The Coming Crash in Legal Education: How We Got Here, and Where We Go Now

• Publication year: 2022

45 Creighton L. Rev. 651. THE COMING CRASH IN LEGAL EDUCATION: HOW WE GOT HERE, AND WHERE WE GO NOW

THE COMING CRASH IN LEGAL EDUCATION: HOW WE GOT HERE, AND WHERE WE GO NOW

RICHARD W. BOURNE(fn*)

I. INTRODUCTION

The initial impetus for writing this Article came in the form of the tragic death of one of my former students just a little over a decade and a half ago. The student, a bright, sweet young man, a terrific student with his whole life lying before him, failed to get the job he had hoped for in one of the larger law firms that serve the city where I have taught for over thirty years. The young man had just rented his first apartment, bought his first car, and become newly engaged to marry his girlfriend when he got the bad news. He felt trapped by debt and pride. Rather than tell anybody, he drove to Annapolis and jumped off the Chesapeake Bay Bridge.

The awful news of this young man's death caught those of us who thought we knew him completely by surprise. For me, his story brought home, for the first time, the sad reality that there might be something wrong with the way we were getting young men and women to put their futures in hock in order to finance their educations. After a few brief talks with colleagues, my attention went elsewhere.

A few years ago, as the realities of teaching law in a twenty-first century law school began to make clear, it was no longer possible to put concerns about the cost of legal education on the back burner. Literature, sputtering at first but now coming on in earnest, began to suggest that there might be a debt crisis looming for the legal education industry. Until 2008, our industry has appeared to be booming. We know, from the principles of Newtonian physics, that what goes up must come down. But often our capacity for denial prevents us from recognizing that we are at risk until it is too late to avoid catastrophe. Now, of course, with the reality of the economic collapse in 2008 caused by overextension of credit in the housing industry, we are beginning to see more clearly that American legal education may also be at the precipice of its own credit-fed denouement.

For most of my adult life, from the time I entered law school in 1965 until the present, legal education has appeared to be a booming industry. The number of seats in American law schools more than doubled from the late 1960s until the mid-1980s, and while the growth trajectory has slowed somewhat, the new schools that have emerged are richer by almost any measure that any of their predecessors could possibly have imagined. The cost of this growth was steep, and the enhancement of law school programs was accompanied by huge increases in student indebtedness in order to support it. The student debt, in turn, was paid for by major changes in the legal services industry, led by gigantic growth and enrichment of large corporate law firms that absorbed increasing numbers of law graduates and helped them pay off the debt they had incurred to go to law school.

The legal services market has changed over the years in ways that, until recently, facilitated the boom in legal education. The collapse of the financial services market in 2008 has radically changed the market for students being trained in legal education. The recession caused a massive downturn at the top of the new-lawyer market, raising questions whether the huge enhancements in legal education in recent years can be sustained, or whether it will be necessary for the industry to become smaller and cheaper in order to survive. And if the legal education industry must change, what direction should the changes take?

This Article will first track the ways in which the legal services market has grown and changed over the past forty years. This Article will then track the major changes that have attended legal education during the same period and the increasing dependence of the legal education industry on student debt. This Article will then explore why, at long last, the boom time may have run its course and why, at some point, painful changes will likely occur. Though they cannot be described in detail, this Article will attempt to outline the likely nature of the changes that will occur. Finally, this Article will briefly explore how the predicted reckoning may yet lead to an improvement in the marketing of legal services and an enhanced role for law schools in preparing new attorneys for the new bar they will be joining.

II. CHANGES IN THE LEGAL SERVICES MARKET

During the first two-thirds of the twentieth century, the number of lawyers did not increase more rapidly than did the population.(fn1) During the 1970s, the lawyer population grew by 90%, and it grew another 48% from 1980 to 1988.(fn2) Such rates of growth reflected gigantic increases in law school admissions, which went up nearly three times during the period.

The growth in the legal services market was remarkably uneven. Demand for "little lawyers"-solo practitioners and lawyers in extremely small firms-did not increase. From 1954 through 1980, the number of lawyers in government practice more than doubled, while those law firms and corporate offices more than tripled.(fn3) Wages for the solo practitioners actually fell, in real dollars, for much of the period, whereas earnings by partners in law firms rose considerably.(fn4) In recent years, growth in new legal services jobs has skyrocketed in large firms, grown considerably in other firms, and actually fallen among solo practitioners.(fn5)

Much of the growth has occurred in large law firms, which have grown more rapidly than other sectors of the legal services market.(fn6) The larger firms have concentrated on corporate law practice.(fn7) The expansion of the large law firm market for corporate lawyers has been matched by a decline in the rest of the private firm market for new attorneys, but not by a decline in the number of lawyers going to work for large entities (government and business or industry house counsels' offices) or entering public interest practices.(fn8) While wages for lawyers in private practice-except perhaps for those entering solo practices-have grown over recent years, income growth in the larger firms has dwarfed that occurring in small and middle-sized firms. Lawyers entering practice in the largest firms-those with more than 250 lawyers-received a 129% jump in starting salaries between 1994 and 2008; meanwhile, lawyers entering small firms of two to ten lawyers received only a 72% increase in salaries.(fn9) The increase in demand for lawyers in the larger firms led an increasing percentage of young attorneys to join these practices, rather than attempt to start out solo or in small firms.(fn10) The only group of lawyers faring worse than those entering small firms is those entering public service jobs(fn11) or going into practice as solo practitioners.(fn12) For most of the last decade, over half of all law graduates either earn the very low salaries that are associated with tiny firms, solo practice, or public service, or the very high salaries coming from the 250-plus lawyer private firms. This creates a bimodal salary distribution curve that somewhat resembles the back of a two-humped camel.(fn13)

It has been suggested that the growth trend in the largest law firms had already slowed or stopped sometime in the middle of the first decade of the twenty-first century. A number of large law firms broke up or went under, and exponential growth of the large firms that had been associated with BigLaw for a quarter century may have begun to trail off into a period of stagnation around 2004 but held steady until the denouement in 2008,(fn14) when by all accounts it collapsed. The weakness of the big firms' structures was masked by the bidding war the firms continued to engage in for top graduates, driving beginning salaries to new highs, despite internal difficulties with their own cost structures.(fn15)

Whatever the cause, there is no question that the large law firms took a huge hit in 2008 and thereafter. The impact of the large firms' inability to employ new graduates has begun to have a reverberating impact. Many new lawyers who might have gone to work in large firms were forced to take less remunerative jobs in smaller firms or the public sector. The legal education industry has also suffered as many of the jobs it had been training young lawyers to fill simply no longer exist.

Studies published after this "Great Recession" began suggest unprecedented weakening of the lawyer employment market,(fn16) particularly at the top. One survey of the twenty largest feeder schools to law firms in 2008 saw a 17% drop in the number of students hired in 2009, and one school, Columbia University, saw 54.5% of its graduates land jobs in one of the 250 largest firms, down from 70.5% just one year earlier.(fn17) In 2009 and 2010, numerous firms rescinded existing employment offers or deferred new hire starting dates for up to a year,(fn18) and often what offers were made came with reduced compensation in the offing. Many new graduates were given only temporary or part-time work in 2009,(fn19) and the trend continued into 2010.(fn20) From the beginning of January 2008 through November 2009, one website counted 14,940 layoffs from "major law firms," including 5,820 attorneys and 9,120 "staff" (comprising staff attorneys and contract attorneys as well as non-lawyer personnel),(fn21) and the number...