Friday, September 07, 2007

The Problem of Law Firm Salary Distributions

In a recent post I discussed concerns over the latest big law firm salary hikes and concurrent slowdowns in the legal job market. On the heels of this, the Empirical Legal Studies blog (elsblog) has a post about NALP salary data for first-year lawyers. The results are fascinating, and they comport with a lot of the comments received on this blog by readers--namely, that lower end legal salaries stay relatively static, while upper end salaries grow faster than inflation. So in a sense, the salary problem is two-fold: the upper end may grow fast and result in layoffs in a downturn, while the lower end suffers from a lack of growth that makes repayment of debt--and pursuit of careers at the lower paying end of the spectrum (including but not limited to many public interest and government jobs)--not very feasible.

The elsblog post, which is by Bill Henderson, is excellent. Make sure you read the reader comments. Henderson's comparison of the law school market to ordinary markets is quite insightful. He is right that institutional actors in the law school market--in which the economic utility pursued is often prestige--certainly will behave quite differently than institutional actors in a market in which monetary profit is the goal. In fact, I might add that the law school market can be broken down into several separate smaller markets--namely, (a) the nonprofit national schools, (b) regional nonprofit schools, and (c) proprietary schools. Each of these should have different business models. In fact, it is pretty clear to me, based on my anecdotal experiences talking with administrators from these different types of schools, that what they seek to maximize is indeed different, and that they thus behave very, very differently.

Henderson's post also is a good (if indirect) reminder that law schools are comprised of faculty who are rational actors, and that they will seek to maximize their utility--which is not always the same as maximizing societal utility. So the trick, then, is to design a system of incentives and rewards that result in law school actors' utility coinciding with a reasonable conception of public utility or welfare. That is admittedly difficult in any market, but perhaps especially so in a market in which many of the actors are well-entrenched (read: tenured).

Many of the comments in the past on this blog have bemoaned this very fact. The irony, perhaps, is that applying academic tools to the subject of law schools identifies these very same problems. Which is not to say that I doubted previous commenters. But it is to say that if law professors and other academicians pride themselves on using scholarship to identify problems and search for solutions (which is much of what legal scholarship tries to do), then it's entirely appropriate to turn these tools on ourselves.

Many scholars have already done that. A search on Google Scholar for "law school teaching," for example, turns up scads of law review articles on the subject. But it's interesting that a single set of data on law school salaries leads off in so many interesting directions.


Joe Miller said...

Great post. These are useful links for investigating salary differentials.

WOW GOLD said...