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Law: employment trends, past and future.

We are a country of law, and, when we look at employment, we learn that we are also a country of lawyers. I'm going to review the employment of lawyers past and present, and then take a look at projections of future demand before turning to consider the supply of new lawyers.

The current employment of lawyers in the United States exceeds 460,000 (see chart 1). Add in judges and magistrates--who must be licensed to practice law--and the number of people working in law-related fields exceeds half a million. According to the American Bar Association, another 100,000 or so people are licensed to practice law. This figure would include many legislators, law professors, and business executives, quite a few of whom make considerable use of their legal training. No matter how you look at the numbers, lawyers are a prominent feature in our country's occupational profile.

The feature is not only prominent, it is also unsual in that a large number of lawyers are self-employed. By and large, we are a nation of wage earners. Only 8 or 9 percent of us are self-employed; yet nearly half of all lawyers are self-employed.

The employment of lawyers--both wage earners and self-employed--is naturally concentrated in the legal services industry, which is where law firms are grouped. Between 75 and 80 percent of all lawyers in 1982 were employed in this industry. An additional 13 percent were government employees, and small numbers were employed in nearly all other industries, notably manufacturing and finance, insurance, and real estate.

At the Bureau of LAbor Statistics, we find that a projection of the future must begin with a review of the past. Because the legal services industry and demand for lawyers are so closely linked, I will begin with a review of that industry.

Legal Services: Recent Growth

The legal services industry was among the fastest growing in the economy over the 1970-82 period. According to BLS data, total employment in the industry--not just lawyers--grew from 235,000 to 565,000, an increase of 140 percent or 7.5 percent a year (see chart 2). By comparison, total nonagricultural employment grew only 26 percent in this period, or 2 percent a year.

In part, this growth reflects the overall growth of economic activity, but even more important were other factors, such as government regulatory activity, business mergers, and class action suits. The 1970's witnessed increased demand for legal services stemming from legislative and regulatory efforts to improve the quality of the environment, reduce hazards in the workplace, guarantee equality of the environment, reduce hazards in the workplace, guarantee equality of opportunity in hiring and promotions, and achieve other social objectives. The 1970's also saw a great increase in the number of business mergers and takeovers, many of which were achieved only after lengthy legal determinations due to the precedent-setting nature of the mergers. The use of class action suits also greatly increased in the decade.

A further catalyst to growth in the period was legal trailblazing in areas such as medical malpractice, computer law, and space law. Establishing legal rights in areas such as these often required a great deal of litigation.

The changing demographics of the Nation also played a role in the increased demand for legal services over the 1970-82 period. The crime rate rose, in part because the baby-boom generation was concentrated in the teens and twenties during the period, the age groups responsible for a significant share of crimes. In addition, the divorce rate rose, as did the number of homes purchased.

Projected Industry Growth, 1982-95

The Bureau of Labor Statistics regularly develops projections under alternative sets of economic and demographic assumptions. These projections cover labor force by age, sex, and race; gross national product and the income and product composition of GNP; and employment by industry and occupation. The latest projections by the Bureau, for 1995, were released in various publications between November 1983 and June 1984.

Three different scenarios were used in making the projections. My remarks will deal only with the moderate one. According to the moderate scenario, employment in the legal services industry is projected to increase 53 percent (see chart 3). This robust growth is nearly twice the 28-percent growth projected for total wage and salary employment in all industries. The difference between the two rates is not quite as great as it has been historically, however, in part because some of the factors that led to extremely fast growth--such as regulatory activity and the crime rate--are expected to moderate.

Besides lawyers--both salaried and self-employed--major occupations in the legal services industry include law clerk, elgal assistant, secretary, and other clerical occupations. These occupations will grow at different rates within the industry. One of the sharpest differences is between the rate for salaried lawyers, who are projected to grow by 79 percent, and self-employed lawyers, who are projected to grow by only 11 percent.

These projections reflect a long-term trend. It will become even more difficult to establish a profitable small practice-particularly given the growing competition in the industry--due to the increasing complexity of law, which encourages concentration in a specialty, and the rising cost of maintaining up-to-date materials. This suggests that law firms may become bigger but not much more numerous. Lawyers will continue to hold a relatively constant proportion of the jobs in the industry, but more of them will be in wage and salary positions than in the past.

