GUEST POST—Smokin’ Bucketful of Awesome (Flow Chart Edition)

(Connecticut attorney Samuel Browning, a friend of The Law School Tuition Bubble, obtained permission from law professor Bernie Burk to create a flow chart version of a series of posts Burk wrote on The Faculty Lounge in June 2014 that characterized law school outcomes as between either “A Smokin’ Bucketful of Awesome” or “A Smoking Pile of Scrap.” Mr. Browning’s chart appears here with only minor proofreading on my part, so any unclear points, variances from Burk’s posts, or errors are his own. Actual hyperlinks to Burk’s articles are included at the bottom. Click on the flow chart to enlarge it in your browser.)

Smokin' Bucketful of Awesome (Flow Chart)

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http://www.thefacultylounge.org/2014/06/more-thoughts-on-self-delusion-in-the-legal-academy-and-an-effort-to-engage-the-aals.html

http://www.thefacultylounge.org/2014/06/self-delusion-spreads-from-professional-to-graduate-education-consternation-curiously-absent.html

http://www.thefacultylounge.org/2014/06/still-more-thoughts-on-self-delusion-in-the-legal-academy-or-accepting-the-difference-between-a-smok.html

71 Percent of Lawyers Work in the Legal Services Sector

71 percent of employed lawyers, that is. We’re not talking about people who are on the rolls but aren’t working.

I haven’t carefully read through all of Michael Simkovic’s and Frank McIntyre’s most recent analysis in law graduate earnings, but it looks like they’re still uninterested in exploring the possibility that law grads’ earnings are attributable to demand-side factors, like price or income elasticity of demand for lawyers’ services. Because they don’t show us that law students who complete all the required law school course work without graduating have the same earnings as law graduates, anything they say about a JD premium is premature. Such an analysis is crucial because one of their own citations, David Card’s 1999, “The Causal Effect of Education on Earnings,” indicates that law grads earn substantially more than the trend would suggest. This finding screams for testing, but Simkovic and McIntyre aren’t careful enough researchers to do that.

Thus, it follows that their comparisons between law grads and college grads in “Timing Law School” are equally inadmissible. Indeed, I may not bother commenting on “Timing” at length at all.

However, I did decide that a little procrastination is good for the human spirit (and entertaining to the reader), so I poked around “Timing” to see what errors I could find. I’ll showcase one.

On page 17 Simkovic and McIntyre write:

Based on initial outcomes for recent graduates and qualitative factors, Henderson and Zahorsky argue that the legal profession is experiencing a “structural shift” due to globalization and technological change.34 Others point to a decline in the size of “legal services” (law firms) relative to GDP.35 What this means for law school graduates is uncertain, since most legal services workers are not lawyers,36 and many law graduates work in fields other than legal services.37

Footnote 36 uses the Bureau of Labor Statistics’ Occupational Employment Statistics (OES) database to show that “out of more than 1.1 million legal services workers, only 375 thousand were lawyers. Other occupations include paralegals, secretaries, bookkeepers and computer support and business specialists.”

And footnote 37 says:

Around 60 percent of law graduates practice law. Simkovic and McIntyre, supra [“Economic Value of a Law Degree”] at 252. Of those working as lawyers, around 65 percent work in “legal services.” United States Department of Labor, Bureau of Labor Statistics, supra note 36. Some of the non-lawyers working in legal services have law degrees.

In other words, the authors bury in a footnote the fact that 65 percent of lawyers work in legal services, so they can claim that it’s unclear how economic swings affecting the legal services sector would in turn affect law grads because most workers there aren’t lawyers. Being mindful of the distinction between law grads and lawyers, it’s nevertheless pretty bizarre to believe that the one industry law school prepares people for most would have a trivial impact on their earnings. The only alternative interpretation is for Simkovic and McIntyre to show that the legal sector is laying off everyone but its lawyers—and admittedly (again, in a footnote) malemployed law grads.

The foregoing aside, their math is still incorrect. It’s true that 375,000 legal sector lawyers out of the 592,670 total in the OES equals 63 percent, but that’s not the full number of lawyers. Why? Because the OES omits self-employed workers, which feature prominently in the legal profession. This is an pitfall that I either first noticed or was pointed out to me when I started writing on law schools nearly five years ago, so it’s amusing to see Simkovic and McIntyre make it.

In 2012, the BLS’s Employment Projections program found 759,800 employed lawyers, of which 374,900 were legal sector wage-and-salary employees. According to the BLS’s estimate of the distribution of lawyers among industries (xls), 165,700 lawyers were self-employed workers. It’s just about impossible for these folks to not be working in the legal sector, and indeed, if one looks at the Bureau of Economic Analysis’ National Income and Product Accounts tables, one finds that self-employed workers are included in the category “Persons Engaged in Production by Industry” (Table 6.8D).

