You are currently browsing archives for January 2014.
Fighting Hierarchies in Hiring
January 19th, 2014 / By Deborah J. Merritt
Law students quickly learn the hierarchies that govern the legal profession. Top employers, especially in BigLaw, prefer students from elite law schools. High class rank, law review membership, previous work experience, and personal connections matter, but the status of a student’s degree sends a strong workplace signal.
We deplore this fact in academia, and many employers rue the practice as well. Over time, employers have learned that graduates of the elite schools aren’t necessarily the best lawyers. Still, the preference continues. Just as no one ever got fired for buying IBM, no one will lose face for hiring graduates of Harvard, Yale, or Stanford law schools.
But now one BigLaw firm has decided to fight back–against its own biases. Clifford Chance, a global law firm headquartered in London, has devised three novel hiring practices. All three techniques aim to widen the firm’s talent pool by reducing its dependence on lawyers trained at Oxford, Cambridge, and other elite institutions. The Clifford Chance innovations are smart hiring practices: perhaps we can persuade U.S. firms and other legal employers to follow them.
Credit for All Work Experience
Clifford Chance has started explicitly scoring candidates’ work experience. That experience includes law-related work, as well as positions “working full-time in retail to cover the cost of tuition fees.” The firm has not released details on how it counts the latter positions, but it is promising that recruiters explicitly focus on this work. Rather than gloss over the assorted jobs that low-income students perform to pay their way through school, the firm will acknowledge the necessity of this work–and perhaps even recognize some of the skills learned through tuition-supporting jobs.
CV-Blind Final Interviews
Even more intriguing, Clifford Chance has adopted a system of CV-blind final interviews. Staff members conducting these interviews don’t know which law school each candidate attended; they know only the candidate’s name.
The firm hopes that this approach will eliminate unconscious attitudes that might bias interviewers in favor of applicants from elite schools. Rather than assume that an Oxford graduate is more sophisticated, articulate, or intelligent than one from a lesser school, the interviewers judge the candidates based on their words and manner.
The CV-blind approach reduces the halo effect created by elite school attendance. Employers can weigh the substance of an applicant’s academic record (including the nature of the school attended) during screening stages of the employment process. There is no compelling reason for interviewers to know the applicant’s school when judging the interpersonal skills displayed during an interview.
Eliminating academic pedigree from final interviews does have one drawback: It reduces the opportunity for firms to recruit candidates based on common bonds. Interviewers will no longer be able to reminisce with candidates about favored (or dreaded) professors and classes. Candidates may come away from these interviews feeling a less personal connection to the prospective employer.
These very connections, however, give elite-school graduates yet another advantage in the hiring process. If a firm has hired primarily elite-school graduates, students from lesser schools will feel less connection with their interviewers. Those students, in fact, may feel more comfortable in interviews where no one’s alma mater plays a role.
Intelligent Aid
Clifford Chance’s most ambitious program is its Intelligent Aid competition. Each year the firm fills twenty of its summer slots with students chosen through this process. The students submit a 500-word essay on a designated topic, then defend their ideas orally before a panel of judges. The twenty best competitors obtain summer jobs; the top competitor also receives a £5,000 scholarship and £1,000 to give a favorite charity.
Intelligent Aid has become a major pipeline for students aspiring to work at Clifford Chance; the competition fills half of all openings in the firm’s summer program.
Outcomes
Clifford Chance’s innovations seem to be working. Last year the firm hired lawyers from forty-one different schools. That number represents almost a thirty percent increase from the number of schools represented the previous year.
The firm has also succeeded in attracting more first-generation students to its ranks. The Intelligent Aid program yielded one-third more of those students than the traditional hiring route did.
Clifford Chance is betting that its innovations will yield a better group of lawyers than conventional hiring practices have done. The firm isn’t running a charity for students enrolled at non-elite universities; it’s seeking the best possible workers. So far, the results suggest that it’s both possible and productive to combat elitism in hiring.
