Too many Lawyers?

Image Source

Courtroom Drama: Too Many Lawyers, Too Few Jobs
Excerpt:

... the legal job market has slowed dramatically. The U.S. will have a 7.3 percent loss in legal employment for 2013, according to Bright.com, a research group. The greatest loss of jobs will be in insurance defense attorneys, and in areas of employment and commercial real estate.

Going forward, the Bureau of Labor Statistics projects nearly 74,000 jobs new lawyer jobs created in the U.S. over the next seven years. The growth is expected in areas including health law, intellectual property law, privacy law, and international law.

But American law schools will graduate about 44,000 students each year during that time, and in doing the math, that means six new lawyers — not including older graduates — will be fighting it out for just one new job.

Pay will also be an issue. The median salary for a new associate at a private law firm is currently about $85,000 a year, according to the BLS. Not bad, but it's down a third what it was just two years ago.

Working for the government, such as a public defender, could pay anywhere from just $40,000 to $85,000 a year, according to the Labor Department, even after years of service.

And most law school grads come out with a student debt usually between $125,000 and $250,000, depending on where they went to school, according to Department of Education statistics. That's on top of their underclass debt which could average the same amount.

Why There Are Too Many Lawyers
Excerpt:

Essen­tially, where get­ting a law job right out of law school was nearly a given, now as many as 35% of grad­u­ates don’t have a law-​​related job nine months after grad­u­a­tion.

That’s a pretty high unem­ploy­ment rate, which sug­gests there are indeed too many lawyers in Amer­ica right now. The rea­son is that the reces­sion (and other reg­u­la­tory changes, I would add) has led to fewer merg­ers and acqui­si­tions and other busi­ness activ­i­ties that require exten­sive legal counsel.

Because get­ting a law job is harder, many prospec­tive appli­cants are decid­ing that it doesn’t make sense to take on $150,000-$200,000 in stu­dent loan debt when the job mar­ket is extremely tight. So law school appli­ca­tions are way down, lead­ing schools—including top schools such as Northwestern—to cut back on the num­ber of admissions.

A Message to Aspiring Lawyers: Caveat Emptor - Number of new jobs annually: 21,800. Number of graduates: 44,000.
Excerpt:

Nationally there are twice as many graduates as there are jobs. The Bureau of Labor Statistics estimates that the economy will provide 21,880 new jobs for lawyers annually between 2010 and 2020; law schools since 2010, however, have produced more than 44,000 graduates each year. Yet schools continue to enroll more students than the market demands and to raise tuition faster than inflation. The result is exploding debt loads for current students and graduates whose employment prospects are appalling.

To be sure, the employment prospects for Americans across a broad swath of society have been grim in recent years. But the legal profession has clearly lost any reputation it might have once had as a safe, prosperous haven in troubled times.

I graduated in 2011 and am one of the "lucky" ones. Within six months of graduation I secured a job in my area of interest, international human rights. My class entered the worst American job market in 18 years—only 56.7% of law graduates found full-time jobs lasting at least a year and requiring passage of a bar exam.

For many new hires, even finding a job with a law firm might not be quite the cause for celebration it once was. According to the American Bar Association, the average amount borrowed by students attending private law schools has gone up 78% in the past decade, to $124,950 in 2011 from $70,147 in 2002. However, these loan figures don't reflect the true burden. With the average interest rate on federal loans for graduate students at 8%, which starts to accrue while the student is still in school, the typical law graduate often holds debt in excess of $150,000 by the time repayment begins.

Making matters worse: Salaries have plummeted, with the mean private-practice compensation today, $78,653, falling 16% from where it was in 2009 ($93,454), and 8% from 2002 ($85,518). The dramatic increase in law-school tuition—which has increased 434.8% at private schools since 1985—coupled with the decrease in jobs and salaries prompted James G. Leipold, executive director of the National Association for Law Placement, to describe the current entry-level job market as "the weakest . . . that NALP has measured in nearly 40 years of doing this work."

Comment: Contrarian views:

Too many lawyers? Says who?
Excerpt:

Moreover, the career for which we educate students, done through the medium of the law, is a career in leadership and creative problem solving.

There Are Not Too Many Lawyers
Excerpt:

Lawyers are by genus problem-solvers. By species, they may be traffic ticket-resolvers, child custody-facilitators, triangular merger-structurers, or business dispute-mediators. Indeed, it's likely that you, or someone very close to you, could recently have benefited from skilled assistance in one of these matters. There are not too many problem-solvers.

Law schools provide their graduates with incredibly valuable skill and knowledge sets. In the first four months of most programs, law students master the components of an enforceable contract, learn the elements of and remedies for negligent behavior, become versed in the myriad ownership interests in real and personal property, sort through the distinction between accomplices and accessories to criminal acts, and are trained to research and provide written guidance on any possible variation on these themes. There are not too many individuals with a deep working knowledge of our legal system.

Comment: My own view is that there are too many. Mundane legal work can be accomplished via websites like LegalZoom. And problem-solving and leadership can be acquired by other disciplines and opportunities.

California, Lawyers and the Food Industry

Lawyers who took on Big Tobacco target food industry

 Excerpts:

More than a dozen lawyers who took on the tobacco companies have filed 25 cases against industry players like ConAgra Foods, PepsiCo, Heinz, General Mills and Chobani that stock pantry shelves and refrigerators across America.

