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Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, February 13, 2014

The Collapse of Big Law: A Cautionary Tale for Big Med

AtlanticThe Atlantic:  The Collapse of Big Law: A Cautionary Tale for Big Med:

The legal industry's obsession with performance metrics has contributed to its dramatic collapse. Could the same happen with physicians and hospitals?

Lawyers have something to teach doctors. But it is not how to avoid medical malpractice claims, protect patients’ rights, or negotiate better contracts with hospitals and insurance companies. Instead it is a cautionary tale—a tale of woe, really—about pitfalls the medical profession needs to guard against if it wants to avoid reprising the epidemic of de-professionalization and demoralization that has beset lawyers and the legal profession. 

Simply put, the law is not well. US law school applications are down by nearly half from eight years ago, and 85% of graduates now carry at least $100,000 in debt. More than 180 of the 200 US law schools are unable to find jobs for more than 80% of their graduates. Median starting salaries for those who do find work are down by 17%, and more than a third of graduates cannot find full-time employment. Tellingly, lawyers have higher rates of depression and alcoholism than the general population. 

When surveyed, about 6 in 10 lawyers say they would advise young people to avoid a legal career. Part of the problem is low public esteem for the law.  Compared to the 85% of Americans who say you can trust nurses, only 19% say you can trust lawyers. But this is more of a symptom than an explanation. To understand why public esteem for the legal profession has fallen so far, why so many lawyers are so unhappy, and what medicine can learn them, we must look deeper.

Part of the explanation is simply economic. Since the severe recession of 2008, the number of clients willing to pay top dollar for high-priced legal service has declined precipitously. Many of the nation’s largest law firms—those employing over 1,000 attorneys, often referred to as “Big Law”—have been forced to reduce their staffs.  In dozens of cases, they have had no choice but to merge or file for bankruptcy, economically unable to sustain their operations.

But look deeper still and other more fundamental problems emerge. One is the increasing popularity of law school rankings. In order to compete for students and tuition dollars, law schools do what they can to improve their standing, which means in part encouraging as many students as possible to apply and to take jobs with high-paying firms when they graduate. And for any school to move up in the rankings, another needs to move down.

An even more serious problem is the way law firms keep score. One prevalent measure is PPP, or profit per partner, introduced by The American Lawyer in 1985. When such statistics began to be published, firms that thought they were doing well suddenly discovered that they were being outperformed by peers.  Soon bidding wars ensued for top earners, who are sometimes referred to as “rainmakers.”

In one respect, ranking law schools by job placement rates and law firms by profits sounds like a good idea. It provides a seemingly fair and objective basis for prospective students, employers, and clients to assess performance. But such rankings have a tendency to bring out the worst in those they evaluate.

(Hat Tip: Tracey Roberts.)

Legal Education | Permalink


Some forms of transparency are not necessarily good. The Freedom of Information Act proved that many years ago.

Posted by: Publius Novus | Feb 14, 2014 6:58:04 AM