If you were finishing law school last year, you might have been given a bit of a preemptive scare regarding your future job prospects. Nearly a year ago, we analyzed some data revealing that a law degree's earning potential may not be as lucrative as expected. Experts warned that legal hiring would dip in 2025, based on employment data and legal hiring trends from last year.
But good news, all: it looks like those predictions were wrong.
Last Year’s Trends
The National Association for Law Placement (NALP) and the American Bar Association (ABA) both gather extensive data on legal employment trends, salaries, demographics, and the overall legal job market. Last summer, NALP published data showing that the market for new law graduates had reached a peak, with the class of 2023 achieving record-high employment rates and salaries. In 2023, 92.6% of law graduates found jobs within 10 months of graduation, with a median salary of $90,000.
However, NALP warned that the trend was expected to be short-lived and that subsequent classes would likely face a more challenging job market. Even with record-high employment stats, demand for lawyers had decreased, and law firms reduced their recruitment efforts. Some experts expressed concerns that the influx of new law students in 2021, which occurred during the early stages of the COVID-19 pandemic, would lead to a saturated job market.
On top of that, data showed that the number of summer associate offers extended by law firms decreased last year, indicating a potential decline in future employment rates. NALP predicted that the class of 2024 would face increased competition, with 12% more graduates vying for jobs. As a result, they predicted that employment rates and salaries would decline this year. With last year’s cooling of the job market for lawyers, NALP warned future graduates to be prepared for a more competitive environment in 2025.
Don’t get too worried, though. We now have new data indicating that those concerns may have been unfounded.
Data Shows Jobs Continue Climbing
A recent report from the ABA has revealed a remarkable uptrend in employment rates for law school graduates in 2024.
Despite earlier concerns that a substantial increase in law school enrollment would lead to a surplus of job seekers, the data shows that a record-breaking 82% of graduates from the class of 2024 secured jobs that require passing the bar exam within 10 months of graduation. This impressive figure surpasses the previous year's rate of 80%. Furthermore, when considering jobs that either require bar admission or where a law degree provides a significant advantage, the employment rate soared to over 87% in 2024, up from 86% in 2023.
The data also reveals that law firms and government agencies experienced the most substantial growth in entry-level jobs in 2024. The number of new law graduates employed in government positions increased by 20% between 2023 and 2024, while the number of graduates working in law firms of all sizes rose by 13%.
Unemployment Rate Declines Despite Increased Competition
The data indicates slightly better unemployment rates compared to last year. The number of graduates who were unemployed and seeking employment rose from 1,775 in the Class of 2023 to 1,825 in the Class of 2024. Despite the increase in the absolute number of unemployed graduates, the percentage point decrease suggests that the overall employment situation improved slightly, from 5.0% to 4.7% of total graduates unemployed. This could be due to the larger graduating class size in 2024.
The data on increased employment rates is even more noteworthy given that there are more people graduating from law school than in previous years. The total number of students who graduated from ABA-accredited law schools increased by 10.6% from 35,215 in 2023 to 38,937 in 2024. The class of 2024 had nearly 11% more graduates than the previous year, resulting in 3,722 additional newly minted lawyers vying for positions. Although this would, in theory, mean increased competition for jobs, the latest data suggests that the job market has not only absorbed the increased number of graduates but has also provided more opportunities.
Reasons for Growth
Why are we seeing this trend? There are a couple of theories.
According to Professor Jerome Organ from the University of St. Thomas, the significant increase in job openings may be attributed to a wave of lawyer retirements. “I think the most likely explanation is demographic,” he explained. “The attorneys that started the significant, sustained growth in the legal profession in the late 1970s and early 1980s are finally starting to retire or die in significant enough numbers to counterbalance new entrants into the legal profession.”
Others think that the growth can partly be attributed to the strong profits law firms enjoyed in 2024, driven by high demand across various practice areas. At the end of last year, we reported that the Law Firm Financial Index reached its second-highest score ever in Q3 2024, marking seven consecutive quarters of growth. Almost all practice areas saw increased demand, with litigation up 4% and real estate up 3.7%.
Profits-per-lawyer increased 8% in 2024. Lawyer productivity rose 1.7% despite increased hiring (up 2%), particularly at mid-size firms. The increased profits were attributed to high demand, higher billing rates, and expansion of non-equity partner tiers.
Will It Last?
Still, it remains to be seen how the class of 2025 will fare in the job market.
Despite the fact that profits in the legal market have consistently increased every year up until now, they are expected to decline in 2025 due to potential demand decline, rising expenses, and challenges from generative AI. On top of that, the current freeze on federal government hiring has halted law student recruitment, and law firms have reduced their summer associate recruitment over the past two years.
Firms will need to navigate a complex landscape this year. They will also have to rethink how they define value in pricing legal services when clients insist on lower charges with improved lawyer efficiency through AI technology.
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