strategy.
January 9, 2010, 3:27 pmDavid Nieporent says:
Yes; they’ve been investigated for same many times. That’s why they have a set of formal requirements that a school must satisfy in order to become accredited, so that the ABA can’t be accused of acting capriciously to deny accreditation for anti-competitive reasons. Of course, their formal requirements are often described by schools seeking accreditation as arbitrary, overly burdensome, and unnecessary.
January 9, 2010, 3:46 pmDavid Nieporent says:
Uh, you know what “median” means, right? By definition, half of them are paid lower.
That having been said, I agree with Cornellian; my first thought was, “But this only includes those who stay in the profession.”
January 9, 2010, 3:50 pmKanchou says:
“Unbundled legal service” and/or “limited scope representation” had been legal for a while in California. California also allowed for “independent paralegals,” know as Legal Document Assistants.
Those in combination, those reform can really save people money. For example:
And the attorney quoted above, Steve Elias, does very well with this business model. In fact, I believes he makes more than most big law associates. And he still have spare times to author quite a few bestsellers with NOLO press, generating decent amount of loyalties.
From my viewpoint as a California county law librarian, the law and ethical rules are basic there. But since this model is relative new, there are not settled case law and a body of ethical complains ruling, and no body like to be the test case. The attitudes of malpractice insurance carriers are not encouraging either, for the same reason. Once there are a few of those, people will get more comfortable. Classic chicken-and-egg issue.
I think this is an excellent opportunity for enterprising unemployed/underemployed young attorneys to take advantage of. Many of my self-representing litigants(pro se/per pro) patrons can not afford anything. But there are plenty of them, while they can not pay a $5000 retainer upfront, can pay for drafting complains, motions, etc. in a pay-as-you-go unbundled legal service.
January 9, 2010, 4:27 pmSuperSkeptic says:
I’m noticing a lot of comments lamenting the lack of “information” that is misguiding or otherwise messing up the legal market.
I wonder if people who are advocating any type of “mandatory disclosure” or some such of any information (e.g., disclosing a “retail installment contract” for law-school loans or otherwise “regulated transparency” or more accurate (?) post-law-school employment rates) in order to counteract a knowledge deficiency problem in lieu of direct or centralized government “intervention” or direct control over supply and demand of lawyers, realize that the reason we have the degree of intervention we do have currently is to counter or “fix” a similar and currently unacceptable “failure” in consumer knowledge of the adequacy of any given lawyer – or what that would be in a free market where anyone could be a lawyer with no ABA accreditation or bar tests. In other words, a purely free market for legal “goods” is currently unacceptable to our society because of similar knowledge issues, leading to the regulation to the degree we have it in order to counter those knowledge issues from a consumer pov – so nobody has to worry that their lawyer is “adequate” because he went to an ABA school and passed the bar, they now “know” that she/he is. Of course, having that, we have it rigged in our favor, the modern day “guild” and all that…
My point is that these people are worried about tangential “knowledge” issues in the face of a more critically important “knowledge” issue in any serious discussion of the merits of a free-market legal system. The most basic market “knowledge” issue is the license. Professor Somin says: “Like members of other professions, lawyers have an incentive to limit entry into their field in order restrict competition and increase their own pay.” And it’s nice to be able to parlay that into a compassionate concern for the lack of knowledge consumers of the goods of our profession – you know clients – (the proper POV for analysis) have and our need to protect them and their lack of knowledge from scoundrels or inadequate lawyers by a competency licensing scheme.
This penultimate knowledge issue needs to be addressed first. Shifting from the ABA to the AALS, as Mr. Greenbaum suggests, would be wholly fruitless – like switching from coke to pepsi, you’re still getting cancer/diabetes.
January 9, 2010, 4:40 pmJoe says:
Reduce the number of laws, simplify the laws, regulations and tax code and reduce the size of government and as a side effect you will reduce the number of lawyers (and drive their fees down, potentially WAY down.)
January 9, 2010, 4:55 pmgeorge weiss says:
Ilya
you are the only person Iv’e ever read anywhere, both before and during the recession, who has ever argued against the now all too common too many lawyers not enough jobs too expensive/don’t go to law school argument.
you make good points here but you fail to respond to many of the common arguments
a) lottery type irrational behavior phenomenon. Most people who enter law school think if they just study hard enough they will be in the top 10%. this may be irrational-but its still a very common belief. this is similar to the way people play the lottery-despite the fact that it is irrational to play.
b) even without fraud in the law school employment statistics, there it is 100% likely there is imperfect information going on for several reasons.
