No Libertarians, the ABA Does Not Control The Supply of Lawyers

Writing for Forbes, University of Chicago law professor Todd Henderson explains to us “Why Lawyer Salaries Are Skyrocketing.” Although he attributes most of the cause of the big-law salary hike to the libertarian red-tape boogeyman, Henderson opens the article with long-falsified supply-side reasoning.

On the supply side, the American Bar Association operates a state-approved cartel, which uses a licensing regime to artificially limit the supply of legal services. In a recent white paper, the White House came out against occupational licensing in general, and breaking the ABA cartel would be a good first step in addressing the staggering growth in lawyer pay.

The last time I recall encountering the “ABA attorney shortage” claim in any depth was two years ago when Michael Lind on Salon told us that that the ABA controls the supply of lawyers. Henderson’s argument though more predictably libertarian is nevertheless surprising because only a month ago The New York Times explored law-graduate underemployment in depth. The natural question is, how can Henderson discuss an attorney shortage while graduates a state away from him struggle to find work at far less pay?

In recent years bar-passage rates have played a role in graduate underemployment to some extent, but not all of the 5,004 unemployed or unsurveyed class of 2015 graduates failed the bar. Another 5,400 graduates were in JD-advantage jobs, which frequently includes positions that could be filled with people with less education. These graduates should be pushing lawyer pay down, and this is prior to any discussion of whether big law salaries should track inflation.

Then of course, there’s the fact that payroll lawyers’ incomes have been flat for quite a while.

10th to 90th Percentile Dispersion of Annualized OES Lawyer Incomes

From a business perspective, law firms could also take the same amount of money and substitute more new associates for the same (or less) pay to cover demand for their services. That is, if demand for their services is really an issue.

Then of course, there’s the ABA’s accrediting power, which a Department of Education panel threatened with a one-year suspension not because it’s refusing to accredit more law schools but because it’s accrediting law schools with insufficient regard to graduates’ employment outcomes.

Cleary other forces are responsible for the ~$20,000 big-law pay raise. I insist I’m not a biglawologist and other voices such as Steven Harper are vastly more credible than I am on the subject, but anyone who thinks ABA rules are choking lawyer supply doesn’t have much credibility when it comes to regulatory boogeymen either.

2 comments

  1. Hrrmmm…this is the same Todd Henderson who said back in 2010 his tax burden was too high clearing $250k, so he would have to cut back on Chicago Lab for his kids, fire the housecleaner, etc. Those historic brownstones don’t pay for themselves, you know.

    Birds gotta fly, fish gotta swim, shills gotta shill. At least U of C turns out admirable results for its law school graduates, the self-interest of certain professors notwithstanding…

    http://articles.chicagotribune.com/2010-09-23/business/ct-biz-0924-rich-blog-20100923_1_law-professor-blog-taxes

  2. Professors like Todd Henderson don’t seem to inhabit the real world. They sit in their office reading articles and exchanging email messages with like minded academics.

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