One Lawyer for every 172 people -- What does it mean?

Previously, I used ABA stats for the number of JDs awarded annually since 1963 to calculate that since 1973 the average number of new lawyers produced by the law schools is enough to sustain having a lawyer to population ratio of one lawyer for every 171.9 people.  Forty years is a long span, so let's just assume that the current lawyer-to-population ratio is one for 171.9 people.  What are the implications of that number and how should a prospective law student interpret it?

In other posts I have shown that only 53.8% of all lawyers produced in a 40 year span from 1969-2008 work in the legal profession and that it is a very good assumption that the percentage of lawyers produced in the past 10 years who were able to find work in the legal profession may be less than 30%.  Of that 30%, the percentage of new lawyers who were able to find jobs that provided compensation commensurate with the costs of their legal education--jobs at large firms, medium-sized firms, high quality small firms, and quality government positions--career-building jobs, is probably much less than 30%.  (A new graduate might find a job at "shit law" earning $30,000/year and would count as part of that 30%, but that is not a successful outcome.)  Those studies alone should be enough to convince prospective law students that going to law school is probably a foolish investment.  Additionally, what can we imply about the value of a law degree using the statistic of one lawyer for every 171.9 people?

According to the Bureau of Labor Statistics, about 26% of all lawyers are self-employed either as partners at law firms or as solo practitioners.  (I assume that this 26% number refers to 26% of the 759,200 people employed as lawyers in 2008 and not 26% of everyone who has a JD.)  This implies that 74% of those 759,200 employed lawyers work for other lawyers or for the government.  So, about 26% * 53.8% = 13.99% or about 14.0% of everyone with a JD either works as a partner at a law firm or as a solo.  Let's assume that half of those people work as solos, or 7% of everyone with a JD.  Let's also assume that 5% of the 1,141,328 people with law degrees (produced over the 40 year period from 1969-2008) work at non-legal jobs where their law degrees add tangible value to their work and where they are paid commensurate with their investment in legal education.

This means that if all of the lawyers who could not find work at law firms, non-profits, with the government, or in non-legal positions that make use of their legal education still wanted to work as lawyers (which, presumably, a great many would) then our nation would need to support 680,260 solo practitioners.

(7% + 46.2% - 5%) * 1,412,328 = 680,742

This works out to a wannabe-solo-lawyer to population ratio of 1 to 450.9.

306,947,000 (2008 U.S. population estimate) / 680,742 = 450.9

So, in order for everyone who graduates with a law degree to benefit from having gone to law school, every 451 U.S. citizens needs to support one lawyer as a solo.  Is that possible?  Ask yourself, when was the last time you personally needed a lawyer?  When was the last time someone you knew needed a lawyer?  Did they need a lawyer's services every year?  Once every ten years?  Once or twice in a lifetime?

Let's assume that your average person will need a lawyer three times in their life to handle matters that can be billed for $2000 after charges for incidental expenses and that the average U.S. lifespan is 78.7 years.  This means that on average, a person will need a lawyer for a $2000 matter once every 26.23 years.  So, 450.9 people is enough to provide a lawyer with 17.19 $2000 matters per year, or $34,380 of gross income each year without benefits that will suffer a 15% social security tax.  Some of that money will be needed to pay for overhead such as advertising, the costs of an office, bar fees, CLE fees,  and malpractice insurance, etc.  If the cost of overhead and the additional 7.5% social security tax is $1000/month, then a lawyer could take home about $22,380/year (without benefits).  Given the exorbitant cost of attending law school today, In order to obtain a sufficient return on one's investment, a lawyer would probably need to gross about four times that, or about $89,000 without benefits.  You can obtain different results using the same methodology while making different assumptions.

This is all just mental masturbation and it is probably a silly post that fails to provide significant insight.  The point I am trying to mathematically demonstrate is that having 1 lawyer for every 172 people means that a great many lawyers will never obtain a return on their investment, especially when going to law school could cost you $120,000-$185,000 and 3 years' worth of opportunity cost.

Statistics may suggest that less than 30% of new JDs were able to find work in the legal profession over the past 10 years.

It's time for more fun with numbers and statistics. Previously I used ABA and BLS stats and some seemingly reasonable assumptions to estimate that only 53.8% of all law school graduates in a 40 year span from 1969 to 2008 worked in the legal profession. I later speculated that the percentage of more recent grads who were able to find work in the field was probably significantly less than 53.8%. In this post I want to demonstrate that mathematically. This is just a back-of-the-envelop calculation that is not suitable for formal publication and it depends very heavily on certain assumptions.

If we assume that 75% of the graduates in the 10 year period from 1969-1978 found jobs as lawyers, that 65% of the graduates from 1979-1988 found jobs as lawyers, and that 55% of of the graduates from 1989-1998 found jobs as lawyers, what percentage of graduates from 1999-2008 were able to find jobs as lawyers?

Years	JDs Awarded	Estimated Percentage Who Found Legal Work	Estimated Number Who Found Legal Work
1969-1978	259,558	75%	194,668
1979-1988	357,311	65%	232,252
1989-1998	389,263	55%	214,094
1969-2008	1,006,132	63.7%	641,015
1999-2008	406,306	29.1%	118,185

According to the BLS stats, 759,200 people work as lawyers.  759,200 - 651,015 = 118,185 jobs left for graduates from 1999-2008. 118,185 divided by 406,306 = 29.10%  So, using my model for the percentage of new lawyers who were able to find work in the legal profession, only 29.1% of all new graduates between the years 1999-2008 were able to find work in the legal profession.  Of course, this number all depends on the accuracy of my assumptions.

Now let's calculate the number using a model based on similar assumptions and 5 year periods.

Years	JDs Awarded	Estimated Percentage Who Found Legal Work	Estimated Number Who Found Legal Work
1969-1973	101,314	75%	75,985
1974-1978	158,224	70%	110,771
1979-1983	176,490	65%	114,718
1984-1988	180,821	60%	108,493
1989-1993	189,705	55%	104,338
1994-1998	199,558	50%	99,779
1989-2003	192,621	45%	86,679
1969-2003	1,198,753	58.5%	700,783
2003-2008	406,306	27.35%	111,125

Using this model, only 27.35% of all new graduates between the years 2003-2008 were able to find work in the legal profession.

Of that 30%, the percentage of new lawyers who were able to find jobs that provided compensation commensurate with the costs of their legal education--jobs at large firms, medium-sized firms, high quality small firms, and quality government positions--career-building jobs, is probably much less than 30%. (A new graduate might find a job at "shit law" earning $30,000/year and would count as part of that 30%, but that is not a successful outcome.)

This is not a scientific study by any means; it's merely back-of-the-envelop calculations based on assumptions that may or may not be accurate.  However, I think it validates my claim that if only 53.8% of all lawyers produced between 1969 and 2008 are working in the legal profession, then the percentage of more recent law school graduates who found work as lawyers must be significantly lower than 53.8%.

In the current recession (which may prove to be a permanent "New Normal"), the percentage of new law school graduates who are able to find legal jobs may be much lower than 30%, and the percentage who are able to find good jobs may be even lower.