Survey finds overall unemployment rate rises for new law school grads

 According to selected findings from the Employment Report and Salary Survey for the Class of 2013 recently released by NALP, despite two years of growth in the number of jobs obtained by law school graduates, the overall employment rate for new law school graduates fell for the sixth year in a row, to 84.5 percent. Even though the total number of jobs obtained by this class was somewhat higher than the number of jobs obtained by the previous class, and the number of employment opportunities funded by law schools increased, the Class of 2013 was also bigger, resulting in the employment rate for the Class of 2013 falling, but by just 0.2 percentage points from the 84.7 percent rate for the Class of 2012. 

NALP measures the employment rate of law graduates as of February 15, or nine months after a typical May graduation. Analyses of these data for the Class of 2013 (measured in February of 2014) reveal an employment rate that has fallen 7.4 percentage points since reaching a 24-year high of 91.9 percent in 2007 and that marks the lowest employment rate since the aftermath of the last significant recession to affect the U.S. legal economy. Since 1985 there have only been two classes with an overall employment rate below 84.5 percent, and both of those occurred in the aftermath of the 1990-1991 recession: 83.5 percent for 1992 and 83.4 percent for 1993. (For information on trends in graduate employment going back to 1985, see www.nalp.org/trends.)
Despite signs of modest improvement, as evidenced by more law firm jobs as described below, there are still signs of weakness in the entry-level job market, as some of the improvements that started in 2012 continued in 2013, but not always at a similar rate. For instance, of those graduates for whom employment status was known, only 64.4 percent obtained a job for which bar passage is required, unchanged from 2012. From 2008 to 2012 this figure fell over 10 percentage points — from 74.7 percent to 64.4 percent — and for the second year in a row is the lowest percentage NALP has measured. An additional 13.8 percent of graduates obtained jobs for which a JD provides an advantage in obtaining the job, or may even be required, but for which bar passage is not required (these are often described as law-related jobs). This compares with 13.3 percent for the Class of 2012 and is the highest since NALP began comparable tracking in 2001. The percentage of graduates employed in other capacities was 6.3 percent. 
The unemployment rate also edged up for this class, and stood at 12.9 percent, compared with 12.8 percent for the Class of 2012. Of the remaining graduates for whom employment status was known, 0.7 percent had accepted a job as of February 15, 2014 but had not yet started that job, and just under 2 percent of the 2013 graduates were continuing their academic studies full-time. The percentage of jobs reported as part-time declined for the second year in a row and was 8.4 percent, compared with 9.8 percent in 2012 and over 11 percent in 2011. The figure nonetheless contrasts with 6.5 percent for 2008 and about 5 percent in the years immediately prior to that. About 3.6 percent of jobs were both temporary (defined as lasting less than a year) and part-time, a figure that is also down from 2012 — when it was 4.6 percent — and that has been cut in half since 2011 when it was over 7 percent. Of the 64.4 percent of graduates for whom employment status was known who obtained a job for which bar passage was required, less than 5 percent of these jobs were reported as part-time — so the percentage employed in a full-time job requiring bar passage is 61.3 percent. Because some of these jobs will last less than one year, the percentage employed full-time in jobs requiring bar passage that will last at least a year is just 59 percent. Both of these figures represent small improvements over the 2012 figures, which were 60.7 percent and 58.3 percent, respectively.
In commentary accompanying the Selected Findings, NALP Executive Director James Leipold noted, “The entry-level legal employment market is a complex labor market that defies easy analysis or simple summation. In the best of times law school graduates have entered the labor force by taking many different kinds of jobs, not all of which can be described as actually practicing law or even law-related. 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. In general, the legal sector is best described as mostly flat in the Spring of 2014, with overall sector headcount still off by more than 40,000 jobs from its pre-recession high according to data from the U.S. Bureau of Labor Statistics. The entry-level job market reflects that mostly flat business environment for the legal sector generally.”
More than half of employed grads found jobs in private practice
Additional analyses of the jobs data for the Class of 2013 reveal that just more than half (51.1 percent) of employed graduates obtained a job in private practice, up from 50.7 percent for the Class of 2012 and the highest since 2010. However, that figure for the Class of 2010 represented a full 5 percentage point decline from 2009. For most of the 40 years for which NALP has collected employment information, the percentage of jobs in law firms has been in the 55-58 percent range and has been below 55 percent only before 1981 and since 2010. The combination of a slightly larger number of jobs overall and a higher percentage of jobs in law firms means that the number of law firm jobs is up, but by just over 1 percent, compared with an almost 8 percent increase from 2011 to 2012, and is the largest number since 2009. Additionally, jobs in the largest firms, those with more than 500 lawyers, continued to rebound from their low point in 2011, and accounted for 20.6 percent of jobs taken in law firms, compared with only 16.2 percent in 2011 and 19.1 percent in 2012. The number of jobs taken in these firms — at almost 4,000 — is up by over 9 percent over 2012 levels, representing a recovery to just over 2010 levels but to nowhere near the 2009 figure of more than 5,100 jobs. Moreover, the lion’s share of the increase occurred from 2011 to 2012, with 2013 contributing only about one-third of the increase. At the other end of the spectrum, jobs in the smallest firms of 2-10 lawyers accounted for 42 percent of law firm jobs, down from 43 percent in 2012, and declined in raw numbers from almost 8,200 to not quite 8,100. Nonetheless, the number of jobs in small firms has generally been increasing in recent years, and for every job in a large firm taken by a Class of 2013 graduate, two were taken in a small firm.
