DEBT, DECEPTION, AND THE ABA

Posted on October 5, 2011 by thebellyofthebeast

The ABA kicked the can down the road again. When law schools classify their most recent graduates as “employed” in 2012, they still won’t have to disclose whether the jobs are part-time or require passing the bar. Anything and everything counts — which leads to this question:

Q: When are some law schools like for-profit colleges?

A: Every day.

Both groups are under increasing scrutiny for similar tactics. The Wall Street Journal doesn’t like the new efforts to hold for-profit colleges accountable. Recently, it used those initiatives to bludgeon a favored target:

“Where there’s money, there are trial lawyers…”

After the many WSJ articles about the rise of corporate big law’s multi-millionaires, such special disdain for greedy, non-corporate trial lawyers seems somewhat disingenuous. But I digress.

The editorial criticizes the government’s intervention in a whistleblower’s False Claims Act case against a for-profit college system and concludes with this non-sequitur:

“If the government thinks such schools are unfairly benefitting from federal subsidies, then it should cut off grants to all college students.”

Whoa, Nelly!

The Journal sidesteps the most important questions that the False Claims Act cases raise and that apply equally to many law schools: How do institutions of higher education recruit students and what happens after they sign up? When colleges are accused of “a boiler-room style sales culture,” it’s no answer to say “a recruiter’s job is to recruit.” Surely, the Journal‘s editorial board understands the importance of truthful information to the proper functioning of free markets.

For example, here’s information that for-profit colleges are loathe to emphasize: their student drop-out rate is over 50 percent. According to one report, only 38 percent graduate within six years (compared to 53 and 64 percent for public and private non-profit institutions, respectively). Another report of the ten largest for-profit schools puts their graduation rate at 22 percent.

Law schools don’t have those stunning drop-out rates, but two other criticisms apply to many of them:

— Encouraging students to take on debt that can’t be repaid. Bloomberg News reports that for-profit colleges enroll 12 percent of all undergraduates, receive 25 percent of all student loan dollars, and account for almost half of all defaults. Only a day after its editorial, the Journal reported that the for-profit default rate had soared to 15 percent, compared to non-profit rates of 7.2 and 4.6 for public and private schools, respectively.

Ironically, the same edition running the editorial attacking efforts to increase for-profit college accountability also contained a small item on the front page: “Vital Signs” — a graph with this accompanying description:

“Americans are borrowing more for student loans. In July, consumers owed the government about $386 billion, largely for student loans, up from $139 billion two years earlier. However, during the same period of time, consumers pulled back on other types of borrowing, such as credit cards and loans for automobiles.” [emphasis supplied]

Evidently, a standard hot-button topic for the Journal‘s editors — “wealth redistribution” — isn’t so bad when the redistribution is from students to their schools.

Law schools? Almost half of their graduates incur more than $100,000 in educational loans. But the real tragedy that the ABA continues to facilitate involves ongoing deception about the prospects for getting jobs needed to repay them.

— Misleading employment stats. For-profit schools’ recent battle over federal “gainful employment ” regulations mirrors the controversy over the way many law schools report employment data. Prospective students read about graduates who are “employed,” even though they’re performing tasks that don’t require the degrees that schools are trying to sell them. Likewise, law schools can call their graduates employed, even if they’re greeters at Wal-Mart.

Overwhelming educational debt is one of many terrible things happening to the next generation under the guise of “letting the markets decide” — however imperfect or distorted those markets may be. Whether for-profit or, like most law schools, run as if they were, educational institutions that pursue the myopic short-term mission of filling classrooms with tuition-paying bodies do their students a disservice. As the cycle of deception-debt-no jobs produces a bubble that is already beginning to burst, the resulting damage to the country will become increasingly obvious, too. Some of the “Occupy Wall Street” protesters are already making that abundantly clear.

THE COST OF DISSATISFACTION

Posted on September 28, 2011 by thebellyofthebeast

This month began with the publication of The American Lawyer‘s annual Mid-Level Associate Satisfaction Survey results. The dismal descent to historic depths continues. Let’s end it with this question: Why should law firm leaders care?

Answer: Because dissatisfied lawyers are costing them money.

That’s the conclusion of Harvard Business School Professor Teresa Amabile and fellow researcher, Steven Kramer, in The Progress Principle. They reported their findings in the Labor Day edition of the New York Times. At a time when most workers feel fortunate to have jobs, Amabile and Kramer have a tough sell in convincing employers, including law firm leaders, to worry about the psychological state of their employees.

We all know the mantra: No one is required to accept any job. The market allocates resources. A labor market clears at the point where buyers and sellers agree on a price for services sought and rendered. Workers take into account the factors that matter to them and get paid appropriately for the jobs they’re willing to do. Case closed.

Not quite. Such an analysis makes dubious assumptions about the market. On the employee side, bad or incomplete information can distort outcomes. A prospective law student might hope to emulate popular media images that merge with law school promotional materials promising a secure, well-paying future. Once in school, individual financial imperatives — such as the need to repay staggering educational debt — can constrain post-degree options. Meanwhile, the anticipated job often turns out to be neither secure nor well-paying.

Likewise, employers take false comfort in the misconception that a new hire is simply exercising free will in a free market. A firm assumes that if young attorneys’ experiences diverge from rosier expectations, any resulting psychological distress isn’t its problem. Never mind that the firm’s underlying business model produces behavioral incentives and a culture that exacerbate the disconnect.

“We’re just trying to run a business,” most law firm leaders would say. “There’s no metric for assessing the impact of career dissatisfaction on performance. If I can’t measure it, how can I consider it when making decisions?”

As long as everyone keeps billing hours, the profits beast continues to be fed. As unhappy associates alone bear the burden of their discontent, leaders rationalize their indifference to growing dissatisfaction with a simplistic analysis: if it gets too bad, people can leave and find another job. In the current buyer’s market for associates, boatloads of replacements are waiting in the wings anyway.

The work of Amabile and Kramer offers an intriguing rebuttal to myopic managers who can’t see past next year’s profits. In a longitudinal study encompassing ten years and 238 professionals in seven different companies, they asked people to make daily diary entries about their emotional states. Negative inner work lives resulted in “a profound impact on workers’ creativity, productivity, commitment and collegiality.”

The findings challenge the conventional wisdom that pervades many big firm cultures, namely, that pressure enhances performance. According to Amabile and Kramer, the data suggest that the opposite is true: “[W]orkers perform better when they are happily engaged in what they do….[O]f all the events that engage people at work, the single most important — by far — is simply making progress in meaningful work.”

The authors note Gallup’s estimate that America’s “disengagement crisis” costs $300 billion annually in lost productivity. They also observe that the vast majority of 669 surveyed managers shared an important incompetence: the managers “failed to recognize that progress in meaningful work is the primary [employee] motivator, well ahead of traditional incentives like raises and bonuses.” The catalysts that enable such progress are worker autonomy, sufficient resources, and learning from problems.

Big firm leaders determine the extent to which their workers experience these three catalysts. The leveraged pyramid and its billable hour regime enslaves associates while inhibiting partners from becoming mentors. In other words, the prevailing big law model cuts the wrong way for everyone. The resulting work environment produces dissatisfaction that’s costing the equity partners money.

How much money? William Bruce Cameron’s observation (sometimes attributed to Einstein) was right: “Not everything that can be counted counts, and not everything that counts can be counted.”

FROM THE SPORTS PAGE

Posted on September 8, 2011 by thebellyofthebeast

Subtle clues revealing the cause of a fundamental problem confronting the legal profession are everywhere, even in the sports section.

Recently, the New York Times wrote about 26-year-old Josh Satin, who made his major league debut for the New York Mets on Sunday, September 4. This time of year, such stories about minor league ballplayers getting a chance to play for out-of-contention major league teams are common. Regrettably, one of my hometown franchises — the Cubs — affords such opportunities almost every year.

This line of the Satin article caught my eye:

“After graduating as a political science major from Cal, Satin was selected by the Mets in the sixth round of the 2008 draft. And like any number of 20-somethings with a liberal arts degree and nebulous career prospects, he kept law school applications at the ready.”

Satin was drafted the same year I began offering an advanced undergraduate course that targeted students like him. For many juniors and seniors who can’t decide what to do next, law school becomes a default solution that buys them more time. Sometimes it works out okay; for too many others, it’s a place where dreams go to die.

Bad information bears much of the blame for the problem of poor career choices that, in turn, contribute to widespread attorney dissatisfaction. Law schools skirting the outer limits of candor to fill their classrooms have made the problem worse. So has the transformation of big firms from a profession to a collection of short-term profit-maximizing businesses that use misguided metrics to drive decisions.

As a consequence, some not-so-funny things happened to many of those who went to law school for the wrong reasons. For starters, the promise of a secure future at a well-paying job turned out to be illusory. The persistent problem of lawyer oversupply rose to crisis levels during what would have been Satin’s first year of law school, if he’d gone. Since then, the market for new talent has gotten worse.

But even many who found decent legal jobs have been unpleasantly surprised. Popular images of dynamic lawyers engaged in courtroom battles widen the gap between student expectations and the reality they’ll encounter; that eventually makes for some very unhappy attorneys. By the time the truth hits, many find themselves burdened with educational debt equal to a home mortgage, albeit without the house.

That doesn’t mean no one should go to law school. The law is a great and noble pursuit in many ways. In fact, even the most pessimistic assessments suggest that about half of all attorneys enjoy satisfying careers. I sure did.

Nor does it mean that everyone who dreams of playing major league baseball — or any other high-profile job that the media infuses with irresistible glamour — should give it a shot. Everyone enjoys watching extraordinarily talented celebrities ply their trades, but for most of us, being a spectator is our highest and best use at such events. In his address to the Northwestern graduating class of 2011, Stephen Colbert referred to commencement speakers who tell college graduates to follow their dreams and asked, “What if it’s a stupid dream?”

But acknowledging the stupidity of a dream shouldn’t make law school the fallback answer to one of life’s most important questions, “Now what?”

I don’t know if Josh Satin will remain a major league ballplayer. If he doesn’t, I don’t know what he’ll do after that. But meanwhile, give him credit for having the courage to pursue passions for which he obviously has talent. It’s a safe bet that he’s happier than his college classmates “with a liberal arts degree and nebulous career prospects [who] kept law school applications at the ready,” sent them in, and pursued legal careers for which they had incomplete knowledge, limited enthusiasm, or both. Compounding the difficulties with which they began law school, they’re now having trouble finding the secure, well-paying and exciting work that they thought would be waiting for them when they graduated.

It turns out that for most of the nation’s 50,000 annual graduates, those particular jobs were never there at all.

LAW SCHOOL NON-LEADERSHIP

Posted on August 23, 2011 by thebellyofthebeast

Disenchanted alumni have filed two more class actions against their law schools. In addition to Thomas Jefferson School of Law, Thomas M. Cooley Law School and New York Law School are now defending their former students’ fraud claims. NYLS said the claims were without merit and would defend against them in court. Cooley, the largest law school in the country, is pursuing a more aggressive strategy that earns it this closer look.

Cooley was founded in 1972 by now-retired Michigan Supreme Court Chief Justice Thomas E. Brennan. In 1996, dissatisfied with the subjectivity of U.S. News rankings methodology that, coincidentally, placed Cooley in its unranked lower tiers, Brennan began publishing his own recompilation of the ABA’s data. The latest edition appears on the school’s website. In it, Cooley’s overall ranking is #2. Harvard is #1; Yale is #10; Stanford is #30; and the University of Chicago is #41. (Exploring the different subjective judgments that underlie Brennan’s alternative system must await another day.)

Cooley’s 2010 graduate employment rate was 78.8% — 181st out of 193 accredited law schools on Justice Brennan’s latest list. The question that has morphed into litigation is what that rate means.

Kurzon Strauss LLP represents the plaintiffs in both of the latest suits. According to the Wall Street Journal, Cooley recently sued that firm “for propagating purportedly defamatory ads on the websites Cragislist and Facebook about the school. The postings were part of the law firm’s investigation into how law schools report employment statistics, according to firm partner Jesse Strauss.” Cooley also filed a separate defamation suit against four anonymous bloggers.

