The apprenticeship marketplace

Critical mass, like the famous definition of obscenity, is one of those things you can’t necessarily define but that you know when you see. We’re approaching a critical mass of discourse on the necessity of change within the American law school system, and when we reach that point, the focus will switch overnight from necessity to inevitability. The latest step in that direction comes courtesy of a National Law Journal article with the suggestive title “Reality’s knocking.” It details efforts underway at numerous law schools — including Washington and Lee, Dayton, Northwestern, Indiana/Bloomington, UCLA, UC Irvine, and the latest entrant, Duke — to integrate market-readying client-focused training into their programs.

[A] growing number of law schools are emphasizing teamwork, leadership, professional judgment and the ability to view issues from the clients’ perspective. “I think we are at a moment of historical change across the landscape of legal education,” said Washington and Lee Dean Rodney A. Smolla. “When we look back at this period in five to 10 years, we will mark it as the time when the whole mission of law schools made a fundamental turn.”

The thrust of these changes — whether shortening the law degree by one year, supplementing traditional coursework with legal skills instruction, simulating law firm environments (complete with client relations and billing), or introducing professional values training in the first year — is to accelerate law graduates’ development into full-fledged lawyers. By doing so, these schools hope to improve relations with the private bar (an increasingly important source of funding), better compete with other school for the most promising pre-law candidates, and (one would like to think) better serve the long-term interests of their students. By and large, these are very welcome developments, and there’s no doubt in my mind we’ll see a lot more of them in the next few years.

What especially caught my interest in the NLJ story, however, was a nearly-throwaway paragraph illustrating the kinds of pressures schools are feeling from the private bar:

The legal labor market is saying that it’s no longer willing to pay top dollar to recent graduates who lack work experience. Law firms including Washington’s Howrey and Philadelphia’s Drinker Biddle & Reath recently announced apprenticeship programs wherein starting associates earn less and spend a significant amount of time training and shadowing partners.

I’ve written about these programs before — Frost Brown Todd, Strasberger and Price, and Ford Harrison have followed suit — and I hope to put together a much more detailed treatise on this subject down the road. Under these initiatives, the law firms pay their new associates much less than the market rate and require far fewer billable hours from them; associates spend most of their time in apprenticeship, training and shadow programs with experienced lawyers, with (unbilled) client contact and observation opportunities where possible. These firms have heard their clients complain about paying to train new lawyers unprepared by three years of law school, and either to mollify these clients, to stake a marketing advantage, or (one would like to think) to actually better serve both their clients’ and their lawyers’ interests, they’ve responded with this new approach.

But what’s most interesting is that these innovative new programs at the law firms don’t really differ in any substantial way from the innovative new programs at the law schools. Both are focused on providing new lawyers with the practical training, skills development, and professional awareness that a traditional law degree and most bar admissions processes fail to deliver. Both aim to reduce the steep learning curve that new lawyers have always had to climb, making them readier to serve clients and generate billable work than they otherwise would be.

What this means is that for the first time, law schools and law firms are providing the same service — apprenticeship training. And when two or more providers offer the same basic service, you’ve got yourself a marketplace. Very good things can happen in marketplaces — intense competition to improve offerings, constant pressure to innovate, a diversity of ideas and approaches, continual erosion of barriers to entry. All of these developments work to the ultimate benefit of that marketplace’s consumers — in this case, new lawyers and (ultimately) the clients whom they’ll serve. The more schools and the more firms that enter this marketplace, the better and faster the results will flow.

I can’t wait to see what a lawyer apprenticeship marketplace might produce over the next several years. But there’s a potentially major problem with this playing field: one of these providers charges its consumers an annual tuition to receive this service, while the other pays its consumers an annual salary. That’s no contest, and in the long run, it will mean that this is a service you can’t charge students to receive — or, more radically, one that new lawyers won’t earn a salary to obtain.


Momentum is one of those things everyone talks about but nobody can ever precisely define or quantify. It’s that sense that things are turning around or gathering speed in a certain direction, usually for the better — with a corollary borrowed from physics that the larger the object and the greater its velocity, the more powerful the result. Skeptics dismiss it — baseball managers like to say that “momentum is tomorrow’s starting pitcher” — but I think there’s something to it, especially right now in the corporate legal marketplace. You can feel the pendulum swinging, the weight shifting — you can sense a gathering wind in the sails of change.

Exhibit A, which you’ve surely read about by now, is the decision by international mining giant Rio Tinto to send $100 million worth of legal work annually to a team of lawyers in India. This is not back-office administrative work of the type that, say, Clifford Chance has been sending overseas. This is associate-level legal work like document review and contract drafting, and you can call it “commodity” work if you like, but there’s tons of it and it keeps many large firms profitable. It represents $100 million that Rio paid its outside law firms last year but won’t pay this year or, probably, ever again. With an offshoring project of this size and scale, Rio is obliterating the “legal work” distinction that many firms have long believed insulated them from the effects of outsourcing.  And it won’t stop there, as Richard Susskind notes in a commentary for the Times:

People often assume that outsourcing and the options are applicable only to high-volume, low-value legal work. The Rio Tinto deal confirms this is wrong. There is no legal job whose complexity and value elevates it entirely beyond market forces. The reality is that significant parts of even the biggest transactions and disputes are repetitive and routine; and in-house lawyers will be delighted that these can be packaged out to less costly providers.