Median starting salaries rise slightly
Salary information was reported for two-thirds of the jobs reported as full-time and lasting at least a year. The national median salary for the Class of 2013 based on these reported salaries was $62,467, compared with $61,245 for the Class of 2012, and is just the second year-over-year increase in the overall median since 2008, when the median increased to $72,000. The national mean for the Class of 2013 was $82,408, compared with $80,798 for the Class of 2012. In each of the two most recent years, the overall median has increased by 2 percent while the law firm median has increased by 6 percent, reflecting the increase in law firm jobs, particularly at large firms. Nonetheless the overall salary median and the median for law firm jobs specifically remain below those of 2008-2010. 
The national median salary at law firms based on reported salaries was $95,000, compared with $90,000 the prior year. With salary medians by firm size remaining essentially unchanged, the modest increase in the overall median is largely attributable to the increase in the number of large firm jobs, with salaries of $160,000 now accounting for 31 percent of reported law firm salaries. At the same time, although salaries of $160,000 still prevail at the largest firms, their share has dropped since 2010. And though still a tiny minority — just about 4 percent — salaries of $50,000 to $99,000 for bar passage required jobs at large firms are more common than just a few years ago, as more graduates are taking staff attorney or similar positions at lower salaries. 
Median salaries in other sectors have remained relatively flat in recent years. The median salary for government jobs has remained unchanged since 2009, at $52,000. The median salary at public interest organizations, which includes legal services providers and public defenders, was $45,000 in 2013, essentially steady since 2011. The median salary for judicial clerkships was $53,000, little changed from $52,600 in 2013 and up just $1,000 from 2010 and 2011.
Other key findings from Jobs & JDs: Employment and Salaries of New Law School Graduates — Class of 2013:
• Part-time jobs were found in all employment sectors, but were especially prevalent in academic settings, at 39 percent (unchanged from 2012), followed by business at 14 percent. About 12 percent of public interest jobs were reported as part-time, compared with 18 percent in 2012.
• Employment in business reached a historic high of 18.4 percent in 2013, and has exceeded 15 percent since 2010. The percentage of jobs in business had been in the 10-14 percent range for most of the two decades prior to 2010, except in the late 1980s and early 1990s, when it dipped below 10 percent. About 28 percent of these jobs were reported as requiring bar passage, and about 42 percent were reported as jobs for which a JD was an advantage.
About 7 percent of these business jobs represent graduates working for agencies that place individuals in temporary legal, law clerk, or paralegal jobs. This compares with more than 8 percent in 2012. The number of graduates taking these kinds of jobs has varied considerably since NALP began tracking this kind of job in 2006. The percentage for 2013 translates to just more than 500 jobs, far below the 700 reached in 2011, but higher than the 400-plus jobs in 2009 and 2010.
• Public service jobs, including military and other government jobs, judicial clerkships, and public interest positions, accounted for 27.6 percent of jobs taken by employed graduates, compared with 28.2 percent in 2012. The higher percentages in recent years notwithstanding, this percentage has remained relatively stable for more than 30 years, at 26-29 percent. Public interest organizations, including public defenders, accounted for 7.1 percent of jobs, compared with 7.2 percent in 2012, 7.5 percent in 2011, 6.7 percent in 2010, and 5.6 percent in 2009. The increases are partly attributable to school programs that provide fellowship and grant opportunities in a variety of settings, including public interest. Although the percentage of jobs accounted for by judicial clerkships has fluctuated somewhat, the number of clerkship opportunities has remained relatively steady since 2010 at just more than 3,300.
• Government jobs including those in the military fell from 12.1 percent of jobs in 2012 to 11.5 percent in 2013, a drop that translates to about 200 fewer jobs.
• Of employed graduates from the Class of 2013, about 22 percent were seeking a different job, a second year of decline from the record high of 24.6 percent for the Class of 2011 but still a much higher percentage than the 15.9 percent figure reported for the Class of 2008. The extent to which employed graduates are seeking a different job varies by the kind of job held. For example, about 41 percent of graduates with a job for which a JD was an advantage were seeking a different job, compared to 14 percent of those with a job requiring bar passage.
• Although slightly fewer graduates from the Class of 2013 are setting up their own solo law practice after law school compared with 2012, they accounted for 4.8 percent of law firm jobs and 2.5 percent of all jobs, still high in comparison to 2007 and 2008.
“It is not true that there are too many lawyers,” commented NALP Executive Director James Leipold. “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,” he concluded.
To read the full text of “Employment for the Class of 2013 — Selected Findings” go to www.nalp.org/classof2013. NALP’s findings for the Class of 2013 will be released in much greater detail in August 2014 in a report entitled Jobs & JDs: Employment and Salaries of New Law School Graduates — Class of 2013.

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