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Courtroom Drama: Too Many Lawyers, Too Few Jobs

Thursday, 21 Mar 2013 | 12:01 PM ET
Tonya Constantine | Blend Images | Getty Images

Becoming a lawyer seemed to be one of those career moves that could stand up to any type of economic setback.

The jobs would always be there, as most people, it was assumed, would need a lawyer at some point in their lives—and a downturn in the economy would likely last no more than it took to graduate from law school.

That's no longer the case. Because of the recession of 2007-2009 and a still-struggling economy, the legal profession is under severe stress. Besides not having enough positions for current lawyers, there are too many upcoming law school graduates and too few jobs to employ them.

"We never saw it like this just a few years ago, but now I've seen it first hand," said Ron Lieberman, a matrimonial lawyer the in New Jersey firm of Adinolfi & Lieberman in southern New Jersey. "There are too many lawyers and too few jobs. We just hired someone, but we didn't look very hard, and she was doing volunteer work."

He added: "I'm not sure it's going to get better any time soon."

The legal profession, like many others, has been downsizing. It's boosting productivity of current staffers, rather than hiring new employees, analysts say, and anyone newly hired is likely to be doing so at half the salary than that of a new hire just four years ago.

"The recession has really changed the dynamics of the legal profession," said Fred Cheever, the associate dean at Sturm College of Law at the University of Denver, who noted the school has had to cut its class size from 380 to 290 this past year. "Other schools are doing the same. It's a way to respond to the recession and the job market."

There are nearly one million people employed as lawyers in the U.S., and the rate of unemployment for lawyers is just around three percent.

(Read More: 'Average' Workers Plague US Businesses: Execs Survey)

That said, 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.

(Note: An earlier version of this story did not take into account retirement/deaths of lawyers during the time period which could lower the ratio of new graduates to available jobs to an estimated to 2 to 1, according to Steven Harper, author of The Lawyer Bubble:A Profession in Crisis)

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.

Instead of looking at the high octane law firms with well-known names — which are in the process of re-examining their staffs — many graduates will have to think corporate and even small time, said Jeremy Paul, dean of Northeastern University School of Law.

"The plum legal jobs in the future will be in big organizations rather than inside big law firms," Paul explained. "And many of our graduates will start careers in small and solo practices. We're starting an incubator to help our grads prepare for such careers."

To help ease the burden of overwhelming student debt, many law schools are copying their counterparts in medicine and shortening the time spent in the classroom.

(Read More: Is There a Doctor in the House? Probably Not)

"We're doing a three-and-three program," said University of Denver's Cheever. "That's three years of undergrad and then three years in law school."

"And we're going to be focusing more on areas like doing taxes, how to file motions, and how to do trials," Cheever said. "That hasn't always been emphasized in law schools in the past and now we are trying to get our students better prepared in today's market."

A changing law job market is already here, said Ganesh Natarajan, founder of Mindcrest, a legal outsourcing firm.

"Technology is upsetting the legal profession and law firms are not what they used to be," said Natarajan, a lawyer who's firm employs some 450 lawyers in India and about 100 in Salt Lake City.

"Instead of an army of lawyers from a firm going over documents, they have us," Natarajan said. You don't need people on a law firm staff to do what we do," Matarajan argued.

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"Law firms are not going away, but they are going to operate differently with smaller staffs," added Natarajan.

For one expert, it's not that there are too few lawyers, but rather a communication gap between clients and the legal advice they seek.

"The real problem is connecting lawyers to people who need them," said Michele Colucci, CEO of MyLawsuit.com. "I have 50 people right now needing lawyers."

"The legal system is fragmented and it's hard for people to wade through," she said. "But I think there are just too many lawyers without access to clients who need them the most, rather than too many lawyers and no jobs."

Law school is still a magnet for many people, but much less so than before.

As of January, there were 30,000 applicants to U.S. law schools for this coming fall — a 20 percent decrease from the same time last year and a 38 percent decline from 2010, according to the Law School Admission Council.

Of some 200 law schools nationwide, only 4 have seen increases in applications in 2013.

The legal profession job crisis has reached the point where the American Bar Association has formed a task force to look into issues like school costs, the overall state of legal education, and future employment. Their findings are expected later this year.

For those who are still willing to jump into the current situation, the advice is simple, said Mindcrest's Natarajan.

"A friend's daughter called me the other day about whether she should go to law school," Natarajan said. "If you have a passion for the law, then go, but don't do it because your family wants you to go or you can't think of anything else to do."

He added: "You have to have the passion with the way things are now. Otherwise, choose something else."

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