Law Grad Salaries Exceed Median Household Income

Still a Good Option If You Can Get  a Bargain on Legal Education

For the full story, see here.

Filling the Needs of Rural Clients

Another Gap 

Created by 

Retiring Baby Boomer Lawyers

Over the last several years, several state and local bar associations have focused on under-served clients living in rural areas.  Twenty percent of the U.S. population resides in rural counties, but only two percent of law practices locate there.  

The October 2014 issue of the ABA Journal re-visits the topic again, profiling a number of lawyers practicing in rural North Dakota and South Dakota.  The article, Too Many Lawyers? Not Here. In Rural America, Lawyers are Few and Far Between by Lorelei Laird, gives a general overview of the situation, identifies a number of resources, and suggests the adaptations to rural practice required of young lawyers. An associated podcast is here.

Additional states -- including Arkansas, Georgia, Iowa, Nebraska, Vermont, Montana, New Hampshire, and Maine -- have started various types of programs designed to encourage younger lawyers to practice in rural areas.  

Other resources on this topic include:

• Bruce Cameron, Becoming a Rural Lawyer: A Personal Guide to Establishing a Small Town Practice (The New Lawyer's Survival Guide) (Volume 3) (2013).
• Gary P. Toohey, Choosing the Road Less Traveled: Reversing the Lawyer Exodus, Mo. Bar Magazine (Winter 2014). 
• Martha Neil, In a Rural County That Lacks Lawyers, No One Seemingly Wants to Buy a Successful Law Practice, ABA On Line Journal (Nov. 3, 2014).
• 

January 12, 2015 Update: More on this story here.

JD Advantage, Legal Temp, and Document Review Jobs

Law Grads in 

Legal Temp Agency Jobs

The ABA has picked up the story on job equilibrium that I started here and expanded this month here, here, and here. The first comment posted to the ABA article reads: "Low-paying, monotonous doc review jobs for everyone…the sooner the better!"

In that story line, I promised to follow up on two concerns expressed by scambloggers about the JD Advantage jobs. I said:

Scambloggers have expressed great concern about the number of graduates finding employment through legal temp agencies and as paid employees of law schools.

The comment to the ABA article shows that this concern continues to exist.

Analyzing the Data. What Data?

So, how many grads, nine months out of law school, held positions as legal temps? I'm guessing most of these grads engaged in document review projects -- either associated with litigation discovery or transactional due diligence review.

NALP first began tracking grads holding "Legal Temp Agency" jobs for the graduating class of 2006.

I continue to use the NALP data, despite Professor Merrit’s comment that it is off by a year when compared to the ABA data. Again, I am looking for trends and averages. I also like knowing both the total number of graduates and, more importantly, the number of graduates responding to the NALP employment survey. The second number changes the denominator when calculating percentages.

NALP provides some collective data on Legal Temp Agency jobs in its report entitled: Jobs in Business and Industry -- Two Decades of Change. I have created a table excerpting some of the data from that report. I also took the number for the "total grads reporting employment" from an earlier table I developed here. 

Year	# of Grads Reporting Employment	# of Jobs in Business/ Industry	% Bar Passage Required	% JD Advantage	# in Legal Temp Agencies	% of Grads Reporting Employment
2006	40,186	5,160	34.2%	29.7%	559	1.4%
2007	40,416	5,223	34.2%	29.8%	636	1.6%
2008	40,582	4,887	32.9%	30.1%	558	1.4%
2009	40,833	4,861	28.9%	28.7%	418	1.0%
2010	41,156	5,446	31.8%	29.2%	452	1.1%
2011	41,623	6,442	29.8%	37.2%	701	1.7%
2012	44,339	67,01	29.1%	39.2%	550	1.2%

The table shows that, since 2006, grads working in Legal Temp Agency jobs never exceeded 2 percent of all graduates reporting employment nine months after graduation. The scambloggers would have us believe that many more graduates "suffer" in these positions. Even in the year before the Great Recession of 2008, 1.6 percent of reporting grads held these positions. During the lousy 2011 job market, that percentage increased by only .01 percent.

This number may say more about the ebb and flow of large scale litigations and deals requiring due diligence than it does about under-employed graduates.

What we don't have is data on a school-by-school basis. A higher proportion of graduates from some law schools may hold more of these positions than grads from other schools, but we just don't know. 

Professor Merritt provides an explanation for why we can't get that data. Law schools and NALP collect it, but do not disclose it. She calls for more transparency of this data, saying: 

This type of omission contributes to ongoing distrust of law schools: We and our national placement organization are still disclosing data selectively. Applicants need to trust us to inform them, not merely to market to them. 

