NALP Data on the Law School Class of 2010 Shows Bleak Employment Picture

NALP’s preliminary analysis of employment for the law school class of 2010 (as of February 15, 2011) was released yesterday.   (NALP’s comprehensive report will be available in August; if you’re a law student or prospective law student, make it required reading.)  The news is not good.  I tend to understate, and “not good” is a pretty good example of that.

The best face one could put on NALP’s preliminary analysis is that the legal employment picture for 2010 law school graduates is grim.  Last year, I advised that my best guess was that the U.S. legal employment market would not recover for the class of 2010, i.e., the 2011 market would not show many positive signs. 

NALP’s data confirm that, and then some.  Here are some of the basics.  Overall employment of the class of 2010 is at 87.6%, its lowest level since 1996 and far off the 91.9% employment rate at the height of the economic boom is 2007.  Worse, legal employment (the reason, after all, that most people went to law school) is at its lowest level since NALP began collecting data.  Only 68.4% of the class of 2010 obtained jobs for which bar passage is required, continuing a decline from 70.8% for the class of 2009 and 74.7% for the class of 2008 (already recession-impacted classes).

I hate to say this, but it gets worse.  Private practice (which includes large law firms, which are market drivers for the rest of the legal market) employed only 50.9% of graduates, down 5 percentage points from 2009 and far off the historical rates that ranged from the mid- to upper-50s.

Public interest took a higher proportion of law school graduates.  There has, of course, always been a significant portion of law school graduates who intended all along to do public interest law upon graduation, but the increase is disturbing for a few reasons.

First, public interest positions generally pay less than private practice positions, which impacts law graduates’ ability to service their considerable—and growing—law school debt comfortably.  I’m all for public service but you should not be unable to afford to do it.  Increased debt loads and lower salaries are a dangerous combination.   James Leipold, NALP’s executive director, indicates that, when NALP’s full report is released later this summer, it will show that “aggregate starting salaries for this class [of 2010] will be shown to be down.”

Second, many (it’s not clear how many) public interest jobs are funded by law schools themselves.  They are, in essence, not jobs based on any fundamentals of the market but reliant upon law schools that have taken measures to make sure that some of their graduates get a little legal experience for the future (and, of course, increase the “employment” numbers those schools can report to the ABA).  Note to the ABA—in the unlikely event that you ever decide to do anything substantive about employment statistic reporting by law schools, maybe you could have law schools report jobs they fund separately.

If you’re looking for a little good news, you can find it in NALP’s basic data, even if the overall picture remains sharply negative.  The most significant is that the aggregate number of jobs obtained by the class of 2010 is about the same as for the class of 2009 but the number of 2010 graduates was greater.  The number of law school applicants this year, of course, reversed a trend of application increases, and certain law schools have indicated that they’ll have smaller entering classes this year.  So it’s possible that for those entering law school this fall, there may be a shrinkage in supply, which will improve employment rates for graduates—unfortunately, only for the class of 2014.

It’s also positive news that, as we reported earlier, fewer 2010 graduates had to deal with deferred start dates.  That’s significant in and of itself, but it’s more important as a positive sign for future classes.

Still, the legal employment market is being buffeted by cross-trends, which is an improvement over the steady dose of bad news that we saw throughout 2009 and 2010, but hardly inspires confidence.  All in all, my analysis of last year—that the market would not begin to show improvement for law school graduates until 2012 (for summer associate positions for the class of 2013), at the earliest, and that the market is unlikely to recover in the medium-term to the levels we saw in most of the last decade—remains my best estimate; the current data reinforce that view.

What that means for those considering law school is that your risk assessment should remain very conservative for the foreseeable future.  When you and your advisors think about your prospects after law school, you should use the class of 2010 numbers as your benchmark and run your risk assessment scenarios moderately up or down from that benchmark to determine your reasonable best case and reasonable worst case scenarios, perhaps by about 8% on each side (with maybe a slightly higher upside, reflecting my cautiously slightly optimistic medium-term view), and should factor into those analyses your likely law schools (and their considerably different payoff differentials) and likely class rank upon graduation.

And, of course, you need to consider your prospective debt load in all of those calculations.  The market for new law school graduates would be distressing in any event, but it’s worse given the excessive cost of law school and (for many) its diminishing return.

Two of those elements—the vast gap in payoff differentials and your likely debt load—underscore two points.  First, make sure that law school is the right choice for you and second, if it is, do everything you can to achieve your best LSAT score, undergraduate GPA (if you’re still in college) and law school application package.  They are ways of mitigating your risk.  But the first questions—are law school and the law right for you?—remain primary.  If you’re not sure of your answers to those questions, law school is, especially now, a particularly poor investment prospect for you.

~ by Kyle Pasewark at Advise-in Solutions on June 2, 2011.

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