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Wrong Again: The PRISM Report’s Prediction of Too Many Practising Lawyers Again Collides With Reality

Author: Grant Buchanan & Chris Scotland Guest Blogger

In this submission we will again demonstrate that the PRISM Report’s prediction of too many practising lawyers in Ontario badly missed the mark in the first few years that it studied and that it can be expected that it will continue to do so going forward. Indeed, new years of data confirm our view that not only was the PRISM Report incorrect, but it now appears more likely that the number of new practising positions will at least match the number of new lawyers than it is that there will be a surplus of lawyers during the forecasted period of 2015 to 2025.

As a preliminary comment, we would note that to assume that for every year from 2017 to 2025 the increase in practising lawyers will be less than the increase following the 2008 financial crisis, and then use this assumption to estimate the future ratio between “supply and demand” for lawyers, may strike some as a strange exercise.

Nevertheless, in November 2016, the Higher Education Quality Council of Ontario released a study it had commissioned from PRISM Economics and Analysis (the “PRISM Report”)[1] which incorporated the historical and projected supply and demand of lawyers into a proprietary model to estimate the future ratio for lawyers in Ontario over a 10 year period ending in 2025. Its key conclusion was that there would be too many lawyers and that there would be 1.6 lawyers for every new practising position. The PRISM Report’s chapter with respect to the demand for lawyers was included, verbatim and unchallenged, in the Law Society of Ontario (the “LSO”’s -then the LSUC’s) Dialogue on Licensing reference materials which included a recommendation that repeated the 1.6:1 lawyers to new positions reference.

The assumption that demand for practising lawyers would be so low was wrong when the PRISM Report first came out, and it remains wrong today. We felt that the PRISM Report was in error in July, 2017, and together with Hilary Smith, we published a critique (the “Critique”)[2] of the PRISM Report. In it, we demonstrated that this 1.6:1 projection was wrong at the time.

Notwithstanding that the PRISM Report has been proven wrong with respect to its predictions, it is still being cited in the legal profession. For example, in November 2018, the misleading 1.6:1 forecast was cited in the Canadian Lawyer Mag, “[a]n estimate by the Higher Education Quality Council of Ontario projects 1.6 new licensed lawyers for every one practising position in Ontario by 2025.”[3]

The fact that the PRISM Report is still being cited caused us to revisit its projections in light of two more years’ worth of data from the LSO.

By way of a refresher, while there were several variables that went into the PRISM Report’s projections, one stuck out as being far and away the most critical in arriving at its 1.6:1 ratio. As noted by Malcolm Mercer,

It should be clearly understood that the most important variable in the PRISM Report is the projected expansionary demand. The ability to make this sort of macroeconomic projection is highly suspect.[4]

In the Critique, we focused on that projected expansionary demand. It seemed anomalous to us that the projected expansionary demand for lawyers in Ontario would contract so significantly, even to levels far lower than what was seen in the financially-troubled 2008-2009 period.

The chart below, based on the PRISM Report’s Figure 2.5, shows in blue the PRISM Report’s projected expansionary demand.

[Please click on this image to expand the view.]

History has proven that our skepticism regarding the PRISM Report’s projections in that regard was well-founded. In 2016, when the PRISM Report estimated that expansionary demand would create only 708 new positions for lawyers, in fact 1,275 new positions were created.[5] In 2017, a similar gap existed, with the PRISM Report predicting only 434 new positions for lawyers versus the reality of 999. An even larger gap occurred in 2018, when the PRISM Report projected a plunge in the growth of legal positions to only 343. In contrast, the Law Society of Ontario has advised that in fact, in 2018, the total practising lawyers increased by exactly 1,000.[6]

It is noteworthy that in the previous eleven years from 2005-2015 inclusive, the average expansionary demand in Ontario exceeded 800 lawyers per year[7] even though that period included the worst recession since those of 1981-82 and 1990-92.[8] Given the positive state of the economy in Ontario, it is not surprising that the expansionary demand figure has stayed near or above 1,000 lawyers for every year since 2015 (an average of 1,091 new positions annually[9]). Even in 2009, following the 2008 financial crisis, employment demand still increased by 610 positions.

Conversely, for the years 2019 to 2025, the PRISM Report projected growth in employment demand to be less than in the year following the 2008 financial crisis. In fact, the PRISM Report projected that the number of expansionary positions for lawyers will be even lower in the years from 2019 through 2025 than its erroneously low projections for the 2016-2018 period. Indeed, the PRISM Report’s projection of 3,227 expansionary positions for lawyers for the entire ten year period from 2016-2025 has already been exceeded in just the first three years of that period.[10] And in 2018 alone, more expansionary positions were created for lawyers than the PRISM Report projected for the entire five year period from 2021-2025.[11]

It will be interesting to continue to monitor what happens to this divergence between the PRISM Report’s predictions and reality in upcoming years. One thing is certain, however and that is that if parties are relying on the PRISM Report, it is time that the narrative changed. It is time that we relied on hard evidence and not on reports that use erroneous assumptions.

Grant Buchanan and Chris Scotland

 

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[1] Prism Economics and Analysis. (2016) Labour Market Trends and Outlooks for Regulated Professions in Ontario. Toronto: Higher Education Quality Council of Ontario, online: <www.heqco.ca/SiteCollectionDocuments/Labour%20Market%20Trends%20and%20Outlooks%20for%20Regulated%20Professions%20in%20Ontario.pdf> [Prism Report].

