Too Many Lawyers?

Keith Lee posted an interesting chart on his blog today, comparing how fast the number of lawyers is growing to how fast the general population is growing. The U.S. population has grown at a slow and steady pace since 1945. The lawyer population, however, has grown at a much faster rate since the 70s.

People have been complaining about “too many lawyers” since at least the 70s, if not earlier. This data would seem to explain some of that feeling, as the lawyer population has grown faster than the general population.

But how accurate is that complaint? Are there too many lawyers?

Not too long ago, you could say “no” and back yourself up with a convincing supply-and-demand argument. The market demanded more legal services, so more lawyers were coming out of school to fill that demand. If there wasn’t demand for a lawyer’s services, he’d soon find something else to do.

It’s not as if lawyers create their own work, after all — personal injury lawyers don’t go around causing traffic accidents; transactional lawyers don’t draft contracts because they feel like it; criminal defense lawyers don’t make people go out and commit crimes. It’s the clients who want to sue each other, who have deals that need to be structured, who get in trouble and need help.

So if more and more lawyers were out there, it wasn’t the legal profession’s fault. It was because the rest of you were suing each other more often. It was because life, business and government were getting more complex, and you needed more help in navigating your affairs. It was your fault, not ours. Simple supply and demand.

There weren’t too many lawyers. There were exactly as many lawyers as you, the clients, wanted there to be.

Actually, the growth in lawsuits and wills and ordinary lawyering wasn’t really ballooning. Ordinary lawyering was keeping pace with the population, for the most part. What was really growing, starting around 1970, was the demand for corporate transactional work. That’s what created the big firms, what drove the big fees.

But this new corporate demand wasn’t a permanent shift in the demand curve. It was a bubble. Actually, it was a series of bubbles — the M&A bubble of the 70s, the real estate bubble of the 80s, the dot-com bubble of the 90s, another real estate bubble in the 00s — Wall Street percolated with all kinds of demand for more corporate work. Each bubble burst, as they tend to do. But so long as Wall Street kept percolating, there were always new bubbles coming along. Overall, it was constant. And it drove higher and higher fees, higher and higher salaries, secure and steady work. And that drove more and more people to go into the law, looking to get some of that steady work and high pay. (Which is the exact wrong reason to go into the law, but that’s what happened.)

But then, about six years ago, it stopped. The demand for the high-pay big-firm corporate work dropped significantly. The profession tried to ride it out, keeping all those high-pay lawyers around for when the work came back. But it didn’t. And a year later they realized they couldn’t keep paying all those high salaries without the same level of fees coming in. So they started shedding lawyers.

Those were good lawyers, of course. These firms had only hired the best of the best. Which was great if you weren’t a top student from a top school — with those guys competing for the Wall Street-driven jobs, there was more room for you on Main Street. But once those guys started competing for the Main Street work, there was less demand for graduates whose grades or schools weren’t stellar.

And so you saw an awful lot of students who had entered law school expecting an easy job market graduate with no job (but plenty of debt).

If you asked one of those new graduates if there were too many lawyers, you’d probably hear a resounding “YES!”

But that’s because there were more lawyers competing for fewer jobs. The actual number of lawyers working as lawyers was still exactly as many as you, the clients, were demanding.

The job market took that hit in 2008, and it hasn’t really changed much since then. But law school applications — which had been steadily falling up until then — now shot up, rising faster than before for the next couple of years. Presumably well-educated college-graduate adults saw law school as an attractive option, despite all the evidence to the contrary. A lot of these applicants looked on law school as a default — the economy sucked, so this was a great way to ride out the recession and have a good-paying, steady, upper-middle-class career on the other side. They didn’t want to be lawyers for the right reasons, but they wanted to go to law school.

Supply and demand being what they are, if more people wanted to pay good money to go to law school, there were going to be more seats for them to fill. And so the number of law students continued to rise. And so even more fresh graduates came out to face the same job market that had NOT been growing at the same pace.

If you ask any of these new graduates if there were too many lawyers, you’d probably hear a resounding “YES!”

Supply and demand being what they are, of course, people eventually stopped applying to law school in such numbers. They’ve resumed their downward path. In fact, applications are going down faster than ever, and are probably at their lowest point in thirty years. Meanwhile, those who couldn’t find work as lawyers have mostly found something else to do. So this oversupply of fresh graduates is in the process of shaking itself out.

But even with this momentary oversupply of fresh graduates, the number of lawyers actually working is still going to be however many you, the clients, demand. The answer to the question “are there too many lawyers” is still “no.”

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Of course, what people are really complaining about when they say “too many lawyers” is that there are too many bad lawyers. Nobody complains about the good ones. But that’s a subject for another time.

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 Since I got off on this from looking at some graphs, I thought I’d make some of my own. Look at these and ask yourself if there really are too many lawyers: