There is no question that law schools have suffered from the impact of the dramatic collapse of the world economy in 2008. Because of a lag effect the full impact was delayed a couple of years but now indeed enrollment has dropped significantly.
The delay in the enrollment decline occurred because new college grads tried to flood into law schools from 2008-2010 in order to wait out the economic turmoil. The problem they then faced was that the recovery only took hold in 2012-13 and that meant oversupply in the market. The enrollment bubble can be seen in this chart prepared by the ABA. As the economy took off under the influence of low interest rates in 2003 enrollment steadily climbed and jumped up significantly as the credit crisis was in full swing. The peak in first year enrollment was in AY2010-2011 at 52,488. The continuing impact of that bubble period is indicated by the fact that the highest number of JD’s ever awarded in the US occurred in 2013, three years after the peak of first year enrollment.
Now, of course, law schools face both a reputational effect of that oversupply problem and the fact that with a wider economic recovery underway law school is no longer necessary as a hiding place for unemployed college grads. Many college graduates can get jobs right away with just a BA, even if these gigs don’t pay as well as lawyering.
Ironically, and as has happened in several prior business cycles, the decline in the attractiveness of a JD is occurring as the legal employment market is steadily recovering. New BLS data analyzed by Ted Seto at Loyola Law School in Los Angeles suggests there will be a shortage of lawyers beginning as early as 2016. One legal industry consultant, Peter Zeughauser, told the Wall Street Journal that “the legal industry across the country was faring better than in the years following the financial meltdown of 2008. ‘For the first time in six years, the legal economy is back on track,’ he said.”
These basic facts about economic cycles and the BLS data on legal employment do not bother the Washington Post, however. Their legal reporter Catherine Ho reports today that there is a “shrinking job market for young lawyers” and a “major retrenchment” underway since 2008 in the legal sector.
This would certainly come as a surprise to the many large law firms handing out bonuses that are larger than any they have awarded associates since 2007. The conclusion also flies in the face of the data the BLS carefully assembles on legal employment and wages. The number of lawyers employed in the US has risen steadily every year over the last decade (except for a one time drop in 2008 to 553,690) to a high in 2013 of 592,670. Average annualized earnings have grown every year as well from $107,800 in May of 2003 to the May 2013 total of $131,990.
And even in Washington, D.C.’s lawyer rich environment, legal employment and incomes have recovered steadily. Employment reached a crisis period low of 28,390 in 2010 but hit 31,810 in 2013, well in excess of the pre-crisis 2007 number of 29,060. Average annual earnings have been slightly more volatile but hit $162,800 in 2013, a significant bump up from the pre-crisis number of $143,520 in 2007. In fact, lawyer incomes increased in DC in 2008, 2009, and 2010, with a slight drop in 2011 before hitting a record high $165,590 in 2012 and then settling back in 2013.
These numbers hardly suggest a shrinking market much less a major retrenchment. It is possible that the Post, like many law school critics, prefers anecdotes to data, so I asked the Post reporter Catherine Ho if she could provide me the basis for her reporting but have not yet received a reply. If I receive it I will update this post.
[New Year’s Day Update: Ms. Ho has not yet responded to my inquiry. The facts about a recovering economy are hard to deal with for the law school critics. Even the man made global warming crowd in a post authored by Professor NPV himself chose to ignore what the BLS data and other indicators of rising lawyer employment and incomes tell us in their quixotic effort alongside their friends at the Cato Institute to destroy the American law school.
[A year by year look at enrollment indicates that enrollment flattened and even fell during the impact of the dotcom bubble then started to rise when that bubble burst only to flatten again once the real estate bubble took hold, then rose again as that bubble burst only to start falling off now that recovery has – slowly – started to take hold. It is this kind of cycle effect that mystifies the law school critics in a manner that is reminiscent of those who used to think man caused global warming. At least the global warming crowd has had the courage to change their mantra to “climate change.”]