Perspective on legal employment outcomes for the Class of 2016

The American Bar Association has finally released the employment statistics for the Class of 2016.

I say finally deliberately. Last year, the ABA released them around May 2. The ABA here disclosed them May 11.

In 2013, the ABA approved a change to reporting employment statistics. It used to be "employment outcomes 9 months after graduation," or an employment date of February 15. The ABA moved it back to 10 months for the Class of 2015, or an employment date of March 15. Deans of law schools in New York and California in particular objected that due to late bar exam results (often in November), followed by a holiday season, it was difficult for some students to secure employment by February 15. That artificially depressed employment figures in these jurisdictions compared to the rest of the country.

That pushed back the deadline for schools to report employment outcomes from March 15 to April 15. April is a significant season for prospective law school matriculants. Schools typically have "deposit deadlines" in April, requiring a few hundred dollars' nonrefundable deposit to secure a seat in the class. (I Googled a few: Washington & Lee requires $250 by April 15; Cornell requires $300 by May 1; Georgia requires $150 by April 15; New Mexico requires $200 by April 15.)

It's worth noting that if these employment disclosures are supposed to advance a "consumer protection" rationale (although I'm not sure much has been studied about students' reliance on these disclosures), the decision to move from 9 months to 10 months has undermined some of the "consumer protection" rationale. While most schools have put these results on their websites, several (I'll leave them nameless) have not; the ABA disclosures would be the first release of this information.

Additionally, the putative reason for moving the reporting deadline back a month does not appear to have been borne out. Consider New York & California employment outcomes in the last few years: it's not obvious that the employment situation materially improved after the date change. Granted, some of this is likely attributable to other causes, the peril of isolating one factor among many possible factors. But it would be worth the ABA considering evidence from these law schools that the change did materially improve outcomes in those jurisdictions--evidence we just don't have.

It's also a time to discuss recent predictions about this class. Professor Ted Seto in 2014 offered an optimistic prediction for the Class of 2016: "If the new BLS projections are accurate, we should see demand and supply in relative equilibrium in 2015 and a significant excess of demand over supply beginning in 2016."

Perhaps the BLS data wasn't quite accurate, or perhaps it was an overly-rosy view of what employment might look like. In what's surely a disappointment, nationwide employment in unfunded full-time, long-term, bar passage-required positions has been steadily declining. Placement in such positions was just 22,874, down from 25,787 three years ago. (UPDATE: please note that I excluded Puerto Rico's three law schools from this analysis.)

  Graduates FTLT BPR Placement FTLT JDA
Class of 2012 45,751 25,503 55.7% 4,218
Class of 2013 46,112 25,787 55.9% 4,550
Class of 2014 43,195 25,348 58.7% 4,774
Class of 2015 40,205 23,895 59.4% 4,416
Class of 2016 36,654 22,874 62.4% 3,948

The good outcome is that the percentage of graduates placed has improved as the number of law school graduates has declined sharply. So why a decline in raw jobs? There are many possible reasons, and I only offer a few to speculate here for future investigation.

Some of this is likely attributable to declines in bar passage scores. But perhaps more troubling has been the decline in J.D. advantage positions, too. For years, the versatility and flexibility of J.D. has been a common point of defense among law schools, not without some controversy. But those positions--which not only highlight the versatility of the J.D., but aren't contingent on passing the bar--have been declining, too.

It may be that law schools have too readily assumed the fungibility of a law degree. That is, even if the total number of law school graduates have declined, it may be that employers still prefer individuals who graduate in the top X% of the class, from a top-Y law school. It may be that they have been reluctant to dip lower into classes or to lower-ranked schools. That is, they're not just looking for any law school graduates; they're still looking for a certain quality of graduate, and they may not be convinced that they should move off their previous expectations. Or it may be that BLS or other labor data has simply been too optimistic about the new lawyer market.

Last year, I noted the sharp decline in law school-funded positions. The same is true for this year. Through a combination of changes to reporting requirements (schools must pay at least $40,000 a year), the requirement under the Affordable Care Act that they provide health insurance if they are working more than 30 hours a week, and the USNWR decision to cut the weight of such positions in its methodology, we likely won't see a resurgence in this category anytime soon.

In short, the good news of the employment picture is almost exclusively a result of law school graduating classes shrinking significantly. Raw job placement has grown slightly and steadily worse over the last few years, while the placement rate has ticked up somewhat--7 points of improvement in the last few years.