Generation eXit

This, I’m reasonably certain, is the first Law21 post to start with: Spoiler Warning. It’s only fair to advise that if you haven’t seen the Joss Whedon horror thriller The Cabin In The Woods, and you plan to do so, then you should skip the rest of this post, because I’m about to give away the plot and the ending. (Mind you, I haven’t seen it either — horror’s not my thing, so I went and read a complete summary of the movie online. Yes, that’s cheating.)

The Cabin In The Woods is a darkly comic post-modern take on the traditional slasher film, in which attractive young people in a remote location are hunted down and killed by a mysterious or supernatural predator. The twist is that this longstanding horror trope actually turns out to be a worldwide government program in which real monsters that would otherwise devour humanity, familiar to us through legend, are kept at bay by offering up young sacrificial victims in an ancient rite. Things go wrong, however, and by the end of the movie, the program has failed and the monsters are breaking loose. The two surviving teenagers are told that unless they agree to be ritually sacrificed as originally intended, the pact with the monsters will be broken and the whole world will be destroyed.

Here what’s really interesting: the teenagers, after trading swift glances, respond: No. If this is what is required to save the world, they reason, then the world isn’t worth saving. And, they might have added: if we need to die because of the bad bargains you made to stay alive, then we’re bringing you down with us.

The Cabin In The Woods is an original take on horror movies; but if you view it through a generational lens, it becomes highly illuminating in other ways. An older generation that preserves its safety and well-being by sacrificing its children’s future is a concept with a lot of traction for Millennials right now, and the film did extremely brisk business with young moviegoers (as did The Hunger Games and Snow White And The Huntsman, other movies in which the old survive only at the expense of the young).

Unemployed and underemployed in the highest numbers in recent memory, Millennials are doubly embittered because the generation that raised them to follow their dreams and believe anything was possible is the same generation that has left their playing field in ruins. Millennials have no doubt whatsoever about who’s to blame for their predicament. Many Boomers might find their reasoning defective or their conclusion unfair; Generation Y, like its favourite meme the honey badger, don’t care (if you’re not familiar with the link, be advised that it’s rather NSFW).

For an especially acute rendering of this generational bitterness, read this acidic manifesto from a Millennial to Boomers and Gen-Xers alike: “Quit Telling Us We’re Not Special — We Know We’re Not.” You don’t have to agree with the entire blistering arsenal unleashed in that article. But I would still suggest that you give it a serious look — and specifically, that you note the labels used by older generations to describe this young one. They strongly echo those that established members of the legal profession like to rain down on the most recent cohort of new lawyers: Lazy. Pampered. Entitled. Unwilling To Work Hard. If you borrowed heavily to obtain an impotent law degree, You Should Have Known Better. If you can’t find a job, it’s because You Haven’t Tried Hard Enough. Sound familiar?

I don’t know if you’ve spoken recently with many young lawyers, especially the ones struggling to find legal work (45% of the American class of 2010, for example). But they’ve heard those sentiments from veteran lawyers, they’ve seen how the legal profession is treating its young, and they are extremely unhappy about the profession they longed to join but that has no place for them.

That’s got me kind of worried. I’m concerned not just that we’re about to lose part of this generation of lawyers, but also that we might not recover that loss in the future. We’re watching an economic scalpel carve a permanent chunk out of the profession’s demographic profile several years wide, which is all bad enough. But in the process, we’re also risking our profession’s reputation with future cohorts of intelligent, creative and caring would-be lawyers, those who were once drawn to a legal career but who might now look elsewhere. We could be poisoning our own brand.

The statistical evidence of unprecedented unemployment among heavily indebted new lawyers has been widely documented; less well-publicized has been the nearly one-quarter drop in applicants to US law schools in the past two years. That’s a problem for the American legal profession, because that’s its talent pool for the years 2020-2060, and a drop like that is a sign of potential drought. I’m not aware of similarly acute declines in other countries’ law school application rates, but the same threat exists and could easily materialize.

That rate of decline can’t and won’t be sustained, of course; but I also don’t think it’s going to reverse and return to previous levels all of a sudden. In a fully connected world where aspiring professionals have extraordinary access to information about career prospects in various fields, hard facts about legal jobs are easier than ever to come by. Law’s reputation as a relatively safe and remunerative career, one in which new entrants could expect to be helped out by older colleagues and brought along by law firms, has been damaged. The bloom is coming off our rose.

This is an issue that goes beyond individual law firms’ profits or even regulatory concerns; this is about law’s ability to be competitive with other careers. We can argue all day about what constitutes “the best and the brightest” of each new generation; but however you define the best and brightest, we want them in the law. We want the legal profession to attract and retain individuals of the highest intellectual, creative and ethical character. We want the cream of every year’s crop. We’ve succeeded in attracting those candidates for many years, including over this past decade, and good for us. But we’re currently failing to retain those lawyers, to shelter them in difficult times, or to help them stay the course. And we’re sending a clear signal to those who might follow this unlucky generation: if you struggle starting out in the law, and you very well might, you’ll be on your own.

Many people will still strive to be lawyers, of course — I can’t foresee any future in which hardly anyone wants to practise law. But many other people who would normally pursue the law will have second thoughts, and they will act on those misgivings. They’ll look for different careers, ones without reputations for unstable employers, brutal facetime expectations, and widespread unhappiness. They’ll be like star athletes who could choose any sport — but who will look at short careers, excruciating injuries, debilitating concussions, and institutional apathy and decide that they can do better than football. Law does not want to become the NFL of professions — but that’s where we might be headed.

You could raise any number of reasonable objections to my concerns. Most law schools experiencing drops in applications can simply dig deeper into their waiting lists. Every profession goes through down cycles: who would have wanted to be an accountant in the wake of Andersen Consulting? And wasn’t I saying just the other day that the legal profession is shrinking and we won’t need so many lawyers in future anyway?