Rio Tinto’s move is bad news for traditional law firms in two ways. First, the outsourced Indian lawyers are doing this work for one-seventh the cost of traditional outside counsel. Think about that: firms have lately been offering their clients rate discounts of up to 10% and feeling magnanimous about the sacrifice, and here comes CPA Global doing the same work for 85% less. That’s a stunning cost savings, and it doesn’t just change law firms’ playing field, it destroys it: it reduces any proffered “rate discount” to  irrelevance. Rio Tinto has served notice to its outside counsel that the price bar for this type of work  has been reset at a radically lower level, permanently. It should go without saying that traditional law firms can’t compete for that work at that price, not as they’re currently structured.

But maybe more importantly, Rio Tinto’s move feels like a momentum shifter. Its own sheer size as a client, and the mammoth scale of the outsourcing commitment it’s making, should have enough critical mass to really get things moving within a legal marketplace that, despite recent upheavals, has yet to make real, radical alterations to its business. Rio is not the first law department to send legal work offshore, far from it — but it’s a very visible example of what Seth Godin called Guy #3 , the participant whose entry breaks the ice and gives everyone else “permission” or cover to join.

Rio is sending a message to other law departments that legal work can be exported en masse to India without GCs having to automatically fear for their jobs. And it’s sending a message to law firms that the game has changed — a message some firms have received. Just a couple of days after Rio’s move, large UK firm Pinsent Masons announced it’s sending litigation work to lawyers in South Africa, while competitor Simmons & Simmons is preparing to send its own legal work to India, Australia or South Africa. This quote from Simmons managing partner Mark Dawkins is gold: “We’re not going to defend a business model that clients don’t want to have to pay for.” It’s really as simple as that — it always has been — and the reality on the ground is now starting to reflect that.

What’s really interesting, though, is that this momentum isn’t restricted to outsourcing — look around the legal marketplace and you can start to feel real momentum shifts in numerous places.

Consider firms’ treatment of new associates: after peaking  at $160,000, starting associate salaries have been in retreat for a few months now, to no one’s surprise. What was surprising was last month’s decision by Philadelphia-based firm Drinker Biddle to chop those salaries to $105,000 but add training and apprenticeship services for these new lawyers. “In some ways, we intend for your experience in your first six months to be a bit of a throwback to how lawyers ‘grew up’ in their firms literally only a few decades ago, before the rise of the billable hour,” the firm wrote to its incoming associates. Within a month, Cincinnati firm Frost Brown Todd followed suit. (Defenders of the articling year at Canadian law firms are probably feeling pretty good right now.)

And then, just a few days ago, large international firm Howrey LLP played the Rio role and announced it was cutting associates’ pay but increasing their training. Howrey has a track record of paying attention to how its lawyers learn (and, interestingly enough, in outsourcing to India too) — its Howrey Virtual University has been providing coordinated firm-wide web-based lawyer training since 2005. Howrey managing partner Robert Ruyak’s words are also noteworthy: The old model is broken. You’re bringing on these extremely bright individuals and letting them waste their careers buried in documents where they aren’t really learning the practical skills it takes to be a lawyer. The comment board at Above The Law, which invariably trashes any law firm decision that doesn’t involve more pay and less work, reacted positively to Howrey’s move overall — nearly 70% of poll respondents said they’d take the deal if it was offered to them. My guess is that right now, many large law firms are watching Howrey closely and treating it as their advance scout — like Rio, Howrey is a substantial player whose participation can and should tip the balance toward change.

There are other examples. Look at the recent frenzy of reports of law firms pricing their work at “fixed fees” — we’ve heard about flat-fee or fixed-fee initiatives underway at traditional firms like Alston & Bird, Lightfoot Franklin & White, Kirkland & Ellis, Simmons & Simmons (there they are again) and Morrison & Foerster, to name a few. Law firms generally still don’t understand fixed fees — here are some excellent critiques of their mindset and methodology from Tim Corcoran, Patrick J. Lamb and Jay Shepherd — and “alternative fees” are by and large still that, alternative.

But now along comes respected midsize firm Saul Ewing, creating a “cost certainty commitment” that standardizes fixed-fee arrangements with clients. Again, what’s unique here isn’t so much the offering as the prominent, high-profile way in which it’s being rolled out — the key to building momentum is to be seen to build momentum. From the Legal Intelligencer article: “Altman Weil’s Pamela Woldow said Saul Ewing’s cost certainty commitment is certainly unique. She said she isn’t aware of any other firm that has created such a program and made such a public, formal commitment by putting it on its website.” All of these moves — Rio Tinto’s, Howrey’s, Saul Ewing’s — are significant largely because of the signal they’re sending, quite intentionally, to the other members of the marketplace that things have changed.

