How Should We Count "JD Advantage" Jobs in Assessing Job Equilibrium for Law School Grads?

JD Advantage Jobs: 

The Data

In November, I tried to support Prof. Organ's prediction that new law-related jobs would exceed the number of graduates in 2015 or 2016. That posting has gotten a lot of attention since then. 

Top law blawger, Brian Leiter, first drew attention to it. Then Ohio Professor Debra J. Merritt made further calculations on her blog. Then the Wall Street Journal picked up the story. Then the National Jurist cited my posting in its December issue. 

One feature of that conversation is how to count a category of jobs that NALP began tracking in 2001 -- the "JD Advantage" (or "JD Preferred") jobs versus the "Bar Passage Required" jobs. Some people suggest, including many scambloggers, that the JD Advantage jobs should not be considered when reporting the employment rate of law graduates. 

Apparently, these folks believe that all prospective law students choose law school because they all plan to practice law in a private practice, government, or public interest setting that requires the graduate to have passed a state bar exam. Any employment short of that measure is inferior according to this point of view.

By way of background, NALP "is an association of over 2,500 legal career professionals who advise law students, lawyers, law offices, and law schools in North America and beyond."

I intend this posting to simply lay out the data.  I'll comment about it in later postings.

Data Collection Before 2001:

Before 2001, NALP divided employment positions for new graduates into six categories:

• Private Practice
• Business/Industry
• Government
• Judicial Clerks
• Public Interest, and
• Academic

NALP broke down the Business/Industry category into some interesting sub-categories. 

• Accounting-Legal
• Accounting -Other
• Banking-Legal
• Banking -Other
• Insurance - Legal
• Insurance - Other
• Fortune 500 - Legal
• Fortune 500- Other

NALP explained the growth in this category in its undated report entitled: Jobs in Business and Industry 1991-2000 (including an interesting chart showing the trend):

Since 1991, the percentage of employed graduates taking jobs in business and industry has increased by about two-thirds, from 7.5% of jobs in 1991 to an estimated 12.3% in 2000. This percentage reached an historic high of 14.2% in 1998. Translated into job counts, the 4,000 or more jobs taken in business and industry in each of the past five years is more than double the number in 1991.

It should be noted that some of the increase in job counts may be attributable to increased reporting of graduate employment over the years. Also, because the reporting of jobs as "legal" and "other" within the business realm is not entirely consistent, the absolute numbers should be viewed with caution. Nonetheless, they do provide a basis for comparisons of the orders of magnitude involved. [H]eightened interest shown in JD's by accounting firms, insurance companies, and financial institutions has translated into substantial increases in the number of these jobs taken by new graduates compared with ten years ago. This is true despite a decline in recent years in the number of accounting and financial jobs taken

New Data Categories After 2001:

Beginning in 2001, NALP began reporting employment in the following categories:

• Bar Passage Required
• JD Preferred (later called JD Advantage)
• Other Professional
• Other Non-professional

Thus, the table summarizing the employment data for the 2012 graduating class (for example) is more extensive than the comparable table produced before 2001. NALP no longer posts the comparable pre-2001 tables, but this table and this table hint at the data NALP captured.  

NALP explains:  

Prior to 2001, jobs were classified as legal, other professional, and nonprofessional, so direct comparisons with 2001 and later years are not possible. During the 1992-2000 time period, about 40% of business jobs were reported as legal. It is likely that some portion of these jobs were closer to the JD Advantage categorization than to jobs for which bar passage, in addition to a JD degree, were required.

Recent Analysis of Jobs in Business and Industry:

In November 2013, NALP updated its earlier report through 2012 and providing several helpful charts to show the growth of jobs in business and industry for law grads.  In its new report, entitled Jobs in Business and Industry -- Two Decades of Change, NALP explains: 

Over the past 20 years the percentage of employed law school graduates taking jobs in business and industry has doubled, with the doubling point reached in the two most recent years. In the same time period, the number of employed law school graduates taking jobs in business and industry has about tripled, again reaching the tripling point in the two most recent years. 

As the bar chart accompanying this article shows, the percentage of jobs in business and industry climbed steadily through much of the 1990s, then dropped somewhat in the next few years before a decade-long pattern of mostly sustained growth, with a small decline in both percentages and numbers of jobs in 2008 and 2009. (It should be noted that both the number of graduates and the percentage for whom employment status was known have increased in the past 20 years. However, the broad contours of the trend remain, and it is clear that the trend line is up, as shown by the additional chart on the number of jobs reported in business and industry from 1992-2012.)

NALP provided a second graph of the trend:

NALP further explains:

Although other kinds of employers within business are tracked, such as publishing, management consulting, and entertainment/sports management, it remains the case that about half of the jobs in business and industry are with "other" kinds of employers not specifically tracked. This encompasses a wide range of businesses, such as all manner of positions in retail, manufacturing, healthcare, and pharmaceuticals, to name but a few kinds of employers.

Dec. 10, 2013 Update:  This new analysis of BigLaw staffing is a must read: Did the Market for Law Firm Associates Peak 25 Years Ago, by Bill Henderson of The Legal Whiteboard.  In the referenced monograph, the author notes:

[T]he relentless increase in the complexity of business and regulation has caused many clients to strain under the weight of a tradition [BigLaw] time-and-materials billing model  This pressure is fueling the urgency for alternative billing arrangements that would incentivize efficiency and innovation.  It is also opening the door to various types of legal vendors who use process, technology, and labor arbitrage to perform a wide variety of legal work formerly handled by junior lawyers in law firms. 

Dec. 17, 2013 Update:  In my research, I found this list of law schools sued for allegedly providing prospective students inaccurate employment data.   As far as I know, courts dismissed most of these suits.

Dec. 21, 2013 Update:  For an updated summary of the "revolution" happening in the legal field take a look at this blog posting.

Dec. 27, 2013 Update:  One blogger, Matt Leichter, of the Law School Tuition Bubble blog,  has continued to work with the numbers and published a story in the AmLaw Daily here.