Job Report Sends Mixed Messages

MixedMessage

There’s good news, and there’s bad news…

Which would you like to hear first?

That was the theme of this year’s employment report from the NALP (National Association for Law Placement). While optimists can tout higher salaries for the class of 2013, the overall numbers paint an industry unlikely to return to pre-recession hiring.

“In general, the legal sector is best described as mostly flat,” says NALP Executive Director Jim Leipold, “with overall headcount off by more than 40,000 jobs from its pre-recession high … In general, the picture that emerges is one of slow growth, and growth that is a blend of continued shrinkage and downsizing in some areas offset by growth in other areas.”

So let’s start with the good news. According to NALP, median starting salaries rose from $61,245 to $62,467 over the past year. Overall, the average starting salary for 2013 graduates climbed from $80,798 to $82,408. These salaries were buoyed by big law hiring, which rose from 19.1% in 2012 to 20.6% in 2013. Even more, median starting salaries at big law firms jumped to $95,000, up from $90,000 the previous year (with 31% of big law jobs paying $160,000 to start).

However, these figures also reflect just how far compensation fell during the Great Recession. Median starting salaries are still $9,533 less than they were for the class of 2008. Similarly, median big law salaries have dropped by $35,000 since 2009.

Another positive indicator comes from big law hiring, which rose 9% over 2012. However, this uptick didn’t apply to hiring at small firms and the public sector, which declined by 1% and 0.6%, respectively. Part-time hiring also fell from 11% in 2011 to 8.4% in 2013. However, this percentage still lags behind the 6.5% low posted in 2008.

Overall, hiring remained frustratingly stagnant in the legal sector, as employment slipped from 84.7% in 2012 to 84.5%. This drop is no surprise, as the 52,000 students who entered law school in the fall of 2010 marked an all-time high in enrollment (with over 46,700 graduating in 2013). And it is expected to be an anomaly, according to Leipold.

“With the Class of 2014, we will begin to see smaller graduating classes, and by the time the Class of 2017 graduates, the size of the graduating class nationally is expected to have shrunk by 30% from the high-water mark of the Class of 2013. This contraction in law school enrollment, along with gradual continued improvement in the number and kind of opportunities available to new law school graduates, will certainly contribute to what we expect to be an improved overall employment rate going forward.”

That said, 2013 represents the sixth consecutive year that overall employment has declined from its 2007 high of 91.9%. Overall, the unemployment rate for 2013 law grads was 12.9%, nearly equal to the 12.8% mark for 2012 grads.

These modest prospects have driven many grads to jobs that don’t require a J.D. The NALP reports that only 64.4% of grads held positions that required bar passage, down 10% since 2008. Despite that, law degrees give job hunters an edge:  The percentage of grads who landed positions where a J.D. was considered an advantage improved from 13.3% to 13.8% in 2013. In fact, 18.4% of 2013 grads are now employed in business, a historic high.

And Leipold expects that trend to accelerate. “In the best of times law school graduates have entered the labor force by taking many different kinds of jobs, not all of which can be described as actually practicing law or even law-related,” he said. “As the legal services market continues to change at a rapid pace following the dramatic downsizing during the recession, the variety and diversity of jobs that law grads take now is greater than ever.”

The NALP data comes on the heels of an April report from the ABA, which reflected similar results (aside from a stingier  57% employment rate due to the ABA excluding part-time and project-based jobs for 2013 grads). According to recent numbers published by the New America Foundation, median law school debt stands at $140,616.

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