As a result, 540,600 lawyers out of 759,800 lawyers—71 percent—work in the legal services sector, not 63 percent. These scant 8 percentage points sure make it look more persuasive to me that what goes on in the legal sector influences law grads’ earnings. (Oh, and I add that another 17 percent of all lawyers work in government. Is that sector robustly hiring lawyers?)

I don’t expect those 8 percentage points to persuade Simkovic and McIntyre, though. They’ve gotten plenty of mileage asking the legal profession to accept on an untested, pure human capital hypothesis that law school pays off even if the legal sector implodes. They can at least include self-employed lawyers in their adverse footnotes.

10 Ways to Falsify Law Graduate Employment Doomsayers

I begin 2015’s first substantive post by invoking the right of listicle clickbait.

A loose end from December is Loyola Law School, Los Angeles professor Theodore Seto’s response to my American Lawyer article on the Bureau of Labor Statistics’ proposed change to how it measures the replacement rate for lawyers. For Professor Seto, I have good news and better news.

The good news is that when he writes that he’s flattered that I’d respond to his article, he need not be. Of course I was going to write on the topic for The American Lawyer anyway, but his first article usefully illustrated the kind of thinking I cautioned against when I broke the story in early November.

The better news is that his closing line raises an interesting question worthy of further consideration. He writes:

But we should all remember (myself included) that the best legal counselors, when faced with new evidence, adjust their advice accordingly. They do not simply attack the evidence.

Let’s not discuss whether I was attacking new evidence. Readers can compare my article to Seto’s for themselves. Instead, if I interpret Seto fairly here (and he says I didn’t do that for his other article, so I tread lightly), he’s implying that I or perhaps others make unfalsifiable claims about the future of law graduate employment—that we unfairly dismiss any favorable news about graduates’ prospects because it contradicts our dogmatic positions that law school is a poor decision in probably most circumstances.

If so, he’s incorrect. My beliefs are falsifiable, and because the topic of falsifiability arose on this blog two more times in the last month, I’m inspired to write on it. So, here’s a list of events one could point to (and would probably need to) to predict that things will be better for grads in 2016.

(1)  The absolute number of graduates in the classes of 2014 and 2015 employed in full-time, long-term, bar-passage-required, non-school-funded jobs rises. No one disputes that employment percentages will improve on account of there being fewer graduates, but the best way to show that graduates are finding jobs is … showing that graduates are finding jobs. Similarly, I’d like to see evidence that grads are finding better jobs. That could be the NALP reporting that grads are shifting into lawyer jobs at law firms larger than the 2-10 bracket, though 2013 toed in the right direction.

No. Graduates Employed by Size of Firm (NALP)

You can slag biglaw all you want, but it tends to pay better. Likewise, wage growth in the 25th percentile for law grads is absolutely necessary if anyone wants to convince me that law school is better than going back to college for a more lucrative bachelor’s degree, but technically that’s a slightly different issue.

* Note: At this time I’m not too concerned that the ABA’s decision to give law schools a tenth month to report their graduate employment data will substantially impair any comparisons to previous years.

Continue reading

Japan’s Law Schools Should Take Lessons From Their American Counterparts

Oh Yomiuri Shimbun, why must you blight the Internet with such nonsense in your editorials on legal education?

[T]he number of lawyers employed by local governments and business corporations has not increased as much as anticipated. A large number of people are unable to find jobs after passing the bar exam.

Some law schools have been increasingly inclined to withdraw from their field of education in recent months. The move has accelerated since last autumn, when the education ministry said it would curtail grants-in-aid to law schools whose graduates perform poorly on the bar exam.

There was a time when law schools bloomed, with their number peaking at 74. But the number of law schools accepting applications for admission next spring is expected to decrease to 54. It is only natural for law schools to quit if their students do badly on the exam.

Clearly Japan’s law schools’ mistakes aren’t emulating the U.S. system but not emulating it enough. Employing the strategies used by U.S. law schools could really make a difference at these institutions because over here, we’ve internalized the following lessons. When graduates don’t pass the bar or don’t find jobs, do the following:

(1) Capture the accreditation system and calibrate it so that if graduates from all schools fail the exam at about the same rate, the schools keep their accreditation. You’re not over-enrolled if you’re just average.

(2) Blame the magazine rankings. (Don’t worry if they blame you back, you both make your money on the (prospective) applicants. It’s just part of the business.)

(3) Shake down your alumni to finance a new, gratuitous, state-of-the-art law school building. That’ll show ’em.

(4) Blame your graduates for being greedy, entitled, and unwilling to make the tough sacrifices, like opening practices in rural areas. Lots of people in Shikoku need lawyers.

(5) Alternatively, blame your graduates for moving too far from the school and trying to make money where the jobs are, like Osaka perhaps. After all, it’s not the school’s fault for enrolling too many students for the local market; rather it’s the students’ fault for wandering too far from where their degrees have any signaling value.

(6) Advertize your school’s discounted tuition thanks to senior students who are asked to pay full freight courtesy of unlimited government loans. (Japan has those, right?)