All true. But law schools with fewer applicants find that the quality of candidates gets shallower along with the pool itself. Accounting’s image is still bruised from the scandals of the late 1990s, and accounting hasn’t relied on the prestige factor as heavily as law. And while yes, I don’t think we’ll have as many lawyer “jobs” to fill in future, there’ll still be a great need for lawyer “employment,” and we’ll still need good people to fill both kinds of roles.

More important, I think, is that we want law to continue to be a destination career, one to which as many people as possible aspire. It’s been our incredibly good fortune, reinforced by our commendable historical efforts, to have maintained a strong professional brand for many decades. But no prior decade has been like this most recent one, and no living generation of lawyers has gone through what this one is experiencing. My concern is that they’re not going to keep going through it much longer: they’ll give up on the law and encourage others not to make their “mistakes.” (That process is already well underway: Google “law school scam” for the evidence.)

The end of The Cabin In The Woods stays with me because of the teenagers’ choice: rather than help prolong a world whose rules require their sacrifice, they simply decide to quit the game altogether (dooming the world in the process). This is the first generation of lawyers that might decide, even in part, to do the same: simply exit the profession altogether, give up on the game as not worth the candle.

We’ve long assumed there’ll always be more lawyers coming through the system, always more young minds willing to pay the price of admission. What if that supply slows down or stalls out? What arguments could we muster to coax them back, or their younger brothers and sisters, or their children? Having shown our willingness and ability to sacrifice them, what could we possibly have to say to them after that?

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.

 

Too big to succeed

(Note: This article is reprinted with permission from the July 10, 2012 issue of The Legal Intelligencer. © 2012 ALM Media Properties, LLC. Further duplication without permission is prohibited.  All rights reserved.)

What do we talk about when we talk about “BigLaw”? Let’s be honest: we’re not actually discussing specific law firms at all. We’re really talking about an idea, a model, an approach to the market. “BigLaw” is shorthand for a particular type of law firm, one that employs hundreds of lawyers charging exceptionally high fees to deliver a wide range of standard commercial and dispute resolution services to corporate and institutional clients.

Calling this model “BigLaw,” however, oversimplifies things. These are complex, multi-dimensional entities, and it’s neither accurate nor helpful to describe them by size alone. More to the point, in the months and years to come, the “Big” part of that name will become less relevant. Many of these firms are actually much larger than they need to be — and they’re about to get a whole lot smaller.

Here is an uncomfortable but increasingly unavoidable fact: most large law firms today are overlawyered:

  • They hired too many associates, back when associates were a widely traveled road to higher leverage and greater profits, with no clear plan for their long-term use or development.
  • They converted too many of those associates into oxymoronic “non-equity partners,” bestowing the prestige of partnership without adding the demands and sacrifices the title requires.
  • They promoted or laterally acquired too many equity partners, failing to grasp that partnership is best restricted to exceptional rainmakers and extraordinary managers of people or processes.

In the result, big firms now find themselves misaligned with the emerging realities of the modern legal marketplace. The word that best describes most of these firms is “bloated” — that sickly feeling that comes from indulging too long at the holiday banquet. The holidays lasted a long time for large law firms, but they’re ending now.

The staff and associate layoffs at big firms in the wake of the financial crisis were the first steps in this direction. The growing number of partner de-equitizations is the next stage, and in many firms, that process is just getting started. But it would be wrong to describe those cuts as strategic: for the most part, they were short-term, knee-jerk responses to real or anticipated drops in partner profitability.

What we’re about to see are very similar outcomes driven by very different considerations. Big firms are preparing to go on severe lawyer diets not to fend off dreaded declines in PPP, but because they’re simply not going to need as many lawyers as they once did.

It started, as most market trends do, with the customer. The financial crisis and recession offered corporate clients numerous opportunities to take a stronger hand in their relationships with big law firms, opportunities that they’ve largely squandered. But the law departments at least managed to push back on big firms’ routine fee increases and persuaded their outside counsel to pay more attention to cost control and legal project management.

However reluctantly, big firms did start paying attention to all these issues. And when they did, they rapidly came to recognize a growing array of options for performing legal work that don’t require full-time salaried lawyers.

Technology: Ron Friedmann has assembled this eye-opening list of large firms (including gilded names such as Skadden Arps, Sullivan & Cromwell, Linklaters, and Clifford Chance) that have created online legal services in areas ranging from Dodd-Frank and derivatives to trademark, privacy, and environmental law. These web-based, firm-exclusive solutions are complemented by a growing number of private-sector providers such as Neota Logic, kiiac, Koncision and Fair Outcomes, which all promise to disrupt traditional methods for accomplishing legal tasks (and the traditional workforce that has performed them).

Outsourcing: The initial entrants to this category were legal process outsourcing (LPO) companies, usually based in India, that promised high-quality legal work for much less than large law firms were charging. Many of these companies continue to thrive, such as Pangea3, famously purchased a couple of years ago by Thomson Reuters. But LPOs have since been overtaken in the profession’s imagination by other outsourcing options, including Axiom Law, The Practical Law Company, Novus Law, and Project Counsel, all offering entry-level legal tasks and managed legal services at much lower prices.

Insourcing: You might more accurately call this a market condition imposed upon large firms by their corporate clients, rather than a new option for the firms to work differently. But the practical effect is the same: in-house law departments are choosing to keep more work, especially routine work, within their offices rather than farming it to outside firms. This makes big firms even less inclined to maintain large cohorts of associates, especially newer lawyers unqualified to do much beyond basic tasks. For firms that depended heavily on that routine work to bolster the bottom line, the impact on revenue is even more pronounced.

Every day, more large firms across the U.S. and the U.K. avail themselves of these options, sending more work outside their walls, beyond the border, or into software programs, making full-time salaried lawyers increasingly unnecessary. The ultimate outcome isn’t hard to foresee: large law firms are going to get smaller.

