Where did all the law jobs go? And are they coming back?
Good questions. More on that in a second. But first, we have to say that we’re frankly tired of hearing law students and newish JDs moaning about the dearth of lawyer jobs to be had. Particularly grating are the complaints that it’s somehow somebody else’s fault that they’ve got all this debt and no six-figure job to show for it. Most of these put the blame on law schools for hoodwinking them into thinking the job market for attorneys was awesome. We don’t get that — people who go to law school are grownups, adults with college degrees, but these ones are acting like they’re still kids. Come on, at some point you have to be responsible for your own decisions. Childhood ended a long time ago. Anyway, one would think that someone intending to become a lawyer would have had the basic ability to research what the real job market was like. A simple Google search would have turned up a plethora of articles and discussions about it, going back to mid-2008. If they really had no clue what they were getting into, then they really need to re-think whether they’re in the right profession.
And if they’d bothered to research just a tad more, they’d have found that this ain’t the first time law jobs have been harder to come by. This kind of thing happens every now and then. It’s cyclical, just like anything else. Demographics, economic cycles, and the coming and going of fads have all affected whether there’s enough hiring going on.
One need not understand why it was happening. But for college-graduate adults to not even know that it was happening? And to make life-changing, debt-incurring decisions based on law schools saying their graduates had good-paying jobs? (Or worse yet, based on a fantasy that has never been true, that anyone but the top grads from the top schools would be making the big bucks right out of law school?) That’s just idiotic. Such complaints call into question the very ability of the complainer to have practiced law in the first place. It makes you sort of glad they didn’t find a job, kinda.
Although one need not understand why it was happening, however, it’s still worthwhile asking the question. We’ve had our own theories, but they’re based more on intuition and anecdote than on any rigorous analysis. So it’s good when, from time to time, someone pops up with an explanation.
With respect to the latest turndown, our basic understanding was always this: Starting in the 1980s, for example, the financial sector really began to grow rapidly. Its share of GDP roughly quadrupled between the Reagan years and the start of the financial crisis. Among other things, this led to a burgeoning demand for corporate lawyers, to work on all the transactions that were being put together all over the place and deal with the related taxes, litigation, etc. This is the bread-and-butter work of most of the large, well-paying law firms. So demand grew for bright lawyers who could churn out a lot of billable hours on this stuff. So long as there was money coming in, these very expensive young lawyers were still worth it. But starting with the bursting of the mortgage bubble in 2007, there was a huge slowdown in the financial sector. Big law firms now had a lot of very expensive lawyers on staff, and not enough revenue to pay for them. So starting in 2008, the layoffs began. Layoffs of junior associates, senior associates, even partners continued for what seemed like forever. This had a ripple effect throughout the legal industry. When the top grads aren’t getting the top jobs, they get the next best. This shoves out those who otherwise would have had those jobs, and so on down the line. The less-stellar one’s grades or school, the less likely there was to be a job out there for you.
That was our gut feeling, anyway. Arnold Kling, however, has written a somewhat more insightful explanation over at econlib.org. Answering a question about why the current economic slump seems to be taking so long to shake off, Kling focuses on “just one example of an industry that is undergoing a severe contractionary adjustment: the legal industry. Many large firms have undertaken massive layoffs, and new law school graduates are having a horrible time finding jobs. How can we explain this?”
He starts by referencing Axel Leijonhufvud’s “corridor” theory — basically, people are okay at handling the normal fits and spurts of an economy, but when something big and unexpected happens, people suck at it. Extreme adjustments are required to recover from an extreme deviation, or else everything just gets worse. (This has nothing to do with corridors. Axel wrote it in Sweden in the early 70s, maybe you just had to be there. The concept is intuitive to anyone who’s practiced unusual-attitude recovery in a plane, though. Maybe it ought to be called the “shitohshitohfuckfuckfuck” theory.)
Why is this relevant? Most of the time, everything is normal. The economy — and your own portion of the economy — only makes mild deviations. So people get used to making mild adjustments. An extreme correction would be insane, and likely disastrous. (Keeping with the pilot analogy, it would be like reacting to a bit of turbulence by shoving the nose straight down at the ground. Insane. Not done.) Doing nothing is often just fine. The blip passes. Reacting to everything gets expensive, because every reaction incurs costs.
Because this is the normal state of affairs, people (and law firms) are generally “adjustment-averse.”
This is fine when there are small drops in demand for legal services. Okay, sure there’s less work to go around now, but it’ll pick up later. And it usually does. You don’t need to go through the hassle of laying people off every time demand goes down a little.
But when demand goes down a lot, we still don’t adjust. We ride it out, hoping it’s going to get better. And by the time we realize how extreme the situation is, it’s too late to do anything gently. Drastic measures are required. (For the pilots out there, it’s like ignoring a small bank at night, maybe even getting used to it, until all of a sudden you find yourself inverted and nose-down.)
When things keep going back to normal, the economy is “mean-reverting.” But the economy stopped being mean-reverting. And the legal profession (among other industries) didn’t adjust to it. “Because they had failed to adjust gradually to the underlying technological changes,” Kling writes, “what they got was a large step adjustment, greatly reducing the size of the legal industry relative to its previous trend.”
As a result, the legal economy, like the housing and other sub-economies, was “unsustainable as of 2008. … Once a shock took place, the need for adjustment was exposed…. [The legal profession has] since adjusted relatively rapidly and painfully….”
Economists who apply aggregate supply and demand, he says, would say “we can go back to something like the 2007 status quo with expansionary fiscal and monetary policy.” Kling disagrees, saying that there is “no going back. The market needs to figure out new ways to best utilize would-be lawyers and other unemployed workers.” In other words, they need to find something else to do. There’s no more room for them here, and that’s not changing.
We hadn’t really thought of it in quite the same way, but it does make sense. We’d focused more on the simple macro causes, while Kling explains why the effects were so much more dramatic than they otherwise might have been.
Still, no matter how much the legal “industry” (ugh, we hate that) may shrink, what kinds of jobs are really being lost? Jobs for which there is no demand. That hardly seems like something to get upset about.
For longer than we’ve been alive, people have complained of there being “too many lawyers.” We expect they always will. But there are never too many good lawyers. The profession always has room for one more good lawyer, no matter what the economy happens to be doing. It’s funny, but life seems to work that way.
So instead of ending on a down note, here’s some encouragement to the rising JDs who are smart, hard-working, decent people who want to be lawyers for all the right reasons: Come on in. There’s plenty of room for you.