Why Can’t We Support More Lawyers?
January 15th, 2014 / By Deborah J. Merritt
I wrote recently about the discouraging labor market projections published by the Bureau of Labor Statistics. BLS has–once again–lowered its estimate of the number of new lawyers that the U.S. economy will absorb over the next decade.
Why is BLS so bearish about job prospects for lawyers? The agency devotes an issue of its flagship publication, the Monthly Labor Review to the methodology and trends that underlie its workplace projections. Here are some of the forces that are restraining job growth for lawyers.
The Great Recession
The BLS economists open by noting that the “length and nature of the recession have left lasting scars on the economy.” Recovery has taken longer than even pessimists predicted: Although the Great Recession ended more than four years ago, growth in GDP remains slow.
Unfortunately, BLS predicts that “growth will continue to be slower than was originally hoped.” Robust growth often follows a downturn, but the last recession contributed to a “new normal” in which GDP will grow only about 2.6% per year. That’s better than growth rates during the last few years, which have witnessed growth of only 2.1% annually, but it falls well below earlier growth rates. Between 1992 and 2002, GDP grew 3.4% annually. BLS does not expect that type of growth to return any time during the next decade.
The effects of the Great Recession, in other words, have become structural rather than simply cyclical. This was not an ordinary downturn with a robust rebound. The impacts are lasting. They will dissipate some day, for law as well as other occupations, but that “some day” is still more than a decade in the future.
Decreased Labor Force Participation
The shock of the Great Recession distracted many of us from an economic malaise that has been building quietly over the last twelve years: a declining percentage of our adult population is participating in the workforce. To determine labor force participation, BLS calculates the number of adults (age 16 or older) who are employed or looking for work. That number, divided by the total number of non-institutionalized civilians, yields the labor force participation rate.
In 1947, when BLS started tracking this economic indicator, 58.3% of the adult population was in the workforce. That percentage rose and fell modestly over the next two decades. After 1970, as both women and baby boomers entered the workforce, the participation rate rose steadily–reaching a high of 67.1% that persisted from 1997-2001.
Since 2001, however, labor force participation has been falling noticeably. By 2012, the percentage had dropped to 63.7%, a participation rate that was last recorded in 1979. BLS projects that the rate will continue to fall over the next decade, reaching 61.6% by 2022.
A decline in labor force participation might seem like good news for job seekers: fewer participants means less competition for existing jobs. The negative effects of decreased labor force participation, however, far outweigh any benefits. Declining workforce participation has at least three negative effects:
1. Fewer workers means less productivity. GDP will grow slowly over the next decade partly because of our decreased labor force participation.
2. Declining workforce participation also means fewer people with income to spend on goods and services. Households with a single worker have less disposable income than households with two or more workers.
3. The declining labor force participation rate, finally, means that each worker will support more non-workers. Workers won’t be purchasing goods and services just for themselves; they’ll also be paying both taxes and private money to support the elderly, children, and others who cannot work. In 2012, our economic dependency ratio was 102: For every 100 people in the workforce, there were 102 people supported by the workers. That ratio will climb over the next decade, reaching 106.5 by 2022.
This ratio, notably, is far from the highest one that our population has supported. In 1975, when women still faced employment roadblocks and most baby boomers were still in school, our economic dependency ratio was 126. That ratio, however, steadily decreased during the late twentieth century, falling as low as 91.7 in 1992. Decreasing dependency fostered growth during the late twentieth century; now the trend has reversed.
The Bottom Line
BLS predicts that the long-term effects of the Great Recession, combined with our changing demographics, will impose significant restraints on the economy. Consumers will have less money to spend on goods and services, especially on those that are discretionary.
Lawyers and legal educators tend to think of legal services as essential rather than discretionary, but consumers clearly think otherwise. That is particularly true for middle-class individuals, a group that many law schools and recent graduates hope to attract as new clients.