Going first, and doing so conspicuously, is incredibly important to change in the law. It’s conventional wisdom to blame lawyers’ reluctance to innovate on the fact that they hate being first movers, that they much prefer to stand back and let someone else make the initial move. And that’s true as far as it goes, maybe even more so  for in-house lawyers than for private practitioners.  But the corollary to that is that lawyers also don’t like being the last ones to join the club. Ron Friedmann explains this very well by using “a discontinuous step-shaped function” to describe lawyers’ willingness to change:

Consider adoption in the legal market of e-mail, document management, marketing, lateral moves, or mergers. For each, there seemed to be only a few firms doing it and then, quite suddenly, many or all were. The “step function” reflects lawyer decision making: the first few adopters change slowly, gingerly, and quietly. Everyone wants to follow so once you have a dozen adopters, “the coast is clear” and the rest rush in.

“Gradually and then suddenly,” as Hemingway once put it — lawyers hate being  the first to change, but equally they don’t want to be the last ones left out in the cold. Law firms constantly monitor each other and the legal marketplace to see what’s going on, who’s doing what, and whether there’s anything big happening they should be part of. They’re watching for the “prominent first movers” Rees Morrison talked about in the Rio Tinto context. Once they feel that enough people have jumped into the water and declared it safe — once the reputational and financial risks of change have been taken and minimized by others — then they’re ready to leap, and if they sense a rush of movement among their competitors, they’ll even push each other out of the way to be the next ones in line.

I think that’s where we are today. In all sorts of ways, in many different aspects of the legal profession, first movers are forging ahead and dictating a new energy and direction, while the great silent vastness behind them watches closely and prepares to shift and follow. Momentum — mass times velocity — is an incredibly powerful force; we’re about to see it channeled through the legal services marketplace.

The legacy of work-life balance

I think we’ll soon be closing the book on one of the legal profession’s most-used and least-understood phrases of the last decade: “work-life balance.” It was still all the rage just a couple of years ago — new lawyers invoked it as a mantra, talent recruiters bandied it about, and many legal publications (including those I’m responsible for) frequently referenced it. But even before the economy fell off a cliff, you could see the pushback growing — and not just from cranky corner-office partners who felt the youngsters hadn’t paid their dues. The pushback came from a growing sense that “work-life balance” (WLB) was a meaningless phrase that obfuscated some real issues lawyers needed to grapple with.

Essentially, WLB was shorthand for the widespread sense that the demands of a legal career had outstripped the personal benefits it conferred — or, as my father used to say, “There’s not much point in earning a living if you can’t live the living you’re earning.” WLB was applied most frequently within the context of large law firms, where even jaded observers would admit that billable-hour targets had escaped any rational trajectory. Across all firm sizes, though, people looked at the law and saw a career where effort and satisfaction were headed in opposite directions. It was not irrational to think that this could stand some improvement.

(It’s important to recognize, by the way, that WLB was not exclusively a Millennial issue. Lawyers of all ages reported dissatisfaction with the perceived effort/reward ratio of their careers, especially in larger firms — though Gen Y was the most willing to talk about it, at length. Remember that WLB was also often used to describe the plight of older small-firm lawyers whose clients had come to demand legal services far more quickly and cheaply than before, catching the lawyer in a vise between ever more work and ever less time. Wherever legal work seemed to grow beyond the boundaries of “worth it,” we heard about WLB.)

Most lawyers seeking WLB were really seeking an answer to the question: “Does a legal career have to be all-consuming and exhausting?” As to that, I’ve written before that lawyers now work long hours thanks to a competitive economy and our own inefficiency, and that we’ll always have to run fast enough to keep up with our clients. But during the economic bubble, lawyers who asked that question often perceived that the answer was “no.” The demand for legal services sufficiently outstripped the supply of lawyers, such that lawyers could start to dictate the terms of their availability to employers and sometimes even to clients. The whole thing got wrapped up too often in buzzwords like “personal fulfillment,” “family time,” and WLB, but what it really came down to was lawyers’ rational response to market conditions. They had a chance to get more rewards for their time and effort — unfortunately, many of them chose those rewards in $160,000 annual packages.

Now, of course, the market has changed just a little. After 10,000 lawyer and staff layoffs at large US and UK firms, even the most active WLB boosters have toned down talk that might earn them the dreaded “entitlement” label. Articles and posts that reference the term “work-life balance” now do so in an environment of cold pragmatism: Ashby Jones at the WSJ Law Blog and Dawn Wagenaar at The Complete Lawyer provide good recent examples. Realist observers like Dan Hull and Scott Greenfield have gained the upper hand in the WLB discussion — check out this slam-bang debate at Legal OnRamp about “work-life balance” generational expectations.

