The beginning of the end for the law school bubble

I suspect that in retrospect 2011 will be remembered as the year the law school bubble finally began to burst. It began with David Segal’s first big piece in the New York Times on the lengths law schools were going to in their attempts to hide the actual employment situation from prospective students, and it ended with numerous schools rushing — in the wake of several active and prospective class-action lawsuits — to put something resembling actual employment and salary data up on their web sites.

A commenter asks a $6.4 billion dollar question:

I used to believe that in ten years (which can pass in the blink of an eye), tuition will go from its current level of $45,000 to $73,000; the number of law schools would go from 200 to about 220 and the “% of law grads getting real lawyer jobs” would go from its current 50% rate to about 25-30%.

In other words I assumed that we were far from that critical point.

But now I wonder.

Could we see some of the really notorious low ranked school (e.g. that one that rhymes with stooley) have trouble filling all their seats this year? That would be such an incredible development if true.

No one can know precisely when the current model of American legal education will collapse, or whether that collapse will be sudden, or take place in the social equivalent of slow motion. But the crash is coming. Here’s the cyber-equivalent of an Escher drawing in regard to this question. First, a post from Top Law Schools, in which a Michigan State Law School 3L offers to take questions (Note that MSU is, to the extent such a definition makes sense, an ideal representative of an “average” ABA law school, in that it’s currently ranked 95th-99th out of 200 ABA-accredited schools. We are, in other words, a very long way from the bottom). Naturally, he’s asked if he and his law school friends and acquaintances have jobs. His response:

I do not have a job. Several of my friends have jobs lined up (two in large firms, two in a medium-sized firm, one with a corporation, etc). However, I have a lot of friends (I’m counting 8 just off the top of my head) who graduated last year and they all have jobs now. Of course this is all anecdotal…I don’t know what the percentage of employed 3Ls is. It’s a pretty dismal market (as I’m sure you know) but, honestly, I’m not too worried about it. I’ve received an outstanding education at Michigan State and I realize I may need to wait until after I pass the bar to find a job. It sucks but it is what it is. It’s just gonna take some flexibility and patience I think…through no fault of my own or MSU.

Obviously the placement is great in Michigan and pretty good in Chicago (especially if you spend 1L or 2L summer out there). Our DC placement is pretty rad too because we have a semester program down there. There’s a large MSU alum group in DC as well.

Here’s the other half of the drawing.

For all I know MSU just threw its NALP stats up on the internet this week (perhaps in response to the Law School Transparency Project’s request to all ABA schools that they do so), so this student doesn’t even know these stats are now available. Or perhaps he doesn’t want to know what they are. Under the circumstances, this would be a perfectly understandable defense mechanism.

The short version of these statistics can be summed up in less than 30 words: Nine months after graduation, MSU Law School had determined that 33 of the 348 graduates of its 2010 class were employed as attorneys in positions that paid $60,000 or more. The average law school debt of the 85% of the class that graduated with such debt was $108,444.

In the wake of those two sentences, it really shouldn’t be necessary to continue the autopsy in any greater detail, but those of a morbid disposition can linger over such factoids as the specific employment status of the 150 graduates listed as “employed” in the private practice of law. This group includes 12 solos, 69 [!] graduates employed full-time with firms of 2 to 10 attorneys, and nine more employed part-time with firms of that size — and one of these was listed a temporary employee. Think about that: part of what counts as “employed as an attorney” for the purpose of all those NALP figures is part-time temporary employment with a firm of ten lawyers or less . . . but again, what’s the point of lingering over the crash site’s gory details? Better to simply note most of the people at the scene were killed, a few escaped with injuries of varying severity, and one guy walked away without a scratch (he must have been the one paying attention in Drivers Ed).

A side issue about which I’m genuinely curious: what’s with the huge numbers of graduates who are listed as taking jobs with firms of 2-10 attorneys? Fully a third of the national class of 2009 who are listed as working in private practice nine months after graduation are in this category, and at lower-tier schools the percentage is much higher. Conversely, at elite schools practically no one is in this group. Intuitively, one would think it would be quite difficult to get a real job with an enterprise that would on average have to increase its total attorney workforce by 20% just to hire you. I suspect that many jobs in this category are semi-imaginary: that is, they are temporary contract positions, featuring low hourly pay and no benefits, or (often unpaid) clerking gigs that in palmier days were filled by law students, or they represent a couple of equally unemployed classmates banding together to start a “firm.”

Anyway, the juxtaposition of the MSU 3L’s post and the newly published MSU placement stats raises the fundamental question of just how much real transparency, when it arrives (and we are still far away from that point), will affect the decisions of people who will have to decide whether the kind of tradeoff represented in those employment and indebtedness stats makes any sense for them.

We have a long way to go, but, on the last day of 2011, we are a lot closer to answering that question than we were on the previous New Year’s Eve.

Which reminds me: Happy New Year. Let’s hope it’s a good one.