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Is Legal Education Bouncing Back?

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I have been asked whether I believe the announcements from major law firms that they would increase starting salaries to $180,000 will cause legal education to bounce back. I did not take the question to be serious, but it turns out to have been in earnest. My reply, as you might guess, is an emphatic "no."

Bounce back means, I infer, the hope that legal education will return to the pre-recession levels of interest, with record numbers of applicants vying for seats at accredited law schools. Since then, there has been an unprecedented drop, amidst claims that legal education -- even higher education more generally -- is worthless or some sort of elaborate sham.

The problems have been publicized well enough if hyberbolically. But they are problems plural rather than singular. There is the lack of jobs, specifically those desirable to young people whose expectations have been set by the instant gratification of the internet era; the extraordinary cost of tuition, which typically is debt financed; and concerns over the utility of the skill set that is offered. Fixes for one problem or two problems exacerbate the third problem. For example, the two-year J.D., touted as a panacea (though some schools attempted to charge the same as for the full three-year version), might reduce cost but perforce reduce the training which is received.

A rush of young people into law schools is good for the law schools, to be sure. Whether it is good for the young people is another matter.

If we bounce, it will not be "back." It may be a bounce, to an altogether different place. Things do recover. But almost never to their starting point. Newspapers have been bouncing to the internet, but it's such a bumpy ride that most of them won't quite make it there. Automobiles with only internal combustion engines, operated by human beings, will be replaced within our lifetimes. Record collectors insist on the superiority of vinyl records to even lossless streaming for their music, but most listeners have left analog for digital. They are as likely to return to the turntable as they are to be invited to a private concert hosted by a royal patron to hear the composer play his own work.

Within legal practice, more than a few of the big firms have achieved better profits per partner on the same revenue. Their simple expedient is fewer partners. Other firms have exploded themselves attempting the same maneuvers. Document review in "bet the company" litigation was a mainstay of the flow of profit based on leverage. When I was in practice, literally a lifetime ago (I am twice the age now I was then), a pack of associates with highlighters and post-it notes, located on a windowless lower floor performed the task, one or two even being handed a plane ticket to inspect a warehouse of boxes. Today, a separate firm, maybe a "captive firm," uses outsourcing, scanning, and algorithms, to deliver the same work product at ten times the speed and one tenth the cost.

That is the "bounce."

I actually am an optimist. The rule of law continues to spread, and the Anglo-American common law model has become dominant globally. New types of law can be expected to emerge, especially to address technological change. The demand for legal services, to the surprise of many, is not the same as the demand for lawyer's services: accountants, consultants, and paralegals all compete.

Yet clients are more sophisticated than ever about purchasing professional services. Even ordinary people, likely one-time consumers, can buy a la carte "unbundled" versions of representation. The business has become stratified. It always was, but the disparities are more apparent and the pace of divergence has accelerated. People who belong to the same bar association perform very different functions at very different levels of remuneration.

Above all, however, the jump in big law firm entry-level compensation is not enough to remedy much because of scale -- even for those individuals lucky enough to work a couple of years at such prestigious jobs. Big firms, even in boom times, provide a minority of opportunities to new graduates. A majority of law schools place few if any of their students on Wall Street. The law schools that do feed into high-end establishments cannot guarantee the bottoms of their classes summer associate positions there.

The tenure of the junior lawyers at big firms is not lengthy. The pyramid structure ensures that few will make it to the top. The ratcheting up of the pay scale has consequences that smart associates, conditioned over a lifetime to compete, might not appreciate. It means it will be correspondingly more difficult to justify one's presence.

The law firm is not trying to be nice. It's recruiting and retaining talent through calculation. As Don Draper remarked on the hit television show Mad Men about having to say thank you: "that's what the money is for."

Astute observers have wondered whether every law firm that matches the salary hike can afford the gesture. They feel compelled, for fear of losing their reputation as top-drawer. But some firms cannot sustain those rates. They cannot charge what they wish to, not at the volume they need to. Or they already suffer "compression" issues. Senior associates are at the same level as junior partners. These firms have to extend themselves. We have witnessed what happens when they overextend themselves.

In any event, studies suggest that lawyers making more money report less, not more, career satisfaction. My hypothesis is that those attracted to law for the lucre are disappointed, because they wake up to find themselves toiling for clients who, as businesspeople, make an order of magnitude more. (I have nothing against a young person declaring that they wish to make money -- of course they do. My point is if that is the primary consideration in your career choice, there are better methods for doing so. Joining a profession in which you represent someone else entails making a sacrifice in the name of principle.)

The bulk of law school graduates will end up, as they always have, in solo practice or at small to medium firms; or in government, usually state and local rather than the coveted clerkships with federal judges. The figures paid to their peers at the elite end of the bell curve, or those whom they considered peers prior to matriculating in law school, symbolizes nothing. Perhaps it tastes of the bitterness of the contemporary economy.

That's what mystifies me. When I describe the predicament of the legal profession, and thus of legal education, I have received pushback from people who say: yes, but, there is a range, and there are those firms and schools who are making out just fine. I don't doubt that. What troubles me, and all of the rest of us ordinary folks, is that publicizing only one end of the spectrum (either end) presents a distorted picture.

I grant that the publicity of big firm starting salaries may have an effect. I would not regard it as salutary. It would be the same illusion as created the law school bubble to begin with. People might be attracted by the prospect that their three years and six figure investment would be a sure bet, a ticket to upper-middle-class satisfaction.

I prefer realism. It is positive, I suppose, that big law firms are offering more to their first-year associates. As a signal about the legal marketplace, it is at best weak and at worst misleading.

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