1. employment statistics are reported differently depending on where you look. The nalp survey given 9 months after graduation is reported on the ABA website and NALP without using a 25% unemployment rate for those who dont respond. Response rates vary from some schools that have near 100% of grads reporting to some schools with less than half. US news uses its own 25% rate for unreporters to deflate the stats based upon the assumption that those who don’t report are more likely to not report. Further, when the data then says that x% are employed in bar required or expected positions-is that x% of the total employed or x% of the total? these things change depending on where you look and are not always clear to the casual looker. how do you count those not looking and studying for the bar for the second time? again the answer-depends where you look and not always explained in the methodology. What does JD preferred mean? in the US news category? This coming year-how will differed associates be counted?
2. there is no (statistical) indication of how class ranking effects employment prospects. Yes we all know that you cant get the more competitive jobs like federal clerk, biglaw associate etc..without top grades. But what about those bottom grades. Suppose the bottom 10% of the class has a near 100% unemployment rate after graduation. I would assume this would keep more people away-if not then they are making the same mistake as the lottery hypothesis (see above).
c) there already is government intervention-but not in the limiting direction-instead its in the form of creating more lawyers. this intervention comes in the form of nondischargeablity in bankruptcy of student loans (not only for a certain period of time to protect from fraud right after graduation-but indefinitely even for private loans that are uninsured by the government) this means that the federal gov is willing to loan (whether direct loan or though the bank guarantee program) or virtually regardless of risk. E.g. Unsubsidized Stafford loans are even made regardless of credit. It also comes in the form of things like income based repayment public loan forgiveness after 10 years of successful payments for going into gov/non profit work. Also there are public subsidized loans/grants etc etc… all of this artificially increases demand for law school above market needs.
re bias:
i think your bias is heavy hitting here-not as a law professor-but as someone who loves markets and believes they are almost always best (which is fine-i do too). but you must also realize the problems of imperfect information and government intervention which already exist here-and also allow for the fact that despite classical economic assumptions-people DO NOT always act rationally in market situations…even in the aggregate sometimes (eg. the lottery)
January 9, 2010, 6:38 pmCornellian says:
Reduce the number of laws, simplify the laws, regulations and tax code and reduce the size of government and as a side effect you will reduce the number of lawyers (and drive their fees down, potentially WAY down.)
The vast majority of cases that get to trial are factual disputes, not disputes about how to interpret laws.
January 9, 2010, 7:41 pmCornellian says:
This reminds me of some excellent advice I saw in a book about going to law school, called “Law School Confidential.” Their advice was to go either to one of the top 14 schools that can place nationally, or a regionally strong school in the place where you want to work (e.g. UC Hastings if you want to work in California) or don’t go to law school. It’s tough advice, and everyone can point to an exceptional case of a tier 4 grad who’s doing well, but I think a very large number of prospective law students would be better off heeding that advice.
January 9, 2010, 7:43 pmCornellian says:
The ABA wields power because it gets authority from the government. Similarly, the only way the UAW could make the rules for who could and could not build cars would be if its rules were enforced by government.
You can say that, not just about unions, but about any parties to a contract. The party to the contract has power pretty much only to the extent the government is willing to back up his efforts to enforce the contract.
January 9, 2010, 7:49 pmOperationCounterstrike says:
The solution is very simple: limit their incomes.
Charge a 100% surtax on any income earned by a lawyer above $45,000.00 per year.
Problem solved!
January 9, 2010, 8:02 pmRyan Waxx says:
My thinking is that management across the country would be dancing with joy if the government confined itself to enforcing existing contracts where unions were concerned… as well as anyone who’s been forced to pay union dues.
Try again?
January 9, 2010, 8:14 pmCornellian says:
My thinking is that management across the country would be dancing with joy if the government confined itself to enforcing existing contracts where unions were concerned… as well as anyone who’s been forced to pay union dues.
I’m sure they would, and I’m sure management would have an entirely different reaction if government confined itself to enforcing only the company’s existing contracts. So what?
January 9, 2010, 8:33 pmHary Schell says:
The average competence of government has declined to the point they should be in charge of catching stray dogs and not much more intellectually challenging or complex efforts.
