Tuesday, July 30, 2013

Law in the Time of Ideology

Lately, legal services pundits are finding more excoriation than exceptionalism in the legal marketplace. Some believe BigLaw is dead, dying, or taking too long to die, while others say that’s crazy talk. 

In the meantime, angry bloggers are trying to ride law schools out of town on rails.  They protest that law schools are too numerous, too expensive and too profitable. Schools are accused of churning out too many lawyers who can’t find lawyer jobs and are saddled with student loan debt they’ll have to repay by working at jobs where they don’t need law degrees.  

One of the loudest Jeremiahs about failing law firms and law schools is Steven Harper who in 2008 left Kirkland & Ellis where he had been a litigator for 30 years.  Now retired from practicing law, he is one of Northwestern Law School’s numerous adjunct professors (one of 235, to be precise) and opines about how screwed up the legal profession is at his blog, The Belly of the Beast, and in his latest book, The Lawyer Bubble:  A Profession in Crisis. 

From a different quarter comes a new study by Seton Hall law school professor Michael Simkovic and Rutgers B-school professor Frank McIntyre who calculate the value of a law school education by estimating that the pre-tax lifetime value of a law degree is, on average, $1 million.  Support for this optimism comes from other academics, including Santa Clara law professor Stephen Diamond who defends the study in this post and elsewhere at his blog.

In an Am Law Daily column earlier this week, Harper belittles the Simkovic-McIntyre thesis, citing the “bimodal distribution of lawyer income” as reason enough to ignore the study’s findings about averages.  His bimodal objection references the reality that law schools collectively graduate both higher-paid (BigLaw) lawyers and lesser-paid ones who, I assume, practice at smaller firms or don’t practice law at all.  Harper also complains that because Simkovic spent one year as a BigLaw associate at Davis Polk he surely knows all of BigLaw associates’ complaints, but somehow still summoned the temerity to investigate lawyers’ lifelong compensation—a complaint I readily admit I don’t understand. 

And here, finally, is the actual point of this blog.  Some time ago we arrived at the point where public discussion about the changing nature of clients’ needs, financial and cultural aspects of law firm models, lawyers’ pre- and in-service training, and new ways to practice law in the digital age are immediately framed as smackdowns posing dichotomies like: 

* BigLaw vs. Innovation
* Law Schools:  Evil or Just Stupid? 
* Why Don't Law School Gunners Just Kill Themselves Now Instead of Waiting Until They're Miserable BigLaw Partners? 

After years of listening to these squabbles, I find myself wishing debates were not dominated by snark and logical fallacies.  I wish that more of us were able to acknowledge that we don’t have sufficient information or intelligence to fiercely defend the win-lose arguments that benefit us the most.  Certainly, none of us can claim the perfect prescience to demand that everyone put all of their eggs in our favorite future scenario basket.

Insufficiently explored in these squabbles is the extent to which “the legal services industry” is really multiple, diverse markets.  Each market requires services from vendors with different key performance indicators, different business models, and labor forces with different combinations of training, skills and experience.  The inappropriateness of any single service model to serve all markets well does not invalidate that model for the markets it was designed to serve. 

But one-size-fits-all ideologies and passions have come to dominate what should be more reasoned discussions about our industry’s future.  Ideologues describe each other as disgruntled, disingenuous, disheartening and even demented.  I find least helpful the commentators-for-a-day who raisin-pick anecdotes and data to prop up their storylines. 

The loudest pundits have deep sunk costs they are unable to abandon.  They have been highly rewarded or bitterly punished (in terms of money, power and medals) by their own experiences, and they’re taking it very personally. 

If you invite opinions about the future of law from BigLaw managing partners, LPO CEOs, law school deans, consultants, senior partners and associates, you can predict with nearly perfect accuracy how each of them sees the future of our industry, depending on whether they got a raise and/or a bonus this year, have thriving practices (or not), were just made partner or failed to make partner, were recently de-equitized or recently escorted downstairs into unemployment.
In fact, most of us with a dog in this hunt come across like we should recuse ourselves from the conversation while cooler heads grapple with the important issues. 