Less work for lawyers isn’t a theory or a prediction: it’s already a fact. In the U.K., many large firms continue to announce new rounds of layoffs each week. Job losses in the U.S. legal sector have stabilized for now, but overall employment numbers are still below pre-recession levels. Moreover, the ABA reported recently that just 55% of 2011’s graduating law class had found full-time, long-term jobs that require bar passage nine months after they graduated.

Would-be lawyers have already begun to take the hint: the Law School Admissions Council reports that the number of law school applicants dropped 15.6% last year and is down 24.1% over the past two years. That might go some way to explaining why 10 law schools are planning to reduce the size of their first-year classes.

If you think this looks like the beginning of a shrinking legal profession, you’re probably right. But at the very least, it’s a parallel trend traveling in the same direction and leading to essentially the same destination: the BigLaw lawyer employment engine is revving down.

Mergers, even among global giants, aren’t going to change the fact that fewer lawyers will be required to perform legal tasks. Massive as they might be, newly merged super-firms will still be smaller than they would have been even a few years ago. We might even start to see law firm mergers more closely resemble mergers in the corporate world: amalgamations undertaken chiefly to increase efficiency and productivity, frequently followed by mass employee redundancies and the closing of surplus offices.

The lesson for law firms is this: Size, measured in the number of lawyers at least, is not an end in itself. Big is fine; needlessly big is not. There are new and often better ways for firms to deliver legal services that don’t require the contributions of a full-time lawyer. That will become clear to large firms in the coming months and years, and it will have devastating short-term consequences for lawyer employment as the impact is fully realized.

How can law firms go about this streamlining process? Here are five strategies:

1. Rethink the purpose of associates. Leverage alone won’t be a good enough reason to maintain vast grazing herds of associates, not with lower-cost options available on the market and with fixed fees taking more work from the billable hour. In the same way, the inefficient and arbitrary “tournament” approach to grooming future partners through attrition has no place in a modern enterprise. The primary purpose of associates will (once again) become to create future partners and leaders — and firms will not require nearly so many associates for that.

2. Scale back the accumulation of partners. Dewey & LeBoeuf presents a tragic portrait of a firm that engaged in the undisciplined and irresponsible pursuit of ever more partners at ever higher remuneration with no long-term plan. Smart firms will come to demand the highest standards for free-agent acquisitions, applying to potential new “rainmakers” the fundamental business truth that past performance is no predictor of future success. As a general rule, most big firms are over-partnered to a far greater degree than they are over-associated.

3. Invest seriously in low-cost performance options. Class and cultural blinders are the primary obstacles to big firms’ acceptance that excellent work can be produced outside their hallowed halls. Contract lawyers in smaller centers and LPO lawyers in foreign jurisdictions are much smarter and harder-working than most firms have been willing to believe. Automated contract programs, expert knowledge applications and innovative dispute elimination services are exceptionally powerful and reliable. Pedigree is overrated.

4. Re-engineer workflow. The first three steps lead inevitably to the fourth, which in some ways is the most important. Large firms that insist on producing legal services as if it were 1992 will be unable to give up their addiction to having armies of lawyers on hand. Smart firms will create templates and processes to regulate their systems and activities. They’ll implement legal project management as a philosophy, not just a cost-management measure. They’ll change how they work, and thereby change the nature of the resources needed to perform it.

5. Partner with in-house clients. There’s no point in a large firm trying to transform itself in splendid isolation from its paying customers. In-house law departments are dying to hear that their outside counsel are committed to practicing law differently and more effectively. These clients are going to keep more work for themselves regardless; the firm might as well be part of the process, perhaps through long-term lawyer secondments or client-specific online applications. Strong client ties are far more valuable than adding yet another body at yet another desk.

Clients already know that sheer size is no substitute for value or effectiveness in a law firm. Nor, law firms are finally coming to realize, is it a substitute for being excellent or profitable. The legal profession’s fetish about size is drawing to a close, thanks to advances in technology and alternative resources for legal proficiency. It’ll soon be time to find another word for “BigLaw” — it’s just not about size anymore.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.

The dying cult of the corner partner

Let’s start with an odd fact: the self-interest of a law firm is fundamentally opposed to the self-interest of its most powerful partners.

Here’s how I see it. The more influence a lawyer wields over a given client, the more stature, leverage and tactical advantage that lawyer gains within his or her firm; these benefits grow in proportion to the size of the client and its strategic importance to the firm. This partner’s influence naturally tends to undermine the firm’s security: the partner could bolt at any time, depriving the firm not only of a key client but also of the partner’s substantial contribution to the firm’s average PPP, which in this environment might actually be the greater threat. This creates a dysfunction in the relationship between a firm and its best lawyers: the more the lawyer succeeds, the less control the law firm has over its own destiny.

The firm recognizes this fact, of course, and it takes steps to mitigate the inherent risks of a powerful partner. It invests heavily in firm-wide marketing and “brand,” to ensure that its individual stars don’t shine more brightly than their corporate constellation. More importantly, it strives to create teams for critical clients, to attach multiple lawyers to these clients and to increase the “stickiness” of the relationships. I’ve written elsewhere that if you have an irreplaceable employee, your goal as a manager is to make that employee replaceable.

The partner, no fool either, recognizes these attempts and does everything possible to undermine them, most notably by hoarding the most significant work and key client interactions and by keeping more junior partners at a safe distance (tactics that dovetail nicely with lawyers’ natural proclivities anyway). This power struggle takes place every day in almost every sizable firm, often with neither side consciously realizing what it’s doing and why.

That struggle, however, usually leads to a long-foregone conclusion: the partner wins. And that’s mostly because of one of the legal industry’s most durable and reliable mantras: “Clients hire the lawyer, not the firm.”