Legal assistants are projected to grow even more rapidly than salaried lawyers. In fact, legal assistant is the second most rapidly growing occupation among the 675 occupational projects published by BLS. Naturally, the employment of legal assistants is concentrated in the legal services industry. These workers perform mostly routine research that otherwise would be performed by a junior associate, a very experienced legal secretary, or a self-employed lawyer working alone. The rapidly growing acceptance of legal assistants in the industry reflects the notion that lawyers are most productive when they are freed from what can be performed by lesser trained and lower paid personnel. Legal assistants also have more modest advancement aspirations than lawyers. At this time, it is still unclear what impact the very rapid growth of employment of legal assistants may eventually have on requirements for lawyers, but in the projection period no great change is anticipated.

Modest growth is projected in the employment of clerical support personnel in the industry, reflecting the productivity increases anticipated from office automation. Word processing systems increasingly speed the preparation of documents, making legal secretaries more productive. New computer software packages likewise improve the productivity of support personnel in timekeeping, billing, and other administrative functions.

The impact of office automation will not be confined to clerical and administrative workers, however. Lawyers and legal assistants are increasingly discovering that the computer can assist them in their work as well. For example, packages available to lawyers in fields such as taxes, estate planning, and real estate allow them to prepare tax returns quickly or analyze different tax strategies without spending hours at the calculator. Other software aids in the management of litigation when thousands of supporting documents are involved. Similarly, legal research software packages--such as WESTLAW, LEXIS, and the ABA's new AMBAR system--allow lawers and legal assistants to scan thousands of case summaries for key words and retrieve the whole summary when it's wanted. As computer aids become more widely used, lawyers and legal assistants should improve their productivity. At present, it is clear that automation will have a significant impact on the nature of the lawyer's work. However, the extent of the impact, if any, on employment growth is unknown.

The growth of legal assistants and office automation are manifestations of efforts to streamline legal services and make them more efficient. In a sense, they mark a great change from the traditional way of doing business in the industry. The recent recession seems to have adversely affected many law firms and awakened them to the fact that competition will be the hallmark of the future--or at least of the coming decade. Law firms have come to realize that they are going to have to compete for the legal-service dollar, not only with each other but with legal clinics, Sears, and in-house legal units of corporations.

Government

Although the legal services industry provides the bulk of jobs for lawyers, attorneys also work in fairly large numbers for the government. Government employment at the State and local level generally grew very rapidly up to about 1975-76. Federal employment was essentially static throughout the past decade. In the future, the government sector is projected to grow slowly at best, with the number of lawyers employed rising only 9 percent from 1982 to 1995.

Employment Growth for Lawyers, 1982-95

Turning from the legal services industry and government to the whole economy, BLS projects an increase in the employment of lawyers from 465,000 in 1982 to 624,000 in 1995, an increase of 34 percent (see chart 4). The growth will be concentrated in wage and salary positions in the legal services industry, as shown above, but faster than average growth rates are also projected in two industries that together now employ about 4 percent of all lawyers: Manufacturing and finance, insurance, and real estate. Projected employment growth for all other industries is also faster than average, but the increase will account for less than 4 percent of the new positions.

Supply of Lawyers

We have been discussing historical and projected demand. Supply is equally important but much more difficult to project. Nearly everyone who becomes a lawyer does so by graduating from law school and passing the bar exam. A completing correspondence school programs.

The number of degrees conferred annually in law (LL.B. or J.D.) grew from 17,421, in the 1970-71 academic year to 35,991 in 1981-82, an increase of nearly 107 percent. Preceise projections of law graduates are not available. But, according to the Law School Admissions Commission, the number of people taking entrance exams for law school has declined recently; however, at least in the near future, this decline will not affect enrollments to any great extent. As best as we can tell, therefore, the number of new law graduates should be relatively constant during the projection period.

Another important--but usually overlooked--source of additions to the supply of lawyers is occupational transfers. Occupational transfers include people licensed to practice law who enter practice from positions such as judge, magistrate, law school professor, business executive, and various other jobs, as well as from unemployment. Many of these transfers are probably reentrants, people who may have worked as lawyers at some time in the past but who left the occupation. The number of entrants to the profession through transfer cannot be projected with any precision, but data BLS has compiled on occupational mobility suggest that the total may be significant.