Where proponents of “work-life balance” went off-track, to my mind, was that they argued the duty to ensure a satisfactory proportion between a lawyer’s work and the rest of her life was an institutional responsibility — that it was up to the law firm, basically. The  firms disagreed, and all they had to do was wait for the marketplace to turn their way to make that clear.

Law firms aren’t going to unilaterally change their business models for the sake of WLB. No law firm ever budged an inch on its billable quotas or offered associates more money and perks because its partners genuinely felt they should be nicer employers — appeals to conscience at partners’ meetings don’t have a roaring record of success. Firms change their working conditions as the talent market dictates. In a seller’s market like the one we’ve just had, they play nice; in a buyer’s market like this, they don’t. If almost every potential legal recruit said, “I’m not going to work at that firm — the demands are ridiculous and the benefits to my career aren’t nearly worth it,” and did so for several consecutive years, then you’d see the firm think about changing its business model. That didn’t even happen during the boom, and I doubt it’s going to happen now.

The thing is, “work-life balance” is a lawyer’s personal choice and responsibility. If money and “prestige” are that important to you, you’ll sign up to work 3,000 hours a year at a law firm, and you can reap the rewards and suffer the personal consequences accordingly. If keeping your work hours within a predictable box is important to you, you’ll be seeking out public-sector jobs or setting up a practice with just enough reasonable clients to pay the mortgage — and you’ll always have one eye on your bank statements. When we talk about “balance” in lawyers’ lives, we’re really talking about the tradeoff everyone has to make between compensation and lifestyle. If WLB stood for anything, it was for the fact that we all have the right and the obligation to make that tradeoff on the terms we want.

But here’s the caveat, and here’s where “work-life balance” proponents were right —  most lawyers in their first several years of practice don’t really have that choice. There are two institutional flaws in our system that hurt our newest colleagues. First, there’s the unspoken symbiosis between law schools and law firms — the former charge students huge amounts of money and provide little practical lawyer training, allowing the latter to hire low-skilled and heavily indebted graduates to fill virtually the only positions lucrative enough to pay off their loans. And secondly, billable-hour targets for associates at more than a few firms simply can’t be achieved without damage to one’s health or ethics, or both. These problems are neither natural nor inevitable — they result from our neglect of the system, and they annually damage our profession’s standards and morale.

In the heyday of WLB, we were at least starting to talk about these things, and the whole debate should have shined a light directly on them. What we were groping towards, under the banner of WLB, was the gnawing sense that most everyone starts their legal career behind the eight-ball for no particularly good reason. Now that the moment has passed, I worry that WLB will be relegated to the status of a mere generational quarrel during a freak economy. We need to do better than that. There are still some serious institutional problems for our profession to resolve — dealing with them openly and effectively would be the kind of legacy “work-life balance” deserves.

Graduating into a recession

It’s rare that a reader asks me to write something on a specific topic, rarer still that multiple requests for the same subject come in. So the fact that a few people have now asked for a post about law students and the recession indicates just how much anxiety is rising in law schools and among new lawyers.

It really is amazing how fast everything changed. When the classes of 2009 and 2010 entered law school, the economy was booming (or more accurately, bubbling) and some big law firms were seriously contemplating $200,000 annual salaries for first-year associates. Now those same firms are rushing to cut salaries, while the economy, though probably past full-scale crisis, isn’t as strong as the markets would have you believe and likely is set for several years of mediocrity. So you can kind of see where young lawyers’ anxiety is coming from.

Not that everyone is sympathetic to their plight. But if you think they’re overreacting to the recession, try to remember how you saw the world in your twenties, and that no law school generation has ever graduated this deeply in debt. And try to remember, too, that our whole industry, from educators to employers, told these young people that the professional cow was full of cash and would only grow fatter. The growing ranks of unemployed young lawyers and frightened law students out there should remind us how poorly we’ve managed the business of law for years now. We raised their expectations too high and made promises we couldn’t keep, and it seems to me we bear at least some responsibility for helping them get through this.

I first wrote about graduating into a recession last January, and most of what I said then still applies. But in the intervening  months, it’s become clearer that this isn’t just another cyclical downturn. Economically, it’s all bad enough: many banks are still on life-support, people are still paying off or defaulting on various types of debt, and government spending can’t replace consumer spending indefinitely. These problems aren’t going away anytime soon. In the legal industry, the financial crisis has accelerated already-existing trends towards more power in the hands of clients and more downward pressures on lawyers’ fees — major change should now arrive ahead of schedule.

Most of all, though, the crisis has triggered upheaval for large law firms, which for years have been providing the profession with on-the-job training for its new law graduates. The newest trend is toward what NALP’s James Leipold refers to as the “collision of classes” — all those retracted job offers and deferred starting dates for 2009 graduates are leading towards their logical conclusion: no new hires from the class of 2010 (here are recent examples from the US and the UK). Granted, hiring untrained law grads and paying them scads of money to fill out dockets is a recruitment model long overdue for replacement; but for the purposes of new law grads, it means one of the tightest job markets in memory.