In doing so, she also notes: "According to the ABA’s spreadsheet of 2012 job outcomes, half of all law schools had 25 or fewer graduates in JD Advantage jobs."  That's all JD Advantage jobs, not just the Legal Temp Agency jobs.

My Experience with Document Review 

I practiced law for about 20 years before joining the academy. Early in my career, I worked for Skadden Arps, then the third-largest law firm in the world. 

I spent most of those three years working on document review. I spent nearly six months reviewing documents in Tulsa in a litigated case involving an energy company. We reviewed hundreds of banker's boxes filled with documents relating to the dispute, but also lunch menus filed in folders. We even found a pair of men's underpants in one box.

I also spent several weeks reviewing documents as part of the due diligence in an energy-related acquisition. I staffed other document reviews, but I have forgotten their specifics.

I remember those days very fondly. I worked with young, bright, energetic, and yes, complaining associates and paralegals who always managed to stay playful and humorous. Their generosity of spirit still makes me smile.

As an associate, and then later partner, in a St. Louis law firm, I supervised litigation-related document reviews because I was the only lawyer in our small law firm who knew how to manage such a big project. One review kept me in Los Angeles from Thanksgiving of one year to Valentine's Day of the next year. I spent my free time searching for the best creme brulee in the city, perhaps an unwise past-time given how many hours a day I was sitting on my butt reviewing files.

Yes, these jobs are boring, offer little in the way of substantive legal training, and provide modest professional growth. That was true then, and I imagine that is true now.

But, I never really minded them. I always saw them as a hunt for the smoking gun. And, almost without exception, we found it. 

I am curious, if not nosy, about other people's lives and communications. (That may be why I like mediation so much.) I loved, yes loved, reading through mounds of correspondence and then developing a timeline and list of players that allowed the story of fraud or mismanagement to emerge. When I presented that paper trail to the litigating partner, I loved, yes loved, watching his (almost always his) face light up. I was a hero because I had managed the boredom and stayed on task.

I also enjoyed culling the documents arguably within the attorney-client privilege or work product doctrine. I enjoyed finding ways to ethically keep them out of the hands of the opposing party.

It was a very big chess board, and I loved playing this part of the game. I know. Go, figure.

The chess board has changed significantly.  At worse, I had to read crumbling telexes printed on silvered paper produced in the mid-80s.  Now, document reviewers must find a way to sift through millions of emails and other electronic data.

The chess board has also changed in the staffing model. Corporate clients are no longer willing to pay for law firm associates to do most of this grunt work.  Low-status contract attorneys now do it.

When I started at Skadden in 1985, I made $65,000 (worth $141,086 today). I think the firm billed my time at $200 per hour.  Three years later, I left making $120,000 in salary and bonuses (worth $236,902 today). (Frankly, I'm sorry I computed those present worth numbers because, as a law professor, I don't earn the equivalent of what I made as a 2d-year Skadden associate nearly 30 years ago.)

Based on a report I got from one of our ASL grads, graduates staffing modern day document reviews make $25 per hour.  If anyone has additional information about the pay for these jobs, please share it.  

At $25 per hour, working an eight-hour day for 50 weeks a year (assuming two weeks of vacation), this grad will make $50,000 per year in current dollars (or $20,669 in 1982 dollars when I graduated from law school).  (By comparison, I joined the largest law firm in Oklahoma at a salary of $35,000 in 1982.)  

Many of these document review jobs have begun disappearing as they move offshore or get done by computers that can scan, analyze, and report the data in ways not possible for easily-bored, human brains. 

This shift is a small part of the commoditization of law jobs that Richard Susskind discusses in his book Tomorrow's Lawyers. Commodity work will continue to lose value in the marketplace and the price for it will move towards $0. 

When I read that book this summer, I realized that a recessionary economy was just one of the challenges new grads will face over the life of their careers. But, I will save that discussion for a later posting.

The Red Velvet Lawyer in the Spotlight in an ABA Article

ABA Blawgwhisperer

Picks up 

the Job Equilibrium Story

ABA journalist Sarah Mui, of the Blawgwhisperer, reported December 6, 2013 on the job equilibrium story line, first appearing here on The Red Velvet Lawyer.

The article is entitled:  "When will law grads and law jobs reach equilibrium? Between 2015 and 2021, depending on who you ask."

I want to thank my friends and colleagues for giving this story the attention it has gotten.   I largely attribute this attention to the coverage provided by Brian Leiter on his blog, Brian Leiter's Law School Reports, that he provided here and here.

Thanks for supporting The Red Velvet Lawyer.   

