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.

 

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.

Fixing the failings of new lawyer training

Last week, I contended that when it comes to the current lawyer admission process, law schools are part of the problem and show little interest in being part of the solution. Two articles published since then do give me some hope for the academy, both from Canadian law school deans: “Five new developments to reshape Canadian legal education,” by Lorne Sossin at Osgoode Hall Law School in Toronto, and “The Canadian Lawyer in the 21st Century,” by Ian Holloway at the University of Calgary Faculty of Law.

But that’s as much as I want to say about the schools, because what we’re really talking about in these conversations, when you get right down to it, is the competence of practicing lawyers. The legal profession is concerned with competence in two ways: at the start of a lawyer’s career (what I’d call Initial Professional Development, or IPD) and then throughout the course of the lawyer’s career (what we already call Continuing Professional Development, or CPD). Let’s begin with the first one and tackle the second one next week.

The bar has a self-evident interest in ensuring that new lawyers enter the profession with enough knowledge, skills and experience to provide reliable legal services at a purely functional level. It’s the responsibility of lawyers, as self-regulating professionals, to set and enforce these basic, minimum standards — to oversee this Initial Professional Development — in order to fulfill our mandate to protect the public in the provision of legal services. So far, so good.

Here’s the problem: Initial Professional Development for new lawyers is a mess. It’s been cobbled together from a mishmash of activities, some mandatory and some optional: a law school education, a summer stint in a law firm, a bar admission course, a bar exam, an articling or trainee contract, and so forth. These measures overlap in some areas and leave other areas completely unaddressed: a new lawyer might have sat through three primers on real property law, for example, but never have the opportunity to run a simulated mediation.

All these activities, moreover, are administered by a range of providers that rarely consult with each other to coordinate their efforts and that are, to a great extent, free to set whatever standards they like in planning and administering these activities. No jurisdiction that I’m aware of sets and enforces a comprehensive strategy and structure for new lawyer training. The bar has effectively outsourced Initial Professional Development to a series of for-profit providers without specifying the equivalent of an acceptable and enforceable Service Level Agreement to govern it.

We frequently complain that “law school doesn’t prepare students for practice.” But we’re missing the point. The point is that our sloppy, jury-rigged approach to new lawyer training is broken. It’s a glaring failure of self-regulation, and it’s what Initial Professional Development reform needs to address.

Consider three emerging alternatives to the status quo, and you can start to see the forces that will guide this reform process.

1. The training brokerage. In the UK, a contract lawyer agency called Acculaw has set off a minor earthquake with its entry into the solicitor training sphere (new solicitors are required to spend two years as “trainees” and pass a professional qualification course before recognition as full-fledged lawyers). Before now, firms would recruit and hire the trainees themselves, much as Canadian firms recruit articling students and American firms hire first-year lawyers. The difference is that UK firms are making commitments well over two years in advance of the day they’ll actually bring these trainees on board as solicitors, at which point the firm’s and the market’s circumstances may have changed dramatically.

Now, Acculaw will hire these trainees straight out of post-graduate law school and then “second” them to law firms as requested. The secondments (a maximum of three per trainee) will last between three and eight months. The premise is that the trainees will serve as a “just in time” resource for firms that want to hire potential new lawyers more sparingly and judiciously.

Acculaw says it will oversee the secondment and ensure that the trainees are, you know, trained. But how this will work in practice is anyone’s guess: we’ve never tried something like this before, so we don’t know how well, if it all, this will advance the goal of acceptably competent new lawyers. Most large and prestigious firms will continue to recruit straight from the schools and have their pick of the graduating litter, so Acculaw’s trainees probably will be viewed as the leftovers. Will this increase their attractiveness on the market? Probably not. But the UK is much farther ahead than other jurisdictions in sending work to LPOs and contract workers: trainee offers of all kinds have dropped nearly a quarter in the last two years. Many trainees will be happy to take whatever they can get.

Make no mistake: this is not a graduate-oriented initiative. Acculaw couldn’t be clearer that its customers are law firms and that its goal is to streamline the trainee recruitment process for efficiency and effectiveness. But this all came about because the previous system wasn’t serving the firms’ needs. That’s the lesson to draw from the early days of the Acculaw experiment: if law firms don’t like the lawyer training process, they will come up a risky and potentially problematic alternative. A centralized brokerage for Initial Professional Development, one where the company takes the trainees in hand and accepts ultimate responsibility for their competence, could work very well in theory, and I hope that’s where this goes. But it’s not hard to envision a less happy outcome.

2. The teaching law firm. Law professors Brad Borden and Robert J. Rhee attracted a lot of attention earlier this month with the suggestion that law schools own and operate their own law firms. In Prof. Rhee’s words, “graduating students [would] get trained in the practice of law for a fixed duration, similar to a judicial clerkship or analogously a residency for new doctors. The law firm would be run by senior attorneys who develop books of business, and it would be economically sustainable.Response from the legal community was widespread — that last link contains an excellent analysis by John Hodnicki — and mixed interest with skepticism. My own reaction was that I’d be more interested to see law firms get into the legal education business. But there is definitely something here.

