Category Archives: News You Might Have Missed

LIZARD-BRAIN REMNANTS…

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Tuesday night’s Nova episode on PBS –“Mind Over Money” (April 27) — waded into the continuing debate over what went wrong to produce the recent economic collapse. Coincidentally, Goldman Sachs executives spent the day explaining themselves to the Senate Subcommittee on Investigations. Meanwhile, biglaw leaders around the world anxiously await the April 29 release of this year’s Am Law 100 rankings.

Maybe these things are related.

Nova interviewed scientific researchers who think they’ve identified the human brain’s unique response to money. MRIs show that it activates deep recesses in the mind — areas that evolutionists believe we share with the earliest forms of life, such as lizards.

Once engaged, those impulses become as powerful as any addiction and as strong as the instincts for sex and survival. They dominate our actions in ways that explain why, for example, people hold on to losing stocks too long and new participants in an auction experiment routinely bid more than $20 for a twenty-dollar bill. It’s not just that the efficient markets model of economic rationality fails; affirmatively irrational behavior takes over.

If these researchers are correct, money itself triggers something that can combine with competition and ego to produce a dangerous mix. When a subconscious reaction to dollar signs overrides rational thought, the resulting decisions can be — shall we say — problematic.

What’s the connection to Goldman Sachs and the Am Law 100? I’m not suggesting that obviously intelligent people at GS did anything illegal. Judges and juries will make that determination someday. Nor am I criticizing leaders of large or small law firms who pay attention to revenues and costs because they need to make a living, just like everybody else. The practice of law has never been an eleemosynary endeavor and never will be.

Still, the research shines an interesting light on the intersection of human behavior and free market capitalism. Just as stratospheric quarterly profits propelled Goldman to develop novel vehicles that continued to feed its insatiable profits beast, perhaps the fixation on annual Am Law rankings triggers an inner impulse in biglaw leaders that even they themselves don’t realize. When a money-laden thought — like average equity profits per partner — becomes a definitive decisional metric that defines professional standing and institutional culture, does reason become a casualty?

If so, what’s the antidote?

Perhaps it doesn’t matter. There’s not much incentive to recover from a socially acceptable addiction that defines who too many of us are.

28 DAYS – The Big Squeeze Continues

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While we’re waiting for NALP to reveal what it decided on April 26 — when it was supposed to grapple with the problem of getting biglaw firms to provide career tracking information on their non-equity partners (see my April 21 post: “Will Anyone Notice on April 27?”) — consider another recent NALP move…

Twenty-eight days sounds like a lot of time, doesn’t it?

On February 26, 2010, NALP announced a new provisional guideline. Beginning in August 2010, students receiving summer or permanent job offers from new prospective employers will have 28 days to respond. Yea or nay…up or down…fish or cut bait…

You get the idea.

NALP ignored the elephants in the room: law firms follow no uniform timetable in extending offers and, even worse, an accepted offer can turn out to be bogus when the employer later withdraws or defers it. When that happens, the victim is without recourse.

In other words, the ongoing capitulation to biglaw’s demands continues. In 2008, NALP adopted the prior rule giving students 45 days to ponder the decision that could shape their futures. Most big firms thought that was too long. Before that, students had until December 1. Before NALP existed, they had as much time as an individual firm gave them — which was usually a lot.

Do you detect a one-sidedness to the trend? Law firms have always retained flexibility to make rolling offers at their pleasure and to revoke them at will. Who’s looking out for the students?

Not NALP:

“Member feedback…has indicated that a shorter period will still allow students sufficient time to choose among competing offers.”  (http://www.nalp.org/provisionaltimingguidelines2010)

Ah, “member feedback.” Who provides that? Not students or anyone committed to their best interests, that’s for sure.

NALP’s board consists of biglaw representatives and law school career development officers seeking to maximize their graduates’ placements in large law firms. That means the big firms wield commanding voices.

The new guideline is an example. Biglaw scuttled NALP’s recommendation to move “the current recruiting model away from rolling response deadlines to a model based on ‘offer kickoff dates,’ the specific dates before which offers could not be made,” followed by a universal 14-day response period. That wasn’t perfect, but at least it would have allowed students to know all of their options before locking in their final answers.

Under the new rule, they’ll never know what might have been. Then again, based on biglaw’s associate attrition rates immediately preceding the Great Recession, the vast majority of new hires won’t remain with their first employers for more than three years anyway.

Whether students should rush like lemmings to the sea toward biglaw opportunities is a question that most students don’t consider, but they should. Shortening the response time won’t help them or the profession’s growing problem of attorney career dissatisfaction.

After piling up enormous law school debts as new job offers dwindle, are any of you prospective biglaw associates feeling squeezed again?

READ THE FOONOTES…

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Another 5-4 decision from the U.S. Supreme Court.

Civil rights advocates are unhappy with last week’s opinion limiting attorneys’ fees awards in federal cases where the losing defendant pays the winner’s lawyers. (Perdue v. Kenny A (http://www.supremecourt.gov/opinions/09pdf/08-970.pdf))

They shouldn’t be the only ones.

The plaintiffs’ attorneys in the case represented children in Georgia’s foster-care program. It took 30,000 hours of lawyer time over eight years before the state finally surrendered in a consent decree that revamped the entire system. The winners sought a bonus beyond what lawyers call the “lodestar” — an amount equal to the hours devoted to the case multiplied by the hourly rates prevailing in the community. 

The trial judge praised plaintiffs’ counsel as the best advocates he’d seen in 27 years on the bench. So he enhanced their fee award to produce an average attorney hourly rate of $435. The Supreme Court threw it out.