How Should We Count the Unemployed and Students Seeking Advanced Degrees in Assessing Job Equilibrium for Law School Grads?

Counting the Unemployed

Here’s the next question?  Do we adjust the data predicting a job equilibrium as early as 2015 and as late as 2021 by accounting for law graduates who do not fall into the categories of "employed" grads? 

These "unemployed" grads have:

• Enrolled in a full-time advanced degree program, like an LL.M;
• Are not working and instead are studying for the bar exam full-time;
• Are not working and not seeking employment (perhaps a new mom or dad, for example); or
• Are not working, but seeking employment.

NALP first began tracking the ranks of the “unemployed” for the graduating class of 2003.  

I continue to use the NALP data, despite Professor Merrit’s comment that it is off by a year when compared to the ABA data.  Again, I am looking for trends and averages.  I also like knowing both the total number of graduates and, more importantly, the number of graduates responding to the NALP employment survey. The second number changes the denominator when calculating percentages.

The data can be found here organized by each graduating class.  I have relied on two documents:  the "Selected Findings" and the "National Summary Report" for each class.

	Grads Reporting Employment	Enrolled in Adv. Degree Program	# Total Not Working	# Studying for Bar	# Not Seeking Employ- ment	# Seeking Employ- ment	% Not Working
2003	35,787	964	3,011	829	763	1,419	8.4%
2004	36,834	911	3,170	1,110	758	1,302	8.6%
2005	38,951	852	3,187	1,178	815	1,194	8.2%
2006	40,186	889	2,832	868	860	1,104	7.0%
2007	40,416	931	2,362	NC	692	1,670	5.8%
2008	40,582	977	3,108	NC	936	2,172	7.7%
2009	40,833	1,247	3,540	NC	1,110	2,430	8.7%
2010	41,156	1,214	3,899	NC	1,330	2,569	9.5%
2011	41,623	936	5,034	NC	1,044	3,990	12.1%
2012	44,339	928	5,669	NC	922	4,747	12.8%

Notes to table:

• The total number, and percentage, of grads "not working" does not include those grads pursuing an advanced degree or those grads employed part-time (or, obviously, those grads employed full-time.)
• The number of 2012 grads seeking employment does not include 204 grads with employment start dates after February 15, 2013.  NALP first reported this new category in 2012.
• After 2007, NALP quit using the category that identified graduates studying full-time for the bar exam. 

In making my quick calculation of the year in which new jobs might exceed new law grads, I assumed 100 percent employment rates.   (My calculations were intended as a ball-park analysis.  Had I known they would have drawn as much attention as they have, I would have spent more time on them.)

Luckily, my posting encouraged a deeper view of the data.  However, Prof. Merritt’s analysisalso assumed a 100 percent employment rate within nine months of graduation. 

The latest study, reported in the December 2013 issue of the National Jurist, notes this assumption and says:

But since NALP began tracking data in 1985, the percent of recent graduates who were employed in full-time legal jobs has never exceeded 84.5 percent.  In fact, from 1998 to 2008, it averaged 75 percent.  That is because many graduates get jobs after the nine-month mark, and others choose not to pursue full-time or legal employment.

(Emphasis added.)  Taking account of historical unemployment data, the National Jurist predicts job equilibrium for the (entering?) Class of 2016, defined as 75 percent of grads employed in full-time legal jobs.   That prediction assumes new job growth remains flat.  If job growth increases, the equilibrium would come for the (entering?) Class of 2015.  The article does not make clear whether these statements apply to the entering class for those years or the graduating class for those years (as my calculations did). 

National Jurist expects to provide a chart of the data in its January issue.

Note that in making this prediction, the National Jurist apparently goes one step further than I have in this posting by including in the "unemployed" category those grads seeking advanced degrees and grads employed part-time.  Also, without spending more time with the NALP data, I can't tell whether National Jurist includes JD Advantage jobs in the category of "full-time legal jobs."  The promised chart may answer these questions.

In 2012, the percentage of grads reporting part-time employment held jobs in the following categories:

• Bar Passage Required -PT   4.4%
• JD Advantage -PT               3.0%
• Other Professional - PT       1.0%
• Non-Professional - PT         1.3%
• Job Unknown - PT               .01%

Total part-time:                             9.71%

In any event, despite all the errors I made in my own calculations trying to support Professor Organ's prediction, the ultimate prediction of an equilibrium for the graduating Class of  2015 or 2016 appears accurate depending on how you define "employment."

I invite other bloggers to work with these numbers and to clarify the situation using various assumptions.

Dec. 27, 2013:  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.

So, What is a JD Advantage Job?

