The statistics that open Richard Epstein’s WSJ review of Steven J. Harper’s The Lawyer Bubble paint a depressing picture of the state of the legal profession. Top firms are cutting back, wages are down, and tens of thousands of young law grads are looking for work in a competitive marketplace. As a result, law schools are feeling the pinch. Applications and enrollment are declining. Some schools may be forced to cut staff or close entirely.
Nevertheless Epstein defends the current system as essentially sound. Big firms may be coming under stress, but the savvier firms of the bunch are finding ways to adapt and thrive:
They do so, in part, by avoiding overstaffing, by cutting bad clients and by paying premium wages to young associates—many of whom, debts paid, happily bail out for less stressful work as in-house counsel for companies or in the government and nonprofit sectors. Over all, the model proves stable: With Congress passing monstrosities like Dodd-Frank and the Affordable Care Act, top-flight legal talent is needed more than ever to guide well-heeled clients through the growing regulatory maze.
Ironically, Mr. Harper misses the most significant recent dislocation in the practice of law, which is at the consumer end of the market: the rise of low-cost online law firms like LegalZoom and RocketLawyer that aid clients in drafting standard partnerships, wills, leases and the like. These firms pose a mortal threat to sole practitioners, not to Big Law.
Epstein may be right, but he doesn’t talk enough about the fact that part of the problem is that there are simply too many law school grads with too much debt for the current market to bear.
Law firms may survive by “avoiding overstaffing,” but this is clearly a problem for the glut of newly minted JDs looking for work. Over time, this problem will sort itself out, as prospective students abandon law for other opportunities, but this does nothing to help recent and soon-to-be-minted grads looking for work in a depressed marketplace. “Low-cost online firms” probably won’t pick up much slack, and it will be difficult for employees of these firms to pay off the six-figure student debt they racked up in law school.
Law firms may adapt to the new realities, but many law schools will have a harder time doing so—especially the ones that opened or expanded in recent decades in order to tap into the extra demand. In the future, law schools will need to be smaller, cheaper and fewer in number.
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