The entry-level law job market isn’t going to rebound anytime soon, and larger law firms’ newly stingy hiring practices are largely to blame.
That’s the gist of a draft paper by University of North Carolina law professor Bernard Burk. He analyzed lawyer-hiring trends over the past 30 years in an attempt to put the current employment picture into context and help gauge whether the law job market is likely to recover in the near future.
Firms of 100 or more attorneys have seen the biggest contraction in entry-level hiring, which in turn has created a greater scramble for jobs at smaller firms and in other sectors, according to the paper, “What’s New About the New Normal: The Evolving Market For New Lawyers In The 21st Century.”
“I saw a lot of people talking about the job market, but they weren’t talking about the different pieces of the job market,” Burk said in an interview. “Large law firms are a pretty separate sector of the employment market. But there are smaller firms, government work, public interest work. It turns out that these other sectors are affected much more similarly to each other than they are to Big Law.”
He also wanted to take an empirical look at the debate over whether the contraction in new lawyer jobs is cyclical, tied to the recession; or whether structural changes in the larger firm market will prevent a return to the go-go associate hiring days.
Burk looked at NALP hiring data going back to 1982 and found that the ratio of entry-level law jobs to new graduates has improved steadily, with slight dips during the early 1990s and 2000s when the economy was in recession. That upward trend reversed abruptly in 2008, when the number of new law graduates continued to climb but the number of available law jobs fell off precipitously.
(Burk offers several caveats to the historical data, including that the categorization of law jobs has changed over time and that NALP reporting rates were significantly lower in the 1980s.)
At no time during the past three decades has the ratio of law jobs to new graduates exceeded 80 percent, a peak reached in 2007—meaning that even when the hiring scene was a its most robust, one in five new attorneys hadn’t found law jobs within nine months of leaving school. Some of those graduates may have failed the bar exam on their first try or concluded that they didn’t want to practice law, the paper notes.
But the largest single driver of the recent decline in law jobs has been large firms reducing the size of their associate classes.
“Over half of all the full-time, long-term Bar Passage Required jobs that were lost between the class of 2007 and the class of 2011 were lost out of BigLaw alone, even though in 2007 BigLaw hired less than one-fifth of the graduating class,” the article reads. “Thus simply as a matter of volume, many of the recent contractions in the entry-level Law Jobs market are focused far more in larger private law firms than in any other sector of the legal employment market.”
BigLaw has shed six times as many jobs as have other employment sectors, Burk found. The number of new graduates in firms of two to 10 attorneys surpassed the number of newly minted lawyers at firms of 100 or more attorneys in 2010—the first time that had happened since 1998.
Even though smaller firms, the government and public-interest sectors aren’t losing jobs at the same rate as for large firms, the hiring slowdown at those larger firms is having a ripple effect. The high-achieving law graduates who likely would have landed in larger firm before 2008 are now competing for jobs in those other sectors, Burk found.
“Graduates with less-fancy resumes are having a harder time finding the jobs they used to have because there is an influx of people from fancy schools now looking for the type of work that didn’t seek out in the past,” Burk said.
Regarding the debate over whether changes to the entry level hiring market are cyclical or permanent, Burk’s research favors the latter conclusion. It is true that law hiring rebounded fairly quickly following recessions in the early 1980s, 1990s and 2000s, he said. But the rise of legal-process outsourcing, client pressure on pricing and the disappearance of the traditional partnership track make a strong case that large firms will never return to hiring armies of new associates each year, the paper argues.
“These structural trends indicate that entry-level BigLaw hiring is likely to remain depressed even as demand for the services that BigLaw firms have traditionally provided returns to pre-recession levels,” the paper reads.
Burk acknowledged that his article delivers a pretty grim picture. But there is a silver lining, he said: The contraction of large firm jobs has helped to spur a steep decline in law school applicants, which has in turn forced schools to enroll fewer students. The smaller class sizes will mean that future law graduates face less competition to land law jobs, so employment figures should improve somewhat.
“With fewer new lawyers chasing Law Jobs, more graduates who want a Law Job should be able to get one,” the paper reads. “In yet other words, the poor employment prospects for new law graduates today can be attributed as much to an excess of law graduates as it can to a shortage of Law Jobs.”