Legal Profession Makes Its Appeal

Here’s something to ponder when you’re assessing your business needs for legal services: In 1975, the U.S. population was 216 million people. Today, that figure stands at 325.7 million. That means an additional populace of nearly 110 million people generating additional demand for legal services to launch businesses, conduct transactions, facilitate mergers and acquisitions, secure and defend patents, defend environmental lawsuits or medical malpractice cases or challenge workplace unfairness and discrimination. And that’s before you get to the personal services like tax guidance, setting up wills and trusts, resolving divorce cases or settling estates.

It’s a good thing, then, that the nation’s law schools are keeping pace with that growing population by producing a corresponding number of new lawyers.

Except for one thing . . . they’re not. Enrollment at U.S. law schools last year stood at 111,620, barely recovering over the previous two years, which produced the lowest enrollment totals in nearly half a century. Before enrollment in the modern era bottomed out at 110,183 in the 2016-17 school year, combined enrollments nationwide had not been that low since they stood at 105,078 in the 1974-75 academic year.

Law-school enrollment is ticking back up now, but firms are starting to notice a smaller pool of qualified associates with three to five years of experience—enough to sort out many who might be on the fast track to partnership, those who will be more of what college football coaches call “projects,” and those who might be better-suited to careers in other fields.

At the larger firms in Kansas City, that’s playing out in various ways.

“We continue to hire a significant number of new associates from law schools, while also hiring lateral more experienced associates as needed,” says Mark Hinderks, managing partner for Stinson Leonard Street’s Kansas City co-headquarters. “Hiring new associates from law schools has the advantage of facilitating training and development in our processes and quality from the beginning, and allows us to build a long-term relationship with a pool of high-value recruits before another law firm has a chance to do the same.”

A bigger challenge for firms, given the comparatively reduced numbers of lawyers, is retention. Nobody wants to be the minor-league farm club for a competitor. “Hiring lateral associates sometimes allows us to acquire associates who have already developed some expertise and can step right in and be productive, but must be done on more of a one-by-one basis,” Hinderks said.

Office managing partner Jeff Simon says Husch Blackwell has turned to hiring of associates with previous experience, “both in order to provide depth to key practices and to compensate for smaller first-year associate classes.” That trend, he notes, may be reversing: “Our 2019 summer associate class will total approximately 80 law students. That is the most we’ve had since the end of the financial crisis.”

At the top end of the food chain, of course, hiring is easier—that’s where the best newly minted lawyers often look to start their careers after law school, so many firms are still able to boast of having their pick from among the most promising. And, surprisingly, the concentration of talented graduates is increasing. “Indeed, with law firm enrollment declines, we are finding that there are fewer law school graduates who went to law school because it seemed to be an opportunity to make money rather than because they really wanted to be lawyers,” says Hinderks. “The recruits we are getting are more purposeful about developing a career in the law.”

Still unresolved is whether the traditional career arc toward partnership has been adjusted because of lower enrollments. “It’s way too early to know definitively,” said Simon. “Those lawyers who graduated from law school since the financial crisis are only now becoming candidates for partnership in their respective firms. And we need to remember that the ‘traditional arc’ was already subject to change long before the decline in law-school graduates seen recently.

In other words, it’s more complicated than just extrapolating general trends from law-school enrollment.” One effect of lower numbers and greater demand for talent that is showing up is in compensation. “Associate salaries have risen over the last 3-4 years in most of our markets,” Hinderks said.

Husch Blackwell, said Simon, adjusted associate salaries in 2107, but he points out that “supply and demand are at work on a much broader level. Corporate legal department spending has been relatively flat since the financial crisis, and a larger share of legal work is being handled in-house.

So while the supply of law-school graduates is down from historical trends, the demand for legal services from corporate law firms—particularly from firms outside the largest 20 or 30—is also down from historical growth trends.”