So what would I recommend? Well, students currently in law school need to ask themselves a tough question and come up with an honest answer: why am I here? It might well be that you’re a law student because you’re bright, well-meaning and helpful, and the law seemed like an interesting, prestigious and financially reliable career path — that pretty much describes my route. But if that’s all that brought you here, then I think you should give some serious consideration to quitting.

I know how harsh that sounds, especially since a lot of great lawyers went into law school not fully certain if this was their calling. But this is not the same profession that your parents or older siblings entered, where entry barriers were relatively low,  learning curves were pretty gentle, and steady employment was more of a question of “where” than “if.” Law is becoming a tougher profession for new entrants — standards are higher, footholds are fewer, breaks and opportunities are disappearing. It used to be that you could spend the first few years of your career learning the ins and outs of practice from large-firm employers — they’d work you hard and train you poorly, but they’d pay you well because they made money off you no matter how long it took you to get the hang of things.

Those days are ending. The vaunted law firm pyramid is being replaced by the law firm diamond — few partners at the top, few trainees at the bottom, a lot of experienced workers in the middle. Because of the economy, and because technology and outsourcing are taking away new lawyers’ traditional tasks, there just won’t be as many opportunities to get your professional sea legs in a law firm. It’s going to be a lot harder for you to gain work experience — and that’s a real problem, because these same firms, perversely enough, are also narrowing their hiring criteria to lawyers with  experience and skills. I need hardly point out that most law schools provide no training in lawyering skills, client relationships or anything else that firms are suddenly deciding they value.

Many of you, then, will find yourselves standing in front of the profession’s gates with a key issued by your law school, only to find they’ve changed the locks. And since most schools don’t seem ready to issue a new set of keys, you’ll need to find another way inside. You’re going to have to develop the necessary skills and gain the requisite experience on your own. That might take several years, during which you’re not going to earn much or make much of a dent in your student debts, and at the end of the process there’s still no guarantee of a job. So unless you’re driven to be a lawyer, unless this really feels like a calling and you’re prepared for a north-face assault on this mountain, you owe it to yourself to think about suspending or abandoning your law degree. I don’t say this lightly or happily, but I do think it needs to be said.

What if you’re among the committed, or you’ve already graduated, or you’re so close to your degree that, even taking account of the sunk costs fallacy, you might as well finish it off? To start with, you’ll need to reorient your expectations along the lines of what I’ve just mentioned, accepting that the rules changed on you mid-way through the game and that there’s nothing to be done about it. Don’t underestimate the importance of attitude: the faster you can readjust your mindset from disappointment or victimhood to determination and opportunity, the wider a gap you can create between you and your classmates-turned-competitors. Take all the time you need to fully make this transition, but don’t take a minute longer.

The next thing to understand is that it’s time for some career triage.  You might not yet be sure what type of law you really want to do, but you no longer have the option of  browsing through the racks and trying things on. Pick something you think you can do and where you already have some experience or contacts — if you DJ’ed in college, think about entertainment law; if you majored in engineering, think about IP; if you worked at a nursing home, think about elder law. This isn’t about making career choices that will bind you for decades; this is about finding a door to put your foot into, an area where you already come with some valuable attributes. You need a place to start, so choose one in familiar territory.

Next, start building networks and skills. Which networks to construct depends on where and what you want to practise. If you’re settling or setting up shop in a given jurisdiction, join the bar association of that state or province (new lawyer fees are generally low) and go to as many meetings of your local chapter and area-of-practice section as reasonably possible. Meet people, introduce yourself, ask questions, follow up. At the same time, investigate your industry: join trade groups, read industry newsletters and websites, get to know the issues facing your future clients.  And get involved in online networks: join LinkedIn and start making contacts. Join Legal OnRamp and make your mark in the groups, conversations and debates there. If it’s at all feasible, blog.

Skills, of course, are the hardest thing to acquire, part of the “how do I get experience/skills without skills/experience” vicious circle. If you’re lucky, you’re with a law firm that will actually pay you while it trains you in the lawyering skills you need. If you have the luxury of volunteer time, identify an organization (preferably in your chosen area) that needs and accepts unpaid legal help and use that opportunity to acquire skills and make personal connections. If you can afford to pay for an associate position, Dan Hull would be happy to hear from you (it would be a pretty good investment, actually).

But maybe your best immediate investment might be Solo Practice University, an online legal learning and networking institution that fills in the many practical gaps in your law school education. At SPU, lawyer faculty teach real-world skills required in numerous areas of practice as well as marketing, management and technology know-how. I received a guided tour the other day and came away impressed. Even if you don’t intend to go solo, you could learn a tremendous amount (inside and outside class) from some very knowledgeable people at your own pace for about 1/20th the cost of the average American law degree — give it a look.

Really, it might help to think of yourself as a start-up — because in a  lot of ways, you’re a start-up law business. You have a law degree, which is far from worthless; it’s now just a piece of the puzzle, not the whole thing. You also have talent, drive and dedication, which is pretty much all that most startups ever set out with, along with your own unique life experiences. Now you need to build your personal law business, from the ground up.

