More barriers to entry into the shrinking legal services market

Ben Trachtenberg points out the failings in New York’s new pro bono legal service prerequisite for bar admission in today’s New York Times:

Mandatory pro bono work for lawyers is a good idea. But Judge Lippman’s plan is deeply flawed, as it affects only aspiring lawyers who have not yet gained admission to the bar. As a result, the beneficiaries of Judge Lippman’s largess will be served by people unlicensed to practice law — who by definition have no real practice experience. (Though internships and law school clinics are useful training grounds for future lawyers, they are no substitute for the rigors of licensed practice.)

The Lippman plan hurts these budding lawyers most of all. Recent law school graduates face a growing employment crisis: the Law School Transparency Data Clearinghouse lists 67 schools (out of the 185 that were scored) with full-time legal employment rates below 55 percent. At the same time, law school tuition and student debt have skyrocketed. The average 2011 law graduate from Syracuse owes $132,993, not including any debt incurred for undergraduate education. At Pace, the figure is $139,007; at New York Law School, $146,230.

After commencement, things get worse. Law graduates often borrow more money for bar preparation, to pay for both living expenses and prep courses, which can cost more than $3,000. Even graduates with good jobs lined up face tight summer budgets; many work in retail or food service to make ends meet, as do many law students. The irony is that many recent law graduates may well qualify for the free legal services Judge Lippman will bestow on New York’s poor. It is from these struggling New Yorkers that Judge Lippman demands over a week’s unpaid labor.

In case you have a need for even more sobering news, LegalZoom has filed for an initial public offering.  Richard Granat illuminates the dent in small-firm revenues that LegalZoom may be creating:

LegalZoom’s data in the S-1 filing is now available for everyone to analyze:

  • In 2011, 490,000 orders were placed through their web site;
  • 20% of all limited liability companies in California were done by LegalZoom;
  • During the past ten years, LegalZoom has served over 2,000,000 customers.
  • Revenue in 2011 was $156 million.

These are impressive statistics and provide support for the proposition that consumers and small business prefer a very limited legal solution that is just good enough to get the job done, rather than pay the high legal fees charged by the typical attorney.