Asians, Biglaw, Minority Issues

What Could Disrupt Diversity in Law? The Economy, Stupid.

How will changes in the law school population affect diversity in the legal industry?

By  
on

“It ain’t happened yet, and that’s what intuition is.” – Kanye West

In the 1997 movie The Devil’s Advocate, Al Pacino’s character (aptly named John Milton) asks Keanu Reeves’s character (Kevin Lomax), “Did you know there are more students in law school than lawyers walking the Earth?” With an estimated average of 44,000 students graduating per year, there are six new lawyers battling for every job. In 1971, there was one lawyer for every 572 Americans. By 2000, there was one lawyer for every 264 Americans. The legal sector tripled between 1970 and 1987, but has grown at an average annual inflation-adjusted rate of only 1.2% since 1988. Perhaps the recent drop in law school attendance will improve this ratio (if the demand remains unaffected). How will the “new normal” affect diversity in Biglaw and the legal industry in general?

From 2003 to 2008, the Dow Jones Industrial Average grew 88% (from 7,524 to 14,164) before it ultimately crashed. From 2009 to now, the Dow Jones has grown 175% (from 6,547 to 18,024). Many people don’t realize the ridiculous run the market has had since 2009. Some will point out that the S&P 500 (another broad market indicator), adjusted for inflation, is still lower than it was in 2000. There are bulls and bears in every market. The legal market is no different. In 2007, nearly 92% of graduating attorneys were employed. Once believed to be recession-proof, the legal industry was hit quite hard during the 2009 collapse.

The “Great Reset” of 2009 changed everything. With first-year attendance peaking in 2010 at 52,488 students, law schools may have thought they weathered the economic storm. But this year’s statistics reveals that total law school enrollment has fallen 17.5% since 2010. There has been a major deterioration in law school enrollment, but only a minor response by law school administrations.

First-year law school enrollment is now the lowest since 1973. The number of total students is the lowest since 1987, when there were 175 approved schools (now there are 204 law schools). By next fall, it is likely law schools will face their fifth straight year of decreased enrollment. Meanwhile, legal employment rates have dropped six straight years. In his book Growth is Dead: Now What?, Bruce MacEwen writes that based on historically “normal” 10 year business cycles, the U.S. economy will produce 218,800 legal jobs between 2010 and 2020 (“if you believe we’re in a long-term and slow employment recovery, this could be an overestimate”). As MacEwen highlights, “U.S. law schools granted 44,004 [JDs] in 2010, which rose slightly to 44,258 in 2011 and 44,495 in 2012. As they say, ‘do the math:’ 132,757 new JDs in 3 years would fill 61% of all available lawyer jobs for the next decade.”

According to The National Jurist, overall law school enrollment dropped 15% from 2011 to 2013, but it has not been consistent among races. Asian students had the largest drop in law school enrollment – 16%. White enrollment dropped 14.8%, black law students fell 1.6%, and Hispanic enrollment held steady. It would be interesting to discover why there is such a large variance in enrollment. For a better diagnosis of future diversity in Biglaw, it may be practical to track the shifting demographics among Top-14 Law Schools and other traditional Biglaw feeder schools. The specific change in demographics among these top-tier schools are likely to be the biggest indicator of potential diversity in Biglaw.

How will the change in the law school population affect the legal industry? I have already noted how diversity among Biglaw partners doesn’t reflect law school diversity. Since the late 1980s, the percentage of minority law school graduates has more than doubled (from 10% to 23%), yet 92-94% of current Biglaw partners remain white. According to The American Lawyer, “Asian-American lawyers are the biggest minority. Their numbers grew slowly and steadily, and they now account for 6.3% of firm attorneys. But the big gap between the percentage of Asian-American partners (2.7%) and all other Asian-American lawyers (9.3%) suggests that the bar to partnership is high.”

Sponsored

As a minority, I know it seems like there is a Chinaman’s chance to ever make partner. But at this point, law school statistics may be even more concerning than current employment statistics. Asian students had the most precipitous drop in overall law school attendance from 2011-2013 – 16%. Asian students’ first year enrollment is now down 21.5% since 2010 and 26.8% since 2011. Based on their current percentage (6.7%) in law school and their rapidly declining law school enrollment trend, it seems like the Asian-American partner percentage (2.7%) is poised to remain minimal for quite some time. Does a Chinaman even have a chance to make it in Biglaw nowadays?

Needless to say, the legal industry (post-recession) will be a very difficult landscape for anybody to navigate. According to the August 2014 NALP Bulletin, the overall employment rate for the Class of 2013 was 84.5% – the lowest rate in 20 years. The good news is the 2013 law school graduates found more jobs than the previous year and starting salaries rose for legal employment as well. The bad news is the overall unemployment rate in the legal profession continued to rise because of the historically large graduating class.

Since 2000, the percentage of minority law school graduates has ranged from 20% to 24%. Minority representation in summer programs in 2007 and 2008 was 24.19% and 24.04% respectively. In 2012 and 2013, minorities accounted for 29.55% and 29.51% of summer programs respectively. Before and after the 2009 crisis, the legal industry seems to have maintained a real commitment to diversity at the rudimentary level. It is as lawyers progress in their careers that we see more disparity in the data. Some suggest that diversity and inclusion are separate focuses. Could the lack of “inclusion” be the primary factor for my 92% theorem? Perhaps Verna Meyers said it best when she stated, “Diversity is being asked to the party; Inclusion is being asked to the dance.” The legal industry still lags other professions in minority hiring. Does it want for inclusion as well?

After the 2009 economic crisis, widespread layoffs caused women and minorities in law firms to decline for the first time since the 1990s. According to the NALP, “lawyer layoffs disproportionately affected junior and mid-level associate ranks, and because these groups of lawyers were among the most diverse in law firms, it is likely that these layoffs contributed in significant measure to the lower overall percentages that we [saw] in 2010.” From 2009 to now, the Dow Jones has grown 175%. It is the boom that we should study, not the bust. It is only a matter of time before the market regresses to the mean.

Perhaps, these law schools should not be so surprised to see a market correction in their enrollment. After all, law school enrollment had increased every year since 1997. It was only a matter of time before the legal market regressed to the mean. Does anyone believe the current U.S. legal market can support 204 law schools? Which future graduating class will suffer the same fate – of unemployment and crushing debt – as the unfortunate, infamous 2009 graduating class?

Sponsored

If the last recession is any indication, then diversity among lawyers could decline once again during the next crisis. Is our current environment really the “new normal” or are we in the calm before the storm, the precipice of another correction? For better or worse, the next recession will surely have a critical impact on legal employment. It will be interesting to see how the “new normal” impacts Biglaw and the legal industry in general.

Renwei Chung is the Diversity Columnist at Above the Law. You can contact Renwei by email at [email protected], follow him on Twitter (@renweichung), or connect with him on LinkedIn. 

Topics

, , , , , , , ,