Like other start-ups, it might have to be a part-time effort, since you’ll likely need to take a non-lawyer position (or even one outside the profession altogether) to pay the bills. But that full-time  job is just a source of income; your part-time start-up is your calling and your passion, and it will occupy your nights and weekends. If you think that sounds like a lot of work and not much life, you’re absolutely right. Don’t leave your student lifestyle behind yet: the long hours and tight budgets will probably continue for a while, and the discipline they impose, while absolutely a short-term pain, will prove to be a long-term benefit.

A good book to read right now might be Seth Godin’s The Dip: it’s about the importance of quitting the wrong things at the right time, sticking out the right things for as long as it takes, and knowing the difference between them. The most important lesson I took from it was that every worthwhile path has numerous barriers designed to do nothing else except winnow down the number of users. These barriers are what cause the dry spells, frustration, and pain that drive many people to pursue other paths that are easier or better for them — they constitute The Dip, and they separate the curious from the committed.

For a long time, law didn’t have much of a Dip, didn’t have many barriers — most everyone who acquired a law degree ended up with a law job if they wanted it. Now there is one — a law degree has become the start of your legal training, not the end of it. If you’re in law school or just emerging from it, you need to decide whether you can and want to make it through these barriers, the ones that right now are winnowing out thousands of people from this profession. If not, there’s no harm and no foul — life is long, and there’s a new century of opportunities opening up for you.

If you do decide to go for it, get ready for a long and often difficult haul, early-morning work and late-night second-guessing. And you still might not make it. But as that wise man Tom Waits once said: if it’s worth the going, it’s worth the ride. Good luck.

The disappearing associate

Well, that was ugly. In case you missed it, or you need a summary, here’s what happened on a day (yesterday) that the ABA Journal called Black Thursday and Above The Law readers have decided should be named (a little early) the Valentine’s Day Massacre:

This doesn’t include announcements of other cost-saving measures, like more salary freezes and Luce Forward rescinding its offers to new graduates and cancelling its 2009 summer program. If there’s one certainty you can take from this very unhappy day, is that this is just a sampling of what’s to come. (This morning, Peter Zeughauser agreed: “There will be more. Materially more. I’m aware of some big ones coming up.”) We’re at the beginning of this process, not the end.

And what process is this? Well, as previously noted here, it’s of course the marked decrease in client engagements; but it’s also the fallout from the 2008 financials finally becoming clear and the dire need for firms to keep partnership revenue and marketplace confidence as steady as possible. But I’m also coming to think it’s about something else: a serious, gut-check re-evaluation of the whole purpose of law firm associates. I count 297 lawyer firings in that list above; so far as I know, not one of them was a partner.

It’s becoming more evident that we’re not just looking at a normal recession with the usual coping tools (layoffs, salary freezes) from law firms. We’re looking at an extreme recession  (or worse) that happens to be occurring at a time of particular vulnerability for law firms and an unprecedented willingness or necessity to reconsider traditional approaches. With every brutal update, the good folks at Citi and Hildebrandt are speaking more plainly:

[T]he current economic downturn can be viewed as an opportunity to make some fundamental changes in the way law firms are structured and do their business – changes that are not only long overdue but that will also serve the profession well as it emerges from the current recession. …

Among the measures that Citi and Hildebrandt strongly urge is the abandonment of lockstep compensation for associates:

In the current economic climate, it is irrational to have half or more of a firm’s highly compensated lawyers on largely seniority-based salaries…. Firms that have not already done so should seriously consider modifying their associate compensation structures to allow a substantial portion of compensation to be tied to individual performance in support of the firm’s goals and strategy. Firms should also be willing to consider moving away from locked-step associate advancement (and compensation) toward competency-based models. The legal profession is one of the last industries still to cling to this outmoded seniority-based method.

This would not be an unprecedented measure, of course. But as sensible a move as this would be for many firms, events are overtaking it. Some firms are already in the uncomfortable position of having clients refuse to pay for work billed by first- or second-year associates, on the premise that these novice lawyers add inconsequential value to the task at hand and that the client is not going to pay the law firm’s on-the-job training costs. A few others are facing up to the reality that Indian firms can and will complete associate-level tasks for dimes on the dollar, or that new software can streamline and automate the due diligence and document review process on which so many associate hours have been billed.

What we’re looking at here is the real possibility that the law firm associate, in its current form, will not survive this crisis. As the number of associate billable hours clients are willing to pay declines, so too does the need to develop and maintain these vast grazing herds of associates within firms. Partners are going to have to start thinking seriously about what purpose associates serve when they no longer constitute the bottom two-thirds of the profitability pyramid. If you can’t sell the billable hours they’ve been churning out, what do you do with them? What, exactly, is the law firm associate for?