Historically, middle-income consumers have been reluctant to pay going rates for legal services. Technology and more efficient practice management may now allow us to deliver services at lower rates to these consumers; that’s a noble goal that we should pursue as aggressively as possible. This prospective client base, however, is a moving target. With slow economic growth and more dependents to support, these individuals will have even less money to spend on legal services than they did in earlier decades. We will have to make legal services very efficient and very economical to attract considerable business.
We also have to be realistic about the fact that consumers choose among goods and services. Even the largest corporate clients have budgets; they prefer to spend their profits on executive compensation, developing new products, and opening new markets than on legal bills. For small businesses and individuals, budgets are even tighter. People will almost always buy food, shelter, and health care before they purchase legal services. Many of them may also prefer iPhones, internet connections, and football tickets above legal advice. The BLS projections incorporate, not what people would buy in an ideal world, but the mix of goods and services they are likely to purchase under projected economic conditions.
The constraints sketched here don’t touch on the special factors that are reducing demand for legal services. Those include technology, increasing competition in a profession that once benefited from substantial economic protection, and new management practices. Those structural changes are affecting our industry in particular ways. Meanwhile, we face the same structural changes (lasting impact of the Great Recession and changing demographics) that affect the economy as a whole. This is an era of slower growth and increased dependency–both significant dampers on the economy.
Practice Projections: 2014
January 13th, 2014 / By Deborah J. Merritt
Hildebrandt Consulting and Citi Private Bank have just released their 2014 Client Advisory for law firms. The annual Advisory, which draws upon surveys of law firms and interviews with managing partners, focuses primarily on BigLaw (although some smaller firms respond to the survey). The Advisory also relies upon self reports from firms, rather than independently collected data, which can decrease accuracy. Still, the Advisory offers a useful perspective on key trends in law practice. I summarize below the highlights with greatest importance for legal educators.
The Past Is Past
Very few people, I think, still believe that law practice will soon return to the heady days of 2002-2007. For those who do, Hildebrandt and Citi Private Bank offer yet another rebuttal: “we do not project a return to pre-2008 levels of performance,” the Advisory announces on its first page. “We believe that we have witnessed a fundamental shift in the market for legal services, resulting in a changed and more muted demand environment for law firms.”
Later, the report offers concrete figures. Demand for law firm services grew 4.4% annually between 2002 and 2007, then dropped sharply from 2007 through 2009. For the last four years, demand has been flat. Going forward, Hildebrandt and Citi Private Bank predict “much more modest growth” than before 2008. Demand will grow over the coming years, but quite slowly.
For law schools, these predictions offer further confirmation that we can’t expect BigLaw hiring to rebound to pre-recession levels. Conditions at those firms have improved since the dark days of 2009 and 2010, but associate hiring is unlikely to grow beyond where it stands today. In addition to offering fewer plum positions to our graduates, this BigLaw contraction will continue to create cascade effects in the market as more graduates seek positions in government, public interest, or smaller firms.
The Present: Lower Cost Lawyers
Since the recession, law firms have greatly increased their use of contract lawyers, staff attorneys, and outsourcing companies. This year’s Advisory devotes considerable attention to that trend, noting the rise of “lower cost lawyers” at most firms. 82% of the law firm managers who responded to the Citi survey acknowledged that they use temporary or contract lawyers to support their work. 70% acknowledged that they hire lower cost, non-partner track lawyers at their firm. Hildebrandt and Citi recognize these practices “as a permanent shift in the legal staffing model.”
Notably, the Advisory offers insight into the trends that have made this shift possible. Technology allows senior lawyers to supervise temporary and contract workers more easily; software also supports quicker training of those lawyers. Project management skills have become more common in law firms; those skills allow lawyers to organize large teams of temporary workers more readily. Excess capacity in the labor market, finally, provides a steady stream of lawyers willing to work in temporary or lower paid positions.
Law firms are not the only organizations hiring lawyers at lower wages. Hildebrandt and Citi point out that corporate clients are pursuing the same path on their own. Some corporations are hiring more in-house lawyers than they did in the past, realizing that they can pay those lawyers less than they would pay law firms for the same services. Corporate clients are also sending some of their routine legal work to alternative providers, bypassing law firms entirely.