[2] “A Critique Of The PRISM Report’s Conclusions Regarding The Future Demand For Lawyers In Ontario” by Grant Buchanan, Chris Scotland and Hilary Smith (July 28, 2017), online: <lsodialogue.ca/wp-content/uploads/2018/07/Written-Submissions-Dialogue-on-Licensing-D2_2018jul6-red.pdf>.

[3] Canadian Lawyer Mag (November 21, 2018) “Provincial government denies approval for Ryerson law school”, online: <www.canadianlawyermag.com/legalfeeds/author/anita-balakrishnan/provinicial-government-denies-approval-for-ryerson-law-school-16522/>.

[4] Malcolm Mercer, “Too Many New Lawyers? Build a Wall?” (27 March 2017) Slaw, online: http://www.slaw.ca/2017/03/17/too-many-new-lawyers-build-a-wall/

[5] In 2015, PRISM’s forecast of 1,060 exceeded the actual increase of 876 (34,436 in 2015 less 33,560 practising in 2014).

[6] Per correspondence with the LSO on February 12, 2019, there were a total of 41,576 lawyers employed, of which 3,689 were categorized as “Other”. Excluding the “Other” category to be consistent with the Prism Report brings the total down to 37,887. In 2017, the respective totals were 40,406 and 36,887 (excluding “Other” from total) per LSO’s annual reports; All Annual Report Data; Employment Type; Lawyers By Type of Employment, see online: <//lso.ca/about-lso/governance/annual-report>. This is a difference of exactly 1000 (37,887 – 36,887).

Per correspondence with the LSO, the following statistics are all as of today, February 15, 2019:

  • 45,447 lawyers had filed a 2014 Lawyer Annual Report. 33,560 of those lawyers indicated on their report that they practised law relating to Ontario in 2014.
  • 46,625 lawyers had filed a 2015 Lawyer Annual Report. 34,436 of those lawyers indicated on their report that they practised law relating to Ontario in 2015 [an increase of 874].
  • 47,806 lawyers had filed a 2016 Lawyer Annual Report. 35,711 of those lawyers indicated on their report that they practised law relating to Ontario in 2016 [an increase of 1,275].
  • 48,772 lawyers had filed a 2017 Lawyer Annual Report. 36,710 of those lawyers indicated on their report that they practised law relating to Ontario in 2017 [an increase of 999].

[7] Average of approximately 801.

[8] The Globe and Mail, by Tavia Grant, “Why Canada’s recession wasn’t as brutal” (April 29, 2018), online: <www.theglobeandmail.com/report-on-business/economy/economy-lab/why-canadas-recession-wasnt-as-brutal/article612437/>.

[9] Three year average based on 1,275 added in 2016; 999 added in 2017; and 1,000 added in 2018.

[10] In 2016 1,275 positions were added, and 999 in 2017. Therefore, in 2018, only 953 positions needed to be added to match the total ten year forecast projected in the Prism Report (3,227 – 1,275 -999). As noted in Note 5 above, based on LSO’s annual employed lawyers, the increase was exactly 1000. A similar increase using the LSO’s practising lawyer survey results should be expected as well.

[11] 1000 added in 2018 (see note 6), which is greater than the 957 forecasted for years 2021 to 2025 (278+154+138+172+215).

Comments

  1. This post would be more fair if you also acknowledged that your own previous forecasts also “collide[d] with reality”.

    In the July 28, 2017 critique by Buchanan, Scotland, and Smith that you link to, you forecasted an increase in “total practice requirements” for 2017 of just under 2000 positions (figure 2.9, page 12). Using the data in your footnote 6 in this post, that was a massive overestimate (nearly 2x) of the number of positions that actually materialized.

    Some of your criticisms of PRISM’s predictions are reasonable, but do you still feel that it’s anywhere near the realm of credible to expect an annual increase of 3000 positions (!?!) a year by 2025 as your team predicted in 2017? It seems to me that your numbers are likely to be off by a substantially greater margin than PRISM’s.

  2. These types of economic forecasts are notoriously unreliable: no one can predict what’s going to happen with supply and demand for lawyers and legal services even next year and especially not a few years out. But everyone knows that.

    Debunking the PRISM report is a moot point. Even if it was dead accurate and could be relied on, isn’t the point here that the LSO should stick to its core mandate of trying to ensure ethics and competency of the bar – and not playing the game of trying to regulate supply and demand – because this would be in the public interest?

  3. Grant Buchanan and Chris Scotland

    In our Critique we took pains to make clear that we were not making forecasts. “While [we] do not suggest what will transpire over the next decade, the Prism Report should be seen as but one possible scenario rather than a useful prediction.” (Critique at page 20). We simply took Prism’s numbers and demonstrated their “fragility” by reproducing Prism’s Figure 2.9 and then used alternative figures to illustrate the spectrum of possible supply/demand outcomes. You cited one of them. The other, using the 2005-2014 period for our regression (Figure 2.9, Page 11), had results which were in between the extreme pessimism reflected in the Prism Report and the one that you cited. Prism’s famous 1.6:1 ratio was eliminated, and effectively meant that the number of new lawyers matches the number of new positions over the 10 year period ending in 2025. Not surprisingly, now that we have more years of actual data, it turns out that the reality is near that midpoint and demonstrates that, as we suggested, the Prism forecast created a low and unrealistic floor.

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