Challenging the Conventional Wisdom About the Job Market for Lawyers

St. Louis University law professor Aaron Taylor recently published a good column challenging the conventional wisdom that holds that the job market for lawyers is rapidly collapsing:

It’s open season on legal education — falling applications, lawsuits by former students and dooms day warnings about the legal job market. The rampant bad publicity has taken on a sensational flair. Popular blogs and even established news forums are peppered with anecdotes about law school graduates drowning in debt with no good options for the future.

But as is often the case with anecdotes, these compelling tales of woe represent exceptions…

Lawyers have not been immune to the effects of the recent recession. However, they have fared much better than most workers. According to U.S. Department of Labor data, the unemployment rate for lawyers was 1.5 percent in 2010 — more than six times lower than the overall rate of 9.6 percent. Since 2009, while the overall unemployment rate has remained above 9 percent, the rate for lawyers has exceeded 2 percent only once. It is true that unemployment among lawyers has increased significantly over the last few years (it was barely 1 percent in 2007), but the increase pales when compared to other occupations.

Salary data show that the vast majority of lawyers earn relatively high salaries. According to the U.S. Census Bureau, lawyers boast the fourth highest median salary behind medical doctors, dentists and CEOs (some of whom have law degrees). While the majority of occupations have median salaries between $20,000 and $49,999, the median for lawyers in 2010 was almost $113,000. Again, this was the median — the actual midpoint — which means the majority of lawyers made six-figures.

Predictably, starting salaries for new lawyers tend to fall below the median for the profession as a whole, but they still tend to be relatively high. According to NALP, the class of 2010 had a median starting salary of $63,000, a respectable living for a new entrant into any profession. On the downside, the 2010 median was $9,000 lower than the year before. But declining wages have buffeted the entire economy. Fortunately, as the economy sputters back to life, salaries are unlikely to continue falling at the same rate — if at all.

Note that most of the data Taylor relies on comes from the Labor Department and the Census Bureau rather than NALP, which has been criticized for relying on overly optimistic data provided by law schools.

I advanced similar challenges to the conventional wisdom on the legal job market here and here. In this post, I noted that the long-term prospects for the legal profession are likely to be good, because the demand for lawyers is largely driven by the amount and complexity of laws – and that complexity is rapidly increasing.

Some will probably accuse me of wanting to make law seem more attractive than it is because I am a law professor. I preemptively addressed that charge here:

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.

I have also long argued that too many choose law school as a sort of default option without giving sufficient thought to the question of whether they’re really likely to be happy as lawyers or entering one of the other professions for which a J.D. is valuable. Law is a lucrative profession and likely to remain so. But many lawyers work long hours at tasks that a lot of people would find boring and repetitive.

I’m far from happy about the continued financial health of the legal profession. Much of it stems from the growth of government and the increasing complexity of our legal system, both trends that I oppose. I also oppose the bar exam, ABA accreditation of law schools, and other government policies that artificially inflate lawyers’ salaries by protecting them from competition. These types of policies make it very hard for the poor and lower-middle class to afford basic legal services, which I think is a problem far more worthy of concern than the supposed financial woes of lawyers.

If the long-run demand for legal services really did decline drastically, I would see it as a positive sign. But that’s not what seems to be happening right now. Like most other professions, lawyers have suffered during the current recession, and entry-level job prospects have worsened. But, as Taylor explains, these economy-wide trends are actually much less severe among lawyers than in most other fields.

UPDATE: Some commenters and others claim that the Labor Department data on lawyer pay and unemployment rates are invalid because they don’t take account of people who have left the legal profession entirely. I responded to similar claims here:

[I]t seems unlikely that there is large Marxian “reserve army” of unemployed lawyers [or JDs who would like to return to the legal profession] out there. If there were, one would expect lawyer salaries to drop substantially as competition from the unemployed drives down the pay of those who have jobs, especially at the lower ends of the distribution (e.g. — the 10th and 25th percentiles noted in the post [both of which are relatively high figures]). Yet the Labor Department data shows lawyer salaries holding fairly steady. For example, today’s [2010] 10th percentile salary of $55,000 per year is actually slightly higher than the prerecession 2007 figure. That would be highly improbable if there were large-scale unemployment among lawyers [or if there was a large number of JDs outside the legal profession, but willing to reenter it].

In addition, it seems highly unlikely that nearly all JDs who can’t find jobs as lawyers, but want them leave the profession almost immediately, thereby keeping the unemployment figure at the low measured rate of 2%. One would expect them to hang around somewhat longer than that. The bottom line is that, although the official 2% figure may not be fully accurate, it is still likely that unemployment for lawyers is far lower than in the economy as a whole.