The Future: Sunshine and Shadows
The Advisory concludes on an optimistic note. Its authors believe that the US economy has stabilized and “the economic outlook in 2014 has improved from the past few years.” Conditions abroad are also improving. As a result, Hildebrandt and Citi predict that “law firm profits will grow around 5 percent in 2014.”
This brighter outlook, however, casts shadows that will capture many of our graduates. Those profits depend largely on “a laser focus on efficiencies.” Firms, in other words, will continue to use contract workers, lower paid staff attorneys, and outsourcing firms. These practices have become essential to support partner profits. At the same time, firms are tightly controlling the number of equity partners and starting to prune income partners from their ranks.
These trends mean that our graduates will continue to settle for more temporary, lower paid work than they did before 2008. They may also enjoy fewer opportunities to become income or equity partners. Jobs in law firms and elsewhere will still exist, and some of these positions may compare favorably to other opportunities for college graduates. The jobs, however, will be different than the ones we are accustomed to imagining for our students.
How Many Lawyers?
January 7th, 2014 / By Deborah J. Merritt
How many lawyers will our economy support during the next decade? As legal educators, we are often bullish about our industry. We know our graduates’ talents, and we see vast unmet needs for legal services. We also know that legal rules are more complex than ever. From those perspectives, it seems logical that demand for lawyers will increase sharply–especially as the effects of the Great Recession fade.
But our perceptions can mislead us. Most of us lack economic training; we also know little about the macroeconomic data that inform labor market forecasts. As academics, we don’t even know much about the economics of law practice. Our very position in the industry, finally, tempts us to take a rosy view of the job market.
The best source of labor market predictions, in our industry and others, remains the Bureau of Labor Statistics (BLS). Every two years, the Bureau prepares a ten-year forecast of job openings in more than 800 occupations. The Bureau uses extensive data and complex macroeconomic models to prepare those predictions. Its economists analyze the economy as a whole, accounting for demographic shifts, technological change, complex interactions among industries, and consumer purchasing power. The final projections are much more reliable than anything that armchair experts might offer.
The Bureau recently released its projections for occupational job openings over the next decade. How will the legal profession fare? The news remains depressing.
Declining Projections
In 2008, at the height of our profession’s prosperity, the BLS projected that 240,400 job openings for “lawyers” would occur in the ten years between 2008 and 2018. That estimate encompassed all jobs practicing law, including work done by solo practitioners. It also counted both jobs generated by expansion and those required for replacement. The projection did not include jobs for judges and judicial law clerks, small categories that the BLS counts separately. I return to those categories below.
Note that even this 2008 projection fell far short of the number of students graduating from U.S. law schools at the time. ABA-accredited law schools conferred 43,588 JD’s in 2008. Even if just 80% of those graduates (34,870) sought jobs as lawyers, that number far exceeded the 24,040 new lawyer jobs per year that the BLS projected at that time.
The forecasts, however, got worse. In 2010, in the wake of the recession and rapid shifts in the legal profession, the Bureau adjusted its projection downward. It estimated that in the ten years between 2010 and 2020, the economy would support only 212,000 new lawyers. That number represented an 11.8% drop in the number of openings for new lawyers.
“Well, of course,” you might think, “the economy was in a serious recession. Of course the number of job openings would decline.” Remember, though, that this projection covered an entire decade. The Bureau assumed that, even if the economy returned to full strength by 2020 (an assumption built into its models), the number of job openings for lawyers would be substantially lower over the decade than previously predicted.
Now the news has gotten even worse. In its latest projections, the Bureau has again lowered the predicted number of openings for lawyers. It now estimates that the economy will support only 196,500 new lawyers between 2012 and 2022. That’s another loss of 7.3%. Put another way: Four years ago, BLS expected the economy to support about 24,040 new lawyers per year. Now it expects only about 19,650 new lawyers per year to find jobs. That’s a loss of 18.3%.
