25-Year Law Practice Employment Trends: Solo, Small Firm, BigLaw, or Someplace in Between?

I graduated from law school in 1982.  At that time,

• 7.6 percent of new law graduates became solo practitioners; 
• 40.3 percent entered small law practices (2-10 lawyers); 
• about 11 percent entered firms 51 to 100 lawyers in size;  
• only 15. 6 percent of new law grads entered large firms of 101 plus lawyers, and more women did that than men; and 
• NALP, the Association of Legal Career Professionals, did not keep a separate category for firms with more than 500 lawyers. See trend report here. 

According to an earlier trend report, in 1982, about 10 percent of new law grads entered business and industry.

About 23,000 students graduated from law school in 1982.

Fast forward to 2007, the year of record employment among lawyers, NALP reports that:

• 3 percent of new law grads became solo practitioners (a 4 percent drop);
• about 33 percent entered small law practices (2-10 lawyers) (a 13 percent drop); 
• about 6 percent entered firms 51 to 100 lawyers in size (a 5 percent drop); and
• a whopping 42.3 percent of new law grads entered large firms of 101 plus lawyers (a 26.7 percent increase).

According to yet another report available from NALP, in 2007, about 14 percent of new law grads entered business and industry (a 4 percent increase).

About 43,500 students graduated from law school in 2007, an increase of 20,500 grads compared to 1982.

The data varies on each of these reports, but I have tried to use the most recent iteration of the data, which I assume reflects more complete information for each year.

What does this shift from smaller firm practice to larger-firm practice say about new law grads over this 25-year period?  Over time, did they shun more risk-taking jobs in smaller or solo practices.  Did they seek the perceived security and guaranteed higher salary of the BigLaw?   Were more jobs simply available in the larger firms?

What does it say about law practice, the legal client market, and access to justice for people who would more likely retain a small firm practitioner?

Now let's take it forward through the years of the last economic recession.  NALP reported that BigLaw (500 plus) hired 3,600 new associates in 2012, down from 5,100 in 2009, but up from hirings in 2011. Employment opportunities at BigLaw rose 27 percent over the last two years.

But what about employment in small and solo practices.  This data relies on NALP reports for each year available here.  You can see that the data for 2007 varies a bit from the later-reported data shown above.

In pre-recession 2007:

• 576 (2.8%) grads opened solo practices;
• 6,461 (31.3%) found jobs in firms of 2-10 lawyers;
• 4,745 (23%) joined BigLaw (501+).

In 2008, 

• 685 (3.3%) grads opened solo practices;
• 6,479 (31.6%) found jobs in firms of 2-10 lawyers;
• 5,193 (25.3%) joined BigLaw (501+).

In 2009:

• 1,058 (5.3%) grads opened solo practices;
• 6.749 (33.5%) found jobs in firms of 2-10 lawyers;
• 5,156 (25.6%) joined BigLaw (501+).

In 2010:

• 1,039 (5.7%) grads opened solo practices;
• 7,160 (39.1%) found jobs in firms of 2-10 lawyers.;
• 3,750 (20%) joined BigLaw (501+). 

In 2011:

• 1,059 (6%) grads opened solo practices;
• 7,570 (42.9%) found jobs in firms of 2-10 lawyers;
• 2,856 (16.2%) joined BigLaw (501+). 

In 2012 (based on preliminary data):

• 8,200 (about 42.9%) found jobs in firms of 2-10 lawyers.
• 3,600 (19.1%) joined BigLaw (501+).  

The numbers indicate that the recession has forced (or encouraged) more graduates to find jobs in smaller firms or as solo practitioners.  

More recent grads may look at the news coverage of BigLaw layoffs and decide that the opportunities for new associates, over a lifetime, in those firms have become increasingly more limited and full of peril. 

In the interest of full disclosure, I worked at the largest law firm in Oklahoma straight out of law school.  I recall it had over 100 attorneys, but maybe it had about 80 attorneys.  I then moved to what was then the third-largest firm in the world for another three years.   As my career progressed, I moved to a 50 lawyer firm and then a 20 lawyer firm.  Each firm offered stimulating legal work and a very different work environment, culture, management structure, compensation system, hourly billing expectations, client base, and support staffing model.  I enjoyed all but one of those experiences.

Dec. 16, 2013 Update:  A new study shows graphically the shift in the staffing model in BigLaw over the last 25 years.  It shows a dramatic loss of associate positions.  

BigLaw "New Normal" Stories

Mayer, Brown (July 2013): http://www.newrepublic.com/article/113941/big-law-firms-trouble-when-money-dries#

Weil, Gotshall & Manges  (June 2013):  http://dealbook.nytimes.com/2013/06/24/big-law-firm-to-cut-lawyers-and-some-partner-pay/?_r=0  (60 associates or 7 percent laid-off).

1,000 lawyers and staff laid off on one day in February 2009: http://www.nytimes.com/2013/06/25/opinion/big-laws-troubling-trajectory.html  (with 2,000 losing their jobs over that month).

Firms shuttering satellite offices:  http://blogs.findlaw.com/greedy_associates/2013/07/mixed-news-in-biglaw-overall-hiring-up-but-layoffs-happening.html

AmLaw 200 layoff list as of 2009: http://www.americanlawyer.com/PubArticleTAL.jsp?id=1202425647706&THE_LAYOFF_LIST&slreturn=20130624105612#wilm

Supply-Demand Gap in Lawyers When Boomers Retire

Most of the news these days focuses on the alleged over-supply of lawyers.  I say "alleged" because the market considered by these journalists does not cover the needs of our rural populations or anyone who can not afford legal services at current prices. But, I'll leave that topic for another post.

Today, I want to focus on the potentially odd likelihood that we will have a lawyer shortage in another five to ten years.  Here's why.

The Washington state bar surveyed its lawyers asking about retirement plans.  The survey found that nearly one-quarter of the state's lawyers planned to retire in the next five years or about 1,440 per year.  Another 32 percent of its surveyed lawyers planned to leave the profession or cut back their practices.  See story here.

The Washington bar report noted that a whopping 71 percent of the state's lawyers were aged 50 or older, with 21 percent being 61 or older.

On the other hand, admissions to the state bar had not kept pace with retirement projections.  Admissions dropped by 13 percent between 2007 to 2011, with about 1,200 new lawyers added each year to the rolls during that time.

I sent the report to friends that work in the administration of the Virginia Supreme Court and to friends in leadership positions in the two state bar associations.  I asked whether Virginia should be doing a similar survey of its lawyers.

The data suggests that the need for lawyers will outstrip supply in the next decade, but few incentives exist in the current legal market to encourage college graduates to pursue a career in law.  Data shows that, on average, about 50 percent of recent law grads will find jobs in traditional law firms.  At the same time, many law grads accumulate over $100,000 of debt.  The high cost of the education coupled with poor current job prospects has reduced applications to law schools by another whopping number: about 50 percent since 2004.   See story here.

As noted in earlier posts here and here, changes in the legal market are propelling changes in law firm staffing models, first-year hiring, and technology use.  Law firms are considering other deeply structural changes in the way they offer legal services to clients.

Oddly enough, if the current generation of law students and recent grads can tough it through the current market downturn, their mid-career options could be diverse and plentiful.  However, the overall situation screams for strategic planning of your own legal career.  On top of everything else that new grads must master, they must also understand the changes happening at a macro level in our profession.   We are calling the situation the "New Normal."  

9/19/13 Update:   The National Jurist covered this story in greater depth here.