But escalation can amplify unwanted publicity; publicity creates the potential for visible missteps. Based on the Journal‘s report, I think Cooley made one:

“Jim Thelen, Cooley’s general counsel, said that if any of the plaintiffs or their attorneys has issue with how law schools report employment numbers, then they ought to take it up with the American Bar Association, which helps set criteria for collecting data, or even the Department of Education — but not with individual law schools. ‘These are nothing other than attempts to bring public attention to this issue,’ Mr. Thelen said.”

Actually, this is a double misstep, proving that sometimes the best comment is none at all. First, using the answers that Cooley and every other school provide to the ABA’s annual law school questionnaire may be today’s catchy sound bite, but it’s tomorrow’s dubious long-term strategy. The ABA doesn’t cash students’ tuition checks; their law schools do. Telling the world that unemployed graduates should take their concerns about the quality of post-graduation employment data elsewhere should send an unsettling message to any pre-law student who is listening.

Second, many litigants seek publicity; calling them out isn’t a defense — or particularly attractive. Attorneys tend to forget that lay audiences quickly develop a “The lady doth protest too much, methinks” reaction to lawyers’ public relations efforts. In fact, a non-lawyer who hears Thelen’s remarks could well wonder, “Well, why are they trying to bring public attention to the issue? Is there a problem?”

The underlying concern — assessing the quality of graduate employment rate data — isn’t unique to Cooley. Deans who understand the serious flaws in the ABA-required reporting methodology should have exposed them long ago, just as the NY Times finally did earlier this year. That most awaited the ABA’s recent directive on this topic evidences a pervasive failure of leadership. The ABA’s annual questionnaire has never prevented any school from doing more to inform prospective students, such as telling them who among their reportedly employed graduates have full-time jobs or positions requiring a legal degree.

Then again, lawyers and former judges run law schools. Sure, disgruntled students who incur enormous educational debt to get their degrees may claim to have been misled. But the defenses will always be many and the odds against certifying consumer fraud claims will forever be daunting. Beat the class and the case usually goes away.

On the other hand, if Dr. King was right that “the arc of the moral universe is long but it bends toward justice,” some law schools may discover that their public comments ring hollow and their short-term victories are pyrrhic.

UNFORTUNATE COMMENT AWARD

Posted on July 25, 2011 by thebellyofthebeast

“The Case Against Law School” in last week’s NY Times opened with an article by former Northwestern Law School Dean David Van Zandt, whom I’ve never met. Regarded as a maverick in the legal academy, he’s now president of The New School. I don’t know how the Times selected its essayists, but Van Zandt earned my “Unfortunate Comment Award” with this:

“Law schools and their faculties have a vested interest in requiring students to spend more time on campus and more money at their schools.”

If he intended his revelation to be that of a whistle-blower, he blew the whistle on himself. Tackling vested interests that run contrary to what’s best for students should be a defining characteristic of leadership in higher education. But during his fifteen years as dean, he contributed uniquely to a problem he now decries — squeezing more money out of students.

Here’s how. Van Zandt was an outspoken advocate of running law schools as businesses and relying on misguided metrics to do it. One was the U.S. News rankings, which he publicly embraced and almost every other dean condemned. When it comes to money, the rankings methodology — so flawed in so many ways — rewards schools’ high expenditures (requiring high tuition) without regard to value.

Perhaps it’s coincidental, but consider the tuition trend during Van Zandt’s tenure: When he took over in 1995, three years’ tuition for a Northwestern law degree totaled $60,000. By 2008, it had more than doubled to third highest in the country. When he left in 2010, the degree cost $150,000 — just for tuition. Student law school debt has risen accordingly.

When used to run law schools, misguided metrics pose other perils to student welfare. For example, transfer students’ LSATs don’t count in the U.S. News calculus, but they’re lucrative additions to any law school’s bottom line. Under Van Zandt, Northwestern recruited transfers aggressively. But the resulting growth in graduating class size hasn’t served students who entered as 1Ls, especially in today’s job market.

Then there’s the accelerated JD — a flagship initiative of Van Zandt’s final long-range strategic plan that he still promotes from afar. The plan incorporated his view of law school as a business that placed special value on large firms. After all, they were key customers because of their metrics: Big law pays new graduates the highest starting salaries, thereby justifying ever-increasing tuition. This dubious short-term approach, along with his efforts to sell it, drew attention away from the school’s other vitally important strengths.

As for the students, acceleration buries first-years in additional courses to develop “core competencies” while reducing time for thoughtful reflection about their places in a diverse and challenging profession. Before implementing that plan, he should have read Scott Turow’s One L and reviewed big law’s associate attrition and career dissatisfaction rates.

Finally, students in the two-year accelerated program pay the same total tuition as the traditional three-year people because, according to the school’s website, “Northwestern Law prices tuition by the degree pursued rather than the length of enrollment.” That’s a choice, not an economic imperative.

Defending that choice in the Times, Van Zandt wrote, “The cost to the school [of the accelerated students] remains the same because the credit hours remain the same.” That’s a non-sequitur. Certainly, the accelerated group adds cost for its own first-year section — five required courses, plus negotiation and business school-type classes. But twenty-seven students in the class of 2011 generated $4 million incremental tuition dollars during their two years. As Van Zandt elsewhere explained, after their first year “they are integrated with the rest of the students.” If so, the school’s marginal cost of accelerated students’ second-year credit hours should be minimal. Including them with everyone else should bring its average cost per student down, too.

It turns out that running law schools as businesses that focus on misguided metrics is dangerous. During Van Zandt’s final years at Northwestern, its U.S. News ranking dropped from ninth to twelfth and its NLJ 250 placement rate for graduates joining big firms dropped from first to eighth.

Call it karma.

PRACTICAL SKILLS

Posted on July 18, 2011 by thebellyofthebeast

A few days after the Bureau of Labor Statistics announced the loss of another 2,600 legal jobs in June, the Wall Street Journal ran “Law Schools Get Practical.” Some schools are changing curriculum to develop skills that real lawyers need; that makes sense. But some hope that more big law positions for graduates will result; that is magical thinking.

Reconsidering legal education is important. The first year teaches students to think like lawyers; the second year covers important substantive areas. To deal with the universally maligned third year, Stanford is considering a clinical course requirement involving 40-hour plus weeks of actual case work, while Washington and Lee University of Law School replaced lectures and seminars with “case-based simulations run by practicing lawyers.”

Meanwhile, Harvard has updated its curriculum significantly in recent years. Indiana University Maurer School of Law teaches “project management” and “emotional intelligence.” NYU offers courses in “negotiation” and “client counseling.” Some innovations are more valuable than others, but no one should think that improved job prospects will result.

The article quoted a recruiter at McKenna, Long & Aldridge LLP who said that clients weren’t willing to pay for new lawyer training. Likewise, Xerox’s general counsel described his company’s policy of not paying for first-year associates. The implication is that if new graduates received more practical training in school, clients would pay for them and hiring would increase. Not a chance.

First, new associates in large firms don’t need the practical skills that most law schools are promoting. If there were courses on “maximizing billable hours,” “withstanding unreasonable partner demands,” or “surviving a culture of attrition where fewer than ten percent of new associates will become equity partners,” that would be one thing. But document review, due diligence undertakings, and other mundane tasks that consume most big law associates’ early years don’t require much special training. Some don’t even require a law degree. Xerox — and many other companies sharing its dim view of first-year associate value — won’t start paying for young attorneys just because they have taken the new courses.

Second, average equity partner profits for the Am Law 100 have moved steadily upward over the last decade — to over $1.3 million in 2010. If those firms are already “suffering” from client resistance to paying for new associates, partners nevertheless seem to be thriving financially.

Finally, when asked whether current law school innovations will help students land jobs, Timothy Lloyd, chair of Hogan Lovells recruiting committee, told the Journal:

“It could enhance the reputation of the law school…as places that will produce lawyers who have practical skills. As to the particular student when I’m interviewing them? It doesn’t make much of a difference.”

Bingo. As a big law interviewer myself, I looked for intelligence, personality, and potential. Specific courses didn’t matter. Assessing candidates was and is subjective but, to adapt Justice Stewart’s pornography test, I usually knew a good one when I saw one.

Schools should expand clinical programs, but not because such student credentials matter to large firm recruiters. They don’t. However, those who don’t get big law jobs really need practical lawyering skills. Do it for them — the vast majority of today’s 50,000 annual graduates.

Schools should modernize curriculum, but not to become business school knockoffs for big law. That’s a mistake.

Even more urgently, schools should educate prospective attorneys more fully about the big law path — from the challenge of getting a job to the unforgiving billable hours culture to the elusive brass ring of equity partnership. (See, e.g., The Partnership)

That would be real reform, but at most place it won’t happen. Yale’s cautionary memo about the real meaning of 2,000 billable hours a year and Stanford’s “Alternatives to Big Law” series that compliments its outstanding student loan forgiveness program are hopeful beginnings. But such candor runs counter to the enticing big firm starting salaries that pervade law school websites aimed at the next generation of would-be lawyers. After all, their student loans pay the bills.

TRUTHINESS IN NUMBERS

Posted on June 27, 2011 by thebellyofthebeast

Two recent developments here and across the pond share a common theme: ongoing confusion about young attorneys’ prospects. But the big picture seems clear to me.

Last month, I doubted predictions that the UK might be on the verge of a lawyer shortage. I expressed even greater skepticism that it presaged a similar shortfall in the United States. In particular, College of Law issued a report suggesting that an attorney shortage could exist as early as late 2011 and “may jump considerably in 2011-2012.”

This came as a surprise because the UK’s Law Society has warned repeatedly about the oversupply of lawyers in that country. Why such dramatically different views of the future?

Some commenters to an article about the College of Law report suggested that perhaps the study hadn’t taken into account the existing backlog of earlier graduates who, along with young solicitors laid off in 2008 and 2009, were still looking for work.

Another explanation may be that the College of Law and its private competitors, including Kaplan Education’s British arm, wants to recruit students to their legal training programs. Sound familiar?

The following is from the College of Law website:

“84% of our LPC graduates were in legal work just months after graduation.*”

But mind the asterisk: “*Based on known records of students successfully completing their studies in 2010.”

I wonder who among their students isn’t “known.” As for “legal work,” a recent former UK bar chairman observed that the oversupply of attorneys in that country has driven many recent LPC graduates into the ranks of the paralegals. Digging deeper into the College of Law’s 84 percent number yields the following: 62 percent lawyers; 22 percent paralegals “or other law related.” At least the College appears to be more straightforward than American law schools compiling employment stats for their U.S. News rankings.

That takes me to the recent ABA committee recommendation concerning employment data here. U.S. News rankings guru Robert Morse has joined the ABA in assuring us that help is on the way for those who never dreamed that law schools reporting employment after graduation might include working as a greeter at Wal-Mart. Morse insists that if the schools give him better data, he’ll use it.

It’s too little, too late. Employment rate deception is the tip of an ugly iceberg comprising the methodological flaws in the rankings. For example, employment at nine-months accounts for 14 percent of a school’s score; take a look at the absurd peer and lawyer/judges assessment criteria, which count for 40 percent. Res ipsa loquitur, as we lawyers say.

Frankly, I’m skeptical about the prospects for progress even on the employment data front. Until an independent third-party audits the numbers that law schools submit in the first place, their self-reporting remains suspect. No one in a position of real professional power is pushing that solution.

Meanwhile, back in the UK, Allen & Overy — a very large firm — announced its “second round of cuts on number of entry level lawyers hired” — from the current 105 London training contracts down to 90 for those applying this November. The article concluded:

“The news comes after the latest statistical report from the Law Society highlighted the oversupply of legal education places compared with the number of training contracts in the UK legal market. The number of training contract places available fell by 16% last year to 4,874 and by 23% from a 2007-08 peak of 6,303.”

So much for the College of Law’s predictive powers. Prospective lawyers in the UK are probably as confused as their American counterparts when it comes to getting reliable information about their professional prospects. Most students everywhere assume that educational institutions have their best interests at heart.

If only wishing could make it so.

FAMILY FRIENDLY?

Posted on May 31, 2011 by thebellyofthebeast

Lawyers know that definitions dictate outcomes. That’s why the Yale Law Women’s latest list of the “Top Ten Family Friendly Firms” includes some surprising names. At least, some surprised me.