What the professors are suggesting is essentially the legal equivalent of a teaching hospital. (Surely you’ve watched House?) A teaching hospital, like all hospitals, is primarily concerned with treating the sick and injured; but a strong secondary purpose is to give med school graduates and interns an opportunity to experience and learn from actual medical practice on real patients, something that no amount of instruction or simulation can achieve. Senior physicians and staff supervise their work, of course, but the patient experience is undeniably different than it would be in a standard hospital. The expectations are also different, on both sides of the bed: patients of teaching hospitals are frequently low-income or uninsured. Teaching hospitals work by filling a number of gaps in the markets for both medical services and medical training.

In theory (and at Chicago-Kent Law School, in practice), a “teaching law firm” could work equally well: senior law school students and recent graduates, under the supervision of experienced lawyers, engage with clients, research issues, try to resolve problems and generally learn the ropes of being a lawyer while getting the hang of billing and collecting for legal services. Given the likely clientele, the legal work would likely focus on criminal cases, custody and support disputes, immigration and refugee matters, landlord and tenant conflicts, and so forth. That sounds like a law school legal clinic, but those operations are underfunded and are not, so far as I know, operated like businesses. To succeed, a teaching law firm would have to train lawyers not just to practise law but also to run a profitable business. The profits would probably be minuscule, but the point is that the graduates would learn that a law office is not a charity.

It’s worth wondering, however, whether law schools are the best institutions to operate these teaching law firms. Mitchell Rubinstein points out an important acknowledgment by the professors themselves: “this law school law firm would have to be staffed by attorneys, not by the professors. The major problem with law school professors today is that many, if not most of them, are simply incapable of practicing law and many never had. But this is what we have, for the most part, training the lawyers of the future.” If a law school opens a law firm and has to bring in outside lawyers to run it, we have to ask why the law school is involved at all. Teaching hospitals are often associated with universities, but universities and med schools have a better reputation within the medical profession than law schools enjoy in theirs. And there are very few med school professors who’ve never treated a live patient. This may be a good idea in search of the right home.

3. The expert application. A third possible route for ensuring the competence of new lawyers is a technological one: the use of expert applications. Earlier this month, I received a demonstration of a fascinating new application by a company called Neota Logic, founded by respected knowledge management pioneer Michael Mills. Neota Logic is essentially an applied knowledge management system: it automates lawyers’ knowledge and expertise to create step-by-step processes for solving low- and medium-grade regulatory, compliance and advisory problems. Michael sometimes refers to it as “Microsoft Excel for compliance.”

Neota Logic users log in and enter the relevant data on the regulatory or compliance issue facing them; the system prompts them to answer a sequence of questions based on the data it’s receiving. The system guides the user through the process of entering the data, choosing the paths dictated by the responses, and arrives at the same result that an expert lawyer would have reached. It’s not only a cost-saving system that reduces the need for lawyers — it’s also a quality-control system, through the creation and application of a legal database that’s informed by, and collectively better informed than, all the lawyers whose expertise underpins it.

Neota and other expert applications to come will have a massive impact on legal workflow generally, and I’ll look at that in more detail later this fall. But what really struck me was that in the firms where it’s bring used, Neota has emerged as an associate training tool. The lawyers who’ve used it refer to it as the “partner at your shoulder” system, or more colourfully, the “Guardian Angel.” It performs essentially the same function as having a partner sitting in a chair next to the associate, asking her all the right questions, checking on her responses, and guiding her towards the right conclusion. This type of mentoring is something we wish every law firm partner would devote the time and energy to provide; we also know that extremely few ever do. So an expert system that trains lawyers as they perform could be a fine alternative.

It’s worth noting that none of these three innovations — training brokerages, teaching law firms, and expert applications — has come from the practicing bar or professional regulators. That’s not really surprising, considering lawyers’ track record when it comes to developing innovations; but I do think we’re pretty decent at adopting innovations once they’re available. Olswang has already signed on to the Acculaw system, some law firms are already using Neota, and lawyers of all kinds found the “law school law firm” to be worth a close look. I’d like to see bar associations and lawyer regulators consider these and other emerging options for Initial Professional Development as possible external solutions to the new lawyer training fiasco we’ve foisted on ourselves thus far.

If we’ve learned anything from our current situation, it’s that Initial Professional Development has to be taken seriously as the first and fundamental competence responsibility that comes with self-regulatory status. This will probably sound very familiar to you, but: just because we’ve always ushered lawyers into the profession this way doesn’t mean it’s good enough, or that we should keep on doing it this way. Multiple players have something to contribute to new lawyer training, including law schools, law firms and private-sector providers; but at the end of the day, the organized bar has to pull it all together, decide on a new approach, and enforce it. And “the end of the day” had better arrive very soon.

