Paul L. Caron

Tuesday, February 26, 2013

The Legal Profession and Legal Education: Is It Time to Burn the Ships?

2013-report coverGeorgetown 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.

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Excellent point Larry. The illogic of the two-year schemes in an over-supplied market is largely overlooked by the scam blogs and fellow travelers.

Posted by: Publius Novus | Feb 28, 2013 8:09:18 AM

"And before any legal educators get all huffy about how law firms should recognize their professional obligations rather than simply operating as businesses:"

It's not the job of companies seeking legal counsel to shell out exorbitant amounts of money in order to bolster an economically inefficient system, nor to cut its own profits to deal with the inefficiencies of the legal job market.

Those costs will be passed along to another party. Alternatively, firms who recognise their nebulous, ill-defined "professional obligations" to overpay associates will lose clients to firms who recognise their professional obligation to not overcharge clients for basic legal services.

Perhaps the legal profession, as a whole, could recognise its professional obligation to not overburden young lawyers with debt, to honestly tell young people what their job prospects are, and to ensure that it does not produce too many lawyers for the available jobs. It is hard to see how it is the responsibility of those downstream from the legal admissions, tuition-setting, accrediting, and educational systems, to deal with the upstream problems.

The Red Cross may have a professional obligation to rescue people from disaster, but that hardly means that people do not have an obligation to keep a few days of non-perishable food on hand, evacuate when ordered to do so, and to secure their home against storms.

Posted by: bridget | Feb 28, 2013 7:55:16 AM

What I don't understand is why so much of the commentary about the troubles in legal education are about finding ways to lower the costs. 2-year programs and "undergrad" law degrees are the opposite of a solution to the oversupply or lawyers. I expect to see the # of school places decline, probably leaving the highest cost/most prestigious schools still standing. Some 2nd and 3rd tier schools might adopt cost-lowering strategies to stay alive. It could work...

Posted by: Larry | Feb 26, 2013 6:42:12 PM

Given the evident oversupply of lawyers in America, perhaps we should start exporting law school grads to China. This would not only alleviate the oversupply of lawyers here, but the influx of lawyers to China would clog up the economy there and ameliorate the competitive threat to American businesses. A win-win solution?

Posted by: Jake | Feb 26, 2013 9:59:03 AM

In my twenties and part of my thirties I was a teaching assistant, then a post-doctoral fellow, then an untenured adjust assistant professor, teaching English at universities. I had a Ph.D., but no benefits, and I was at the mercy of the Department head, who could make me more or less indigent by the simple expedient of giving me two sections a semester to teach rather than three or four, or by not hiring me for the following year. There were many of us like that (and still are), existing on the fringes of academia, while the few who were on the tenure-track or who had already gotten tenure had a comparatively easy and secure lifestyle. The economics of it were obvious -- there were simply too many young people who had been romanced by the idea of being an English professor in college chasing too few jobs.

Bailing out of academia in my mid-thirties (in the mid-1990s), I went to law school, then became an associate in a big law firm, then a partner. Life has been very good for the past fifteen years.

Now I see a future for the practice of law that looks an awful lot like what universities have looked like for a long time -- a caste system where there are a few partners who make a lot of money, a small track of associates who might become partners, and then a lot of part-time, no benefits, contract lawyers or "piece-work" lawyers hired to help out on particular tasks on particular cases. It's a pretty dismal prospect, but it's what happens when too many lawyers chase too few jobs (and, in fact, when too many lawyers and law firms are chasing too little legal work).

One aspect of legal practice is marginally better than academia -- you can hang out your own shingle as a lawyer, but you can't hang out your own shingle as an English professor. But that's a dog-eat-dog world, and one that is a far cry from the image of ten years ago of a 25 year-old getting out of law school and getting a $100k plus job right off the bat.

Posted by: Paul Bauer | Feb 26, 2013 6:58:07 AM

So it's true: law firms and law departments are full of greedy, self-serving, unethical lawyers. Who'da thunk?

Posted by: FrancisChalk | Feb 26, 2013 6:17:46 AM

"Once you have worked two years as a back-office document reviewer, what professional skills do you have--other than reviewing documents?" Earth to Prof. Merritt: How is this different than employment of white-shoe associates ten years ago? I was on DOJ lateral hiring committees for 15 years--and we commonly received applications from fourth- and fifth-year associates at large firms who had done nothing but review documents in windowless rooms. The vast majority of these types of applicants had never had direct client contact; been in court as anything other than a bag carrier; or attended, much less defended or (gasp) taken, a deposition.

Posted by: Publius Novus | Feb 26, 2013 6:11:26 AM

The students and the new lawyers are paying the price, for sure. There is no institution so noble that it cannot be corrupted, and the law and law schools in this era are solid examples of that. Law schools should have engraved over their doors this slogan: "We are whores. Sleep with us at your peril."

Posted by: Lowellguy | Feb 26, 2013 6:10:44 AM