It turns out that the YLW’s definition of family friendly is more restrictive than the plain meaning of the words. According to the survey methodology, it’s mostly a function of firms’ attention to particular issues relating primarily to women. There’s nothing wrong with that, but it shouldn’t be confused with what really undermines the family-friendliness of any big firm — its devotion to billable hours and billings as metrics that determine success. That problem isn’t gender-specific.

To compile the annual list, YLW surveyed the Vault Top 100 Law Firms. What would happen if they included all of the NLJ 250 or an even larger group that included small firms? I don’t know, but I’ll bet the list would look a lot different.

Now consider the survey categories and YLW commentary:

— Percentage of female attorneys: “Although YLW found that, on average, 45% of associates at responding law firms are women, women make up only 17% of equity partners and 18% of firm executive management committees. Additionally, on average, women made up just 27% of newly promoted partners in 2010.”

— Access to and use of parental leave: Virtually all firms have them. Big deal.

— Emergency and on-site child care: I understand the advantages, but how much family friendly credit should a firm get for providing a place where young lawyers can leave their babies and pre-schoolers while they work all day?

— Part-time and flex-time work policies: “98% offer a flex-time option, in which attorneys bill full-time hours while regularly working outside the office.” So what? I know senior partners without families who’ve done that for years.

— Usage of part-time and flex-time policies: “On average, 7% of attorneys at these firms were working part-time in 2010.” Will they become equity partners? “Of the 7% of attorneys working part-time, only 11% were partners, a number that may also include partners approaching retirement. Only 5% of the partners promoted in 2010 had worked part-time in the past, on average, and only 4% were working part-time when they were promoted.”

— Billable hours and compensation practices: “[I]t remains to be seen whether it is truly possible to work part-time at all. Our statistics indicate that while part-time attorneys appear to be fairly compensated, many may work more hours than originally planned. Most firms (93%) provide additional compensation if part-time attorneys work more than the planned number of hours or make part-time attorneys eligible for bonuses (96%). However, part-time attorneys received bonuses at higher rates than full-time attorneys (25% compared to 23% on average), suggesting that many part-time schedules may ultimately morph into full-time hours over the course of a year.”

— Alternative career programs: What’s that? Outplacement support?

All of this gets weighted according to another survey of Yale Law School alumni who ranked the relative importance of the surveyed policies and practices.

Continuing efforts to achieve greater big law transparency are laudable. But one problem with lists and rankings is that they take on a life of their own, wholly apart from methodological limitations and the caveats accompanying the results. (See, e.g., U.S. News rankings). Here, the YLW cautioned that it “remains concerned about the low rates of retention for women, the dearth of women in leadership positions, the gender gap in those who take advantage of family friendly policies, and the possibility that part-time work can derail an otherwise successful career.”

The honored firms will gloss over that warning, issue press releases, and delude themselves into believing that they are something they’re not. Someone truly interested in whether a place is family friendly should find out where it ranks on the “Misery Index.” Partners won’t tell you, but that metric would reveal a firm’s true commitment to the long-term health and welfare of its attorneys and their families.

If you really love someone, you should set them free — even if it’s only every other weekend.

LAW SCHOOL DECEPTION — PART III

Posted on May 18, 2011 by thebellyofthebeast

Money talks, especially to prospective law students concerned about educational debt. Tuition reduction programs promise some relief. Surely, scholarships conditioned on minimum GPAs are better.

Recently, the NY Times profiled a Golden Gate University School of Law student needing a 3.0 to keep her scholarship. By the end of her first year, she’d “curved out” at 2.967. Her Teamsters dad drove a tractor before he was laid off, but she and her parents came up with $60,000 in tuition to complete her degree.

Maybe that’s reasonable. A “B” average doesn’t seem difficult. Is this just whining from what some article comments called “the gimme generation”?

Only if the victims knew the truth. She has no paying job, legal or otherwise. That’s her true victimization, along with many others.

— Statistically possible v. doesn’t happen v. fully disclosed

Golden Gate imposes mandatory first-year curves limiting the number of As and Bs. In second and third year courses, the curves loosen or disappear. The profiled student graduated with a 3.14 GPA — a nice recovery, but too late for the lost scholarship.

According to the article, more than half of the current GGU first-year class has merit scholarships and Dean Drucilla Stender Ramey said it’s statistically possible for 70 percent of one Ls to maintain a 3.0 GPA — also the threshold for the Dean’s List. Even if she meant “theoretically” rather than “statistically” possible, I’m skeptical. The school’s handbook reports the mandatory range for those receiving a “B- and above” in first-year required courses: 45 percent (minimum) to 70 percent (maximum). And a B- is 2.67.

“[I]n recent years,” the article continued, “only the top third of students at Golden Gate wound up with a 3.0 or better, according to the dean…. She also maintains that Golden Gate 1Ls’s are well-informed about the odds they face in keeping scholarships.”

This sounds like the lawyer who tells the jury: 1) my client was out of town at the time of the murder; 2) if he was in town, he didn’t do it; and 3) whatever he did was in self-defense.

— Playing with fire

Why offer merit scholarships? U.S. News‘s rankings, says University of St. Thomas School of Law Professor Jerry Organ:

“Law schools are buying…higher GPAs and LSATs.”

Albany Law School Dean Thomas F. Guernsey notes that such catering to the rankings has “strange and unintended consequences,” such as reducing need-based financial aid by redirecting it to those who otherwise “will go somewhere else.”

U.S. News doesn’t collect merit scholarship retention data because, according to rankings guru Robert Morse, “[W]e haven’t thought about it…[T]hese students are going to law school and they need to learn to read the fine print.”

That’s among the least of many profound flaws in the U.S. News methodology. Law school deans know them all, yet pandering to the rankings persists while students and the profession pay the price.

Somewhere in the cumulative behavior of certain schools lies an interesting class action. Particularly vulnerable are recruiters operating at the outer limits of candor to attract students who accumulate staggering loans and no jobs.

Imagine forcing some deans to answer these questions — under oath:

— Where did you go to law school? (That’s foundational — to show they’re smart; for example, GGU’s Dean Ramey graduated from Yale.)

— How many graduates did you put on your school’s temporary payroll solely to boost your U.S. News “nine months after graduation” employment rate? (I don’t know about GGU, but others have.)

— How many have full-time paying jobs requiring a JD? (GGU’s nine-month employment rate is 87.2% of 143 “reporting” 2009 graduates, but the “number with salary” is only 41 (or 29%). Two-thirds of “reporting graduates” had jobs requiring bar passage; only half held permanent positions. And who’s not “reporting”?)

— How many merit recipients lose scholarships? What did you tell those hot prospects when you enticed them with first-year money? Ultimately, how much did they pay for their degrees?

Ironically, even bold typeface disclosure might not change some prospective students’ minds because facts yield to confirmation bias. Convinced that they’ll overcome daunting odds to become winners, they can’t all be right.

Still, the potential class of law student plaintiffs grows by the thousands every year. If they ever file their lawsuit, the defendant(s) better get good lawyers.

A NEW LAW SCHOOL MISSION

Posted on May 15, 2011 by thebellyofthebeast

What ails the profession and is there a cure?

If you haven’t already seen it, you might want to take a look at Part I of my article, “Great Expectations Meet Painful Realities,” in the Spring 2011 issue of Circuit Rider. My latest contribution to the debate on the profession’s growing crisis begins on page 24 of the Seventh Circuit Bar Association’s semi-annual publication.

Part II begins at page 26 of the December 2011 issue.

IMPROVING PROSPECTS — BUT FOR WHOM?

Posted on May 10, 2011 by thebellyofthebeast

Life is just a matter of perspective. For example, here’s some apparently good news:

— The legal sector added 1,500 jobs in April.

— Ashby Jones at the Wall Street Journal Law Blog cited a recent article in The Guardian for the proposition that the U.K. might actually have a shortage of lawyers next year. Could the U.S. be far behind?

— NALP’s Executive Director James Leipold noted that, along with an overall attorney employment rate of 88.3% for the class of 2009, “the most recent recruitment cycle showed signs of a small bounce in the recruiting activity of law firms, a sign that better economic times likely lie ahead.”

Now consider each headline a bit differently:

— “Legal sector” isn’t limited to attorneys; more than 44,000 new law school graduates hit the market every year.

— The Guardian article relies solely on a report from the College of Law that has an interest in encouraging applications to its program for prospective solicitors. More than one comment to the initial report expressed angry skepticism about the College’s short-term motives. Where have I heard that before?

Meanwhile, the Bureau of Labor Statistics projects that, for the entire ten-year period from 2008 to 2018, net U.S. attorney employment will increase by only 100,000. Even if all aging attorneys retired as they turned 65, there aren’t enough of them to make room for all the newbies. In 1970, for example, law schools awarded only about one-third of the number of JDs conferred in 2010.

— To his credit, NALP’s Leipold went behind the 88% employment rate for the class of 2009. The resulting caveats are significant.

First, the percentage employed are graduates “for whom employment status was known.” Who’s excluded? Who knows?

Second, nearly 25 percent of all reported jobs were temporary; more than 10 percent were part-time.

Third, only 70 percent “held jobs for which a J.D. was required.” Unfortunately, law schools don’t offer tuition refunds (or relief from student loans) for education that was unnecessary for their graduates’ actual employment opportunities. That doesn’t surprise me. (See “Law School Deception.”)

Finally, more than 20 percent of employed graduates from the class of 2009 “were still looking for work.” Beneath the veneer of superficially good news — having a job — career dissatisfaction continues to eat away at too many of the profession’s best and brightest in yet another generation.

That doesn’t mean people shouldn’t go to law school. It means that they should think carefully about it first, starting with this question: why do I want to be a lawyer and will the reality of the job match my expectations?

Turning the employment subject toward big law leads to one more lesson on perspective.

A day after the Ashby Jones and James Leipold articles, the WSJ‘s Nathan Koppel summarized big law’s continuing job-shedding: the NLJ 250 lost another 3,000 in 2010, bringing their total decrease since 2008 to 9,500. They may be hiring some new associates, but they’re getting rid of many more.

NALP expects to release its 2010 employment data in May. But every big law leader knows that May’s true importance lies in a much more significant event: annual publication of the Am Law 100. For some partners, pre-release anxiety is palpable, if not paralyzing.

This year, average equity partner profits for the Am Law 100 went up by over 8% — to almost $1.4 million. For context, that surpasses 2007, which was the peak of an uninterrupted five-year PPP run-up. Pretty stunning for an economy that remains difficult for so many. Gross revenues increased as overall headcount dropped by almost 3%. More revenues from fewer attorneys meant more billables — mislabeled as higher “productivity” in big law terms — for the chosen. (See “The Misery Index.”) As jobs remained scarce and associate hours climbed, equity partner earnings continued their ascent.

How much is enough? For some people, the answer will always be more; short-term metrics that maximize current PPP guide their way. Life is easy when deceptively objective numbers make solutions simple, reflection unnecessary, and the long-term someone else’s problem. It’s just a matter of perspective.

DEBT LOADING

Posted on April 25, 2011 by thebellyofthebeast

The University of Virginia Law School has offered its unemployed 3Ls stipends to defray the cost of bar application fees ($500) and bar exam prep courses ($1500). This follows a protest during admitted students weekend when some UVA students wore (and sold) T-shirts saying, “$40,000 a year and no jobs.” Of course, such public turmoil is the tip of a mammoth iceberg that isn’t limited to UVA.

The absence of jobs — even for graduates of top schools — is especially dire because repayment of educational loans typically begins when higher education ends. The collateral damage of such debt can persist for generations. As one analyst recently told the NY Times, “A lot of people will still be paying off their student loans when it’s time for their kids to go to college.” According to the same Times article, last year’s college graduates left school with $24,000 in debt.

For those moving on to law school, $24,000 soon looks like the good old days. The 2009 Law School Survey of Student Engagement reported this stunner:

“The percentage of full-time U.S. students expecting to graduate owing more than $120,000 is up notably in 2009…29% of students expect to graduate with this level of debt.” Almost half of all law students expect to cross the $100,000 debt threshold before getting their degrees.

