Do These Charts Spell Doom For Solo Practice?

It's a sink or swim situation for new lawyers entering solo practice, and there are no life preservers available or rescue boats coming to help them.

Last month, over at Lawyers, Guns, & Money, Paul Campos was provided with an advance copy of Benjamin Barton’s new book, Glass Half Full: The Decline And Rebirth of The American Legal Profession (affiliate link), published by Oxford University Press. The blurb for the book states:

It would be easy to look at these enormous challenges and see only a bleak future, but Ben Barton instead sees cause for optimism. Taking the long view, from the legal Wild West of the mid-nineteenth century to the post-lawyer bubble society of the future, he offers a close analysis of the legal market to predict how lawyerly creativity and entrepreneurialism can save the profession. In every seemingly negative development, there is an upside. The trend towards depressed wages and computerized legal work is good for middle class consumers who have not been able to afford a lawyer for years. The surfeit of law school students will correct itself as the law becomes a less attractive and lucrative profession. As Big Law shrinks, so will the pernicious influence of billable hours, which incentivize lawyers to spend as long as possible on every task, rather than seeking efficiency and economy. Lawyers will devote their time to work that is much more challenging and meaningful. None of this will happen without serious upheaval, but all of it will ultimately restore the health of the faltering profession.

So despite the negative downward trends on the legal sector, Barton believes things are going to come up rainbows and ponies in the end. Things are just going to suck for the next few years first. Oh, and we’re all going to make less money. And everyone who graduated in the past 7-8 years is probably a “lost generation.” But hey, ultimately things will right themselves and “the profession” will become healthy again! Think on that as you toss and turn at night wondering how you’re going to pay back that six-figure student loan debt.

Speaking of being able to pay for things, Barton has also been collecting tax data on private practitioners for years. In his book, Barton provides data and graphs on the salary data for a variety of practitioners, but let’s look at solos, because as Campos notes, “75% of all practicing lawyers are in private practice, and half of these people are solo practitioners (the other half is made up of partners and associates in law firms of all sizes, along with lawyers who work for businesses and other non-government entities). This means nearly two out of every five practicing lawyers are solos.” So let’s look at how solo practitioners earnings have been doing.

As we can see, partners at firms used to make more than solo practitioners, but not incredibly more. That has changed in over the past few decades. Solo income has risen at a steady, but marginal rate, while partner income has had significant growth. At this same time, in the past 20 years, this has happened to solo earnings when examined in 2012 dollars.

Which, as Campos notes, when you combine those two with the following, there are some real problems for solo practitioners:

Perhaps everything will even themselves out as Barton believes. But that doesn’t provide much solace for the solos out there right now. Nor the large number of graduating law students who are having to join them, often not by choice.

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It’s a sink or swim situation for new lawyers entering solo practice, and there are no life preservers available or rescue boats coming to help them.

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