The standard answer, of course, is that associates are future partners in training — that’s what the recruitment brochures maintain. That might be more convincing if attrition — natural and otherwise — didn’t slice off about three-quarters of all lawyers between first year and the partnership committee. It might be more convincing  if more firms had a rational system for identifying, assessing and hiring associates, actively trained those associates from day one in the firm’s financial and culture realities, and had a strategy setting forth how many future partners are expected to come up through their own ranks as opposed to through lateral hiring.

Since all of these things are true at very few firms, and none of them are true at many, we’re left to conclude that as a general rule, associates are hired to be billing machines. If that machine stops working, then we have a serious problem.

Paul Lippe of Legal OnRamp noted in an American Lawyer piece:

[T]he recession will last through 2010. Law firms will use this period to substantially restructure, and beginning in 2011, things will start growing again. While there’s a lot of detail and nuance around the form this restructuring will take, it can be described in simple terms. A typical law firm bill in January 2011 will generate the same dollars for partner work as it does today, but it will generate half the revenue for associate work.

Paul’s article is titled in part: “The End of Leverage.” “Leverage” in law firm terms means associates. It’s not hard to see where this is taking us.

And in truth, not every law firm has been slow to figure this out. Calgary energy law boutique Thackray Burgess has 29 partners and 0 associates. The firm employs more than 20 “consultants,” independent contractors who look like associates but are paid by the hour, work however many hours per year they feel like, pay the firm a fee to cover their overheads costs and a percentage of the hourly rate they charge their clients, and keep the rest themselves. I don’t love the hourly billing aspects of this setup, but the idea of associates as independent contractors, retained for what the client requires and no more, makes perfect sense. Axiom Legal and Virtual Law Partners have also re-engineered the traditional associate position. I’m sure there are other examples, and more will come.

By the time this recession runs its course — and no one really knows when that will be — both client expectations about the manner in which rote legal work is done, as well as the technological and offshore solutions available to do that work, will be so different from today that there’ll no be going back. The idea that a firm can employ dozens if not hundreds of inexperienced lawyers primarily to generate revenue on low-value work will eventually be seen as a relic of the 20th century. Firms will still hire and retain associates — new partners, even laterals, have to come from somewhere — but there’ll be far fewer of them, they’ll be selected, evaluated and trained far more systematically, and they’ll be engaged, billed and compensated much differently than they are today.

We should make no mistake about how profound a change this will be, nor believe that its ramifications will be limited to big law firms. To a growing degree over the last decade or two, large multi-service law firms in urban locations have been completing the job of legal education that law schools and governing bodies have been haphazardly starting. We can complain all we want about overpriced, underskilled associates in firms; the fact is that these firms and their clients have been subsidizing the bar admissions process, providing the last three years of what amounts to a seven-year law degree. When modern marketplace economics finally puts an end to this practice, who will pay new lawyers with few skills and massive law school debts while introducing them to law practice? Who will be responsible for completing lawyers’ education and training them? We’re going to need answers to those questions, and fast.

Like I said, we’re at the start of this process, not the end. The fundamental restructuring of the law firm business model that Citi and Hildebrandt are calling for is at hand, and the changes we’re seeing now stand a very good chance of being permanent. There’s a reason I used “fired” instead off “laid off” at the start of this post.


If you haven’t already, please take Law21’s reader/market survey. If you have, thanks very much!

Can’t get no LSATisfaction

Here’s something interesting: the consultancy Kerma Partners recently conducted an in-depth study of more than 1,300 current and past “timekeepers” on behalf of an AmLaw 25 law firm. The study identified which personal qualities and attributes of lawyers correlated most strongly with firm success factors such as productivity and longevity. Lawyers possessing the best of these attributes, it turns out, doubled or even tripled other lawyers’ showings in terms of profitability. The authors don’t reveal what these “best” attributes are — presumably, the firm will keep that information close to its vest – but lawyers’ law school rank and GPA were not among them.

Those results are in themselves serious food for thought. What’s significant about this study, though, is that it happened at all – a very large and successful law firm set out to rationally reconsider all of the assumptions it makes and criteria it uses in its lawyer recruitment process. It’s part of what I’m coming to think is the quiet but very real advancement of empirical analysis in the process of how the legal profession understands itself.

Of course, rational, evidence-based analyses of legal education and legal practice have been around for a while. There are excellent blogs that examine empiricism in the context of law schools (Best Practices in Legal Education and Law School Innovation, to name two) and law firms (Empirical Legal Studies and Adam Smith Esq., to name two more). But just last month, I flagged some emerging studies that cast serious doubts on, respectively, the utility of the LSAT, the traditional criteria for law professors, and the importance of law school grades in identifying and shaping good lawyers.

There are also academic institutions that study how we train our lawyers and run our law firms. Georgetown Law’s Center for the Study of the Legal Profession is probably the market leader. But again, last week also saw the arrival of William Mitchell College of Law’s Center for the Empirical Study of Legal Practice, which aims to “research the daily realities of the work of a lawyer and the business of the legal profession.” The new center is led by political science professor Herbert Kritzer, who quotably describes himself: “I am to lawyers what Dian Fossey is to gorillas.”