The lawyer and the firm are always fighting over who gets to take the client to the dance; but in the end, the client invariably chooses the lawyer for its date. It’s not an entirely irrational choice. As I’ve catalogued before, law firms traditionally have been unable to guarantee the consistency of their service delivery, the reliability of their systems, or even the quality of their lawyers. And powerful partners are very good at creating industrial-strength personal bonds with clients. But there’s something else, something more pernicious, at work here: there’s the cult of the corner partner.

There is no more powerful person in a law firm (arguably, in the legal market itself) than the corner partner. You know the one I mean: extraordinary skills, extensive connections, huge book of business, intimidating presence, and (to put it politely) an outsized personality. Corner partners don’t have to occupy actual corner offices, of course: what distinguishes them is not their dual window views, but their status (real or perceived) as the sine qua non of the firm’s profitability and prestige.

No major firm decisions are taken without the input or acquiescence of corner partners; no new initiatives proceed without their approval and no member of the firm, up to and including the managing partner, survives a serious conflict with them. We sometimes call them “rainmakers,” but that sells them short: they’re more like the patriarchal (or matriarchal) overlords of the firm. Some are benevolent overlords, using their influence to ensure the long-term prosperity of the firm and its members; I don’t think it’s overly cynical to call such partners the exceptions rather than the rule.

Everyone buys into the cult of the corner partner, and this is nowhere more evident than in law firms’ single-minded preoccupation with, and frenzied pursuit of, lateral partner hires. Subscribing fully to the “Clients hire the lawyer” mantra, law firms clamber over one another in the mad scramble to poach partners with big books of business in key practices or industries, invariably with escalating promises of more and more money.

If its efforts are successful, the law firm trumpets its poaching expedition in a flurry of statements and press releases (in which the new corner partner can be expected to speak glowingly about the advantages of the new firm’s “larger platform”). This has been the primary growth strategy for hundreds of midsize and large law firms through North America for several years now. The resulting free-agent culture of the BigLaw bar, as well as the increasingly yawning spread between the annual incomes of a firm’s highest- and lowest-paid “partners,” are hardly surprising results.

But should this state of affairs change in any meaningful way — should the power of the corner partner begin to wane, should the cult lose some of its fervour — then the implications for law firms and the legal market would be immense. This week, Ron Friedmann gave us a thought-provoking post that quotes extensively from an analysis by Steve Nelson, managing principal of The McCormick Group, who believes that this very change might be upon us.:

There is a widening gap between the prospective portable billings that incoming laterals vouch for and the actual results that occur months after the laterals arrive. While some of this can be attributed to overly optimistic predictions by the laterals themselves, we believe that other factors are more significant. In particular, the old adage about “we don’t hire law firms, we hire lawyers,” often no longer applies. Instead, in an era where increased pressure is on corporate counsel to reduce outside legal spending, there has been an increased emphasis to consolidate legal providers who both know the client’s business and can offer increased efficiencies. So the ability of one partner (or sometimes even a group) to hold onto a significant amount of a client’s business in a particular discipline is diminishing each year.

It’s difficult to overstate how significant this development would be on the corporate legal market. Both lawyers’ personal career trajectories and law firms’ strategic growth plans have long revolved around the idea that the partner is king and the corner partner is emperor. But there’s growing evidence that the emperor is perhaps not actually as fully dressed as we had thought.

I’ve heard of multiple law firms expressing disappointment over the failure of ballyhooed lateral acquisitions to deliver the promised injections of business and profit. Often, the new partner’s expenses (including paying for the entourage that accompanied him or her from the old firm) cancel out the new revenue streams; the partner is a zero-sum acquisition. More problematically (but quite predictably), the new corner partners don’t cross-sell to, or grow the business books of, their new partners: they guard their client relationships just as jealously here as they did there. And it need hardly be added that new corner partners are an unstable resource: just as the best predictor of divorce is having been divorced before, the best predictor of a partner leaving a firm is that partner having bailed on a previous one.

But there’s more to it than just profit churn and instability: there’s also a growing loss of faith in the lateral acquisition model itself. The tipping point here might prove to be the failure of Dewey & LeBoeuf, a mega-firm built on a stack of lateral partners the way Yertle’s kingdom was built on a stack of turtles. We’ve only begun to see the damage Dewey’s fall will wreak on the traditional BigLaw model, but I suspect one of the first victims will be the cult of the corner partner. Lawyers and law firms are remarkably susceptible to fashions in strategy and management; but as soon as one of these trends becomes unfashionable, it can’t be abandoned fast enough. Law firms everywhere are now waking to a sudden thought: not only does corner partner poaching not accomplish much, it can be incredibly destabilizing. Once that thought crystallizes, look out.

What’s really interesting, though, is that this isn’t just about the fall of the corner partner; it’s also about the rise of the law firm.

A funny thing happened following the financial crisis: law firms realized they needed to get better at what they did if they wanted to survive and prosper. What’s more, they actually began following through on that realization. One of corner partners’ strongest advantages over their firms has always been that most firms were haphazardly structured and amateurishly managed, never more than the sum of their parts: the best partners always looked better by comparison. That is now changing.

  • Professionally trained managers now occupy more positions of influence in law firms.
  • Practice and industry groups operate with more precision and panache.
  • Associate training and partner competence has received more attention and resources.
  • Knowledge management has developed real engines of expertise circulation.
  • Legal project management has brought order and discipline to the legal production process.

Law firms, after many years and many false starts, are finally starting to get their act together. Not all of them, by any means, and mostly in fits and starts. But there is unmistakeably a change in the air. Law firms are taking themselves more seriously as corporate entities, and clients are taking notice. We are seeing the start of a shift in the balance of power between law firms and their most accomplished lawyers.

