June 29, 2009
The End of an Era: the Bi-Modal Distribution for the Class of 2008
[posted by Bill Henderson, crossposted to ELS Blog]
NALP has just posted
its entry-level starting salary for class of 2008--i.e., the lawyers
who started their jobs just as Bear Sterns and Lehman Bros unraveled
and the credit markets completely froze up.
Of the 22,305 law school graduates, a remarkable 23% (5,130 members of the class of 2008) reported an entry-level salary of $160,000. In contrast, 42% of entry level lawyers reported salaries in the $40,000 to $65,000 range. Once again, the central tendencies are a poor guide to the distribution as a whole: whereas the mean salary is a $92,000, the median salary was $72,000. Further, the two modes ($50,000 and $160,000) are separated by $110,000.
Amidst all the layoffs, deferrals, salary cuts, and apprenticeship programs announced in 2009, it is safe to venture that the bi-modal era has peaked. Every law school class for the foreseeable future will graduate to a much different economic landscape. Although many students will regret the opportunity to earn such a big payday upon graduation, it brought with it intense billing pressure, client resentment, heavy leverage, and very little substantive training for new hires. I would argue that profession as a whole (including current and future graduating classes) is better off with a lower entry level salary.
Admittedly that is a long-term view for the profession as a whole. In the short term, current students and recent graduates are in a world of hurt. Specifically, law school debt loads continue to climb. Thus, law schools are (rightfully) going to be under increased pressure to deliver value to our students. I don't think most law professors and law school administrators fully appreciate the difficult times ahead. For a provocative take on the current state of legal education, see Paul Lippe, Welcome to the Future: Time for Law School 4.0.
For some perspective on how this crazy market evolved, see:
- Henderson, Distribution of Starting Salaries for 2006: Best Graphic of the Year (Sept. 4, 2007)
- Henderson, How the Cravath System Created the Bi-Modal Distribution (July 18, 2008)
- Henderson, Class of 2007: A More Extreme Bi-Modal Distribution (July 30, 2008)
- NALP, A Picture is Worth 1,000 Words (Sept. 2007).
After the jump are the distributions from 1991, 2006, and 2007. The primary takeaway is that the bi-modal did not exist in the early 1990s. It first emerged in 2000 (with the dot.com salary wars) and became progressively more extreme as the decade unfolded. On Wednesday, I have an article coming out in the NALP Bulletin, entitled "The Bursting of the Pedigree Bubble," which will provide some additional analysis.
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My big question is "reported".
Who reports and how closely does that reflect the overall rates.
I checked with Career Planning here at Fordham. We get 85-90% of grads to report - but 95% of those at big firms report to CPC. Assuming that grads would rather report good news than not so good or bad - I would bet that reporting rates are lower at schools less favorably positioned, or which have career planning staffs without beagles.
It can't be the case that 23% of 2008 law school grads started at $160k nationwide.
How about 10%?
Posted by: George Conk | Jul 1, 2009 6:55:19 AM
The NALP data is based on data for 22,305 law school graduates. Last year, there were 43,588 total law school graduates. Thus the data above only includes 51% of graduates. NALP's salary data for the class of 2008 is based on a similar portion of graduates. So if the half of graduates that didn't report tend be students who didn't get 145-160k salaries, then, as GWC points out, the actual percent may be much lower than 23% (closer to 12-15%?)
Posted by: Law School Grad | Jul 11, 2009 7:57:55 PM