And boom goes the dynamite

Brian Tamanaha has a piece in the New York Times, summarizing some of the main contentions and recommendations of his new book Failing Law Schools. Brian’s description of the situation in legal education is refreshingly concise:

The economics of legal education are broken. The problem is that the cost of a law degree is now vastly out of proportion to the economic opportunities obtained by the majority of graduates. The average debt of law graduates tops $100,000, and most new lawyers do not earn salaries sufficient to make the monthly payments on this debt. More than one-third of law graduates in recent years have failed to obtain lawyer jobs. Thousands of new law graduates will enter a government-sponsored debt relief program, and many will never fully pay off their law school debt.

I hope it comes as a salubrious shock to most readers of the Times to discover that law schools can literally charge whatever they want for their increasingly dubious wares, and the federal government will then loan anyone law schools deign to admit the full cost of attendance (tuition plus living expenses), in the form of high interest non-dischargeable debt.

That this is a recipe for disaster should be obvious to anyone who got to whatever week in the Econ 101 syllabus started touching on the extent to which “the free market” is a heuristic fiction rather than a sociological fact.

Brian’s recommendations fall into two categories: loan reform and accreditation standards. He argues for caps on the amount of federal loan money law schools should be able to take from students, for making private educational loans dischargeable in bankruptcy, and for changing the ABA’s accreditation standards so as to make it easier for at least some schools to offer significantly cheaper models of legal education.

These recommendations are elaborated on at length in Failing Law Schools, and adopting them would certainly represent a significant improvement on the present absurd situation, in which taxpayers are expected to underwrite the budgets of 199 versions of the Yale Law School.

I suspect that for tactical reasons the piece maintains a discreet silence regarding the fairly obvious fact that, given the underlying statistics it is referencing, a large number of law schools need to disappear. Failing Law Schools consistently puts what is, from the perspective of the status quo, the best possible face on those statistics, again I suspect for tactical purposes, i.e., even the most optimistic reading of the data compels the conclusion that the present structure of legal education is unsustainable.

The real bottom line is that there’s a massive and growing oversupply of people with law degrees, and that while stopping the rapid increase and eventually reducing the crazy amounts of debt people are taking on to acquire those degrees would be a positive step, reform efforts must at some point soon address that problem quite directly.

This morning the Bureau of Labor Statistics issued its monthly report on the state of American labor. Keep in mind that, as a technical matter, the Great Recession has been over for three years now (GDP has been growing since June 2009). People who think an economic turnaround is going to save legal academia’s bacon should consider the very real possibility that this is the “economic turnaround,” and that the debt-leveraged growth of recent decades simply isn’t going to be repeated in the foreseeable future.

In any case, let’s consider what’s going on not just in the American economy as a whole, but in the legal sector. Over the last twelve months the legal sector has added a total of 4,800 jobs. Keep in mind that at best perhaps 70% of these jobs have been filled by attorneys, since the sector includes all support personnel (paralegals, administrative positions etc.). So we can estimate that there are about 3,000 more attorneys employed in America today than there were a year ago.

Now a certain number of people who were working as attorneys a year ago aren’t today, because they’ve died, retired, moved into other lines of work, or have simply become unemployed. The BLS estimates the total annual “outflow” from the profession to be about 13,000 people at present. So that means that about 16,000 lawyer jobs have been filled over the last 12 months by people who weren’t working as attorneys at the time they moved into these jobs.

Note this does not mean that 16,000 new law graduates got real legal jobs, since some unknown number of these jobs were filled by unemployed attorneys who moved back into the legal work force. It’s true that the 2011 NALP stats claim that 25,654 of the nation’s 44,258 2010 law graduates had a full-time job requiring a law degree nine months after graduation. For quite some time now I’ve been trying to explain why that (atrocious) 42% functional unemployment rate for new lawyers is actually seriously understated.

The BLS statistics suggest that the real unemployment rate for new lawyers is more on the order of 63%, if “employment” is defined as having a real legal job, as opposed to the the almost unlimited number of fake legal and quasi-legal jobs the NALP statistics count as full-time employment requiring a law degree (such as for example getting hired into a short-term low-paid position by your alma mater in order to goose its reported employment rate).

It’s a very positive development that Brian’s critique of the growing economic crisis in American legal education and the legal profession is reaching a wider audience. And it’s probably unrealistic to get that audience to appreciate all at once how serious that crisis really is. After all, law schools have barely begun to grapple with its true extent. But this is an important start.

Update: This “job opening” generated 32 applications from law school graduates within 24 hours of being posted on a law school’s web site.