In the depths of the recent recession, it became de rigueur among lawyers and non-lawyers alike to advise recent college graduates against attending law school, with much news coverage about the levels of student loan debt incurred and the inability of law graduates to be able to obtain gainful employment that could service that debt. Whether this advice is sound depends on whether the undeniably large downturn in demand for legal services was primarily based on structural or cyclical factors.
An example of a structural factor would be new technologies and methods for document review that replace junior associates with outsourcing and robots – these methods are here to stay, so those specific jobs aren’t coming back. A purely cyclical explanation would just mean that demand for legal services plunged along with the economy generally and will ultimately recover as the economy does.
While I don’t claim to know where things are headed from here, and while clearly there are both structural and cyclical factors at play in recent years, I tend to believe that the cyclical factors predominate, meaning that for those interested in a legal career, if I’m right, now would be a good time to enter law school and catch the wave of rising demand in a few years. People have short memories, but during the previous downturn of 2001-03, there was much doom and gloom in the legal world about whether demand would recover, whether the law firm business model was viable, etc. When a small firm I was working at folded in 2003, I considered myself lucky to secure a position quickly thereafter. Was the negative sentiment as intense then as it was recently? Probably not, but the recession wasn’t as severe either. In any event, by 2006-7, all was forgotten about questioning law as a secure career.
So what am I suggesting will replace the jobs lost due to technological advances and outsourcing? Even if those trends continue, there can be separate developments that create new demand for legal services. As an example in my narrow world of capital-raising, under the pending crowdfunding rules, a local mom-and-pop shop will be able to sell stock in small amounts to any member of the community. This is simply a transaction that wouldn’t have happened in the past and will potentially create additional work for people who do what I do. Time will tell whether new and unpredictable developments like this will prove to be a net positive.