Obviously, it’s very early days for this phenomenon, and as always, anything could happen. The history of both lawyer behaviour and law firm management provides ample evidence for pessimism. And even if diminished and brought to heel, corner partners remain extremely formidable forces within their firms and the larger legal market; there will always be outstanding lawyers and they will always command more than their share of the sunshine.

But I do think the days of law firms dancing attendance on, and throwing borrowed money at, the latest free-agent power broker are drawing to a close. The focused, streamlined and systematized law firm is, gradually but inevitably, on the rise. The cult of the corner partner is in slow but irreversible decline, and much of our conventional wisdom about the legal market is going down with it.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.

International Legal Technology Association (ILTA) 2012 Annual Conference, Washington, DC

For the second straight year, I’ll be speaking at the annual conference of the International Legal Technology Association (ILTA), held this year in Washington, DC, from August 26-30, 2012. More details on my two speaking slots to come later this summer.

Institute for the Advancement of the American Legal System Annual Awards Ceremony, Denver, CO

I’m delighted to be delivering a keynote address on the future of legal education and the legal services marketplace at the Institute for the Advancement of the American Legal System‘s annual awards ceremony on cOtober 11, 2012, in Denver, Colorado.

Law school revolution

One of my favourite bumper stickers, back when such things were popular, read as follows: “Where are we going? And what’s with this handbasket?” If you’re involved in any aspect of legal education these days, or if you have even a passing interest in how law schools are doing their job, you might feel that bumper sticker is especially appropriate.

Law schools and legal education are in an uproar. There’s a host of factors at work, most notably an extreme and rapid change in how legal work is done and who is required to do it — a trend that’s making things difficult for law firms but that’s positively brutalizing law schools. There’s plenty of upheaval going on in legal education and admission in Canada, in the United Kingdom, and in Australia, but I’ll focus this post on the US, where the worst of the storm is centered. Here are some highlights:

As you might gather from all of that, law schools in the US are feeling tremendous pressure from would-be, current and former students — the three groups that control almost all of their funding and reputation. Much more so than law firms, law schools are extraordinarily conservative and change-resistant places, yet they’re now grappling with the same forces transforming the wider legal marketplace and have fewer resources with which to cope.

The fact also remains that despite these troubles, a great many law schools, administrators and faculty members remain serenely unaware of or unmoved by these developments. Law schools are, in the context of other professional schools and legal entities anyway, stable and profitable institutions whose personnel are remarkably resistant to what few demands for change are presented to them. Law schools have never had a superb reputation within the practicing bar — too many lawyers remember their desperate attempts to figure out their new profession even after three years of “education” — but the bitterness towards and condemnation of law schools by lawyers has never been this strong and this sustained.

I’ve had plenty to say on the subject of law school myself over the past few years, little of it heart-warming. But the fact is, amid all the noise and vitriol around this subject, quiet success stories are being written. If we spread our contempt for the current system’s failings too widely and indiscriminately, we risk missing out on the fact that right now, the very revolution we wish would break out is starting to unfold in front of us.

I want to bring your attention to an array of initiatives, innovations, and courageous pioneering efforts that could, if they catch on and receive the support they need, usher in a new era of legal education. In the areas of technology, informatics, apprenticeship, online learning and structural innovation, the future is already starting to arrive.

Technology

Last term, Georgetown University Law Center in Washington, DC, offered a new experiential seminar called “Technology, Innovation and Legal Practice” that explored how the first two elements can transform the third. Student teams were required to develop applications that either increased access to the legal system or made legal practice more efficient. The results were on display in the school’s “Iron Tech Lawyer Competition,” as described in this PBS news video. Here are two of the projects, one on citizenship acquisition and the other on same-sex marriage legality; all the projects were powered by Neota Logic, a legal tech pioneer that I profiled last year.

At the mobile end of the technology spectrum is another innovative program, Apps For Justice, spearheaded by Ron Staudt at the University of Chicago-Kent Law School (home of legal access software A2J Author) and Marc Lauritsen of Capstone Practice Systems, among others. Apps for Justice, as Marc explains in this six-minute video at Ignite Law 2011, enables law students to create software applications like document templates, guided interviews, dynamic checklists and interactive advisers. These apps perform useful legal work, from helping lawyers work smarter to helping clients resolve their own problems and opportunities. Apps For Justice won the 2011 Future Ed competition sponsored by New York and Harvard Law Schools.

Informatics

Related to but a breed apart from legal technology lies the field of legal informatics, which Wikipedia helpfully defines as the study of the structure and properties of legal information, as well as the application of technology to its organization, storage, retrieval, and dissemination — data crunching in the law, if you like. William Henderson of the University of Indiana-Bloomington Maurer Law School, who also writes urgently and incisively about crises in legal education and large law firms, was the first law professor I found paying attention to the study of data in the law school context (which he continues to do with his company Lawyer Metrics). Stanford Law School’s CodeX initiative is also worth attention in this regard.

This envelope is really getting pushed, however, at Michigan State University Law School, where professors Daniel Katz and Renee Knake are engaged in some of the most avant-garde work in legal education I’ve seen in a while. It includes the Computational Legal Studies program, which features courses in Quantitative Methods for Lawyers and Entrepreneurial Lawyering, as well as presentations with titles like “Quantitative Legal Prediction” and “The MIT School of Law.” There’s also an upcoming legal laboratory called Reinvent Law. In addition, MSU Law has launched the 21st Century Law Practice Program, which this summer features LawTechCamp London, in association with the University of Westminster Law School, presenting courses like “Legal Information Engineering and Technology” and “The Legal Services Act and UK Deregulation.”

