More details on the legal job market: small law firm, business jobs disappearing

Last week, I posted a perspective on the changing legal market and the outcomes for the Class of 2016. Troublingly, job placement in full-time, long-term, bar passage-required positions declined from 25,787 for the Class of 2013 to 22,874 for the Class of 2016; that said, placement improved from 55.9% to 62.4% because of the shrinking graduating class size.

I thought I'd dig into job-specific data to see what may be leading the decline. The problem with the industry-specific data is that we don't know whether the jobs are bar passage-required, J.D.-advantage, professional, or non-professional. That said, we can make some guesses; most entry-level hiring in law firms with 501 or more attorneys are probably bar passage-required, for instance. Regardless, I looked at the full-time, long-term job categories for each position and catalogued notable areas.

I had two instincts. First, perhaps big law hiring has declined and law firms are relying on greater productivity, greater outsourcing, increased reliance on technology, higher retention of junior associates, and delayed retirements. Second, perhaps government hiring has declined in eras of partisanship and budget stalemates.

Both instincts were wrong.

FTLT Class of 2013 Class of 2016 Net Delta
Solo 926 444 -482 -52.1%
2-10 6,947 5,490 -1,457 -21.0%
11-25 1,842 1,640 -202 -11.0%
26-50 1,045 906 -139 -13.3%
51-100 846 768 -78 -9.2%
101-205 1,027 940 -87 -8.5%
251-500 1,041 993 -48 -4.6%
501+ 3,978 4,204 226 5.7%
Business/Industry 5,494 3,796 -1,698 -30.9%
Government 4,360 4,034 -326 -7.5%
Public Interest 1,665 1,398 -267 -16.0%
Federal Clerk 1,259 1,184 -75 -6.0%
State Clerk 2,043 2,021 -22 -1.1%
Academia 490 352 -138 -28.2%

Law firms with 501 or more attorneys were the only category that saw an increase in the last three years, a modest 226-person increase but a pleasant increase at that.

Yes, Government saw a decline, but not as significant as other categories. Other relatively small areas had some big declines. Public Interest jobs declined, perhaps because of combinations of student debt levels or public interest organization funding, and because of law school-funded positions drying up (although it remains somewhat counterintuitive at a time when law schools have been increasing their hiring and development of clinical education). Solo practitioners fell by half--it's become something less attractive for new graduates due to its uncertainty, perhaps.

Instead, two areas saw thousand-student-plus declines in three years.

First, hiring in small law firms, those with two to 10 people, declined 21% in three years.  This has been the single biggest employer of new graduates in recent years, and it has seen a significant decline. These are not firms that typically arrive at on campus interviews. But they are also firms, I think, that probably need new graduates to pass the bar on the first attempt. Failure to do so is a real challenge--they likely can't absorb someone who's unable to practice until the next bar go-around. And these are probably places that are most willing to dip into lower-ranked schools and students with lower grades. The decline in bar passage rates may be impacting this area the most--but that's just speculation on my part.

Second, hiring in business & industry positions has declined nearly 31% in three years. As business & industry jobs are a major source of J.D.-advantage positions, it would explain the decline in J.D.-advantage positions, too. But while bar passage-required jobs in business might also suffer a decline in placement as bar pass rates decline, why J.D.-advantage positions, too? Perhaps--again, some speculation--it's that, in a (relatively) robust economy with many strong college graduates, businesses may no longer be valuing the J.D., or they may be finding greater value in M.B.A. students.

For schools looking to solve their employment challenges, addressing the reasons why there's been a steep drop in demand in these two important employers is crucial. A few speculated reasons here are hardly a beginning to explore the reasons for the changes in climate.