Moneyball, women and law

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Google my name and you’ll find I’ve written a few things about baseball, mostly during my time as a co-founder of and contributor to Batter’s Box, a top-notch Canadian baseball blog. As it happens, one of my favourite baseball books (outside of Thomas Boswell’s and Bill James’s works) isn’t really, I don’t think, about the game at all. Moneyball, a Michael Lewis best-seller about the innovative team-building strategy of the Oakland A’s, is, to my mind, a business book that happens to be about baseball.

If you’ve read Moneyball, you might agree with me that its fundamental lesson is the importance of identifying undervalued assets in a marketplace and stocking up on them before the competition figures out what you’re doing. The A’s front-office combo of Billy Beane and Paul DePodesta figured out that players who reached base a lot contributed as much as or more to victories than did players with more dramatic talents (e.g., stealing bases), yet commanded much lower salaries.

For a team with one of the lowest payrolls in the game, it was a no-brainer for Oakland to pursue the high-value, low-regard personnel, even in the face of derision from richer teams who favoured highlight-reel players. And that’s just what they did. In the result, the A’s were one of the winningest teams of the late ’90s, equalling the performance of New York Yankee clubs with five times their payroll.

It wasn’t a perfect story: Beane conceded that his, um, “stuff” didn’t work in the playoffs, and some of the young players most highly touted in the book never fulfilled what the A’s expected of them. But other teams vindicated this strategy by starting to follow his approach, so Beane switched gears — he began targeting top defensive players as his next “market inefficiency” to exploit. Today, the A’s, when healthy, continue to be a perennial contender.

Looking for the law connection? Others have found it before now: the Moneylaw blog is a great example, as is a terrific blog titled Empirical Legal Studies, which challenges conventional wisdom in the law through the careful application of metrics and reason. Ever since I read Moneyball, I’ve been interested in identifying inefficiencies in the legal talent marketplace.

One of the most obvious is women lawyers, especially those in their 30s and 40s, who are driven out of many law firms by relentless billing demands and inflexible workplace cultures. (I touched on this last year in a comment at Adam Smith, Esq.). Women lawyers in this demographic are just as, if not more, talented and driven than those lawyers willing or able to put up with law firm demands, lawyers whom firms fall over each other to recruit and retain. Law firms’ inability to adjust their business models to take advantage of this available talent and drive is, above all, a real source of shame for the law. But it’s also a gigantic market inefficiency.

Smart law firms should zero in on the best women lawyers in this age range, those whose firms have rejected them because they don’t fit the prevailing culture and billing structure. They could install a full-time day care center on the ground floor, create a flex-time policy that actually delivers flexible time, replace billable hour targets with more sophisticated financial and client satisfaction metrics, and preside over a very happy and financially healthy firm. Instead of paying higher and higher salaries to unproven first-year graduates, firms could be spending their time and money getting to know proven, experienced women lawyers who can deliver tremendous value to clients.

Happily, it seems a few firms are finally adopting a Moneyball approach to women lawyers. An article in today’s New York Law Journal talks about law firms getting in touch with women lawyers seeking to return to practice. There’s a lot of good information in the story, including advice for re-entering women lawyers and links to programs like Skadden Arps’ Sidebar. Courtesy of Bruce again, here’s another link to an excellent ABA program called Back to Business.

If you’re a managing partner and want to take advantage of this market inefficiency, move fast: the wraps are coming off, and pretty soon everyone will reach the conclusion that should have been obvious from the first: when the traditional talent pool starts shrinking, think outside the pool.

And with that, I wish you a happy International Women’s Day. And, Go Jays Go.

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2 Responses to “Moneyball, women and law”

  1. michael webster

    Uh, there are probably four other far more important sources of inefficiency in law firms.

    1. Few consumers are repeat customers for legal services. Thus it is hard to develop a credible reputation signal. So how do law firms compensate for this: large digs, expensive art, high billings, etc. all designed to mimic signs of success.

    2. Large law firms work almost on a pyramid scheme: recruiting at the lower level, promising partnerships which cannot exist, and churning associates at the 6-7 year mark.

    3. A continued monopoly on dispute resolution services based on geography.

    4. This last idea is more controversial. Litigation is aimed at resolving disputes, not finding the truth. Two A+ lawyers will probably arrive at the same type of solution that two B lawyers will get to, but at a higher cost. I suggest that we rank lawyers and require matching ranks for each case -unless of course one party wants to pay a luxury tax.

    In the scheme of all the perverse incentives in law, I think that the lack of women in large firms ranks below these four problems.

  2. Jordan Furlong

    Thanks for your comment, Michael. These are all valid concerns, absolutely — but I’m talking about inefficiencies within the legal talent marketplace, the process of recruiting the best lawyers. Most law firms take an unsophisticated approach to talent acquisition: they spend way too much time and effort looking for the “best” graduating law students, all overfishing the same small pool, while ignoring the vast array of talented (mostly female) lawyers driven out of the law by firms’ completely fixable cultural hangups. That’s the inefficiency — overspending for lesser talent — that a smart firm could easily remedy by looking closely at disenfranchised female lawyers.

    As to the points you enumerated, I’d classify the first as a branding issue: aligning your appearance to meet (or even raise) the expectations of your clients. Sometimes it works: as a friend of mine said, people enjoy a $40 bottle of wine more than a $12 bottle at least partly because they expect it to be better. I completely agree, though, that firms have a hard time maintaining a reputation signal: if firms are (as they constantly claim) all about their people, and both associates and partners switch firms at unprecedented rates, then the signal becomes, as Paul Simon once put it, staccato.

    The revenue generation and talent promotion systems within many law firms is too big an issue to tackle here: it involves questions of profit models, workflow strategies and generational change. I agree, though, that the system is unsustainable, for demographic reasons if no other.

    Geographic barriers do represent an inefficiency within the larger market for legal services, though obviously, one needs to be familiar with a given jurisdiction’s laws, regulations and policies to offer competent legal services there. Still, I’m encouraged by governing bodies’ efforts to move towards multi-jurisdictional practice, and one of these days, the confluence of GATS (remember that?) and universal broadband access will probably make the whole issue moot anyway.

    On the last point, I just don’t see any practical way of ranking lawyers on ability — if a rating site likes Avvo really flourishes and becomes a great judge of legal abilities, then maybe; but private-sector lawyer rankings are far too easily manipulated, and public-sector rankings would be a disaster. What we need are more sophisticated clients with the knowledge to tell when they’re paying Lexus prices for a Honda. We’re getting there, albeit slowly.

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