Here’s the disconnect: according to the Bureau of Labor Statistics, the median salary for all lawyers nine months after graduation is $68,500. Try servicing $120,000+ debt on that budget. Average compensation for all attorneys in the United States is $129,000 a year.

Why the gap between investment and reward? A better question is, why not? The BLS numbers don’t appear in law school recruiting brochures that are more likely to tout big law’s $160,000 starting salaries. Nor do they disclose the downside that comes with those high-paying jobs.

Likewise, most schools don’t report meaningful employment data, either. When they collectively tell U.S. News that the most recent average employment rate nine months after graduation is 93%, something is amiss — like the fact that employed can mean being a greeter at Wal-Mart or flipping burgers at McDonald’s. In an insightful new article, Professor Paul Campos calculates the true rate — graduates with full-time legal jobs nine months out — to be well under 50%.

Revealing the truth would almost certainly drive down applications, compromise U.S. News rankings, and threaten law schools’ bottom lines. That might force many deans to reconsider what they’re doing to their own students. Too many administrators hide behind rhetoric — “free choice,” “markets work,” and “students should take personal responsibility” — as excuses to disregard their own roles as the profession’s most important fiduciaries. When ignorance and misinformation reign, choices are distorted and markets don’t work. I often wonder if law school deans who have kids the same age as those they’re duping behave differently from the rest. Or do they fault students’ “failure to take responsibility,” too?

My article, “Great Expectations Meet Painful Realities,” appearing in the current issue of the Seventh Circuit Bar Association’s semi-annual publication, Circuit Rider has more on this (starting at page 24).

Fraud can be overt — by commission — or it can occur by omission when there’s a duty to speak. Revealing good facts can create an obligation to disclose the bad ones. Greater candor won’t stop the flow of talented applicants to law schools. Nor should it. The legal profession is still a noble calling. But it has also become a way for some educational institutions improperly to persuade the next generation to mortgage its own future — literally.

Some call it the next big bubble. If it bursts, I’m not sure what that will mean. Because of statutory revisions in 2005, bankruptcy doesn’t discharge student loan debt unless the difficult “undue hardship” test is met. The era of big bailouts has passed, so that’s an unlikely solution as well.

Perhaps we’ll see a new growth industry in the revival of an ancient concept: debtors prisons. Law school deans who lost sight of their true obligations to their students and their profession should run them — without pay.

THE U OF C’s BIG LEAP FORWARD

Posted on March 24, 2011 by thebellyofthebeast

My thanks to the standing room-only crowd that turned out to hear about my new legal thriller, The Partnership, at the Virginia Festival of the Book in Charlottesville. That delightful town is, of course, the home of a great university that includes a law school worthy of Thomas Jefferson’s pride.

While I was there, it occurred to me that when law schools get it wrong, they deserve the scorn that comes with a public spotlight. When they get it right, they should bask in its warm glow. The University of Chicago Law School recently got it right. Really right.

It’s ironic. The home of the Chicago School — where free market self-interest reigns and the economic analysis of the law has been an article of faith for a long time — has adopted a loan repayment program that sends students this powerful message:

There’s more to life after law school than pursuing big law’s elusive financial brass rings. If you take the large firm path, do so because it’s what you want, not because you have no other financial options.

This must shock deans who have pandered to the large law firm constituencies that hire some graduates for the best-paying starting associate jobs. Former Northwestern Dean David Van Zandt made himself the most visible and ardent proponent of that approach. The U of C’s new program doesn’t ignore big law as a potential employer of its graduates. In fact, it led all other schools in the NLJ 250‘s most recent list of big firms’ “go-to schools.” But it now tells the country’s top students that even if they don’t want big law, the U of C still still wants them — so much that it will pay their way.

It’s unique. For example, Harvard has a respectable Low-Income Protection Program. In 2008, it went a step farther and announced a plan forgiving third-year tuition in return for five years of post-graduate public service, but overwhelming student demand made it a casualty of the financial crisis. In its place, Harvard now provides limited funds to encourage public interest work on a case-by-case basis. Other schools, including Northwestern, have loan forgiveness programs, too, but none appears to be as good as the University of Chicago’s new one.

A single line from its website description says it all:

“This means that a graduate who engages in qualifying work for 10 years, earns less than the salary cap, and maintains enrollment in the federal Income-Based Repayment Program, will receive a FREE University of Chicago Law School education!”

“Qualifying work” is public interest broadly defined as “the full-time practice of law, or in a position normally requiring a law degree, in a non-profit organization or government office, other than legal academia.” It includes judicial clerkships.

The “salary cap” is $80,000 and doesn’t include spousal income. That combination seems to beat Harvard, Yale, and Stanford. (Caveat: The differences across school programs can be significant and prospective students should consider their own circumstances, run the numbers, and determine which one produces the best individual result.)

The program is a reasoned response to practical realities. First, big law cannot accommodate all top law school graduates, even if deans try to put them there and all want to go.

Second, the burden of law school debt shapes career decisions that lead too many lawyers to dissatisfying careers and unhappy lives, especially in large firms.

Third, the upcoming generation of prospective attorneys wants options other than large firms. To be sure, many lawyers find that such places are a good fit for their personalities and ambitions. But in recent years, such individuals have become a shrinking minority of the people heading in that direction. The profession should encourage attorneys who will become unhappy in such institutions to avoid them in the first place. Imagine a big law world populated exclusively with lawyers who wanted to be there.

Finally, the program is a reminder that the law is a great calling. Law schools aren’t big law assembly lines, grinding out graduates for firms where nobility too often yields to a business school mentality that prizes misguided metrics — billings, billable hours, leverage ratios, and average partner profits — above all else. The best law schools are uniquely positioned to level a playing field that now tilts students toward large firms.

Whatever else they accomplish, the U of C’s actions bring important attention to student alternatives that sometimes get lost in the myopic focus on big law. Now that’s leadership.

LAW SCHOOL DECEPTION — PART II

Posted on March 3, 2011 by thebellyofthebeast

The National Law Journal just published its annual list of “go-to” schools — those that supply the most new associates to large law firms. Clearly, lower tier students aren’t alone in struggling to find jobs. One top school’s ride on the NLJ 250 rankings roller coaster is particularly interesting and instructive.

Northwestern jumped from eleventh to second place on the list in 2007. Then-Dean David Van Zandt credited the “tremendous effort to reach out to employers,” along with the emphasis on enrolling students with significant postgraduate work experience, as attracting big firm recruiters. Last year, Northwestern took the number one spot.

But in 2010, the school dropped to eighth — a relative decline that overall market trends don’t explain, but growing class size does. Northwestern awarded 234 JDs in 2007; the 2010 class had 50 more — 284. One reason: misguided short-term metrics became guiding principles.

Two years ago, the ABA Journal reported that Northwestern had become one of the most aggressive recruiters of transfer students (adding 43 to the first-year class). Such students were a win-win for short-term metrics-lovers: Their undisclosed LSATs didn’t count in the U.S. News rankings and their added tuition boosted the financial bottom line.

Meanwhile, Northwestern’s “go-to” position could continue dropping next year because the class of 2011 will include another new contingent — the first group of accelerated JDs. That program emerged from focus groups of large law firm leaders — part of the dean’s outreach program — who helped to shape Northwestern’s long-range strategic document, Plan 2008, Building Great Leaders for the Changing World.

That leads to another point: leadership. Defining a law school’s proper mission is critically important. There’s nothing wrong with getting input from all relevant constituencies, including large law firms. But retooling curriculum to fulfill big law’s stated desires for associate skills is a dubious undertaking.

In February 2010, Van Zandt explained his contrary rationale during a PLI presentation to large firm leaders. Simply put, he saw starting salaries as setting the upper limit that a school can charge for tuition. Accordingly, attending law school makes economic sense only if it leads to a job that offers a reasonable return on the degree’s required financial investment. However valid that perspective may be, the slipperiness of the resulting slope became apparent when Northwestern’s laudable goal — updating curriculum — focused on satisfying big firms that paid new graduates the most.

Tellingly, in the ABA’s Litigation quarterly, Van Zandt explained that high hourly rates made clients “unwilling to pay for the time a young lawyer spends learning on the job…As a result, the traditional training method of associate-partner mentoring gets sacrificed.” Law schools, he urged, should pick up that slack.

But the traditional training method gets sacrificed only because the firms’ prevailing business model doesn’t reward such uses of otherwise billable time. Rather than challenge leaders to reconsider their own organizations that produce staggering associate attrition rates and many dissatisfied attorneys, the dean embraced their short-term focus — maximizing current year profits per partner.

Relatively, Northwestern still fares well in the “go-to” rankings, but the data depict a dynamic exercise in magical thinking. Among the top 20 schools, it led the way in increasing class size as the school’s absolute big law placement numbers steadily declined: 172 in 2007; 154 in 2008; 142 in 2009; 126 in 2010.

Most law schools feel the continuing crunch. Overall, the top 50 law schools graduated 14,000 new lawyers in 2010; only 27% went to NLJ 250 firms — a drop of three percentage points (400 lawyers) from 2009. But that only highlights an obvious question: Why should that shrinking tail wag any dog? A diversified portfolio of career outcomes less dependent on large firms is a more prudent plan for schools and their students.

Even if jobs reappear, there’s another reason to combine balance with candor: Recent surveys indicate that a majority of large firm attorneys become dissatisfied with their careers anyway. Those metrics never appear on law school websites. Deans are uniquely positioned to help prospective students make informed decisions. They could serve the profession by focusing less on marketing and more on giving prospective students the truth, the whole truth, and nothing but the truth. If only there were a metric for it.

ON AMY CHUA

Posted on January 18, 2011 by thebellyofthebeast

I have three questions about Amy Chua’s new book:

1. Where’s Dad?

By now, almost everyone knows that Chua followed what she calls the “Chinese way” of child-rearing. She and her husband, fellow Yale Law professor Jed Rubenfeld, agreed to it before the birth of their first daughter. Her book’s most unsettling vignettes demonstrate the technique: rejecting her four-year-old’s handmade “Happy Birthday Mummy” card as inadequate; refusing to allow bathroom breaks from piano practice; threatening to burn a child’s stuffed animals if she didn’t play a recital piece perfectly; calling her child “garbage.”

I was home for family dinners and coached all of my sons’ little league and daughter’s softball teams, so I wondered how Chua’s husband fit into this mess. In an interview with The Guardian (http://www.guardian.co.uk/lifeandstyle/2011/jan/15/amy-chua-tiger-mother-interview), Chua gave this hint:

“‘All the way through, Jed was bringing balance to the family, insisting that we were going to go on family bike rides and to Yankees games and apple-picking and water slides and bowling and mini-golfing, so we socialised a lot actually …’.”

But another passage suggests that he just checked out: “He said, ‘Look, this is your book. I supported you but you were the one that had a strong world-view about how to raise your kids. It’s your world-view, it’s your book.'”

Chua is a high-powered whirlwind who admitted to The Guardian that she loses her temper, is harsh, and yells — so much that she fears her daughters will follow her example. If that misbehavior broke Jed, too, then it explains his absence from the book’s subtitle: “This is a story about a mother, two daughters, and two dogs.”

2. Can Chua think outside her own box?

The mind is fragile. I think individuals at the high end of the standard normal intelligence curve feel most acutely life’s greatest psychological challenges — especially during adolescence. Both of Chua’s daughters are gifted. Like thoroughbred race horses, they merit special handling; not coddling — handling. For a long time, they didn’t get it.

Chua backed off her extreme approach after younger daughter Lulu, then 13, exploded publicly. She smashed a glass and screamed, “I’m not what you want – I’m not Chinese! I don’t want to be Chinese. Why can’t you get that through your head? I hate the violin. I hate my life. I hate you, and I hate this family!”

Now add this data. The Department of Health and Human Services reports that Asian-American women ages 15-24 have the highest suicide rate of women in any race or ethnic classification in that age group. Suicide is the second-leading cause of death for Asian-American women in that age range; family pressures to achieve are a contributor. (http://articles.cnn.com/2007-05-16/health/asian.suicides_1_asian-american-families-asian-women-asian-american-parents?_s=PM:HEALTH) Lulu’s outburst opened Chua’s eyes; it also might have saved Lulu’s own life.