Okay, that is too broad a brush, but the series of failed “solutions” ( start with “stimulus”), breach of fiduciary duty (“stimulus”, socialist health care, Medicare, FICA, Fannie and Freddie, public education…er, I will stop now, but you get my drift) and outright deceit (NY Fed and AIG, Chris Dodd and Barney Frank still having jobs, ACORN and the New Black Panthers legal issues, Eric Holder…ditto, as above)…govt is incompetent to handle its current scope of work (SOW).
Anyone who would add to the SOW is, ah, words fail me.
January 9, 2010, 8:51 pmTodd Zywicki says:
I had never seen that particular BLS data set before, which is interesting. It is interesting–and sort of depressing actually–that DC lawyers get paid more than lawyers than in any other states. That says something depressing about the wages of rent-seeking.
January 9, 2010, 9:00 pmDoc Merlin says:
Um, the government DOES keep the number of lawyers down, via testing, requiring special education and such.
January 9, 2010, 9:06 pmDoc Merlin says:
Forgot to add, its more a matter of how strong government is in that area and how complex law and juris prudence is as to how many lawyers are needed and how much they will get paid.
January 9, 2010, 9:08 pmAndrew says:
I really take issue with this part of the original post:
“Far from accrediting too many law schools, the ABA and state bar associations are running a cartel system that has the effect of driving up the cost of legal services. The poor especially often find it difficult to pay for basic legal services.”
The implicit assumption here seems to be that a loosening of ABA and bar standards would be good for the poor because it would increase the number of lawyers and make legal advice available to more people.
Unfortunately, all that lowering the standards would accomplish is an increase in the amount of dumb and incorrect legal advice given to the poor by unqualified lawyers. That’s not to say that all the ABA standards are good, but a loosening of standards is not good for the poor as the post suggested. The only way to give the poor quality legal representation is through public funding and assistance, not through the market.
I go into this in more depth on my own blog: http://source4politics.blogspot.com/2010/01/standards-for-attorneys-and-poor.html
January 9, 2010, 10:49 pmtheobromophile says:
Another alternative: remove student loans from the equation entirely. If loans were only made through universities (who could take out loans from private lenders to then loan to their students), there would be a much better match between tuition and eventual salary. If students are unable to pay their loans back because their career prospects were horrible coming from that school, then the school would suffer as well. If the school knew, for example, that students in the bottom 10% of the class almost never got jobs, it could refuse to lend money to the bottom 10% of the class after 1L year, thus leaving a student with a year, not three years, of debt.
January 10, 2010, 3:37 amtheobromophile says:
Andrew, you’re assuming that the bar exam has something to do with quality of lawyering. Aside from weeding out plain dumb people, it does very little to ensure that a person is able to function as an attorney. In fact, if we ran around practising like the bar exam – no books, no notes, extreme time crunch – we would be charged with malpractise.
(In fact, the only thing that lawyers really should know off the top of their heads is the rules of evidence, but I doubt that many attorneys will ever need to know when a dying person’s words are admissible into court, which is, of course, tested on the bar exam.)
January 10, 2010, 3:42 amneurodoc says:
What are the ABA’s conflicts of interest when it comes to law school accreditation? Why should the AALS be expected to do a better job of it than the ABA? There is a parallel to the AMA versus the AAMC, the former of those having no role in the accreditation of medical schools, and I’m not sure of what practical consequence for these purposes is the “professional” association vs “independent (of what?), nonprofit (is ABA a for-profit enterprise), academic” organization distinction. Anyone know the historical background of how it is that ABA accredits law school but AMA doesn’t accredit medical schools, and how would things be if it were otherwise?
January 10, 2010, 8:48 amneurodoc says:
The lowest rungs of the food chain in terms of prestige, and more importantly income and opportunities, are occupied by general practitioners, many of them in practice by themselves. They may be more familiar with courtrooms than those higher up in the food chain, espcially those toward the top, many of whom will never represent a client in court. And even many litigators don’t go to trial all that often, though they may interact with judges a good deal. So even if true that “the vast majority of cases that get to trial are factual disputes, not disputes about how to interpret laws,” that doesn’t mean that fewer and simpler laws wouldn’t result in less demand for legal services. (Any data on what % of attorneys do substantial trial work versus those who rarely if ever enter a courtroom for any reason? How about % of attorneys who are not with a law firm or on practicing on their own, but employed. % employed by a government, federal, state, or local?)
January 10, 2010, 9:03 amneurodoc says:
Any idea about the economics of medical schools? They aren’t money makers, and I am aware of only one or two proprietary schools offshore.
