By Chad Holcom
Crain’s Detroit Business
Posted online Aug. 22, 2010
Investment always comes with risk — and local universities have begun to warn the swelling ranks of prospective law school students that investing in a future legal career is getting riskier. Applications jumped almost 9 percent for admission at the region’s five largest law schools this fall semester, to a combined 18,532 compared with 17,065 for fall 2009.Deans and admissions officers note that student competition has soared for fewer job prospects, since the economy has eroded the supply of new attorney positions.
Anecdotal evidence also points to interest by some law students in simply beefing up their business education résumés without any intention of working at a law firm.
Despite the application surge, the schools themselves held enrollment almost constant. An estimated 1,291 first-year students start classes next week through Sept. 7 at the University of Michigan Law School, Wayne State University Law School, University of Detroit Mercy School of Law, the Auburn Hills campus of Thomas M. Cooley Law School and Michigan State University College of Law. That’s compared with 1,279 in fall 2009.
The National Association for Law Placement Inc. in Washington reported last month that as much as 11.7 percent of 2009 law graduates were not employed nine months after graduation — the highest rate among recent grads since 1996. It’s the second consecutive year the employment rate has fallen.
John Nussbaumer, associate dean of the Auburn Hills campus of Cooley, said the latest data tends to support the idea that graduates are increasingly following alternative career paths rather than aspiring to become first-year associates at law firms.
As some private practice prospects dry up, more graduates are turning to jobs in academia, the public sector, nonprofits and public interest work, or are working outside the legal profession, deans said.
“What we are hearing more of is some (graduates) who get a part-time, contract position on a set contract, and we’re coaching our students that one way to play onto the team is to take interest in these jobs,” Nussbaumer said.
“They still build experience, and there’s a better chance you’ll build business and become the lateral hire (at an established firm) when things recover.”
Nussbaumer and others said a growing share of students pass through law schools without sitting for the bar examination or becoming licensed attorneys. Some 9.2 percent of national graduates work in non-attorney professions where law degrees are “preferred,” up from 6 percent in 2001.
“The (juris doctorate) preferred category can be non-legal professions where the JD is an asset like a specialized degree, such as an HR director with (labor law knowledge), or jobs within a law school handling career services, or government jobs within the FBI where the bureau prefers a degree,” said Judith Collins, research director for the law placement association in Washington.
Summer job pool dries up
Then there’s the increasingly shrinking pool of summer associate positions — which traditionally paved the way for jobs at big firms.
Eleven of the largest local law firms reported to Crain’s that this summer they employed a combined 48 students as summer associates. That’s compared with 72 summer associates at the same 11 firms last year and 78 two years ago.
Detroit-based Dykema Gossett PLLC and Miller, Canfield, Paddockand Stone PLC each reported their summer classes were half the size of 2008.
Intellectual property law firms Harness Dickey & Pierce PLC in Troy and the Ann Arbor office of Chicago-based Brinks Hofer Gilson & Lione each said they hired no summer associates this year, compared with five and two respectively in 2009.
“The classes that might be in the worst shape are the ones who graduated about a year or two ago,” said Robert Ackerman, dean of the Wayne State University Law School. “They probably thought they had positions where they were (summer associates), then they were deferred six months, and then after that they were told “We’re sorry, there isn’t anything here for you.’ ”
Susan Guindi, assistant dean of career services at the University of Michigan Law School, said the worst may be yet to come on the employment front.
“I think where you’ll start to see an effect of the economy is in the 2010 class (which reports data in 2011). We had a higher percentage come back without post-grad offers from their firms,” she said.
“Those students summered in 2009, but at the end of summer the firms told them “You’re great, but we just don’t have the business volume to justify bringing you out.’ ”
Law schools collect their data for the placement association based on graduate responses to their inquiries nine months after graduation.
Students must have jobs related to their legal education to count as employed.
Wayne State reports 83.1 percent of its 2009 graduates who responded were employed, compared with 86 percent of the 2008 class in early 2009 and 88.3 percent of its 2007 grads.
Cooley Law School reports 85 of its 2009 graduates were employed earlier this year, compared with an average of 92 percent across the 2002-2008 classes, in data compiled by Cooley for a recent American Bar Association certification process.
Guindi said 99.1 percent of UM’s law class of 2009 was “employed or continuing their education” — but even that was off from 99.8 percent in 2008.
“There was a suppression of (mergers and acquisitions) for so long, and how much of a ripple effect does that have on firms?” she said. “Then I think we also saw a structural change in the profession. More companies are finding litigation has become too expensive in some matters to make business sense.”
Cooley’s data also indicates private practice accounted for only 54 percent of jobs for Auburn Hills campus graduates in 2009, compared with 61 percent in 2002-08. At the same time, 13 percent of 2009 graduates had government employers earlier this year, compared with an average 8 percent for 2002-08.
The national report says that nearly 25 percent of 2009 graduate jobs were temporary, a marked increase over past years, and academic employers made up a record 3.5 percent of jobs, which “may be accounted for by schools’ efforts to provide post-graduate job opportunities in a tight job market.”
More than 3,000 respondents were past summer associates who were deferred, but still count as employed if their offers were not rescinded.
David Galbenski, president and CEO of Royal Oak-based Americlerk Inc. doing business as Lumen Legal, said his outsourced legal services and staffing company had 37 percent more contract attorneys on assignment this month than the same time in 2009, but would not give specific figures.
He also said a recent team of document-review contract attorneys assembled for a project launching this week was more than half entry-level employees less than three years out of law school — which is typical for Lumen project teams.
Leor Barak, manager of pro bono programs at Detroit-based Community Legal Resources, said his organization has seen increased interest in referrals from newly minted attorneys looking for experience representing nonprofits.
“We’ve got a few job openings right now, and we’ve seen a tremendous increase in the number of related applications compared to what would come in two years ago. A huge part of that is the economy, I’m sure,” he said.
Lloyd Semple, dean of the University of Detroit Mercy School of Law, said 2009 graduate placement in private practice is around 58 percent, compared with 56 percent nationally. He also believes more Mercy students are gravitating to public sector and nonprofit work, a trend he attributes both to the economy and the school’s own Jesuit traditions.
He also said the door hasn’t closed completely on well-paid associate positions at big law firms, but more might be forced to build experience on their own as contract lawyers or solo practitioners, and look for a lateral hire later in their careers.
Mercy data compiled for the law placement association showed that 16.6 percent of the 2009 class was not employed nine months after graduation.
“I feel a moral obligation to talk to (students), and we don’t accept anyone if we don’t think they can graduate and pass the bar. But I also make sure to stress that you’ve got to be pretty darn careful in pursuing a law degree,” Semple said. “Because it’s now a $100,000 journey, and even when you leave here you might still have a long way to go.”
Chad Halcom: (313) 446-6796, firstname.lastname@example.org