(7) Complain that the press and the blogs don’t use any facts—because they don’t.

(8) Use Pyrrhonian skepticism to dismiss government employment projections showing that there is no need for your graduates’ professional labor.

(9) Notwithstanding (8), point to the imminent wave of retiring lawyers whose positions will need to be filled.

(10) In case Abenomics fails, waive away any predicted productivity increases in legal services, low household incomes and formation rates, the apparent income elasticity of demand for legal services, and predictions that the economy is going to stagnate for many years to come. Do not waver: The backlog of graduates will clear!

(11) Claim that your graduates are easily finding jobs after the employment data are collected. Disregard the findings of longitudinal studies like After the JD in the U.S., which found that graduates who enter the profession in good years frequently leave law practice several years later due to massive attrition.

(12) Throw out marginal product theory, the law of diminishing marginal returns, and the sheepskin effect and argue that your school’s degrees are “versatile,” ensuring that graduates will get an earnings premium in any occupation besides law practice because all schooling increases earnings for all positions regardless of the skill required.

(13) Ask rhetorically, “What else will intelligent young people do?” Obviously law is the answer.

(14) Plead that your school is virtuous because it enrolls minority students who do poorly on exams. It doesn’t matter if they never enter the profession or can’t service their debts. (They have IBR in Japan, right?)

(15) Use the crash in applicants to encourage people to apply. After all, it’s not like everyone will seriously heed this advice and make it self-defeating.

(16) U.S. law schools haven’t tried this yet, but yous should: Insist that the profession’s licensing rules are so restrictive that they prop up prices for lawyers’ services, which is why so many of the highest earners in the country are lawyers. Therefore, anyone who graduates from your law school is a lucky ducky. If anything, the country should allow foreign-trained lawyers to practice as it will drive costs down.

(17) And if all else fails, compare the number of attorneys per capita in your country or region to others because that’s an obvious measure of lawyer shortages. Duh.

So Yomiuri Shimbun and all Japanese law schools, the problem wasn’t adopting the American model; it’s not adopting it all the way.

How I Learned to Stop Worrying and Love the ‘JD Advantage’ Category

…Pretty much sums up my response to the National Association for Law Placement’s analysis of the class of 2013’s employment outcomes.

Quoth Executive Director James Leipold:

As the legal services market continues to change at a rapid pace following the dramatic downsizing during the recession, the variety and diversity of jobs that law grads take now is greater than ever. In general, the picture that emerges is one of slow growth, and growth that is a blend of continued shrinkage and downsizing in some areas offset by growth in other areas.

Although the NALP changed its terminology from “JD Preferred” to “JD Advantage” starting with the class of 2011, this year marks the record percentage of JD Advantage jobs.

Percent Employed by Status (NALP)

The good news is that the percent not working (aka the unemployment rate) has fallen to 12.9 percent. The record was 14.6 percent in 1993. I’m confident that record will not be breached, so there’s some good news. Indeed, I think it’s disturbing that the early ’90s recession mauled law practice so badly.

As for the JD Advantageers (seriously, slap a jetpack on them and shoot them into the sky), though, I did a quick correlation analysis for the 2001-2013 period. JD Advantage has a surprising -0.94 correlation with Bar Passage Required and an unfortunate 0.85 correlation with Not Working. This bodes ill for the merits of JD Advantage generally.

As for the correlation between JD Advantage and employer types, again, private practice correlates at -0.94. (Wow.) Business and Industry weighs in at 0.97, but Public Interest comes in at 0.91, which is either good or means that Public Interest has been watered down with people who couldn’t find work in firms.

(I forgot to mention that Business and Industry hit a record 18.4 percent of employer types this year.)

So yeah, strong positive correlations with unemployment is usually something you don’t want when making sense of employment categories. Thus, when Leipold says that the picture is one of “slow growth that is a blend of continued shrinkage and downsizing in some areas offset by growth in other areas,” I caution against seeing growing proportions of JD Advantage outcomes as plausibly representing a positive future for law school graduates.

Leipold, lamentably, disagrees:

It is not true that there are too many lawyers — indeed even today most Americans do not have adequate access to affordable legal services — but the traditional market for large numbers of law graduates by large law firms seeking equity-track new associates is not likely to ever return to what it was in 2006 or 2007, and thus aggregate earning opportunities for the class as a whole are not likely to return to what they were before the recession.

Not too many lawyers? Tell that to the JD Advantage cadre.

NYT Op-Ed Authors Ignore Bloat in Legal Education

…Is up on The American Lawyer.

Memo to law students who think their underemployed, indebted classmates are Lucky Duckies: THIS is how you write about legal education.

‘After the JD’ Offers Weak Evidence of JD’s Value

…Is up on The Am Law Daily.

And now ladies and gentlemen, the band called Death.

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This band’s interesting story is the subject of a documentary titled, A Band Called Death, that’s on Netflix.

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