OH, CANADA

At a recent CLE, I talked about the drop in the number of law school applications. LSAC keeps a moving tally of  the number of applications and the number of applicants to US law schools. As you know, the applications this year are well below last year, and the applications last year were well below the prior year.

In the chart I printed yesterday, the number of applicants this year is currently 40,000 compared with 50,000 and 60,000 applicants (approximately) in the two immediately prior years at this time in the cycle. 

And last year at this time, LSAC reports, 76 percent of the final number of applicants had applied.  So absent a "growth spurt" we can expect the numbers to stay the same relative to each other.

But LSAC does the same tally of applicant and application numbers for Canadian law schools. Here there is no signficant fall off from 2011 to 2012 or 2012 to 2013. The graph lines converge.

How can this be? Are we so overlawyered where by contrast Canada has found the market sweet spot? Are Canadian law graduates finding jobs, thereby explaining the continued strength in the  Canadian application rate? And if so, why the difference?

Comments

[Milan Markovic]

Dear Stephen,

I think that the main reason is cost. All Canadian law schools are subsidized by the government. The most expensive law school in Canada (University of Toronto) is around $30,000 a year. Osgoode, another excellent law school in Toronto, is approximately $20,000.

Canadian law school graduates have been struggling, particularly with finding articling opportunities, but the oversupply of lawyers is not nearly as dire as it is here given that there are far fewer law schools.

My sense is that there has also not been anywhere near the level of media coverage of the difficulties facing new lawyers in Canada.

[Alice Woolley]

I don't entirely agree with Milan. I think the major difference is that until 2010 there had been no new law schools in Canada since 1980ish, and now material expansion in law school classes in that same period. I.e., you had approximately 30 years of no growth in law school graduates yet significant expansion in the Canadian population and economy.

While students in Ontario struggle to get articling positions, that is not because there is no demand for lawyers, but is rather because of the narrow band of the profession able and willing to serve as principals to articling stdudents (since articling students are usually paid for their work). In addition, this is a problem a) more specific to Ontario than other provinces; and b) more related to students who did not graduate from Canadian law schools than to those who did. During the entire period from the 2008 financial crisis the University of Calgary has placed 99% of its students in articling positions.

Milan is correct that a part of it is cost. Attending all Canadian law schools except the University of Toronto costs in the area of $10-$20K per year in tuition. U of T isa pproximately $30K per year. I.e., every CAnadian law school is a fraction of the cost associated with most American law schools.

There are problems with the Canadian system. Approximately 400 Canadians a year are studying law overseas. Every year we turn down many, many highly qualified applicants - at the University of Calgary we have approximately 1500 applicants for 100 spots - which raises real issues of fairness. There are also significant barriers to entry for foreign trained lawyers, even from the US and other common law countries, barriers that are hard to justify on a principled basis. We also suffer from major issues of access to justice for the middle class and for the poor in civil cases (although we do have in every province a legal aid system which, I think, is more generous than its US counterparts). Those issues are made more difficult to resolve by the barrier to entry created by the articling system, but teh articling system has significant justifications in terms of the training that it provides to graduates, training that I understand many US jurisdictions to be interested in emulating.

[Milan Markovic]

Dear Alice,

Thank you for the additional information. From the media coverage of the "articling crisis," I missed that it has predominately affected Ontario.

By the way, do you know if Canadian law schools are required to track employment outcomes? It would be very interesting to be able to compare those outcomes versus those here in the U.S.

[NoelSemple]

Building on what's above, here are two reasons why Canadian lawyers have better employment prospects than American lawyers (which makes law school more appealing here):

#1. Lower supply of lawyers. There are significantly fewer of us per capita in Canada compared to the USA. There are 2.21 Canadian lawyers per 1000 pop.; 3.06 USA lawyers per thousand pop. (2006 figures, from Clifford Winston et al, First Thing We Do, Let's Deregulate All the Lawyers (Washington: Brookings, 2011 at page 26))

#2. Unlike in the USA, Canadian demand for legal services did not fall dramatically after 2008. Canada's recession has been significantly milder than the USA's, so demand for lawyers did not drop nearly as much since 2008. Nor did we fall from so high a point -- demand for lawyers was very high due to the financial services boom in the USA pre-2008; this wasn't true to the same extent in Canada.

[stephen gillers]

So other than cutting tuition to US law schools, what can we learn from the Canadian experience?