The Bureau expects the absolute number of lawyer jobs to increase between 2012 and 2022, but the increases will be considerably smaller than previously predicted. The available openings, furthermore, won’t come close to accommodating the number of law school graduates–even if those numbers decline as anticipated.
Graduates and Openings
I previously calculated that about 36,260 students will obtain JDs from ABA-accredited law schools in 2016. Those are the students who just finished their first semester of law school and are on track to graduate. Once again, let’s assume that only 80% of them will seek jobs as lawyers–a generous allowance for JD Advantage jobs. Even if one-fifth of our graduates take jobs outside the “lawyer” category, we will still graduate 29,008 eager new lawyers in 2016.
The BLS, however, predicts that the economy will support only about 19,650 new lawyers per year. If that prediction proves correct, then lawyer jobs will exist for only two-thirds (67.7%) of the graduates seeking them–or only 54.2% of the full graduating class. Those ratios are slightly worse than the ratios for the Class of 2008, when the job market was much stronger. Even with reduced class sizes, we are losing the placement race. Graduating classes will have to shrink substantially more to approach the number of lawyering jobs that the economy is predicted to support.
Other Job Categories
As mentioned above, the BLS counts some “lawyering” jobs in categories of their own. Judges, Magistrate Judges, and Magistrates, for example, constitute a separate category from lawyers. So do judicial law clerks. Neither of these categories, however, offers much comfort for law graduates: BLS has dramatically reduced projected openings in these categories. In 2010, the Bureau estimated that the economy would support 9,600 new judges/magistrates and 6,800 judicial law clerks between 2010 and 2020. The more recent predictions have cut those numbers to just 5,200 new judges/magistrates and 2,500 new judicial law clerks over the next decade. The latter reduction is particularly notable; it may represent cuts in government budgets as well as an increase in permanent law clerks.
Adding these small categories to the estimates offered above doesn’t alter the picture much. If we include job openings for judges, magistrates, and judicial law clerks, then the BLS predicts about 20,420 new openings per year for lawyers. That number will accommodate only 56.3% of the students projected to graduate from ABA-accredited schools in 2016. (To be clear, I think it’s appropriate to include judges, magistrates, and law clerks in these projections. I omitted them in my initial calculations because the numbers are small and the BLS has redrawn these small categories over the years. For clarity, it’s easier to focus first on the primary “lawyer” category.)
According to the BLS, only three categories of law-related professionals enjoy better prospects today than they did two years ago: paralegals, title examiners, and other legal support workers. The Bureau raised projected openings in each of those fields in its latest estimates, producing a combined total of 119,600 expected openings during the next decade.
Why Won’t the Economy Support More Lawyers?
The reasons for this decline are complex. They include lasting effects of the recession, technology, new efficiencies in the provision of legal services, and changing demographics. The last factor is particularly intriguing; it is one that we in the legal academy often overlook. My next post will explore these economic change-agents in more depth.
About Law School Cafe
Cafe Manager & Co-Moderator
Deborah J. Merritt
Cafe Designer & Co-Moderator
Kyle McEntee
Law School Cafe is a resource for anyone interested in changes in legal education and the legal profession.
Around the Cafe
Subscribe
Categories
Recent Comments
- on Scholarship Advice
- on ExamSoft: New Evidence from NCBE
- on COVID-19 and the Bar Exam
- on Women Law Students: Still Not Equal
- on Ranking Academic Impact
Recent Posts
- The Bot Takes a Bow
- Fundamental Legal Concepts and Principles
- Lay Down the Law
- The Bot Updates the Bar Exam
- GPT-4 Beats the Bar Exam
Monthly Archives
Participate
Have something you think our audience would like to hear about? Interested in writing one or more guest posts? Send an email to the cafe manager at merritt52@gmail.com. We are interested in publishing posts from practitioners, students, faculty, and industry professionals.