In how many places, and where exactly, are midwives prohibited from attending births?
January 10, 2010, 9:11 amKevin! says:
It’s funny to hear efforts to restrict law school accredition described as “liberal.” You think liberals are behind this? Any added hurdles for law school loans, or to close down lower-tier law schools, will disproportionately shut lower-income and minority students out of the law school system. It will also skew the supply of new lawyers away from local lawyers serving the individual market and towards elite corporate attorneys.
It’s funny to hear libertarians fight this so hard! The law school system is paid for with government money. Every dollar Ilya earns is federally-backed. But the government should keep its nose out!
January 10, 2010, 1:13 pmDrew says:
The real metric to use is the beneficial salary/employment effect of law school on law school graduates. If someone fails the bar, they will never practice law and won’t be a lawyer. While medical school board examinations are difficult, they are not the end-of-the-road, tough barrier that the bar exam is.
Rather than try to weed incompetent people out at the end of the process by a bar exam (which doesn’t seem to work, given the number of bad lawyers out there and the fact that bar passage rates, even in CA and NY, are pretty high), it would be better to adopt a med-school model in that we are selective at the front end. Then you wouldn’t induce people to blow $150,000 on an education for a field that won’t employ them.
That’s where schools’ interests diverges with the interest of consumers and the profession; law schools want to make $$, so will admit as many people as they can, regardless of their ultimate suitability to practice law or the need for lawyers. But schools would rather take loans from people who statistically are unlikely to practice law than do the right thing by the saps they admit.
January 10, 2010, 1:14 pmJoe says:
The vast majority of legal work has absolutely nothing to do with trials except to prevent them. Most legal work is to cover ones ass. The reality is that we have system of convoluted, contradictory and heavy handed laws that require lawyers for even the simplest thing. For example, the tax code has gotten so complicated that you not only need an accountant AND a computer for what should be straightforward things, but you need a lawyer.
The amount of money the company I work for spends on lawyers is absurd and most of think we aren’t spending enough! (We are exposing ourselves to some liabilities that will eventually bite us when that one plaintiff starts looking for deep pockets. Fortunately, we don’t have deep pockets. Metaphorically, we almost have no pockets at all, but that won’t stop the lawyers from trying.)
January 10, 2010, 3:50 pmEvilNonGenius says:
Joe: is your company spending hundreds of thousands of dollars on legal fees? That is what a decent lawsuit costs unless it is settled early. The tax compliance, transaction stuff you describe is not even close to the cost of litigation. I know, I bill my clients for it every month.
January 10, 2010, 4:51 pmmwb says:
I think it is telling that the problem is framed as ‘too many lawyers hurting other lawyers’ wages,’ rather than ‘not enough affordable, competent lawyers for the MANY who desperately need them.’
i have read a few posts touching upon the market gap for affordable, competent legal services, but not much re: the availability of public-interest or ‘low bono’ legal service providers. my experience, having just graduated, is that there is a glut of grads all going for the same types of traditional lawyer positions at traditional law firms. there are not many grads looking to create new types of legal service delivery systems to address this gap (though there are now a few of networks for small- and solo-practitioners looking to practice ‘private-public-interest’ firms–CUNY’s CLERN program has proven so successful that it is being copied in India.)
I think that part of the problem is that too many grads lack the creativity, public-interest orientation, or appetite for risk to pursue such ventures; many would rather live off of their parents until a legal job just like the one their parents’ have becomes available. the legal profession will obviously adapt to the market just fine, though clearly not everyone will adapt along with it.
January 10, 2010, 8:44 pmmwb says:
I also want to note that the reforms Ilya advocates would significantly reduce the cost of entry into the profession, thus making it more palatable for grads to pursue the riskier or potentially less profitable types of positions needed to improve legal service delivery to middle- and lower-income populations. Though this is not a priority for most legal institutions, and threatening to law schools, so I don’t see it happening any time soon.
January 10, 2010, 8:52 pmJMA says:
Heheheh. I’ve always had a hard time laughing at lawyer jokes, but the closer I get to actually attending law school, the funnier this gets.
That’s probably bad.
January 11, 2010, 11:31 amAndrew says:
Well, for one thing I wasn’t only talking about the bar exam, I was also talking about ABA standards for law schools. And it’s true, that you don’t need to run your entire practice like you do the bar exam, just like doctors don’t run their practices like they do the med exam. In fact, no field has true “practical” exams, mostly because the day to day life in the profession is relatively simple and hard to make an exacting test out of. That does not, however, get rid of the usefulness of examinations (though your argument could be applied to any field.)