I also believe that most of us are ignoring two inconvenient truths.  The first is that the practice of law is inherently and highly competitive—intellectually, psychologically and financially.  I don’t know how we can factor competition out of the legal profession or the industry.  Put most bluntly, we cannot.  

The second inconvenient truth is that lawyers, as a group, are psychologically unresilient—meaning that they find it hard to bounce back after a loss or to tolerate change comfortably (see “The Case for Testing” by American Lawyer publisher Aric Press). 

Put succinctly, we have a US legal services industry now worth nearly $300 billion that’s in transition and that’s managed and staffed by a preponderance of combative neurotics.  Given this combination, we probably should not expect our industry’s transition to be easy or pretty. 

Nonetheless, I hereby make a public mid-year’s resolution to breathe more deeply when considering and discussing the future of the legal services industry, to listen more carefully to all viewpoints, and to stop thinking that those whose observations and conclusions differ from my own should DIAF. 

Monday, July 22, 2013

I'm Shocked, Shocked!

The New Republic’s latest cover story, “The Last Days of Big Law – You Can’t Imagine the Terror When the Money Dries Up” by Noam Scheiber, is a dishy article about the international law firm of Mayer Brown. The author recited some of Mayer Brown’s well known management missteps over the last decade and cited numerous unnamed sources, most of whom are former lawyers at the firm, to construct a parable of what’s wrong with the rest of Big Law.

For the record, I once consulted with Mayer Brown and think highly of that firm and the leaders, lawyers and marketers I worked with who are still there.

The author of The New Republic article looks down his nose at Mayer Brown and, consequently, Big Law for (1) having too many lawyers, (2) replacing expensive lawyers with cheaper lawyers, and (3) firing anyone because there’s not enough work for them to do. He says he's shocked to discover that (4) Big Law is also Big Business, which those of us who work in and for law firms have known for some time. Perhaps most amusingly, he is even more shocked to find that (5) lawyers are competitive creatures who are ideally educated and trained to game every reward system ever built.

The author employs the effective journalistic techniques of card-stacking, false assumptions, either-or-fallacies, false generalizations, etc. Given his skills, I’m surprised he doesn’t do more political reporting.

He appears either ignorant or uncaring of any actual facts about the size of the corporate legal services market and its recent- and long-term trends. However, he’s not alone in that regard, since “The Sky Is Falling” still seems to be #1 on the “I Wonder if Someone Will Pay Me to Write about Law Firms?” hit parade. Here are just a couple of actual facts:

•  In 2007, Am Law 100 total revenue was $62.9 billion. In 2012, it had grown to $73.4 billion. Yes, some of that was due to cross-border mergers. But most of it was not.

•  By 2020, Global 500 revenue is predicted to double – from $30 trillion to $60 trillion. Call me crazy, but the business, legal, political, demographic, and other changes that accompany that growth will doubtless require some considerable, proportionate growth in legal services.

(An aside to those who think the above facts are misleading: If your own firm’s revenue is declining, then the proper response might be to consider whether your firm is selling what buyers used to buy, not what they’re buying now.)

I readily acknowledge that my irritation with this article and similar ones I’ve read lately stems from my long tenure in the legal services industry. I’ve been around law firms so long now that, while I constantly see new things happening, I also see them as part of longer-term patterns. For that reason, I suppose I’m less alarmed than younger participants in this space.

All industries change – they change a lot. And people adapt – so much better than you’d think they would. There are always career casualties when big change comes. The resilient are resilient. The unresilient are not. The popular theory that the legal profession and the legal services industry don’t and won’t change is one that I simply refuse to accept. I’ve seen firms, lawyers, leaders, and their business advisors all change so much in the decades I’ve worked in this industry. The future rewards – financial, intellectual, and otherwise – of adapting successfully are too great to ignore.

Finally, I do get piqued by those who randomly wander in from off the street and say: “Hey, I know somebody who used to work in a law firm, and they hated it. You guys must all be miserable, too!” When that happens, I think for a moment about how good it would feel to toss my beer in his face. And then I smile and remember – that’s why I don’t do PR for law firms.