Justice Alito wrote for  the majority that included the usual conservative alignment — Justices Thomas, Scalia, Kennedy, Chief Justice Roberts, and himself. They sent the case back with more than a suggestion that an average rate of $249 was adequate. Never mind that it was below the statewide average for all Georgia lawyers — as Justice Breyer noted in a dissent  joined by Justices Stevens, Ginsburg, and Sotomayor. (Breyer op. at pp. 9-10)

I know what you’re thinking: Why feel sorry for the lawyers? Isn’t  $249/hour a lot of money? Sure, but as Justice Breyer observed, it pales in comparison to the rates that corporate clients routinely pay large firms where $249 won’t buy an hour with a second-year associate. Chief Justice Roberts’ rate when he left private practice to join the Court was probably three times that amount.

Which takes us to footnote 8. Alito was incredulous at the prospect of allowing the  higher fee award: the winning attorneys “would earn as much as attorneys at some of the richest law firms in the country.”

Excuse me? Is that a bad thing? Are outstanding civil rights lawyers suing on behalf of children and the oppressed less valuable to our society than biglaw senior partners? If he were still around, Clarence Darrow might have some thoughts on that one.

“AND THE CHILDREN SHALL LEAD…”

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It was a great Star Trek episode, and not just because one of the most famous trial lawyers of his time, Melvin Belli, played a villain who tried to take control of every child on planet Triacus. The episode reveals the potency of two great powers: youth and truth.

The moral of the story endures, as I realized while reading an article in the National Law Journal earlier this week. (http://www.alliancealert.org/2010/04/20/law-students-push-schools-for-better-employment-numbers/)

The best prospects for improving the profession will come from new entrants who refuse to settle for answers that others would like them to accept. So it’s gratifying when youth seeks truth as law students start asking the right questions.

Two Vanderbilt students have realized that most law school information about graduates’ employment and compensation is incomplete — and sometimes misleading. Law schools tend to mask reality in aggregate statistical compilations that make them look good. (See Mark Twain on the three kinds of lies: “Lies, damn lies, and statistics.”)

For example, when a school reports to US News that 95% of a recent class was employed at graduation, what does that mean? For jobs that involved temporary research for a professor because nothing else was available, not much.

Likewise, when the median salary at a first-tier school is also the top of the range because many graduates went to big firms, isn’t the overall distribution meaningful? And two or three years later, what happens to the young attorneys in those firms? For too many, nothing good, according to NALP’s associate attrition data.

So two Vanderbilt students are trying to build and publish their own database of detailed information about individual students. The most encouraging aspect of the initiative has less to do with trying to collect what the law schools probably won’t divulge. Rather, it’s the fact that these students — and hopefully many others — are thinking in concrete terms about what their legal careers will actually be like.

Moving away from statistical aggregations and abstract images that don’t educate anyone about life as a real lawyer, they want specific information about their options and prospects (or lack thereof). This initial inquiry — how much individual graduates earn and what happens to them — should lead immediately to a second: what type of work are young attorneys performing and do they enjoy their jobs?

If undergraduates started this deliberative process before they took the LSAT, the profession could begin curing its worst problem: growing attorney unhappiness.

How? The profession is filled with too many lawyers who never should have gone to law school in the first place. If only they had known the truth…and then thought about it…

WILL ANYONE NOTICE ON APRIL 27?

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When is a partner not a partner?

One of biglaw’s profitability secrets relates to what “partner” means. In increasingly common two-tier partnerships, only equity partners have an ownership interest that translates into the stunning average incomes reported in the Am Law 100. (In 2008, the average was $1.26 million.) The distinction should interest students who seek biglaw jobs and want to know what any particular firm is really like.

So where can they learn the truth? Every law student knows about the NALP Foundation. It’s the only organization that collects comprehensive personnel information directly from major U.S. law firms. It publishes much of it in a Directory that is every student’s bible of prospective employers. But data on firms’ non-equity/equity partner distribution is conspicuously absent from NALP’s reports, as is any attempt to track non-equity partners’ careers.

In December 2009, NALP decided NOT to collect data distinguishing equity from non-equity partners. When disappointed law students heard the news, NALP responded that it would begin compiling such information. It then backtracked because law firms balked.

Hmmmm…..

On April 6, a prominent group of 75 attorneys, judges, and legal scholars protested NALP’s decision on the grounds that tracking non-equity partners was important to assessing a firm’s true gender and racial diversity. Of course, they’re correct.

But there’s another reason to provide students with this information. According to Am Law, between 1999 and 2008, the nation’s 100 biggest firms increased their non-equity partner ranks threefold, but the number of equity partners grew by only one-third. What is the fate of most big firm non-equity partners? Don’t ask; don’t tell.

Could that be the real story behind NALP’s reluctance to cross so many of its biglaw board members, advisors, and benefactors?

NALP said it would reconsider the issue at its April 26 meeting. Will anyone notice? Will anyone care?

For students who understand the issue well enough to do the research, American Lawyer lends a hand. Although it doesn’t have diversity information, the annual Am Law 100 issue publishes overall breakdowns of the largest firms’ equity/non-equity partners. So why not let NALP take the next step? What happened to all of those biglaw free market enthusiasts who usually argue that complete, easily available information facilitates better decisions? What could be more relevant than a firm’s answer to a fundamental question: who are your real partners and whither goest the vast cadre of attorneys who survive the associate gauntlet only fail in their efforts to overcome the final hurdle into the ownership ranks?