Jobs for Law Graduates in Banking, Finance, Technology, E-Commerce, Management Consulting, Government, Public Interest, Accounting 

-- and Yes --

as Legal Temps

NALP describes a JD Advantage job as follows:

It turns out that the JD degree prepares you for a variety of exciting jobs and careers. While many law school graduates go on to practice law, many others go on to play leadership roles in a variety of settings. 

* * *  

You will see that JD Advantage positions are jobs that do not require bar passage, an active law license, or involve practicing law in the traditional sense. However, in these positions, a JD provides an advantage in obtaining or performing the job. In fact, many graduates view entry-level opportunities with the federal government or in business/industry as a primary goal. There are many law-related positions for which a JD is a significant competitive advantage.

At the same website page, NALP offers a series of video interviews it says:
"[H]ighlight[] the significance of JD Advantage positions. These interviews shed light on some of the many kinds of positions taken by recent law school graduates."

In May 2013, NALP reported that:

With the persistently weak entry-level job market for law school graduates that has followed the 2008 recession, interest in jobs that can be categorized as JD Advantage jobs has grown. In fact, the extent to which law school graduates take jobs for which a JD provides an advantage in obtaining the job has been growing steadily since NALP began tracking this kind of job in 2001. 

For the Class of 2011, 12.5% of graduates for whom employment status was known had obtained such a job, more than double the rate of 6% in 2001. Also, this year for the first time the US News & World Report law school rankings changed their methodology so that jobs that require bar passage and jobs that provide a JD advantage were given more weight than other categories of jobs. 

Nearly one in seven jobs taken by the Class of 2011 was reported as a JD Advantage job. In numbers, this translates to more than 5,200 jobs. These jobs were most common by far in the business realm, which accounted for 46% of the JD Advantage jobs obtained by the Class of 2011.

NALP reports that the JD Advantage jobs appear in the following sectors, in descending order of jobs created:

• Business (described below);
• Government (federal and state executive and administrative agencies);
• Private practice (law clerks and paralegals);
• Public interest (policy and advocacy groups); and
• Academic (law research assistant or fellow).

For the 2011 graduating class, NALP further explained:

Within specific business sectors, banking and legal temp agencies were the biggest source of JD Advantage jobs, and the specific job types most frequently reported were management and consulting. 

However, the single largest category of JD Advantage jobs in business were “other,” suggesting a wide range of jobs outside of those tracked specifically and that do not easily lend themselves to categorization. No other sector accounted for more than 19% of JD Advantage jobs. 

As the charts accompanying this report indicate, jobs in the business sector also include:

• Financial institutions
• Technology
• E-commerce
• Management consulting, and 
• Accounting firms.  

Scambloggers have expressed great concern about the number of graduates finding employment through legal temp agencies and as paid employees of law schools.  I'll blog about that issue in a later posting.

Professor Merritt, in calculating the year in which new jobs would equal or exceed new law grads, stated:

All of the above calculations assume that the future JDs will be satisfied with JD Advantage jobs.  That seems a dubious assumption. We know that recent graduates have not been satisfied with those jobs.  Among 2011 graduates, 46.8% of those with JD Advantage jobs reported that they were seeking other work.  Graduates have been taking JD Advantage jobs to survive, but they are not satisfied with those positions.

Professor Merritt does not site the source of this information, so I have trouble analyzing it right now.

Anecdotally, several recent ASL grads got JD Advantage jobs in the energy industry. One grad made a six-figure salary only a few years after graduating from our school. Yes, he is seeking another job, but that's so he can be closer to his family and avoid a weekly commute between Virginia and the Marcellus Shale Play located in Pennsylvania.  Is he otherwise satisfied with a JD Advantage job in the energy industry? Yes. For one thing, it pays substantially more than the Bar Passage Required jobs available in the area.

In short, I hate to make too many assumptions about graduates holding JD Advantage jobs, especially those in industries identified as "hot,"  like energy, regulatory, and health care.

I've planned a posting comparing salary data for Bar Passage Required jobs and JD Advantage jobs.

Dec. 6, 2013 Update:  I just got this email from Professor Merritt:

Hi, Paula. I just put up a post with some more information about JD Advantage jobs. I agree with you that we shouldn't make assumptions about these jobs. As I write here, however, schools and NALP already have useful information about these jobs -- but they haven't been willing to disclose that information. I have been trying to get schools to disclose the information they have, and I hope you'll join me. There is also more information that could be collected, but there is quite a bit available.

Professor Merritt has also provided in this posting the data and its source supporting her statement that almost half of graduates holding JD Advantage jobs are continuing to seek another job.

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.