Monday, 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.
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
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