Yet in a recent interview on NBC Nightly News, Chua said that she’d make only “small adjustments” in pursuing the same parenting strategy again. Admitting error isn’t her strong suit; maybe additional practice drills will help.

3. What’s ahead?

Chua has published an ongoing, uncontrolled, and incomplete experiment. Unfortunately, other parents might view her — a Harvard graduate teaching at Yale (where they don’t give grades, by the way) — as providing a template for others. Certainly, a parent shouldn’t indulge a child’s every whim, or mischaracterize mere participation as excellence.

But there’s something to be said for parenting, even in tough-love situations, that maintains fundamental respect for the child as a human being. Retrospective reassessment is difficult for anyone, but I hope someday Chua’s kids can revisit their mother’s definition of success to decide whether they want it to be theirs.

How will Chua’s children — now 18 and 14 — ultimately fare? No one will know the answer for decades. Regrettably, their mother has now made them a subject of continuing scrutiny. Chua said that every friend and family member who read her manuscript urged her not to publish it. She ignored that advice and has another achievement — a best-seller whose author embodies the difference between intelligence and wisdom.

LAW SCHOOL DECEPTION

Posted on January 12, 2011 by thebellyofthebeast

Last Sunday, the NY Times asked: Are law schools deceiving prospective students into incurring huge debt for degrees that aren’t worth it?

Of course they are. The U.S. News is an aider and abettor. As the market for new lawyers shrinks, a key statistic in compiling the publication’s infamous rankings is “graduates known to be employed nine months after graduation.” Any job qualifies — from joining Cravath to waiting tables. According to the Times, the most recent average for all law schools is 93%. If gaming the system to produce that number doesn’t cause students to ignore the U.S. News’ rankings altogether, nothing will.

My friend, Indiana University’s Maurer School of Law Professor Bill Henderson, told the Times that looking at law schools’ self-reported employment numbers made him feel “dirty.” I assume he’s concerned that prospective students rely on that data in deciding whether and where to attend law school. I agree with him.

But an equally telling kick in the head is buried in the lengthy Times article: Most graduates who achieve their initial objectives — starting positions in big firms paying $160,000 salaries — quickly lose the feeling that they’re winners. Certainly, they must be better off than the individuals chronicled in the article. What could be worse than student debt equal to a home mortgage, albeit without the home?

Try a legal job with grueling hours, boring work, and little prospect of a long-term career. Times reporter David Segal summarized the cliche’: “Law school is a pie-eating contest where first prize is more pie.”

These distressing outcomes for students and associates aren’t inevitable. In fact, they’re relatively new phenomena with a common denominator: Business school-type metrics that make short-term pursuit of the bottom line sterile, objective, and laudable. Numbers prove who’s best and they don’t lie.

Law school administrators manipulate employment data because they have ceded their reasoned judgment to mindless ranking criteria. (“[M]illions of dollars [are] riding on students’ decisions about where to go to law school, and that creates real institutional pressures,” says one dean who believes that pandering to U.S. News rankings isn’t gaming the system; it’s making a school better.)

Likewise, today’s dominant large firm culture results from forces that produced the surge in average equity partner income for the Am Law 50 — from $300,000 in 1985 to $1.5 million in 2009. Leveraged pyramids might work for a few at the top; for everyone else — not so much.

The glut of law school applicants, as well as graduates seeking big firm jobs to repay their loans, leaves law school administrators and firm managers with no economic incentive to change their ways. The profession needs visionaries who are willing to resist perpetuating the world in which debt-laden graduates are becoming the 21st century equivalent of indentured servants.

Henderson calls for law school transparency in the form of quality employment statistics. I endorse his request and offer a parallel suggestion: Through their universities’ undergraduate prelaw programs, law schools should warn prospective students about the path ahead before their legal journeys begin.

Some students enter law school expecting to become Atticus Finch or the lead attorneys on Law & Order. Others pursue large firm equity partnerships as a way to riches. Few realize that career dissatisfaction plagues most of the so-called winners who land what they once thought were the big firm jobs of their dreams.

A legal degree can lead to many different careers. The urgency of loan repayment schedules creates a practical reality that pushes most students in big law’s direction. If past is prologue, the vast majority of them will not be happy there. They should know the truth — the whole truth — before they make their first law school tuition payments. Minimizing unwelcome surprises will create a more satisfied profession.

Meanwhile, can we all agree to ignore U.S. News rankings and rely on our own judgments instead of its stupid criteria? Likewise, can big law managers move away from their myopic focus on the current year’s equity partner profits as a definitive culture-determining metric? I didn’t think so.

“LIES, DAMN LIES, AND STATISTICS”

Posted on November 16, 2010 by thebellyofthebeast

ALM editor-in-chief Aric Press penned a provocative article about Indiana Law Professor Bill Henderson’s for-profit venture on recruiting, retention, and promotion. (http://amlawdaily.typepad.com/amlawdaily/2010/11/pressconventionalwisdom.html) The WSJ law blog and ABA Journal covered it, too. (http://blogs.wsj.com/law/2010/11/15/on-law-firms-and-hiring-is-a-new-paradigm-on-the-way/) Henderson is analyzing why some attorneys succeed in Biglaw and others don’t.

Does anyone else find his project vaguely unsettling?

At first, I thought of the venerable computer programming maxim, “garbage in, garbage out.” That’s because he’s asking Am Law 200 partners to identify values and traits they want in their lawyers — and he’s assuming they’ll tell him the truth. But will they admit to seeking bright, ambitious associates wearing blinders in pursuit of elusive equity partnerships typically awarded to fewer than 10% of large firm entering classes? Or that such low “success” rates inhere in the predominant Biglaw business model that requires attrition and limits equity entrants to preserve staggering profits?

Then I considered Mark Twain’s reflections on the three kinds of falsehoods: “Lies, damn lies, and statistics.” It came to mind because Henderson’s researchers “pour over the resumes and evaluations of associates and partners trying to identify characteristics shared by those who have become ‘franchise players’ and those who haven’t.” Here’s what those resumes and evaluations won’t reveal: the internal politics driving decisions.

Most Biglaw equity partners are talented, but equally deserving candidates fail to advance for reasons unrelated to their abilities. Rather, as the business model incentivizes senior partners to hoard billings that justify personal economic positions, those at the top wield power that makes or breaks young careers — and everybody knows it. Doing a superior job is important, but working for the “right” people is outcome determinative. Merit sometimes loses out to idiosyncrasy that is impervious to Henderson’s data collection methods.

But perhaps the biggest problem with Henderson’s plan is it’s goal: identifying factors correlating with individual success. Does the magic formula include “a few years in the military, a few years in the job force, or a few years as a law review editor?”

If managers warm to Henderson’s conclusions (after paying his company to develop them), they’ll leap from correlation to causation, develop checklists of supposed characteristics common to superstars like themselves, and hire accordingly. Law schools pandering to the Biglaw sliver of the profession (it’s less than 15% of all attorneys) could take such criteria even more seriously. Before long, prospective students will incorporate the acquisition of “success” credentials into their life plans.

The difficulty is that today’s Biglaw partners already favor like-minded proteges. That inhibits diversity as typically measured — gender, race, ethnicity, sexual orientation, and the like — along with equally important diversity of views and a willingness to entertain them. Even today, concerned insiders are reluctant to voice dissent from Biglaw’s prevailing raison d’etre — maximizing short-term profits at the expense competing professional values and longer-term institutional vitality. Won’t meaningful diversity — of backgrounds, life experiences, and resulting attitudes about professional mission — suffer as groupthink makes firms even more insular? Meanwhile, trying to improve overall “success” rates is a futile goal; they won’t budge until the leveraged pyramid disappears.

I don’t fault Henderson, who bypassed Biglaw practice for academia after his 2001 graduation. But Press’s warning is important: “To some extent, it doesn’t matter what Henderson and Co. discover. What matters is that the inquiries have begun…If we’ve learned anything from the last decade, it’s that we can’t predict the consequences of new information beyond acknowledging its power to disrupt.”

Consider two unfortunate examples. The flawed methodology behind U.S. News’ law school rankings hasn’t deterred most students from blindly choosing the highest-rated one that accepts them. (Exorbitant tuition and limited job prospects may be changing that.) Likewise, Biglaw’s transformation from a collegial profession to a short-term bottom-line business accelerated after publication of average partner profits at the nation’s largest firms (then the Am Law 50), beginning in 1985; I just published a legal thriller describing that phenomenon. (http://www.amazon.com/Partnership-Novel-Steven-J-Harper/dp/0984369104)

The most important things that happened to me — in Biglaw and in life — were fortuitous. No statistical model could have predicted them. Still, I hope Henderson’s study answers an important question: Would his likely-to-succeed factors have led any firm to hire me?

SOLVING THE BIGLAW MYSTERY OF GROWING CAREER DISSATISFACTION

Posted on September 30, 2010 by thebellyofthebeast

Clues that explain the growing ranks of dissatisfied Biglaw attorneys are everywhere — even on C-Span. I’d intended to watch the recently televised replay of a judicial conference panel discussion for a few minutes, but the ongoing train wreck captivated this onlooker for an hour. I wonder if I can get CLE credit?

Participants included a Biglaw managing partner, the general counsel of Fortune 100 company, and a professor at a top law school. The absence of a law firm management consultant was surprising; they’re ubiquitous.

There’s no reason to name the Biglaw partner or his firm because his views are mainstream — and reveal why attorney career dissatisfaction continues to increase more rapidly in large firms than elsewhere. Here’s a synopsis of his comments:

1. Law schools should turn out project managers. That’s what he and his clients really need because front line opportunities — such as trials for litigators — are disappearing.

2. In their first days at his firm, new associates learn about its finances: “They realize that our 35% profit margins are fragile. They understand the importance of billing their time. They know more about the firm’s finances than I did as a first-year partner.” He didn’t mention Am Law‘s most recent report that his firm’s average equity partner profits exceeded $1 million. Everyone avoided that elephant in the room.

3. When asked whether associates today felt greater work-related pressures, he was adamant: “No. People today are nostalgic for a time that never existed. As an associate, I worked hundreds of hours a week reviewing documents. Today’s associates don’t work any harder, just differently. They leave the office, have dinner with their families, help put the kids to bed, and then work from their home computers. So they actually have it better than I did.”

The client representative on the panel followed with a line that generated the day’s biggest laugh: “I’m wondering how you billed hundreds of hours a week when there are only 168 hours in a week. But then I realized that you were talking about the bill you sent the client!”

No one asked the Biglaw partner an obvious and unsettling question: His firm’s NALP directory reports an associate minimum requirement of 2,000 billable hours yearly. What was the requirement in the early 1970s, when he was an associate? (Answer: There wasn’t one. There also weren’t cellphones or BlackBerrys that tether today’s attorneys to their jobs — 24/7.)

The law professor responded that law schools can’t train project managers because they’re not business schools. Besides, the law requires something different from such vocational-type training. He could have added that fewer that 15% of all attorneys comprise the NLJ 250, thereby prompting the obvious follow-up: Why should law schools tailor curriculum to satisfy such a small segment of the profession anyway?

“With highly paid starting positions in big firms disappearing,” he concluded, “what am I supposed to tell incoming students they’ll be getting for the $150,000 required to obtain a law degree?” No one suggested the truth, however he saw it.

The general counsel disagreed with the Biglaw partner on a key point: “I don’t hire lawyers to be project managers. I want their best judgments and special skills.” The Biglaw partner replied that perhaps the GC didn’t really know what he wanted or needed.

The audience submitted written questions; the best came from a judge: “I didn’t go to law school to become rich. Why is everything so focused on the money? Is professionalism gone and, if so, how do we recover it?”

When such panels include attorneys willing to speak truth to power, we’ll hear honest answers to those inquiries. But who wants that?

INTERVIEWING SEASON — THE MORE THINGS CHANGE…

Posted on September 1, 2010 by thebellyofthebeast

Labor Day is a good time to talk about getting a job. When it comes to Biglaw, I’ve been on both sides of that table. As interviews proceed on law school campuses, I wonder, “If I were a law student today, what would I ask big firm representatives?”

Here’s my answer: the same question that I posed to them 30 years ago. Before revealing it, I offer a few thoughts from an insider’s perspective.