Law firms and the JetBlue guy

Even if former JetBlue flight attendant Steven Slater didn’t plan his famous chute-deploying resignation in advance, he seems ready and willing to exploit the moment, perhaps to land a reality-TV hosting gig. If it does turn out that his Big Quit was staged (like that of Elyse Porterfield, the “Dry-Erase Girl” whose hoax didn’t even last 24 hours), it will be a salient reminder to all of us about things that seem too good to be true.

But what’s real, and what remains, is the widespread public support these figures received and what they represent: a daydream about the courage to quit a job that treats you with less respect than you deserve. And it underlines a serious trend in the workforce to which law firms should be paying close attention. As Daniel Gross explains in a Newsweek commentary, “the poor labour market and workers’ antagonism toward employers and customers are actually connected”:

“The economy has been growing for a year, and corporate profits have surged — Standard & Poor estimates that income of the S&P 500 rose nearly 52 percent in the second quarter of 2010 over the same period in 2009. Much of that impressive growth has been driven by the remarkable gains in efficiency and productivity that corporate America has notched since the recession took hold. Last year, productivity — the ability to produce more with less — soared 3.5 percent, up from 1 percent growth in 2008 and 1.6 percent in 2007.

“Yes, companies have embraced the Gospel of Cost Cutting with missionary zeal — printing on both sides of the page, eliminating bottled water, turning off the lights. But most of the gains came straight out of payroll. Companies slashed salaries and curtailed benefits, all while asking shellshocked veterans to pick up the slack for downsized colleagues. Even as business picked up, companies have been extremely slow to hire; the private sector has added just 630,000 jobs so far this year. And when it comes to wages and benefits, corporate America’s bean counters could make Scrooge blush. Many of the firms that slashed pay or cut 401(k) matches haven’t restored them even though their balance sheets and profits are now healthy. …

“The last couple of years have been a golden era for employers — they’ve found that they can hire whom they want at lower wages, and that it’s easier to retain folks without having to boost salaries. But at some point, companies that want to grow will have to break down and hire new people, or turn part-timers into full-timers, or put contractors on the payroll. Many employers are treating existing and potential employees as if they’re desperate for work. And plenty of Americans are. But desperate times can lead to desperate measures. Push your workforce too hard without adequate reward, and someone just might tell you to take this job and shove it.”

I was reminded of this observation when reading the latest financial report from a large law firm: “Profits rose, revenue dipped at Baker & McKenzie in fiscal 2010.” I’ve seen a couple dozen of these stories in the mainstream legal press over the past few months, breathlessly announcing what amounts to the same thing over and over: firms are bringing in less money, but partners are reaping higher profits. That happy result comes from the important middle step that the headlines don’t include: “Revenues down, costs slashed in a surge of panic, profits up.”

We all remember the bloodletting committed by large law firms in the wake of the financial crisis, as staffers and junior lawyers found themselves out on the street. The firms that threw their most vulnerable over the side then are the same firms reporting rising profits now. It was ever thus — that’s how businesses work, chopping assets (including people) to ensure continued or improved profits for shareholders. But when you chop and chop, making abundantly clear that employees will always be let go at the first sign of profit trouble, then you also risk the full-scale alienation of your talent pool.

Tens of thousands of 2008-10 law schools grads are still deeply in debt and struggling to find law jobs to stay afloat, even to the point of moving to India to work for an LPO. Many law firm partners, I think, have forgotten just how frustrating and humiliating it can be to have no job and no prospect of finding one — and they never had to look for work in an economy like this, where unemployment shows every sign of becoming chronic. And to rub salt in the wound, the law firms that cast off their young lawyers love to blame the victim, castigating new grads for their “sense of entitlement” and “lack of work ethic.” This can’t continue without inflicting real damage.

There are plenty of archaic traditions in the legal profession that have no place in the 21st century. But one tradition that deserves its place of pride is the responsibility to help usher in the next generation of practitioners. The recognition that today’s juniors are tomorrow’s leaders was sufficiently widespread that firms took care of their people as a matter of course. As stewardship in the legal profession has faded, first gradually and then dramatically, lawyers’ trust in the firm and the partnership has faded with it. This isn’t just something we should feel bad about. This is a collective decision to exploit legal talent at the worst possible time.

Throughout this coming decade, we are going to see the continuous rise of lawyers engaged in legal services but employed by non-lawyer entities. Legal process outsourcers, e-discovery providers, document assembly companies, legal project management experts, legal knowledge professionals, and many other entities outside the law firm world will be hiring experienced lawyers to populate their offices. Law firms that took care of their people in the tough times will have nothing to fear; those that didn’t will be astonished and appalled at how easily their lawyers and legal professionals will be poached. Steven Slater’s real-life jump, no matter how contrived it might have been, reflects employees’ economy-wide readiness to jump from jobs that treat them as fungible, exploitable, and expendable. If that’s how you’ve treated your people, you can look forward to the day when they return the favour.

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

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.

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