July Sees Falling Job Numbers for Legal Industry

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September 18, 2017

Legal Job Numbers
On Friday September 1, 2017, the United States Department of Labor released preliminary data that revealed the legal industry lost 4,300 jobs in the month of July. This follows three months of gains in the legal services sector, which employed approximately 1,126,400 lawyers, law clerks, legal secretaries, and paralegals, and other related occupations in July. Jobs in the legal industry began increasing in April; however, despite three months of job increasing, the industry has seen only 600 additional jobs added since January of 2017. However, preliminary data suggests that there was a modest gain of approximately 100 jobs in the legal sector in August.

The report from the Department of Labor's Bureau of Labor and Statistics (BLS) also noted that the overall unemployment rate is 4.4. percent for the month of August and has remained steady at 4.3 percent or 4.4 percent since April. Additionally, total nonfarm payroll employment increased in August with job gains in the manufacturing, construction, health care, professional, technical services, and mining industries. The BLS report follows the general trend in the legal industry that has shown fluctuation between 1.12 million jobs and 1.13 million jobs since June 2013.

The BLS report follows the annual analysis released by the National Association for Law Placement on employment rates of law school graduates for the Class of 2016. The NALP report revealed that the overall employment rate for the law school class of 2016 had increased by nearly a full percentage point to 87.5 percent. However, the number of law school graduates declined for the third year in a row after reaching a record high in 2013. The report notes that while the employment rate increased, the total number of jobs declined.

The NALP report also revealed that the associate positions at large firms, defined as those with 500 or more attorneys, accounted for nearly 25 percent of all law firm jobs obtained by 2016 graduates and that those firms increased their hiring by 6 percent compared to 2015. However, smaller firms hired fewer associates in 2016 compared to 2015.

The NALP report suggests that the overall employment rate has improved largely because of two principal factors. First, smaller law school classes have resulted in less competition for existing jobs. The decline in law school graduates since 2013 has allowed more graduates to obtain legal sector jobs immediately after graduation. However, while the Class of 2017 is slightly smaller than the Class of 2016, the classes of 2018 and 2019 appear to be almost the same size as the Class of 2017 so it appears that class sizes are starting to level out.

Second, large law firms have steadily increased hiring since 2011, adding approximately 1,400 jobs since then. However, hiring from large law firms have likely plateaued, according the NALP, because their recruiting data shows that 50% of large law firms made fewer offers for summer associate positions for Class of 2018 students than those of Class of 2017. Additionally, some of the nation's largest law firms have reported jobs cuts, including at Andrews Kurth Kenyon, Seyfarth Shaw, Dentons, Stoel Rives, and Sedgwick, which has impacted both attorneys and administrative staff.

Moreover, while the BLS report indicates that the overall unemployment rate is 4.4 percent, the NALP report indicated that Class of 2016 law school graduates who were still searching for work ten months after graduation is 8.7 percent, or nearly double the overall employment rate of the country. The NALP suggests that their data supports a continued tight job market for law school graduates. Therefore, if law school class sizes level out or increase over time and large law firm hiring has plateaued, then recent law school graduates may once again find it difficult to obtain a legal industry position.

The Labor Department's BLS monthly employment report for September 2017 is scheduled to be released on Friday, October 6, 2017.

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