The suits, filed over the last four months, assert that food makers are misleading consumers and violating federal regulations by wrongly labeling products and ingredients. While they join a barrage of litigation against the industry in recent years, the group of tobacco lawyers is moving aggressively. They are asking a federal court in California to halt ConAgra’s sales of Pam cooking spray, Swiss Miss cocoa products and some Hunt’s canned tomatoes. ... The lawyers are being selective about where these suits are filed. Most cases have been filed in California, where consumer protection laws tend to favor plaintiffs.

... “It’s difficult to take some of these claims seriously, for instance, that a consumer was deceived into believing that a chocolate hazelnut spread for bread was healthy for children,” said Kristen E. Polovoy, an industry lawyer at Montgomery McCracken, referring to a lawsuit that two mothers brought against the maker of Nutella. “I think the courts are starting to look at the implausibility of some of these suits.”

... A federal judge in California in 2009 dismissed a case against PepsiCo, which accused the company of false advertising because Cap’n Crunch’s Crunch Berries cereal does not contain real berries. He ruled that “a reasonable consumer would not be deceived into believing that the product in the instant case contained a fruit that does not exist.”

Comment: Anyone dumb enough to believe there is a berry called a "crunch berry" should stay home from the grocery store! The Californication of the legal business! More on the CrunchBerry case.

The "Ticktin" 2nd Mortgage: Ingenuity or Sleazy?

Taking 2nd Mortgage to Pay the Foreclosure Lawyer

Excerpts:

For some Florida residents, the price of getting out of foreclosure will include taking on a second mortgage — payable this time to their lawyers.

The new mortgage, which takes effect only if the foreclosure is dismissed and the homeowner’s debt to the bank is reduced, is controversial among defense lawyers, some of whom call it “creepy” and “crass.” Yet even they acknowledge it offers a solution to a vexing question: How do they get paid?

After recent revelations that banks were sloppy in processing many foreclosures and in some cases lack standing to seize a house, potential clients seeking to challenge their lenders are flocking to lawyers. But while these distressed homeowners might have a case, they generally lack the resources to pay legal fees. Being in foreclosure usually means being broke.

“We thought, ‘Why don’t we use a bit of ingenuity to find an affordable way to represent them?’ ” said Peter Ticktin of the Ticktin Law Group in Deerfield Beach, Fla. “It’s a new model, a new paradigm.”

Foreclosure defense is a new legal specialty whose strategies and techniques are still being worked out. Mr. Ticktin, who has some 3,000 foreclosure clients, says his plan to collect fees by taking another mortgage on his clients’ properties has already been copied by other firms.

The Ticktin mortgages resemble the loans that the clients originally got from Countrywide, GMAC and other lenders. Each will be a contractual obligation with the law firm, labeled as a mortgage and structured like one, too, with the client paying a certain sum every month and using the house as collateral.

...

“Until recently, foreclosure defense would have been considered the lowest of the low — below the divorce guys, below ambulance chasers,” said Mr. Oppenheim, who practices in Weston, Fla. “The idea was inconceivable that you might have legitimate defenses when your client did not pay the bank that had lent them a sum of money.”

Comment: Our country has too many lawyers! They are smart and they are always looking for new ways to make money! Image source: Glarkware

Chrysler bankruptcy: Attorney rip off!

Chrysler bankruptcy lawyers rack up $12.7M bill in first month

Excerpt:

During bankruptcy, just about everyone involved with the affected company is going to feel the pain in some form. That is, of course, unless you're a lawyer. New York law firm Jonas Day has represented Chrysler during its time spent in Chapter 11 bankruptcy, and Automotive News is reporting that the firm billed $12.7 million for the month of May alone. That figure included 72 partners working on the case, in addition to another 193 lawyers chipping in. About $256,000 of that figure accounts for expenses, and the rest encompasses some hefty legal fees.

We're not all that surprised that it takes over 250 lawyers to execute a Chapter 11 bankruptcy of Chrysler's magnitude in only 40 days, but the figures for the firm's head lawyer, Corinne Ball, are staggering. Ball booked 15 hours a day, seven days per week for the entire month, at a bill rate of $900 per hour! That's $401,310 to you and I. On average, lawyers on the case billed $477 per hour, while paralegals came in at $224.

Comment: Someone is getting rich at taxpayers' expense!

Lawyers: Good economic news

A Study in Why Major Law Firms Are Shrinking

Excerpt:

In the first quarter of 2009, demand for legal services in New York decreased by nearly 10 percent over 2008, according to the Hildebrandt International Peer Monitor Index. At least 10,000 employees at major firms across the country have lost their jobs so far this year, according to the macabre but wildly popular “Layoff Tracker” run by another blog, lawshucks.com.

At the root of the law-firm crisis, legal experts say, is the credit crisis, which has pulverized the need for traditional practice areas like structured finance, mergers and acquisitions and private-equity transactions — the very things that have always kept a high gleam of polish on the city’s whitest shoes. The downward trend has been unrelenting: fewer Wall Street deals mean fewer Wall Street lawyers.

While the legal industry is hardly battling the existential threat that is facing, say, the newspaper trade, Big Law — especially in competitive New York — is facing a potential paradigm shift as fundamental as the one that has hit investment banks and the auto industry. Big, as a business model (let alone as an expression of the national mood), seems bound for obsolescence.

Comment: Now if we could just have less politicians!