Tuesday, February 26, 2013
Georgetown Center for the Study of the Legal Profession, Report on the State of the Legal Market:
Introduction – Time to Burn the Ships?
As we enter 2013, the legal market continues in the fifth year of an unprecedented economic downturn that began in the third quarter of 2008. At this point, it is becoming increasingly apparent that the market for legal services in the United States and throughout the world has changed in fundamental ways and that, even as we work our way out of the economic doldrums, the practice of law going forward is likely to be starkly different than in the pre-2008 period. The challenge for lawyers and law firms is to understand the ways in which the legal market has shifted and to adjust their own strategies, expectations, and ways of working to conform to the new market realities. While there is certainly evidence that some firms and lawyers have begun to make these adjustments, many others seem to be in denial, believing (or perhaps hoping) that the world will go "back to normal" as soon as demand for legal services begins to grow again.
Legend has it that in 1519, when he and his cohort of some 500 soldiers and 100 sailors landed on the shores of the Yucatan intent on conquering the large and powerful Aztec empire, Spanish conquistador Hernando Cortez promptly ordered his men to "burn the ships." Cortez knew that, unless more tempting alternatives were removed, it would be difficult to motivate his men to take on an empire with a large army that had been in power for more than six centuries. Hence, his bold and decisive order.
The legal market today is an increasingly difficult and challenging environment, one that calls for clear thinking, strategic focus, and flexibility in addressing rapidly changing realities. To an unfortunate extent, however, many lawyers and law firms seem stuck in old models – traditional ways of thinking about law firm economics and structure, legal work processes, talent management, and client relationships – that are no longer well suited to the market environment in which they compete. Perhaps it's time for us, like Cortez, to burn the ships – to force ourselves to think outside our traditional models and, however uncomfortable it might be, to imagine new and creative ways to deliver legal services more efficiently and build more sustainable models of law firm practice.
Deborah Jones Merrit (Ohio State), Inside Report:
Law firms do find one bright spot in today's legal market: it is the oversupply of lawyers. The Georgetown report recognizes this quite candidly: "While excess capacity in the market is certainly not good news for young lawyers or, for that matter, law schools, it provides an environment in which law firms should have the flexibility to redesign their staffing models to respond to client demands. By embracing alternative approaches to staffing--including increased use of staff attorneys and non-partner track associates, contract lawyers, and part-time attorneys--firms can create more efficient and cost effective ways to deliver legal services." (p. 17)
It's hard to find a more brutal statement of market reality than that one: the glut of lawyers created by law schools is allowing law firms to hire those graduates on increasingly contingent and unattractive terms. These new jobs are not designed to train new lawyers in skills they can take to other job sites. Once you have worked two years as a back-office document reviewer, what professional skills do you have--other than reviewing documents? These jobs will serve the economic interest of law firms.
And before any legal educators get all huffy about how law firms should recognize their professional obligations rather than simply operating as businesses: How many law faculty are voluntarily taking pay cuts to reduce tuition? How many are contributing substantial amounts to loan-repayment assistance plans? How many are voluntarily changing what they teach, or the time they devote to research, in order to lower the cost of legal education? How many devote 40 hours a year (one week) to serving low-income clients directly? How many spend that time training or supervising other lawyers in providing that service?
There are some professors who do these things, just as there are some law firm partners who forego income to mentor new lawyers. But there aren't very many. Law schools, just like law firms, have become full-bore businesses. The controlling members of these businesses, equity partners and tenured professors, serve their own interests and maximize their take-home pay.
In a market system, there's nothing wrong with businesses maximizing profit. The problem, with both law firms and law schools, is that we clothe ourselves in the rhetoric and privileges of a profession while pursuing market goals. As clients have gained the information they need to assert their interests--and new businesses have emerged to serve those interests--it's our students and new lawyers who pay the price for our duplicity.