Every law student knows the two-step process. Grades, life experience, and the campus interviewer’s subjective reactions combine at the first stage to answer a single question: Should the recruit receive an invitation to visit the firm’s offices for more interviews that, if successful, will culminate in a job offer?

As I conducted such interviews, I also asked myself what I assumed students were asking themselves about me:

“Is this someone with whom I’d want to work — perhaps for a long time?”

The process involved judgments about which reasonable partners differed. Personally, I was looking for brains and the interpersonal competence to use them effectively. I gave the nod only to those whom I thought would pass muster at the next level and receive offers. There was no reason to waste anyone’s time.

Can a student influence the exercise?

Grades and resumes are what they are, so there’s not much maneuvering room there. Even so, thoughtful interviewers are looking for something more: a relaxed, engaging conversation. How can a student help to achieve it?

This sounds trite, but being authentic is the best strategy because that’s how you’re most comfortable. What have you accomplished if someone likes the person you pretend to be? How long can you maintain that facade? Through the second stage of attorney interviews at a firm? For a summer, if you get an offer? Until you become a non-equity partner? You’ll lose yourself if you start down that road.

Eventually, most recruiters will ask if an interviewee has any questions. Generally, students are reluctant to raise controversial topics. I didn’t, either. Perhaps it was cowardice, but I like to think that I developed a more subtle path to a firm’s jugular. Subject to modification for a particular interviewer’s age, here it is:

“Can you briefly sketch your own career highlights at the firm as, say, a second-year associate, a fifth-year associate, a non-equity partner, and now?”

The question works for both stages of the interview process — on campus and in the office. Lawyers love to talk about themselves and, if you pay attention, you can learn much from the responses.

For example, when a young partner in a prestigious New York firm told me that he’d spent his 10 years there on a single large lawsuit and still hadn’t seen the inside of a courtroom (or much of his family), I learned everything I needed to know about the place. It was — and remains — a great firm of talented attorneys. But I’d attended law school for reasons that seemed unrelated to what he was doing with his life.

Conversely, a fourth-year associate from another big firm told me that he’d recently first-chaired and won a federal jury trial. That sounded like a better fit for my lawyerly ambitions.

Of course, that was then. Any recruit looking for the New York experience that I shunned 30 years ago can find it in most large firms everywhere today. On the other hand, a first-chair trial for any Biglaw associate is rare because small cases offering such opportunities fall outside the current metrics-driven business model in two respects: 1) The limited stakes render associates’ huge hourly rates prohibitive, and 2) a firm’s average profits-per-equity-partner are higher when associates become absorbed into the leverage calculation on large matters.

But the salient point of my earlier inquiry still holds. The experiences of an attorney who has been with the same firm for several years are relevant to potential newcomers. Those listening carefully — and hearing between the spoken lines — can glean important truths about opportunities, mentoring, lifestyle, working environment, and firm culture. If the interviewer is a lateral hire, the answers provide different insights.

So while you’re busy hoping that a firm will offer you employment, you’ll also be getting information that will help you decide whether it’s a job you really want (and for how long). The effort could prevent you from becoming another statistic, namely, one of the more than half of practicing lawyers who are so dissatisfied that they counsel young people to avoid a legal career altogether.

One final point: I, too, labored under constraints that still persist, namely, enormous student loans that leave new graduates little room to maneuver. Get any job now; figure out a way to tolerate it later; repay crushing educational debt; then regroup. I get it.

But law students posing the right questions might cause some big firm interviewers to revisit their own careers, institutions, and lives. As others within the profession raise serious questions about the dominant Biglaw business model, its impact, and its future, a gentle nudge from the next generation can’t hurt.

MIRED IN METRICS? HAVE SOME MORE!

Posted on August 5, 2010 by thebellyofthebeast

Once a bad situation spins out of control, is there any way to corral it? When all else fails, try making things worse.

The ABA recently released its report detailing just a few of the ways that U.S. News law school rankings have been counterproductive for prospective lawyers and the profession — from driving up the costs of legal education to driving down the importance of diversity. (http://www.abanet.org/legaled/nosearch/Council2010/OpenSession2010/F.USNewsFinal%20Report.pdf)

As U.S.News now develops law firm rankings, the report concludes with an ominous warning:

“Once a single rankings system comes to dominate a particular field, it is very difficuly to displace, difficult to change and dangerous to underestimate the importance of its methodology to any school or firm that operates in the field. This, we believe, is the most important lesson from the law school experience for those law firms who may be ranked by U.S. News in the future.”

In other words, rankings sometimes function as any so-called definitive metric: They displace reasoned judgment. Independent thought becomes unnecessary because the methodology behind the metric dictates decision-makers’ actions.

Since 1985, many big firms have become living examples of the phenomenon. That year, The American Lawyer published its first-ever Am Law 50 list of the nation’s largest firms. Most firm leaders now teach to the Am Law test, annually seeking to maximize revenues and average profits per equity partner. The resulting culture of billings, billable hours, and associate/partner leverage ratios begins to explain why surveys report that large firm lawyers lead the profession in career dissatisfaction.(http://www.abajournal.com/magazine/article/pulse_of_the_legal_profession/print/) Without a metric for it, attorney well-being — and the factors contributing to it — drop out of the equation.

Courtesy of U.S. News, large firms now stand on the threshhold of more metrics. Will they make working environments of firms that have succcumbed to the profits-per-partner criterion worse?

It depends, but more of yet another bad thing — rankings — could produce something good — forcing individuals to sift through contradictory data, think for themselves, and make a real decision. But that can happen only if U.S. News produces a list of “best law firms” that bears little resemblance to the rank ordering of the Am Law 100 in average equity partner profits. Such contradictory data would confuse newly minted attorneys and force them to develop their own criteria for decision.

The American Lawyer itself provides a useful example of the possibilities. Eight years ago, it began publishing the Am Law “A-List,” which has gained limited traction as a moderating influence on the Am Law average profits-per-equity-partner metric that otherwise dominates decision-making at most big firms. The A-List’s additional considerations bear on the quality of a young lawyer’s life — associate satisfaction, diversity, and pro bono activities. The myopic focus on short-term dollars still dominates decisions in most big firms, but the A-List has joined the conversation.

What methodology will U.S. News employ in evaluating law firms? If it follows the approach of its law school ranking counterparts, many firms will game the system, just as some law schools have. (See my earlier article, “THE U.S. NEWS RANKINGS ARE OUT!” (https://thebellyofthebeast.wordpress.com/2010/04/16/the-us-news-rankings-are-out/)) But misguided and manipulatable metrics aren’t inevitable.

Talent is essential for any successful firm, large or small. Other qualities — collegiality, mentoring, community, high morale accompanying a shared sense of professional purpose — make a workplace special. Can the U.S. News find ways to measure those qualities?

That’s the challenge. But I fear that students won’t bother focusing on the U.S. News methodology or its flaws. More likely, whatever rankings emerge from the process will provide — as they have for so many deliberating the choice of a law school — an easy final answer.

Ceding such control over life’s direction to others is rarely a good idea. There is no substitute for personal involvement in deciding the things that matter most. That means asking recruiters tough questions, scrutinizing the lives of a firm’s senior associates and partners, and finding role models who are living a life that a new attorney envisions for her- or himself.

In the end, the current large firm business model and its self-imposed associate/partner leverage ratios will continue to render success — defined as promotion to equity partnership — an elusive dream for most who seek it. For those who become dissatisfied with their jobs, time passes slowly. So everyone joining a big firm — even a person intending to remain only for the years required to repay student loans — has ample incentive to get that first big decision after law school correct.

So why would intelligent young attorneys let U.S. News’ self-proclaimed experts make it with something as silly as a ranking? Probably for the same reasons that they relied on U.S. News to make their law school decisions for them three years earlier.

Someday, maybe there will be a U.S. News formula for choosing a spouse. Then won’t life be simple?

WHO’S LAZY?

Posted on June 23, 2010 by thebellyofthebeast

My new novel, The Partnership, has led to some interesting conversations with other lawyers, especially biglaw partners.(http://www.amazon.com/Partnership-Novel-Steven-J-Harper/dp/0984369104/ref=sr_1_1?ie=UTF8&s=books&qid=1273000077&sr=1-1)

“Here’s the problem with young associates today: they’re lazy,” barked a middle-aged man at a recent dinner party that I attended. Soon thereafter, he revealed his occupation: partner in an Am Law 100 firm.

“They feel entitled. They want to make the big bucks, but they don’t want to put in the hours,” he continued indignantly.

Biglaw partners say that a lot. Many regard themselves as special in ways that few young people today ever can be. It’s a form of magical thinking that rationalizes hubris, bad behavior, and arbitrary decisions.

“It’s more complicated,” I suggested after confessing that I’d recently retired after 30 years in a big firm that he respected. “For the last three years, I’ve taught an undergraduate seminar that has given me a different perspective. Ultimately, my students inspired me to write my latest book.”

“How so?” he asked.

“As you know, law school has long been the last bastion of liberal arts majors who didn’t know what to do next. Once they got there, the pressure to get a high-paying job at a big firm began. But most students heading that way had no idea what their lives at such places would be like. When reality struck, many didn’t like it.”

He nodded.

“That’s one reason lawyers are among the most dissatisfied workers in our society. It’s also why, before the Great Recession, the five-year associate attrition rate from big firms exceeded 80%.”

“I didn’t realize it was that high,” he interjected.

“Contributing to all of this is the business model that has overtaken most large firms over the past 20 years,” I continued. “It requires associate and non-equity partner attrition to increase leverage ratios and enhance equity partner profits. Being a good lawyer doesn’t mean the firm will have room for you as an equity partner. The resulting behaviors have dramatically changed the culture of most big firms.”

“You’re right,” he said as he inadvertently moved to his own unhappy plight. “People don’t understand what it means to go from 1,600 to 1,800 to 2,000 billable hours a year. Once you become a partner, it’s even harder. You can’t bill all of the time you spend on client development, but those hours are just another form of work.”

“We agree,” I suggested. “The job turns out to be much different from what most undergraduates expect, insofar as they have any expectations at all. In fact, even as an equity partner, your firm’s increased billable hour requirements have changed your job while you held it, right?”

“True,” he admitted.

“So you’re a victim of the MBA mentality of misguided metrics, too. When reality clashes with young attorneys’ idealized expectations, you have a prescription for psychological disaster. Factor in a business model that myopically focuses on a few metrics — billings, billable hours, and leverage — and look at the result.”

The biglaw partner then revealed his secret: “My son is thinking about going to law school. I told him to stay away from big firms.”

“You’re not alone,” I assured him. “The most recent ABA study shows that 60% of attorneys practicing 10 years or more advise young people against a legal career. As a group, biglaw attorneys are the most dissatisfied; public sector lawyers are happier.”

The senior partner nodded. Long ago, he confessed, his career began in government.

“So we’re back where you started this conversation,” I suggested, “– associate motivation.”

“How so?”

“When an entering class of, say, 50 new associates figures out that only 10 of them will be around five years later and maybe two or three will eventually become equity partners some unknown number of years after that, how does it affect their behavior? How would it affect yours?”

“Partners would say I was lazy,” he laughed. “I think I’m going to enjoy your new book. I’ll get a copy for my son, too.”

WEIRD TILTS AT THE RANKINGS WINDMILL

Posted on June 7, 2010 by thebellyofthebeast

[UPDATE: On January 1, 2011, Northwestern’s former dean, David Van Zandt, became president of The New School in New York.]

Virtually all law school deans — with the notable exception of Northwestern’s David Van Zandt — have urged prospective law students to ignore U.S. News rankings because they’re methodologically flawed, susceptible to manipulation, and counterproductive to sound student decision-making. None of that seems to bother students, most of whom regard them as authoritative.

I introduced Van Zandt’s outlier position in an earlier post. (https://thebellyofthebeast.wordpress.com/2010/04/16/the-us-news-rankings-are-out/). More can be said about how his business school mentality hurts the school and its students, but not today. Right now, I’m more interested in two recent articles on U.S. News rankings.

