The legal profession by the numbers

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Toss around as many buzzwords as you like, the secret to success in business is as simple as supply and demand – let one grow or decline too much in proportion to the other, and somebody’s going to be in trouble.

That goes for lawyers too. Right now, received wisdom is that law schools are turning out too many of them. As usual, received wisdom has some elements of truth, but is not the whole story.

As part of its Legal Futures Initiative, the CBA commissioned a study of demographic trends in Canada. The study found that the number of practising lawyers is growing faster than the country’s general population. In 2000, there were 449 citizens per practising lawyer. That ratio fell to 396 citizens per practising lawyer in 2010 – still well below the 256-1 ratio in the U.S.

In a time when demand for legal services is static-to-declining, as would-be clients turn to self-representation or other professionals, over-supply can be problematic for those who expected a certain return on their investment in law school.

If it were merely a matter of law schools turning out too many graduates, a quick and – relatively – easy solution would seem obvious.

But the demographic trends turn up other mitigating factors at play: primarily among them the fact that lawyers tend to like what they do and are less likely than people in other occupational groups to rush to retire – their median retirement age is 75.

In 2010, 31 per cent of practising lawyers had 25 or more years on the job, while 18.8 per cent of practising lawyers had fewer than five years’ experience.

“Once the senior cohort retires, there should be sufficient room to accommodate the present rate of (law school) admissions,” the CBA report concludes. Based on available numerical data, there are in fact jobs –from a demographics analysis anyway – they’re just not, as our friends in the financial services industry would say, fluid.

Notably, a labour market survey by Human Resources and Skills Development Canada suggests that growth in legal hiring is expected to be strong – but because of people retiring, and not because jobs are being created. Other research conducted for the CBA, meanwhile, suggests technological advances could lead to a loss of traditional jobs for lawyers.

One area where job availability appears to be outpacing applicants is in smaller centres and rural areas. In Alberta, 88 per cent of practising lawyers work in Edmonton and Calgary. That province’s example, while striking, is not out of step with the national picture: 82.6 per cent of lawyers with fewer than five years’ experience practise in urban areas, while suburban and rural areas take 8.7 per cent each.

About two-thirds of lawyers are in private practice. While the proportion of solo firms remains fairly constant, the number of firms with fewer than 10 lawyers has risen from just under 20 per cent in 2000 to more than 30 per cent in 2010.

And regardless of what’s landing in your own wallet, lawyers’ fees in general are also outpacing other fiscal benchmarks, as the table below shows.

Increases in national average lawyers’ fees vs. growth in CPI

 

Sector % change 2005-2010 % change 2010-2012
Consumer price index 12 8.9
Less than five years’ experience 42.3  
More than 10 years’ experience 34.9 28.7

 

Source: Canadian Lawyer, Statistics Canada

The CBA’s trends study showed the fees are rising most dramatically in the areas of uncontested divorce and will preparation – areas where people are increasingly likely to represent themselves or seek out para-legal or non-legal assistance.

The available data show compensation growth generally outpacing the CPI as well for both new and established legal professionals.

To sum up: law schools are turning out grads who may have to wait until the senior cohort retires in order to get a job; most of those with jobs are working in private practice in Canada’s big cities; and according to the national average, fees and compensation are rising faster than the CPI, which may help explain the growing numbers of self-represented litigants – as well as increasing demands from clients to cut costs.

May 13, 2013 |
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