These are grim days for large corporate law firms, which like everyone else were kneecapped by the recession, but have since emerged into a harsh new economic order where their old business model appears to be collapsing. Noam Scheiber has captured this sad state of affairs beautifully for The New Republic this week in a piece sure to make anyone who ever toyed with the idea taking the LSAT feel very, very vindicated.
But rather than revel in schadenfreude -- which I realize is pretty much the default emotion when discussing the travails of richly compensated lawyers -- I want to talk about why the industry collapse that Scheiber describes, is actually far more important than many are willing to admit.
And when I say many, I mean law schools. Talk to an academic about the changing value of a law degree, and there's a decent chance they'll play down the recent trouble in Big Law -- the semi-affectionate industry nickname for the 200 or so top firms. Their justification is pretty simple: the vast majority of lawyers don't work in Big Law and never will. There were about 1.5 million Americans with a J.D. in 2009, according to the Census bureau. According to The National Law Journal, meanwhile, the 350 biggest firms in the country by headcount only employed about 141,000 lawyers last year.
Here's what that argument misses: while tony corporate firms only employs a small fraction of the country's lawyers, they were disproportionately responsible for the industry's growth during the boom that lasted from the mid 1990s until the financial meltdown of 2008. According to the Economic Census, which runs every five years, the top 50 law firms by revenue were responsible for almost 23 percent of the industry's job growth between 1997 and 2002. Between 2002 and 2007, they were responsible for roughly 38 percent of all job growth.
Now, remember, these numbers only include for-profit law firms -- not nonprofits, government agencies, consulting firms, or corporations that hire lawyers as in-house counsel. And in the end, the 32,000 new jobs these firms created between 1997 and 2007 amounted to less than a single class of J.D.'s. That said, we're only talking about the 50 largest firms here. If census numbers were available for the the top 200, Big Law's role would undoubtedly be even more pronounced.
And in the end, despite all the homilies about how you can do anything with a law degree, firms big and small are still the major driver of J.D. hiring. Without Big Law's explosive growth, it's impossible to imagine that law schools would have ever expanded or raised tuition the way they did during the good times. With Big Law on the rocks, we can only be thankful that schools themselves are now shrinking.