Apprenticeship

Long-time readers will remember my articles about apprenticeships at law firms (PDF) and the potential I see for law schools to step into this arena. The pioneer in this regard, of course, is Washington & Lee Law School in Virginia, which ripped out its traditional third year and installed an entirely experiential curriculum “comprised of law practice simulations, real-client experiences, the development of professionalism, and development of law practice skills.” The program, which involves a broad range of clinics and externships, continues to thrive. Experiential legal education has since been embraced widely, including at Northeastern University Law School. (And it’s not only law firms that can benefit: corporate law departments are the subject of similar programs at the University of Chicago Law School and Columbia Law School.)

Now, here comes the next phase of apprenticeship, one I’ve been eagerly awaiting. Arizona State University Law School, running with an idea first proposed by law professors Brad Borden and Robert J. Rhee, is creating a “teaching law firm,” a kind of residency for lawyers that resembles teaching hospitals at many universities. Upwards of five experienced attorneys would act as “partners” to supervise 15 to 30 “resident lawyers,” recent ASU grads who would spend up to two years providing bankruptcy, family and corporate law services to middle- and lower-income clients. Above The Law, as harsh a critic of law schools as you’ll find these days, thinks it’s a great idea; I think it’s potentially a game-changer. (See also the small but growing number of law school “solo incubators.”)

Online Learning

If ASU Law’s “teaching law firm” is a game-changer for law schools, then coming up on the horizon is a development that could be vastly more influential and devastating to the traditional law school model. Online education is in the early stages of changing everything we assume and believe about learning, led by the Khan Academy and countless fellow travelers. This article in The Atlantic relays a telling account by Harvard professor Clayton Christensen of his first, eye-opening experience with online classes.

To get a sense of what distance learning could mean to legal education, read this New Yorker article about Stanford University, in particular the final page about Stanford’s recent experiments with online learning (and watch this TED video, wherein one of the professors talks about teaching a class with 100,000 students). A law school course with 100,000 students? Why not? Someday soon, some law school is going to invest seriously in online learning, and will turn their industry upside down in the process. (The private sector is already several steps ahead on this one: witness Solo Practice University, which is doing in this area exactly what law schools could and should have done years ago.)

Innovation

Then there are the pure innovation engines within law schools, driving full-scale change not just in their own institutions but industry-wide. Law Without Walls, as this ABA Journal article reports, is “a collaborative academic model that brings together students and faculty from 11 international law schools and one business school, law practitioners, business professionals, entrepreneurs and venture capitalists to develop innovative solutions to problems facing law school and practice.” LWOW’s participating schools (it’s based at the University of Miami Faculty of Law) hail from the US, England, Australia, China, Spain and Colombia. The initiative’s third annual ConPosium is set for next April; check out the extraordinary Projects of Worth that the 2012 version created.

Further west, you’ll find the Institute for the Advancement of the American Legal System, a standalone institution at the University of Denver, and in particular the IAALS’s Educating Tomorrow’s Lawyers initiative. ETL’s mission is “to encourage and facilitate innovation in legal education” in line with the Carnegie Model of legal ed reform, in pursuit of which it researches and designs innovative teaching methods to share with other law schools and showcases those school’s own innovations. (Here’s my own curriculum wish list, if you’re interested.) More than 20 US law schools are part of the ETL’s Consortium. Denver Sturm College of Law is also home to other innovations, including the transformation of the standard first-year legal writing course into a Lawyering Process Program.

The IAALS, by the way, describes itself as “a national, independent research center dedicated to continuous improvement of the process and culture of the civil justice system.” In that respect, it shares much in common with a growing number of research and innovation Centers at various law schools, devoted to improving both the legal education system and the legal services industry domestically and globally. These programs can be found at Georgetown Law, Indiana-Bloomington Law, Stanford Law and Harvard Law.

That’s more information about legal education reform, and more links to a wealth of rich content, than you can get through at one sitting, yet there are still law school initiatives and innovations that I haven’t touched on here. (If I’ve overlooked one that we should know about, please detail it in the comments.) I’ve provided you with all this data for two main reasons:

1. I want to increase your awareness and appreciation of what some legal educators are doing, their recognition that the present model is unsustainable and their commitment to trying something new to make the system work better for all concerned. Not every law school is clueless or manipulative, and it’s a disservice to lump the reformers together with the reactionaries.

2. I also want to encourage you to get involved with these initiatives at the law school or with the organization closest to you. I’m a volunteer with Law Without Walls and I’m speaking at an Educating Tomorrow’s Lawyers event in Denver in October, and I’m actively speaking with law deans about innovations in their own schools. The more the profession gets involved, the better the chance these projects will succeed.

You say you want a revolution? There’s one starting up right now. Grab your bullhorn.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.

The future of legal employment

The American legal profession is on the verge of a full-blown jobs crisis. The Bureau of Labor Statistics estimates that over the course of this decade, 440,000 new law graduates will be competing for 212,000 jobs, a 48% employment level. The BLS’s projection does assume law school graduation rates will remain steady during that time, and the latest news is that US law school applications are down nearly 25% in the last two years. But fewer applicants won’t necessarily translate to smaller classes; it may simply mean that law schools accept a greater percentage of applicants than in the past. Canada and the UK are likely facing similar long-term trends, although not nearly to so devastating a degree.

There’s no question this is serious business, and the sooner we take steps to deal with it, the better. Here’s something to think about, though: a “jobs” crisis is not necessarily the same thing as an employment crisis. Put differently, it may be that we should focus less on whether new lawyers can “get a job,” and more on whether and how lawyers can be gainfully employed for the use of their legal knowledge and skills.

A “job,” as we understand the term today, is in some ways a slightly archaic concept. It’s an industrial-era unit of production that became a foundational element of the post-War white-collar economy. When an organization pays you a pre-set amount to perform a range of tasks with defined responsibility in a centralized location during specified hours, that’s a “job.” Boomers, in particular, believe deeply in “jobs” — they were raised in, and flourished in, an environment where jobs were not only plentiful, but were also considered touchstones of personal success and fulfillment. Gen-Xers like me, and the Millennials streaming into the profession right now, were raised in far more uncertain employment environments, yet “jobs” remained the default format for earning a reliable and respectable living.