Some smart and dedicated people are putting the profession’s habits and assumptions, particularly those relating to who should be a law student and what makes a good lawyer, under the microscope. Not a moment too soon, I say. And at this moment, the magnification is being turned up especially high on that old standby, the LSAT: the increasingly maligned test that figures prominently in many law school admissions systems (and in the equally maligned US News & World Report rankings of US law schools). Continue Reading

Trading money for time in your legal career

One of the unexpected benefits of this blog for me is the correspondence I’ve received from people who’ve read something I’ve written and have struck up a conversation about it. Recently, I received an email from a reader in the western US, and I thought you might be interested in both his question and my reply — especially if you disagree with my conclusions. Here’s the letter:

I was wondering if you have any suggestions for me. I graduated with a degree in accounting and had worked in a Big 4 accounting firm for a year before I quit. It’s not that the work was especially terrible, but working 60-90 hours a week, 6-7 days a week, I just didn’t have time for anything else.

While I’m finishing up my accounting licensing requirements, I’m contemplating going to law school, because I have always had quite an interest in legal work. However, I want to enter a career where I am not working over 60 hours and get the majority of weekends off, even if it means less money.

Are there any sectors of law where lawyers have these kinds of hours on a consistent basis (with a comfortable and reasonable salary) or does becoming a lawyer come with the implied recognition that there is no semblance of a “9-5”?

Here’s my response: Continue Reading

Dispelling the myths of lawyer education

There’s an old story about a supposed experiment in which five apes are placed in a cage containing a stepladder. A banana is hanging from the roof of the cage, and a sprinkler with ice-cold water is positioned above it. Whenever an ape tries to climb the ladder to get the banana, the sprinkler comes on and drenches all the apes until the ambitious ape abandons the effort. Eventually, after numerous attempts and soakings, the apes learn to avoid the ladder altogether. Then the sprinkler is turned off completely.

Now one of the apes is replaced with a new ape, who, not surprisingly, heads straight for the stepladder to get the banana. The other apes set upon him immediately, beating and shoving him until he gives up — even though the water never comes on. Then another replacement ape arrives, and when he tries to get the banana, the other apes attack him — including the previous new ape who has never been soaked! Eventually, five new apes who’ve never been showered with ice water will nonetheless avoid the stepladder and the banana. And that, the story goes, is where policy comes from — that’s the way we’ve always done it around here.

The legal profession resembles that cage in a lot of ways, but how we educate and recruit new lawyers might be the best example. Our beliefs and practices about the legal training process owe far more to our professional myths and oral traditions than they do to the cold light of evidence. Here are two recent examples. Continue Reading

Fear and loathing in the law firm

Many law firms’ insistence on treating their newest associates as adversaries continues to baffle me.

Law firms know very well that the associates they hire fresh out of law school (or even after a year of articling) are sufficiently unskilled that they don’t merit the salaries they make or the rates they bill. Equally, firms traditionally haven’t cared about this, because (a) the tasks churned out by most new lawyers in firms require more stamina than skill, (b) most partners learned their craft by osmosis rather than training and are quite content to continue that approach, and (c) firms could always afford to throw money at associates because the cost could always be passed on to clients.

These days, of course, the current that keeps (c) lit up is flickering, as clients balk at associates’ bills and some order firms not to assign first- or second-years to their files. So firms are squeezed between incoming associates’ expectations of high and rising salaries and clients’ refusals to foot the bill therefor. That means the cost of associates is showing up not in bigger client bills but in partners’ smaller profits — and hey, suddenly, firms are decrying the cost-value imbalance of their newest lawyers. Funny how that works.

In this respect, the best thing that ever happened to these firms is the recession, as suggested by this article in The Recorder about the latest news from the associate salary front. The recession is the new Red Menace — the all-purpose justification to lay off scads of low-level employees and thereby put the fear of God in the survivors, who are suddenly thinking less about bonuses and more about keeping their jobs. (The ABA’s recent blessing of offshore legal work has also been another effective way to keep those uppity youngsters focused on survival, not salary.)

These are real market forces at work, of course — but rather than use them as a catalyst for change, most firms exploit them to keep doing what they’ve always done, but spend less doing it.

The crazy thing is that firms feel they need these excuses and fear tactics — they know they’re acting irrationally, but the force of traditional practice and the pressure to imitate rivals is so strong that they can’t or won’t act against it. It’s like that now-famous quote by Citigroup’s Chuck Prince when the liquidity crisis was starting to break: “[A]s long as the music is playing, you’ve got to get up and dance. We’re still dancing.” Many firms just don’t have it in them to be honest with themselves that their associate compensation systems (and related billing structures) are broken, so they look for someone or something else to take them off the hook — a tourniquet instead of surgery, intimidation rather than straight talk.

Anyway, I’m not really here to lecture these firms — I’m here to talk about how you can take advantage of this irrational and hidebound behaviour by your rivals in the talent wars. Continue Reading