Separately, does anyone know if the law school ratios are higher in Canada (student to faculty) and if law faculty salaries are lower -- because faculty salaries and related benefits are the biggest ingredient in law school budgets and rive tuition.

[Alice Woolley]

Hi Stephen,

Have fewer law school places and fewer lawyers - as Noel said, there is a real supply and demand point on this. Of course there are issues with that too, especially in terms of access to legal services.

Law faculty salaries are lower in Canada. Based on public reporting (and remember that every Canadian law school is at a public university which receives state funding) a tenured professor in Canada can expect to earn about $100-$220K (with someone at about 10-15 years out earning in the 110-140 range). The professor who I would guess is the highest paid in Canada - (a very eminent and senior professor at the U of T), earned about $284K in 2011. But that is aberrational. A Canadian law dean would earn in the range of $180-$250K.

Because it is not regulated as it is in the US I would guess that there are fewer faculty members per student at most Canadian schools, although I don't know the numbers on this. I know that most of the urban schools, including ours, rely quite significantly on adjuncts.

[Malcolm Mercer]

The US LSAC data on law school applications is interesting both in the short term and in the longer term. While admissions are reasonably level, the number of applications to US ABA law schools has fallen annually for a decade. Of course, it has fallen more sharply since 2008. The post 2008 US pattern is no surprise but the longer term trend is interesting.

In contrast, applications to Canadian law schools have increased during the same period including since 2008.

There are a few factors apparently at work some of which are mentioned above. The following (at least from an Ontario perspective) are significant:

1. The number of law schools has been static (until recently)for a very long time. The number of first year students in Ontario was essentially unchanged from the 1970s to the early 2000s. In the 2000s, two law Ontario schools materially increased their class sizes. In addition, foreign law schools started to market to prospective students. This increased applicants for licensing from about 1,200 per annum in the early 2000s to about 2,000 currently. Most of this increase is in the last three or four years. It is not surprising that this very significant increased demand for articling positions has not been fully accomodated.

2. Leverage in large US law firms was very different as of 2008 than in Canada. A typical partner to associate ratio in large Canadian firms was somewhere between 1 to 2 compared to a much larger number in the US. Large leverage is very profitable when the work is there to be done and very costly when there isn't enough work. The result of 2008 and following was a massive deleveraging in the US compared to Canada with the opportunities for young lawyers becoming much worse very quickly. And many of those looking for rational career choices would avoid law until the market corrected over time. While large Canadian firms have decreased their intake, the decrease was comparatively much less significant. The US decrease in hiring and layoffs has been of sufficient duration now that potential law school applicants have obviously taken note.

3. As Noel said, the post-2008 economic downturn was less significant in Canada than in the United States. We didn't "enjoy" the bubble to the same extent nor did we suffer a burst Canadian bubble. But like all Western economies, we are not doing as well as pre-2008.

4. The so-called articling crisis is of relatively recent duration and is disproportionately experienced by those educated outside of Ontario. It is not surprising that Canaidan law schools will not have suffered a significant decrease in applications because their graduates have done relatively well in finding positions. But I wonder if the same will be true for the law schools outside of Canada where Canadians have been sought after.

We could start to see employment problems for first year lawyers as the significantly increased volume of new lawyers starts looking for jobs and competing for work. If this becomes the story, a decrease in applications to Canadian law schools may well follow.

[John Steele]

Thanks for all the insights about the Canadian situation.

[NoelSemple]

I don't know how to answer Prof. Gillers' question: "what can we learn from the Canadian experience?" I do however think that Canadian law schools have a lot to learn from American ones. Specifically, competition for students is forcing innovation which I don't see happening to the same extent in Canada.

Dramatic curriculum changes like NYU Law's (http://dealbook.nytimes.com/2012/10/16/n-y-u-law-plans-overhaul-of-students-third-year/) seem to be driven by the schools' need to differentiate themselves in what is now a cut-throat competition for good students. "Nothing focuses the mind like a hanging," and the very real risk being closed down (http://lawyerist.com/will-some-law-schools-shut-down/) -- or losing your best students-- is a painful spur to innovation.

That's really not happening in Canadian legal education. Our law schools simply don't have to choose between innovating and dying. However, they might nonetheless wish to innovate to better carry out their educational and research missions. If so, they should watch and learn from the Darwinian adaptations which emerge from the crisis in American legal education