Today, “jobs” are becoming more difficult to define and measure. A growing number of economists accept that “unemployment rates” are an imperfect metric because they do a poor job of capturing, for example, part-time and itinerant workers or jobless people who’ve given up looking for work. At the same time, independent workers and entrepreneurs are gaining increasing traction in the economy — I recall one estimate that as many as one-fifth of all American workers now fit into those categories. The concept of “getting a job” — securing a reliable, medium-term engagement of steady activity in return for steady compensation — might yet prove to be a product its economic era.

What does this mean for lawyers? Technically speaking, private-practice lawyers are entrepreneurs — owners rather than employees, independent professionals who contract directly with purchasers without the involvement of an organizational middleman. And for solos and truly small-firm lawyers, I think this still holds true. But most lawyers in midsize and large firms, if we’re talking in practical terms, are really holding down “jobs.” The associates certainly are, for anywhere from five to ten years at the start of their careers. But even many partners, if they honestly assessed their position, might concede that they’re “employees” of the firm more than “owners,” their continued association with the firm still governed by productivity demands imposed by others higher in the partnership chain.

And when you move beyond the private practice of law, you realize that the vast majority of lawyers out there are employees, not owners. Government and public-sector lawyers? Corporate law department lawyers? Law school lawyers? Judicial system lawyers? Administrative agency lawyers? All employees: they get paid by an organization to perform a range of tasks with defined responsibility in a centralized location during specified hours. This is hardly surprising: our legal training, which does nothing to prepare us for entrepreneurship, all but destines most of us to organizational employment, and our natural risk-aversion doubles down on the tendency to favour security over independence. Being an entrepreneur is difficult and stressful, and for many people (not just lawyers), the rewards fail to outweigh the costs.

Nonetheless, I’m coming to believe that entrepreneurship is the best weapon we have to get through the legal jobs crisis. Simply put, the “lawyer job” is starting to disappear. Organizations that require legal services are creating fewer full-time lawyer jobs to deliver those services. They’re using substitutes like contract lawyers, overseas lawyers, paralegals, LPO companies, and increasingly sophisticated software. There just aren’t going to be as many “lawyer jobs,” as we’ve traditionally understood the term, in future. But there should be a growing number of “lawyer opportunities,” some of which the market will make for us and some of which we’ll have to make for ourselves.

What might these opportunities look like? Richard Susskind gave us seven to start with in The End of Lawyers?, including process analyst, project manager, ODR practitioner and risk manager. Others might include:

  • General Contractor, assembling the best team of legal professionals to achieve specific goals or solve one-off problems;
  • Knowledge Tailor, creating customized banks of legal know-how uniquely designed for specific clients;
  • Strategic Auditor, analyzing organizations for legal risk, strategy disconnects, function variances and productivity leakages;
  • Accreditation Monitor, reviewing other lawyers’ continued fitness to hold a law licence on behalf of regulators;
  • Proficiency Analyst, periodically assessing an organization’s legal advisors for competence and client awareness;
  • Legal Physician, providing individual clients with annual low-cost checkups of their family’s legal health;
  • Informal Arbiter, delivering fast, brief, non-binding “judgments” of disputes to facilitate settlements;

I expect there are a handful of lawyers out there doing these things already, but that’s not really my point. What I want you to focus on is what many of these potential future lawyer roles share in common:

1. They envision multiple clients, not just one: These aren’t single-channel “jobs” in the traditional sense; they’re more like engagements or opportunities that are customized multiple times to an ever-changing roster of clients.

2. They require the application of high-end skills or talents: Lawyers need to deploy judgment, counsel, business analysis or strategic insight to fill these roles — not process or content, which will be systematized and automated by non-lawyers.

3. They involve a high degree of customization. Mass-produced legal products and services will be the province of high-volume, low-cost providers. High-value services will be uniquely tailored, like designer drugs based on a patient’s DNA.

4. They meet a need unfilled by a traditional provider. Law firms, law schools, legal publishers, CLE providers, governing bodies, and other industry mainstays could provide supply or drum up demand for these roles, but haven’t.

5. They focus far more on preventing problems than on solving them. Richard Susskind, again, reminds us that clients want a fence at the top of a cliff, not an ambulance at the bottom. These are all fence-building positions.

6. They presume a high degree of connectedness. The future of law is collaborative, and successful future law careers will hinge in no small part on the size, quality and effectiveness of lawyers’ networks.

7. They deliver specific, identifiable, and actionable value to the buyer. Much of what lawyers now provide is procedural and transactional: hoops that must be jumped through. These roles are rich in direct, verifiable value to clients.

Those seven jobs I dreamed up aren’t as important as these seven characteristics. Nobody can actually predict the “jobs of the future” — raise your hand if you thought “app developer” was a viable career as recently as 2005. But we can predict the features people will seek out in their legal professionals, the talents and skills that will deliver value to a more literate, tech-savvy, mobile, frugal and assertive client base than lawyers have served in the past. New lawyers need to understand this; but equally, new lawyers are uniquely positioned to grab this opportunity, because they’re not as burdened with assumptions of what a legal career ought to look like. Fresh eyes for a new marketplace are now a distinct advantage.

My message to new lawyers, really, is this: don’t gear all your career efforts towards “getting a job,” or at least, not one that you’ll hold for more than a few years. The legal economy’s traditional employment infrastructure is starting to crumble, and if you count on spending your career inside it, you could be caught in the collapse. There are plenty of markets and industries that will continue to make lots of traditional full-time “jobs” available, but I doubt very much that the law will be one of them. If you wind up in a steady law job, that’s obviously great; but you should think of that outcome as the exception more than the rule.

