Wednesday, August 4, 2010

Don't Let the Salaries Fool You

The other day, I read a very entertaining article which suggested that we do away with the bar exam.

Everybody has their opinion on the bar. I waffle too much to even address if we should have a bar exam, so that will be left for another day.

I'm going to address a side point that the author raised about attorney salaries.


More importantly, I think that the high salaries of lawyers combined with the high cost of even very basic legal services show that we have too few lawyers rather than too many, and that the best way to determine the “right” number of lawyers is through market competition, not government mandate.

I clicked on the bio of this writer. Surprise, surprise, they are in academia! And instead of using personal anecdotes, or even questioning why this urban legend of thousands of unemployed attorneys exists, they reach for NALP numbers.

The professor/blogger says this bon mot in another blog entry:

I should note that the NALP and Labor Department data do not account for lawyers who are unemployed. Unfortunately, neither these sources nor others I have looked at have shown anything approaching a good estimate of the unemployment rate among lawyers. However, it seems unlikely that there is large Marxian “reserve army” of unemployed lawyers out there. If there were, one would expect lawyer salaries to drop substantially as competition from the unemployed drives down the pay of those who have jobs, especially at the lower ends of the distribution (e.g. — the 10th and 25th percentiles noted in the post).

According to this professor/blogger's theory, absolutely nobody should have been an unemployed attorney working the perfume counter at Macy's. Third year law students should have not had to even think about finding a job once they graduated. They should have their pick of desperate employers long before they were measured for their tams. They should have been begged to start work early by those who are swamped with work. Even if BIGLAW was making a few cuts, it doesn't mean that there aren't severely understaffed areas like small firms or public interest groups who have had to turn away cases because they just don't have the labor resources to take them.

I thought an actual clue that there are many unemployed attorneys would be hearing that there were well over 100 applicants for the same low-paying jobs that I had been applying for, but apparently not. Those numbers can be apparently explained away by assuming that there are over 100+ attorneys out there who are unhappy with their current employment and who have decided to lateral over into something that pays less than $40,000 per year.

But let's not stop there: Let's define non-saturation. If the professor wishes to talk about salaries, then we should also speak of what is missing in the compensation packages. If the legal profession were not overly saturated, a good majority of employees would get compensation packages that includes:

Signing bonuses
Paid moving expenses
Company housing
Paid vacations
Health insurance
Offers to pay for travel expenses for interviews
Week-long wooing sessions where they take you (the POTENTIAL employee, not the ACTUAL employee) and your spouse out to 4 star restaurants and Broadway productions
Retirement plans
Reimbursement on your student loans


The biggest sign of non-saturation?


I don't think anybody who has been on a job hunt recently can claim that they were engaged in skillful negotiations to get a great salary. All I've heard about is people who were in a take-it-or-leave-it position who chose to walk away. To me, that doesn't sound like a desperate employer who absolutely can't anybody for the job. It sounds more like an employer who has a large stack of resumes on their desk from people who were just as competent as the person they were offering the job.


  1. You're exactly right. There is NO negotiation going on whatsoever, and these employers really couldn't care less who they hire. It's all about getting the cheapest labor possible.

    This profession was once a give and take, but it is no longer balanced at all. Instead, it is 100% an employer's game. They don't really seem to need anybody at all, and they shudder at the idea of giving up a penny of their lavish income for competent help.

    Further, they couldn't care less about fostering talent into something they can benefit from in the future. Whereas firms once wanted to grow their new talent and mold them into the best partner(s) they possibly could, today, they know they will replace you as soon as cheaper labor is available.

    This isn't MARKET forces, it is price-fixing.

  2. The recent JD is definitely in no position to negotiate his salary with his employer. If you demand too much, guess what?! These people will find someone else who is willing to work their ass off for $35K a year. This is one of the biggest flaws in this GROSSLY over-saturated market.

  3. Yep, no reserve army of unemployed here! Are these "Free market" morons serious?

  4. I felt I had to break up that previous post because it was too big, so I'm sorry previous comments were accidentally erased...more on the hiring practices of firms to come.

    But yes, I had an interview with an attorney who actually said to me, "we're looking for somebody who will work long hours for little pay."

    I thought I had died and gone to Jesus at that moment.

  5. A $elf-intere$ted "law professor's" take on bimodal distribution of lawyer pay:

    “The relevant time horizon for lawyers, however, is the entire 30 to 40 year period of their expected career. On that score, it is difficult to make any precise forecasts. Still, the continued growth in the scope and complexity of law suggest that the demand for legal services is likely to rise. The demand for lawyers is inevitably closely tied to the growth of government and law.

    Furthermore, the NALP data for the class of 2009 show that the median graduate has a salary of about $72,000; in other words, 50% of first year lawyers can expect to make that much or more. Even if you adjust the figure downward a little to reflect reporting rates skewed in favor of large firms, you still get a level of perhaps $65,000 based on the formula that NALP used to recalculate the mean salary (reducing the initial estimate by about 9%). That’s not bad for an entry level salary in the middle of a deep recession.”

    He doesn't seem to take into account that LEGIONS of JDs every year never get into the field, because of gross market over-saturation. Instead, he wants us to focus on the hypothetical attorney's career.

    Apparently, Ilya the hardened libertarian has no problem "earning" $130K as an “associate professor of law” teaching legal theory - off of federally-backed student loans.

  6. Like I said, there are no market forces at work here. It's price fixing.

    Everyone knows if they all pay just a little, no one will have to pay a lot (or even a reasonable wage).