Should Big Firms Worry About Plummeting Bar Scores?

Photo by Chris Ratcliffe/Bloomberg News

Bar passage rates continued their downward spiral with only 61% of test-takers passing the New York bar this July. These dismal results set off a fresh round of speculation about the deterioration of the legal profession. Do big law firms need to worry that their lawyers are getting dumber?

Probably not. The impact of the lower pass rate on large law firms “should be close to zero,” says Barry Currier, Managing Director of the ABA Section of Legal Education and Admissions to the Bar, who believes “firms are still quite happy with caliber of applicants.”

“In my lay opinion, I do not see these lower pass rates affecting the applicant pool for large law firms,” says James Leipold, Executive Director of the National Association for Law Placement.

Currier also points out that a closer look at the results reveals the sky is not falling. Excluding foreign-educated lawyers, the passage rate this year for first time takers was 79%, only 4 percentage points down from 2014.

And, though the firms are just receiving word about their own first years’ passage, large firms do not appear to be fazed by the downward trend so far. Partners and leadership at a number of big law firms were unaware of the issue or did not see it affecting their associate pools.

And recent data suggests that recruiting for associates appears the most robust it’s been since the recession. After law firms had reduced their incoming class sizes after the recession, they are now beginning to feel understaffed as capital markets, M&A and corporate work picks up. “With respect to class sizes that were smaller three or four years ago… with business being strong, most firms are seeing a shortage in mid- to senior- associates,” said Barry Wolf, chair of Weil Gotshal & Manges, in an interview with Big Law Business earlier this month.

Mid-level to senior associates are even more valuable because they represent a rare skill set: they survived the layoffs following the recession and have experience coming up through the ranks of a big law firm.

While all seems relatively well in the realm of elite law firms, the bar passage numbers do “signal that we have a serious problem in legal education in this country,” says James Jones, Senior Fellow at the Center for the Study of the Legal Profession at Georgetown Law. “We have people going to law schools who shouldn’t be.”

Since 2010, applications to law school have plummeted 37% and enrollments have seen similar declines. Once the gold standard in achievement, following a recession that caused massive layoffs in the legal industry and threw into question the stability of the profession, a law degree no longer has the same cache.

As a result, law schools, particularly those further down in the rankings, are having trouble attracting top talent and have resorted to padding their classes with students with sub-par LSAT scores and academic bona fides — students who may be more likely to fail the bar.

The bar exam may be one example of an increased segmentation of between students at top schools entering top firms and their counterparts at lower-ranked institutions.

The inherent unfairness of allowing students to rack-up debt to the tune of $140,000 when their academic records show them to be ill suited to the rigors of the legal profession has led to a push for the American Bar Association to tighten its accreditation standards for law schools.

Unless forced, universities may be slow to become more selective for the simple reason that law schools, unlike medical schools, which are expensive to operate, are “cash cows,” says Jones.

But just as law schools may be enrolling too many students, law firms may be hiring too many lawyers. Productivity at law firms continues to decline according to the 2015 Report on the State of the Legal Profession. “Going forward we’re going to need relatively fewer lawyers,” says Jones.

While the bar exam doesn’t appear to be an impediment to elite law students, the evolution of the legal profession as it adapts to innovations and increasing demand for efficiency from clients may eventually increase competition even more for slots at big firms.