So instead, plan for independence. More and more legal employment will be small and entrepreneurial in nature, rewarding the self-starter who builds a reputation for value, effectiveness and foresight. Look at the legal market around you and ask: What’s missing? What client needs aren’t being met? What needs have clients not even thought of yet? What innovative new industries will flourish in the next ten years, and in what ways will they require assistance that lawyer training and legal skills can deliver? What demographic trends will take full effect in the 2010s, and what are their law-related implications? What technological advances in the legal market, no matter how sophisticated, will still require complementary high-end lawyer services?

The BLS thinks that only 212,000 new law jobs will open up this decade. I say: Prove them wrong. Create new opportunities. Identify and encourage unrealized demand. Find ways to apply your best legal skills — strategic analysis, critical thinking, incisive logic, intellectual coherence, principled persuasion, and more — to create value for clients. That’s the best way — and it might be the only way — to ensure your ongoing success as a 21st-century lawyer.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.

Losing the confidence game

Here are six observations about the legal marketplace for you to consider, each supported by a news report filed just in the last few days.

1. Fewer people want to be lawyers.

Number of law school applicants continues to slide: “[US law school] applications submitted are down 13.6%…. That translates to about 66,696 applicants and about 484,576 applications…. Over the past two years, there’s been a 24.1% decrease in the number of law school applicants and a 19.6% decrease in the number of law school applications submitted… [T]he legal market … is expected to have difficulty absorbing the 45,000 students preparing to graduate law school in each of the next three years.”

2. Fewer new lawyers are finding legal jobs.

Two law graduates for every lawyer: “The [US] Bureau of Labor Statistics [BLS] estimates that 212,000 jobs will become available for [US] attorneys over the course of this decade, mostly as a result of replacement rather than growth. If the number and size of ABA-accredited law schools remains the same, that means 48% of law graduates this decade can be expected to get (not keep, get) a legal job.

3. More clients are using lawyer substitutes.

The low-cost lawyer is not a lawyer: “The financial constraints of the last few years have forced companies and law firms to consider whether every legal problem must be staffed with attorneys who, thanks to the high costs of their education, demand higher salaries.  If BLS’ projections bear out, it appears that clients and firms may have found permanent low-cost substitutes for many legal jobs in the form of paralegals, legal assistants and even accountants.”

4. Lawyers’ monopoly over legal services is dissolving.

Co-Operative Legal Services granted license to practice law: “In the past six years, [the Co-Op] has built a £25m-plus, 500-person legal business without needing to be an ABS, but the licence opens up more opportunities.They include launching a fixed-fee family law service later this year, handling legal aid work, and offering face-to-face legal advice through the Co-op’s bank network.”

5. Clients have access to lawyer-like technology.

Disruptive technology in the hands of clients: “The Association of Corporate Counsel today launched ACC Contract Advisor, a contract-drafting tool built on what is described as a “vast collection” of sample contracts and thousands of real-world clauses. Launched in collaboration with kiiac.com, the new resource is, unfortunately, available only to ACC members. … A user can search all documents for specific language. Model contracts and clauses can be downloaded.”

6. More disputes are being resolved without lawyers.

Coming soon: a global ODR system: “Businesses that have a really well-developed resolution system make a lot more money. Customers trust them,” added Rule, former director of online dispute resolution for eBay Inc., and PayPal, which collectively uses ODR to resolve 60 million disputes a year. … “We built a civil justice system. We built a walled garden. Now the challenge is more and more transactions are happening outside the walled garden.”

You could draw any number of conclusions from these six data points. But my strong impression is that we’re experiencing a switch in the legal market’s default setting.

Watching the legal profession today is like seeing a champion golfer, previously considered invulnerable, struggling with his game for so long that at a key moment, his opponents experience a sudden switch from feeling intimidated to feeling empowered. It’s like seeing a global business smartphone giant, whose products were once ubiquitous, suffering so many consecutive reversals of fortune that at a key moment, the market decides that the company’s products are no longer the default standard and switches en masse. It’s like seeing a national leader, in power for so long that everyone accepts his rule as a fait accompli, make enough bad decisions that the streets are filled with opponents who suddenly believe today, as they haven’t for many yesterdays, that change can happen.

The aura of incumbency is far more powerful than we realize. Politicians who “can’t” lose, products that “can’t” be outsold, majority opinions that “can’t” be swayed — in these and similar situations, the “can’t” is most often rooted in the challenger’s state of mind. The simple act of observing those who occupy positions of power leads us to credit them with more merit than they probably deserve. The incumbents, in turn, sense and absorb this impression, making them feel and appear even stronger, while also making them more complacent.

But when the aura of incumbency flickers or fades — when, for a variety of reasons, the “natural” leader suffers a series of setbacks and loses momentum — then a switch invariably occurs, first in people’s minds and then in the market. That’s where the legal profession is, right now.

We’ve held down the primary (if not the exclusive) position in the legal market for so long that everyone — ourselves included — came to believe that this was the natural order of things. Then things changed, as things tend to do. We’ve found ourselves losing much of our momentum and with it, much of our confidence. The aura of our incumbency has slipped. Everyone sees it, and everyone feels the change. And suddenly, we’re foundering.

Can we regain that momentum, restore our aura? I’m not sure. Confidence is a scarce resource in a marketplace: rarely do both the challengers and the champions possess it. Right now, the momentum belongs to the challengers, who see an opening they’re never seen before and had perhaps believed they never would. Lawyers are vulnerable, both in mood and in market reality, to a degree that I think we’ve never experienced. We need to find our confidence and re-establish ourselves as the favourites — but confidence, like liquidity in a financial crisis, is always available except when you really need it.

We’ve entered a crucial period in the evolution of the legal market, one that could usher in a paradigm change, a platform shift, a change on the leaderboard. Are we up to the challenge? The answer to that question contains the future of our profession.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.