First, Mercer University recently named its new dean. That’s not a particularly newsworthy item, especially for an undistinguished school. But the National Law Journal thought otherwise. Presumably, its May 27 headline explained why:

“‘U.S. News’ antagonist lands deanship at Mercer University.” http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202458884379&US_News_antagonist_lands_deanship_at_Mercer_University&hbxlogin=1

So that’s what made Gary Simson’s new job noteworthy? He was a U.S. News antagonist? But that describes every law school dean in the country — except Van Zandt.

Simson had been dean of the Case Western Reserve Law School for 18 months when, in summer 2008, he urged law schools to boycott the U.S. News rankings because deans pandered to them. (http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202423187148)

Dean Van Zandt quickly proved the point. A few months after Simson’s call to arms, the ABA Journal exposed Northwestern’s aggressive recruitment of prospective second-year students whom that school had rejected a year earlier. (http://www.abajournal.com/magazine/article/transfers_bolster_elite_schools/) As transfers, their LSATs wouldn’t count in the U.S. News rankings, but their tuition dollars would go directly to the school’s bottom line.

Nobody asked students in the original 238-person class what they thought of that win-win solution for the business school mentality of misguided metrics. Their class grew by almost 20% in 2006-2007. Ironically, Northwestern’s U.S. News ranking has fallen for each of the last three years — from 9th to 11th.

Unfortunately, Dean Simson was already a wounded warrior when he took up the rankings crusade. He’d generated criticism from faculty, alumni, and donors for a variety of reasons, including Case’s low state bar passage rates (75% for Case first-time takers in February 2008 compared to 95% for Cleveland State’s). In October 2008 — just before another round of bar passage results was released — the university’s president announced that Simson “had agreed to resign.” (http://blog.cleveland.com/metro/2008/10/case_western_reserve_law_schoo.html) So much for the boycott messenger and his message.

Yet now, two years later, Simson’s antagonism toward U.S. News rankings has become his claim to fame. Could skepticism about the rankings be attracting new followers and redeeming old ones?

That leads to the second article, also in the NLJ. The Society of American Law Teachers (SALT) has urged law schools to stop providing U.S. News with incoming students’ LSAT scores. SALT asserts that the pressure on admissions deans to get students with top scores compromises efforts to achieve campus diversity. (http://www.law.com/jsp/article.jsp?id=1202458731270)

It’s a noble gesture, but little more. Starving U.S. News of LSAT scores means only that the magazine will have to get such information from the ABA and the Law School Admission Council, both of which report LSATs at individual schools.

Still, recent noise about the dangers of using flawed rankings criteria as decisive metrics is encouraging. The volume should increase in October when U.S. News releases its newest compilation: rankings of the best law firms.

On that one, U.S. News may have awakened a slumbering giant. In February, the ABA House of Delegates adopted a resolution to investigate the proposed law firm rankings and, while they’re at it, take a close look at law school ranking methods, too.

Perhaps someday wise leaders of our profession will grasp the destructive impact of the rankings game — from law schools to big firms (based on their average-equity-profits-per-partner metric) — and it will all end. But I doubt it.

After all, metrics make life’s decisions so much easier, don’t they? Indeed, they eliminate the need to think at all!

A BETTER ALTERNATIVE OR A LEAP FROM THE FRYING PAN?

Posted on June 3, 2010 by thebellyofthebeast

Thirty years ago, New York was a scary place for me — mostly because I’d never been there. Midwestern curiousity led me to interview with Cravath, Swaine & Moore’s on-campus representative.

I’d heard that its road to success was the toughest. Rumors circulated that it hired twenty new attorneys for every one or two it might promote to equity partner eight or more years later. Not surprisingly, most of my fellow Harvard students regarded Cravath as the quintessential competitive sweatshop — a characteristic that many of my peers actually found attractive.

Not me. I went elsewhere because, in those good old days, there was an elsewhere to go. Cravath is probably not much different from what it was back then. It’s just that most of the biglaw world has followed its example. As other top-50 firms tightened equity partner admission requirements, Cravath just kept doing what it had always done.

Why did firms emulate Cravath? Law student lore made it the best by some undisclosed criteria. In retrospect, I think money had a role. Even back in 1980, it was one of a very few firms where advancement to equity partner meant wealth that was immense, at least for a lawyer.

According to the first ever listing of the Am Law 50 in 1985, Cravath ranked 2nd in profits per partner with $635,000. For those behind it, the descent was steep: the #10 firm was under $400,000; #30 was $255,000; #50 was $170,000.

Cravath blazed a trail to riches that now accompany those who reach biglaw’s summit: average equity partner profits for the entire Am Law 100 exceeded $1.26 million last year.

But Cravath remains different. Most of biglaw moved to two-tier partnerships and eat-what-you-kill systems where a few key metrics — billings, billable hours, and leverage ratios — now determine individual equity partner compensation. Cravath’s single-tier model has reportedly remained lock-step: admission to its partnership means fixed financial rewards over an entire career without regard to individual books of business.

I don’t know if Cravath’s lawyers as a group are any happier than attorneys in other big firms. But the firm is now courting its Generation X’ers. According to the Wall Street Journal, partners in their late-30s and early-40s have “taken a more pro-active approach, building new relationships and handling much of the work that historically would have been taken on by partners in their 50s.” (WSJ, May 28, 2010, C3)

Referring to Cravath’s deferential culture in which young partners traditionally forwarded big deals to older colleagues, the article notes that senior partners have nurtured the new environment that gives younger lawyers earlier name recognition.

Why has it worked so far?

“The older attorneys didn’t mind, partly because the pay they received didn’t get cut as a result,” the Journal observes.

In other words, lock-step allows elders to step out of the spotlight without hits to their pocketbooks.

In the current biglaw world, Cravath’s experiment is risky. Will young partners remain loyal or use their newly gained client power to pursue financial self-interest elsewhere? Will Cravath be forced to modify or abandon lock-step so that it can retain young partners controlling clients and billings?

I don’t know. Equally significant, I suspect those most directly affected by what the article characterizes as a “sea change at one of the best-known and most conservative of white-shoe law firms” don’t know, either.

And what does it mean for new associates trying to understand how this affects the firm’s culture and their own career prospects?

Ah, the things I didn’t think to consider when I was a second-year law student looking for a job about which I knew almost nothing.

Fortunately, students are wiser now, right?

‘TIS THE SEASON

Posted on May 31, 2010 by thebellyofthebeast

As this year’s college seniors graduate, relentless pessimism about their fate abounds. I’m a glass half-full kind of guy, but it’s starting to get to me.

On May 15, the Wall Street Journal offered “A Lament for the Class of 2010.” After reciting the dreadful statistics — 17% of those age 20 to 24 don’t have a job and 2 million college graduates are unemployed — the author discussed the intense competition that new graduates face in seeking jobs as “waitresses, pizza delivery men, file clerks, bouncers, trainee busboys, assistant baristas, and interns at bodegas.”

A May 16 New York Times article provided a more dismal assessment. “Plan B: Skip College” gave graduates the bad news that they might have wasted their time and money on the degrees they’re now receiving. Great. Now you tell them.

Another Times article on May 29 described the unhappy plight of a 2005 NYU graduate who is $100,000 in debt and has few prospects.

And of course, everyone knows about the abuse heaped on the next generation of workers searching for a toe-hold on opportunity through the 21st century version of slave labor: unpaid internships.

Enough, already.

It’s true that many of the nation’s best and brightest are now receiving student loan repayment schedules along with their degrees. Even those who lack educational debt will feel the burden of an economy that deprives them of the psychological satisfaction that comes with a decent job.

Where’s the good news?

Today’s new graduates are rethinking traditionally safe career tracks that aren’t so safe anymore. The legal profession is an example.

In the 1960s, law school was a sanctuary. Deferments from compulsory military service meant three more years of academia instead of rice paddies and bullets in Vietnam. That was a pretty good deal.

When the draft ended, law school offered another kind of sanctuary — it was the last bastion of the liberal arts major who didn’t know what to do next. But it was an acceptable default solution. For a reasonable price, it offered the status of a profession and the realistic prospect of a fulfilling career.

Not anymore. Those looking to weather the current economic storm find that law school is an expensive place to seek shelter. Even worse, its earlier promises of future rewards — not only financial security, but also a satisfying career — have become suspect. In fact, many face a Hobson’s choice: surveys consistently show that today’s unhappiest lawyers work in big firms that pay the most.

That’s actually good news for the next generation of would-be attorneys. The sudden unreliability of the law as a safe path provides an opportunity to regroup. For those who are adequately informed about the experience and remain certain that it’s for them, the law is a sensible choice.

But for the rest, using law school as an excuse for three years of procrastination could be a costly mistake. With crushing debt loads, even many of those who get high-paying legal jobs will find a harsh reality that conflicts with their expectations and aspirations. From there, it’s a short trip to the ranks of unhappy, dissatisfied lawyers. We already have too many of those because the light didn’t dawn on them until they’d passed self-imposed points of no return.

So, recent graduates, as difficult as it may be, consider yourselves lucky. You’ll eventually find yourselves among the most creative, entrpreneurial generation in history because circumstances forced you to think outside the usual boxes as you pursued your passions.

I look forward to seeing the fruits of your efforts.

2,000 HOURS

Posted on May 23, 2010 by thebellyofthebeast

Why is Yale an outlier? Last year, only 35% of its graduates started their careers in large firms. An equal number accepted judicial clerkships; many will eventually join biglaw for a while. Still, Yale has a longstanding pattern of trailing peer institutions that, until this year, routinely placed more than half of their graduating classes directly into big firms.

One explanation is Yale’s public service tradition. Recently, I stumbled onto another: the school encourages candor about associate life in biglaw.

For many reasons — including the quest for perceived status, the urgency of educational loan repayment schedules, and the promise of future riches — most graduates seek initial employment in big firms with stated minimum annual billable hour requirements. Unfortunately, students view such numbers as abstractions.

They don’t pause to consider what it means to say that 2,000 hours has replaced 1,800 as a critical evaluation metric. (A 1958 ABA pamphlet suggested 1,300 as an appropriate yearly goal. Seriously. That would qualify as part-time, non-partner track employment today.)

Yale publishes a brochure that breathes life into the numbers. “The Truth About The Billable Hour” outlines hypothetical workdays and should be required reading for any prospective lawyer.(http://www.law.yale.edu/documents/pdf/CDO_Public/cdo-billable_hour.pdf)

When commuting, lunch, and bathroom breaks get included, the concept of billing 2,000 client hours assumes new meaning. It also provides perspective on legal consultant Hildebrandt Baker Robbins’s observation in its 2010 Client Advisory to our profession:

“The high point of law firm productivity was in the late 1990s, when average annual billable hours for associates in many firms were hitting 2,300 to 2,500.”

Astronomical billable hours are what Hildebrandt and others in its cottage industry told us was “productivity.” So guess what happened after they advised firms to increase it?

According to Hildebrandt in 2010: “The negative growth in productivity, even during the ‘boom’ years preceding the current downturn when demand was growing at a healthy rate, was driven to some extent by associate pushback on the unsustainable billable hour requirements at many firms.”

“Associate pushback” is a euphemism for skyrocketing attrition rates. Before the Great Recession, average associate attrition from the nation’s largest firms in 2007 had risen to 70% of that year’s new hires. (NALP published the data in its 2008 “Update on Associate Attrition.”) No one cares about that crisis level of turnover now because the demand for new graduates has collapsed and those who have jobs aren’t going anywhere soon — at least, voluntarily.

But if recent surveys are accurate, relatively few of the newly employed winners will find career satisfaction in their current firms. So what will happen after they finish repaying their school loans?

Like earlier crises confronting the profession, we’ll probably ignore that one when we get to it, too.

EARLY RETURNS

Posted on May 19, 2010 by thebellyofthebeast

No, the title of this post doesn’t refer to Tuesday’s primary election results in a handful of states, although they confirm what I’ve thought for a while. Voters are anti-incumbent, not just anti-Democratic or anti-Obama. That’s one reason Rand Paul trounced Mitch McConnell’s guy in Kentucky. But this is not a space for ideological diatribe or political spin.

Rather, today’s caption refers to personal referenda of sorts.

First, the Belly’s audience is growing.

The American Lawyer is now running some of my posts. On May 10, Am Law Daily published “The MBA Mentality Rethinks Itself?” (http://amlawdaily.typepad.com/amlawdaily/2010/05/harper1.html) I’m grateful to editors willing to air a controversial voice.