Examinations are supposed to put you in a situation more exacting than those you face in the actual profession, with the understanding that your memory of many of the details will fade (though you’ll probably maintain at least some memory of it, especially if you study well.) Even when you don’t need to know something off the top of your head, it’s a good idea to have it in the back of your mind: knowing where to start saves you time on research and helps you in quick situations.
It’s probably true that the bar exams are overly broad, but the only solution to that would be to create bar certifications in different areas and limit lawyers to practicing in that area. That, though, would probably be largely unpopular.
As to the argument that the bar exam just “weed[s] out plain dumb people,” that may be true. That’s more than nothing, however, and if anything is just an argument that its standards should be raised, not lowered.
January 12, 2010, 10:36 pmattorney seeking a job says:
WE NEED AN ORGANIZATION THAT UNITES ATTORNEYS AGAINST ABA. If med schools can limit their number to 131 and Dentists can limit dental schools to about 58, then we can surely keep the number of law schools under control. The whole thing is a scam. Yet ABA continues to keep accrediting new law school despite the known oversupply of attorneys. I graduated from Texas Southern University law school – some of my professors were barely literate. Except for a few good professors, most did nothing for me. They have a mysterious double grading system that undercuts students who secure good grades on their merit. There are other terrible law schools out there and plenty of terrible lawyers because of it. The law schools, including mine, inflate their post-graduation employment figures by hiring graduates from menial temporary jobs or by outright lying. ABA leadership is heavily composed of law school administrators and Big Law attorneys, while majority of Attorneys in america dont fall into the big-law category and these are the people who are struggling to find jobs. The average lawyer is severely underpaid, her/his pay undercut by the huge numbers of graduates being churned out of diploma mill law schools every year. On top of that , ABA has allowed outsourcing, this has severely cut the basic work unemployed attorneys depended on – document review. The average attorney is squeezed from all sides with ABA doing more to hurt her/him. The medical field takes care of its own. The dental field takes care of its own. But the only people the ABA takes care of are 1. the deans of trashy law schools like mine who make a million or more a year and 2. the Big law firms that benefit from getting their document work done by ridiculously underpaid attorneys in the US or abroad. ABA, please stop this madness! stop this corruption! You have destroyed not only our livelihood but the prestige we worked so hard to get.
February 21, 2010, 12:08 pmattorney seeking a job says:
MWB, you dont know what you are talking about. Building up a private practice takes money and assets, which most law school graduates dont have. And it is clear to me as you mouth off self-righteous nonsense, that you have never run a private practice. It is very difficult to get business and even with wealthy clients, a lot of chasing before you actually get paid. Do the grown-ups a favor, shut your mouth until you have lived in the real world.
February 21, 2010, 12:16 pmElizabeth Wurtzel’s Case for Abolishing the Bar Exam | theConstitutional.org says:
[...] that the high salaries of lawyers combined with the high cost of even very basic legal services show that we have too few lawyers rather than too many, and that the best way to determine the “right” number of lawyers is through market [...]
July 14, 2010, 8:45 amWhy Better Bar Exams are Not the Answer | theConstitutional.org says:
[...] Even if the independent regulatory agency could be completely insulated from lobbying by lawyers, its tests are still likely to have important shortcomings. One is that lawyer “competence” is not a binary variable in which either you’re competent or you’re not. Rather, there are different degrees of competence. Some low-quality lawyers lack the skill needed to handle complex cases and transactions, but are knowledgeable enough to handle very simple ones. Many such people could well end up failing even a well-designed bar exam. Yet keeping them out of the market would harm consumers by driving up the cost of the simple but important basic legal services they can provide. This is a crucial point, since one of the main flaws of the current system is the very high cost of simple legal services, which is especially damaging to the poor. [...]
July 15, 2010, 1:49 pmThe Bimodal Distribution of Lawyer Pay | theConstitutional.org says:
[...] There has been much grousing in the legal profession and blogosphere about the recent National Association of Law Placement report finding that recent law graduates have a “bimodal” pay distribution: while those who get jobs in big firms have starting salaries around $160,000 per year, few others top $75,000. No doubt, this finding will lead to renewed claims that lawyer salaries are too low, and that we need to restrict the supply of lawyers further. I previously criticized such arguments here. [...]
July 26, 2010, 11:13 am