BLS data indicate that the occupational separation rate of lawyers was only 4.9 percent from 1980 to 1981. This reflects the fact that lawyers have a strong professional identity, enjoy considerable social status, are generally well paid, and require a substantial educational investment to enter the occupation.

BLS data on entrants to occupations between 1980 and 1981 indicate that 42,000 people entered jobs as lawyers during the year, and 20,000 (48 percent) of these either were in school the previous year or were less than age 25, suggesting that they were probably recent law school graduates. The remaining 22,000 entrants (52 percent) probably transferred from other occupations since they were all age 25 and over, had not completed their education during the previous year, and had either been employed in another occupation or not working. The conclusion suggested by these data--that the majority of entrants to jobs as lawyers were not recent law school graduates--requires, of course, further investigation. More than 35,000 people received law degrees in 1979-80, not 20,000. But these data do serve to illustrate that a significant number of people enter lawyer jobs other than as recent law school graduates, although law school graduates certainly constitute a majority of entrants.

Job Outlook for Lawyers, 1982-95

It is not possible to quantify--at least with any precision--the prospective supply and demand for lawyers because the volume of entrants through occupational transfer cannot be quantified and the supply from law schools cannot be projected with any degree of confidence. Nevertheless, some inferences can be made.

If an annual occupational separation of 4.9 percent is assumed, the average annual number of job openings for lawyers would be as follows over the 1982-95 period:

Overall, supply-demand conditions are expected to remain about the same as in recent years; that is, the relationship between the number of people seeking entry into the legal profession and the number of job openings for lawyers will not change significantly.

Graduates of prestigious law schools and those who rank high in their classes should have the best prospects, while graduates of less prominent schools and those with lower scholastic ratings may experience difficulty finding a job. While the overwhelming majority of graduates are expected to find jobs as lawyers, some graduates may enter fields where legal training is an asset but not normally a requirement. For example, banks, insurance firms, government agencies, and other organizations seek law graduates to fill a variety of managerial, administrative, and business positions. In this tight job market, a law graduate's willingness to relocate, legal work experience, or advanced training in a specific area of law may be an advantage in getting a job.

Related Fields

BLS does not prepare projections of all occupations related to law, but our latest projection of the job outlook for college graduates in general indicates that the keen competition that characterized the job market for college graduates in the 1970's and early 1980's will not abate appreciably through the mid-1990's. Over the 1982-95 period, according to the BLS projections, an average of about 1 in 5 labor force entrants with a bachelor's or advanced degree will be forced to take a job that does not require such eduation or else become unemployed.

Over the past decade, the effects of this overall surplus of coolege graduates--or, alternatively, this deficit of college-level jobs--have been felt more keenly by graduates in some fields than in others. For example, more than 90 percent of those graduates of the class of 1980 who majored in accounting, chemistry, computer science, engineering, mathematics, and nursing who joined the labor force entered jobs that normally require a college degree. The effects of the surplus were felt much more by graduates in agriculture and natural resources, art, communication, English, and the social sciences. Less than 25 percent of the employed graduates in these fields entered a college-level job within a year of graduation.

We have no information on the prospective job outlook for MBA'S. With regard to careers in court administration, however, the projected slow growth in government employment suggests that few new jobs in court administration can be expected; most job openings will be due to replacement needs. Similarly, there is little cause for optimism in the field of law school teaching. College and university faculty employment is projected to decline over the 1982-95 period, but the annual number of law degrees is projected to remain virtually constant. As a result, opoortunities in law school teaching will probably not be good, but they should be better than many other areas of college and university teaching.

Summary

The employment of lawyers increased rapidly during the past two decades. BLS projects steady growth in the legal services industry, where most lawyers are employed, but much slower growth in government and among self-employed lawers. Because the number of law school graduates, as well as transfers from other occupations, is projected to remain high, strong competition is expected for lawyers' jobs between now and 1995.
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Author:Kutscher, Ronald E.
Publication:Occupational Outlook Quarterly
Date:Mar 22, 1985
Words:2648
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