Second — and speaking of controversy — my new legal thriller, The Partnership, (http://www.amazon.com/Partnership-Novel-Steven-J-Harper/dp/0984369104/ref=sr_1_1?ie=UTF8&s=books&qid=1273000077&sr=1-1), is selling well and generating strong reactions.

Big firm attorneys have offered these responses:

“Great read…It’s a very fair and accurate representation of large law firms. This is how we operate.”

“I enjoyed reading your novel — and was reminded how things changed over the years…and hardly for the better.”

“Great stuff…highly enjoyable.”

In contrast, non-lawyers have said:

“Now I have a more informed concept of ‘billable hours.’ Wow!”

“Your book has disturbed me. Greatly. Do lawyers really behave this way?”

Quite a juxtaposition, isn’t it? Lay persons become shocked and outraged at attorney attitudes that most lawyers themselves take for granted.

“How can we change people, so they look at things differently — without a myopic view that maximizes short-term profits at the expense of other things that matter?” the last commentator asked.

Here’s what I told him:

1. You can’t. The trends that trouble you are too imbedded; the resulting financial rewards flowing to the few are too great. Perhaps more significantly, the things that disturb you most — including undue reliance on misguided short-term metrics — aren’t unique to the legal profession. Big firm lawyers use billings, billable hours, leverage ratios, and profits per equity partner. Ask journalists, doctors, college professors, and others to describe the metrics by which they’re held accountable. Then ask them if they regard themselves as members of a profession or participants in a business enterprise.

2. Sometimes you can hold up a mirror to a person who then doesn’t like the image that appears. A book can try to do that, but it’s hard to dislodge internal rationalizations that justify a lifetime of unfortunate behavior.

3. Real hope resides with the next generation. Our kids and grandchildren will have to decide that they want things to be different. That’s what we baby boomers did, only to discover that different didn’t always mean better.

Unfortunately, without mentors and models of success that can compete with the MBA-mentality of misguided metrics now dominating too many big law firms and other once-noble professions, our progeny face a daunting task.

Now you understand the twin thoughts appearing immediately following The Partnership‘s inside title page:

“Sunlight is the best disinfectant” and “Forewarned is forearmed.”

RUSHING TO WHERE, EXACTLY?

Posted on May 14, 2010 by thebellyofthebeast

A May 12 article in the Wall Street Journal made me wince.

Among those interviewed in “Speeding College to Save $10,000” is a student who chose a small liberal arts college in Indiana because it “had a new program that would let her speed to a bachelor’s degree in just three years, saving her family $10,000.”

Her motives are understandable. College has become expensive and law school even more so. By the time they’ve finished their formal education, many law graduates find themselves chained to the equivalent of a home mortgage — but without the house.

So the solution seems obvious: unnecessary years of school are a luxury. Isn’t it better to save the expense and get on with whatever you want to do with your life? Why not accelerate your way through law school, too?

Then came a disturbing revelation:

“[S]he will have to take two courses online this summer in addition to working her usual job at a greeting-card shop…”

Online courses? At a small liberal arts college? What sort of experience is she buying with her tuition dollars? Is all of higher education destined to become the University of Phoenix?

But here’s the line in the article that really made me squirm:

“[She] wants to go to law school, and is eager to get there a year sooner… ‘this is where I want to be,’ she says. The three-year program ‘is working out perfectly for me.'”

What makes her so confident at age nineteen that a fast track to a legal career is “where she wants to be”? I hope I’m wrong, but here’s my guess: She read To Kill a Mockingbird in high school (only a year or two ago) and she finds most episodes of Law and Order engaging.

I hope she and others like her learn more about where they’re headed before incurring enormous law school debt to finance their journeys. Unfortunately, accelerated educational paths squeeze out precious time for contemplating such distractions.

The law is and will remain a noble profession in which many thrive. But others have pursued such degrees without any real understanding of what awaits them. When reality clashes with expectations, disappointment and unhappiness follow.

The profession and those seeking to enter it would benefit from providing prospective lawyers better information about their likely jobs before locking themselves onto that track. But it’s a daunting assignment.

Especially when you’re young, bad things usually happen to someone else, right?

25 YEARS…

Posted on May 12, 2010 by thebellyofthebeast

There are no other lawyers in my family. One of my sons has a rock band, Harper Blynn, that just released its new album, The Loneliest Generation. (http://www.myspace.com/harperblynn)

It’s an anthem for young adults, but it also engages my Beatles-era baby boomer mind. The album’s first track — 25 Years — resonates on many levels. Fortuitously, it also marks the end of a time span that began with the first ever Am Law listing of the nation’s largest firms.

In its 1985 inaugural appearance, there were only 51 Am Law firms. (A tie required expanding the first group from its intended 50.) For a while, the annual lists were of passing interest, mostly to the profession’s voyeurs. But eventually, the rankings assumed a status that revolutionized the profession — in a very big way.

Once upon a time, how much money a person made wasn’t the subject of polite conversation. At least in the large law firm world, Am Law changed all of that. It didn’t happen overnight, but it happened.

For many firms, a key metric became definitive: average equity partner profits. Wrapped in illusory objectivity, decisions became easier:

“The numbers don’t lie.”

As firm leaders themselves became armed with MBAs, more business school-type metrics and jargon began to displace meaningful discussion about quality lawyering:

“What are your billable hours?”

“What’s the leverage ratio of non-equity lawyers working on the matter?”

“What client billings comprise the ‘business case’ for promoting an attorney to equity partner?”

And now the rhetoric is simpler as the transformation from profession to bottom-line business has become complete:

“A dollar of revenue is a dollar of revenue, period.”

“I’m just trying to run a business.”

Along the way, attorneys at many firms found the road to equity partnership longer and less certain. But things played out well for the winners, although retaining that status became more challenging, too. In 1990, average equity partner profits for the Am Law 100 were $565,000. Last year, in the midst of economic recession, they were still over $1.26 million.

How did all of this affect the culture of many firms? There’s no convenient metric for measuring that impact, but try this one:

In surveys identifying those who are the unhappiest and least satisfied workers in any occupation, lawyers — especially those in big firms — consistently lead the pack. It’s a race no one wants to win.

Which takes me to the chorus of Harper Blynn’s 25 Years:

“You don’t have to go the lonely way —

— That wrecks your heart with sorrow and leaves your mind in disarray —

Don’t pretend that you don’t know –

— Twenty-five years….and nothin’ to show.”

WHEN IS BAD NEWS REALLY GOOD NEWS IN DISGUISE?

Posted on May 7, 2010 by thebellyofthebeast

One of my former undergraduate students sent me a link to a WSJ.com article on the dismal job market for graduating law students. (http://online.wsj.com/article/SB10001424052748704866204575224350917718446.html)

Of course, the focus is where it always is: on reduced hiring at the nation’s largest firms.

This is not news to most of us in the profession. Big firms started laying off associates in big numbers shortly after the financial collapse in the fall of 2008. Last year, the Am Law 100 saw its first year-over-year reduction in attorney headcount since 1993. (http://www.law.com/jsp/tal/PubArticleTAL.jsp?id=1202448340864&Lessons_of_The_Am_Law_&hbxlogin=1)

Large firms always get the editorial lead on this subject, in part because that’s where most top students in the best law schools seek to begin their careers. Why they flock in that direction is a complicated question. Herd behavior accounts for some of it, but one factor has assumed overwhelming power in their decision-making calculus: When law degrees come with six-figure student loan debt, financial reality pushes graduates toward biglaw, which shows them the money.

Here’s the hitch. Few know what awaits them if they land one of those increasingly elusive starting positions. For some, the fit works. But for too many, the surprise turns out to be unpleasant.

In its 2007 “Pulse of the Profession” survey, the ABA found that big firm attorneys were unhappier with their careers than any lawyer group. Only 44% gave a positive response to the statement: “I am satisfied with my career.” (http://www.abajournal.com/magazine/article/pulse_of_the_legal_professionunhappiest)

In contrast, lawyers working in the public sector reported an overall satisfaction rate of 68%.

Getting a public sector law job isn’t easy, either. But it’s curious that the nation’s largest firms continue to dominate the discussion, even though the biggest 250 firms employ fewer than 15% of all attorneys. When you consider associate and non-equity partner attrition rates from those places, the myopia becomes even more puzzling. Very few graduates who begin their careers in such places will stay for more than a few years.

So for current and prospective law students (and attorneys who have lost their jobs), short-term unemployment could become a catalyst for reassessment that leads to longer-term personal rewards.

But I also understand human nature. In the end, the shiny brass ring will continue to blind many people. American Lawyer recently reported that as headcount and average gross revenues declined in 2009 for the Am Law 100, average equity profits per partner increased — to $1.26 million.

How, you might ask, could that happen and what does it mean for those on the inside? I have my own views; they’re in my new novel, The Partnership. (http://www.amazon.com/Partnership-Novel-Steven-J-Harper/dp/0984369104/ref=sr_1_1?ie=UTF8&s=books&qid=1273000077&sr=1-1)

THE MBA MENTALITY RETHINKS ITSELF?

Posted on May 5, 2010 by thebellyofthebeast

Yesterday, the Harvard Business School named its new dean.

According to the Wall Street Journal (May 5, 2010, p. B9), Professor Nitin Nohria says “his focus will be on business ethics, a cause he has long championed, particularly during the financial crisis. He has also been a vocal critic of management education and the leaders it produces.”

What does that have to do with the legal topics that usually occupy this space?

As the Great Recession deepened, Nohria and a colleague wrote that management should become a profession, complete with a code of ethics similar to that for lawyers. (“It’s Time To Make Management a True Profession,” Harvard Business Review, October 2008) Nohria wants to move business leaders away from a myopic focus on maximizing shareholder value toward a broader social vision of their roles as institutional custodians and citizens. Looking to the legal profession as a model, he hopes to restore legitmacy lost over the last decade.

Maybe he has Atticus Finch in mind. Sadly, Finch is a fictional character. It’s too late for the most lucrative and influential segment of the profession to help him.

The tide has already taken most of biglaw out to sea in the direction he seeks to reverse. Following their corporate clients’ examples, firm leaders have embraced an MBA-mentality. Increasingly over the past 20 years, large law firm managers themselves have MBAs and have relied on business-school metrics — billable hours, leverage ratios, and profits-per-partner — to dictate decisions that shape the culture of such places.

How that happened and the unfortunate behavior that adherence to such deceptively objective metrics can produce are subjects for another day (and the novel I just published — The Partnership.

For now, the point is this: If Dean Nohria is looking for a new model of something that is a profession, rather than a collection of bottom-line businesses where MBA-type metrics set the tone, he’ll have to look elsewhere.

Does anyone have any candidates?

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The Belly of the Beast

Steven J. Harper, Esq.

Category Archives: Law School

DEBT, DECEPTION, AND THE ABA

THE COST OF DISSATISFACTION

FROM THE SPORTS PAGE

LAW SCHOOL NON-LEADERSHIP

UNFORTUNATE COMMENT AWARD

PRACTICAL SKILLS

TRUTHINESS IN NUMBERS

FAMILY FRIENDLY?

LAW SCHOOL DECEPTION — PART III

A NEW LAW SCHOOL MISSION

IMPROVING PROSPECTS — BUT FOR WHOM?

DEBT LOADING

THE U OF C’s BIG LEAP FORWARD

LAW SCHOOL DECEPTION — PART II

ON AMY CHUA

LAW SCHOOL DECEPTION

“LIES, DAMN LIES, AND STATISTICS”

SOLVING THE BIGLAW MYSTERY OF GROWING CAREER DISSATISFACTION

INTERVIEWING SEASON — THE MORE THINGS CHANGE…

MIRED IN METRICS? HAVE SOME MORE!

WHO’S LAZY?

WEIRD TILTS AT THE RANKINGS WINDMILL

A BETTER ALTERNATIVE OR A LEAP FROM THE FRYING PAN?

‘TIS THE SEASON

2,000 HOURS

EARLY RETURNS

RUSHING TO WHERE, EXACTLY?

25 YEARS…

WHEN IS BAD NEWS REALLY GOOD NEWS IN DISGUISE?

THE MBA MENTALITY RETHINKS ITSELF?

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