Saturday, March 31, 2012

The Inner Experience of Being a Lawyer

Posted by Jeff Lipshaw

I am working on an article that considers the relationship of information, like that disclosed in a securities offering, to the internal judgment of the investor who has to make a decision whether to invest based on that information.  The empirical studies suggest that more information is better on a macro-basis, when all of the actors are black-box monads, and we get to think of them on the whole as rational (hence, Richard Posner's memorable dictum that in rational actor analysis the internal experience of the actor is irrelevant - "it would not be a solecism to speak of a rational frog").  On the other hand, the overwhelming thrust of behavioral economics is that human beings manage, on an individual micro basis, to have a far less rational connection between the available objective information and the individual's judgment.  Nevertheless, even behavioral economics takes an objective, external analytic stance; it's proposing a theory for putatively non-rational action, not providing a protocol for someone actually making a decision.  In other words, does getting a lot of information about my tendency to use heuristics and biases have an impact in reducing the impact of heuristics and biases in my decision-making?  I'm a long-term skeptic on that one, and the fact that almost every book I've seen on behavioral economics and judgment in law or business ignores or punts on this issue (see Bazerman, Brest, etc.) tends to confirm my skepticism.

It's therefore not surprising to me that legal education, with its emphasis on objective after-the-fact judgmentalism, just eats up prediction seeking social science, whether of the rational actor or more nuanced variety.  Why?  Because that's exactly what lawyers' lawyers, whether transactional or litigative, are supposed to do:  predict the legal effect of actions in terms of their likelihood of being deemed, after-the-fact, the proximate cause of something bad or good.

Imagine my delight, then, in getting the January, 2012 issue of Entrepreneurship Theory and Practice (Vol. 36, No. 1, a perk of my membership, thanks to Tony Luppino at UMKC, in the United States Association for Small Business and Entrepreneurship) devoted to "The Heart of Entrepreneurship."  The second article, "Framing the Entrepreneurial Experience," by Michael H. Morris, Donald F. Kuratko, Minet Schindehutte, and April J. Spivack, highlights the affective aspects of entrepreneurship, not from the standpoint of an objective analysis of the entrepreneur, but from the standpoint of the lived experience of the entrepreneur "as actor in an unscripted temporal performance who continually encounters novelty."  The authors suggest,

If entrepreneurship is fundamentally experiential, we know surprisingly little about the nature of the experience.  What is it like to be "in the moment" as a venture takes form? ... As a lived experience, we highlight the critical role played by idiosyncratic events are frequently uncontrollable and unpredictable.  Lichtenstein et al. (2007) make it clear that such events are at the essence of entrepreneurship, and give rise to patterns and punctuating moments.

My suspicion for a long time has been that lawyers engage in a form of attribution error when encountering dealmakers, entrepreneurs, and business people generally.   If you look at your business client as a black-box monad, you are likely to attribute your own affective experience (or lack thereof) without considering that the inner experience and circumstances of the client is significantly different than your own.  In other words, my job as a lawyer is to explain and blame (in retrospect) the causes of the uncontrollable and unpredictable, or to use some legal science before the fact to place myself prospectively in the after-the-fact position so as to avoid the circumstance in which my client or I might be the subject of that blame.  (In the venture capital term sheet, that becomes the wrangling over the representations and warranties and the anti-dilution clause.)  And when my client is wholly uninterested in any of that, it must be because she is just weird, flighty, unorganized, naive, ethereal, or whatever.

Oh, and it's not just lawyers and entrepreneurs that have this attribution problem.  I'm pretty sure that the Wall Street lawyers we used to hire to help on our deals scratched their heads and wondered why I, as the general counsel of the company, had no apparent interest in the interstices of the environmental representation (as opposed, say, to the financial statement representation or the post closing price adjustment mechanism), or why in the critical moments just before we were to sign and wire funds, I would politely blow off what might otherwise be reasonably considered a helpful clarification of some of the wording.

Obviously, moot courts, trial teams, mock negotiations (like Karl Okamato's Transactional Meets), and clinical experiences (like the Entrepreneurial Law Clinic associated with Don Kuratko's entrepreneurship center in the Kelley School of Business at Indiana) offer the chance for students to live the inner experience of a real lawyer. The bigger challenge is learning to bridge the objective-subjective divide when dealing with others. Bill's words from a previous post are more profound perhaps even than Bill thought:

For those of us who accept change as the one bankable constant, change is less a threat than an opportunity. Over the next five to ten years, maybe slightly longer, a more sustainable Post-Langdellian business model for legal education will emerge. This new model will likely place a higher emphasis on communication, collaboration, and problem solving, which are the skills needed to price, allocate, manage, or engineer around legal risk or legal problems. Winning a case in court is only a sliver of the calculus. Technology and new pedagogy will pack a much better education into three years. At least some scholarship will be highly applied. And at the best schools, teaching, service and scholarship will merge, and the most valuable faculty will be less ivory tower. It will be an exciting place for students, professors and alumni.

Maybe it takes a law school pedagogy that is somewhat less rational, analytical, reductive, and behavioral, and somewhat more personal, emotional, affective, and experiential.

[Cross-posted at Legal Profession Blog.]

March 31, 2012 | Permalink | Comments (0)

Wednesday, March 28, 2012

Breaking News: Larry Kramer to Head Hewlett Foundation

KramerLarry Kramer, dean of the Stanford Law School, has announced to faculty and administrators that he is resigning, effective August 31 this year, to take over as president of the Hewlett Foundation.  He is not the first Stanford Law dean to take that job; he will be succeeding Paul Brest.

[Jeff Lipshaw]

March 28, 2012 | Permalink | Comments (0)

Tuesday, March 27, 2012

Law Firm Strategies for Human Capital: Past, Present, Future

I am in the process of uploading a backlog of articles and essays onto SSRN.  The backlog includes a book chapter I wrote for the Studies in Law, Politics and Society Series (Austin Sarat  editor).  It explores some of the themes discussed in "Too Good for BigLaw": The Statistician Edition and A Reply to Empiricists at NWU Law -- albeit in far greater depth. 

You can read the (dry) abstract here.  But in retrospect, I think the puzzle is better described by the first 1.5 paragraghs of the chapter:

Large corporate law firms are in the business of selling legal expertise to clients, usually by the hour and preferably at a premium price. Without high quality lawyers, these organizations have nothing to sell.  Therefore, it stands to reason that law firms operating in a highly competitive market would seek to answer the most fundamental questions at the heart of their business: Who succeeds at our firm? Why do they succeed?  What traits do they share in common?   Can we recruit and develop more of these individuals?   What are the characteristics of lawyers who prioritize building the organization rather than maximizing their personal income? Unless a firm has a realistic grasp of these human capital issues — which go to the very heart its business — it cannot make intelligent trade-offs.  Such a firm thus becomes susceptible to paying too much for the wrong input, or ignoring the right input available at a bargain price.

In  my  study  of  this  market  over  the  last  several  years,  I  have observed a remarkable indifference to these questions. ... 

[Posted by Bill Henderson]

March 27, 2012 | Permalink | Comments (0)

Monday, March 26, 2012

What Does Leadership Look Like?

IDEO is the world's leading design and innovation company.   Diego Rodriguez, one of the partners at IDEO, has made a point of sharing the video below with a number of his colleagues.  Why?  Because he wanted to show them "what leadership should look like at IDEO."  It will surprise you.  (Hat-tip to Bob Sutton at Work Matters.)

Maurice Cheeks, then the head coach of the Portland Trail Blazers, sets a high bar for courage, confidence, decisiveness, humanity, kindness, unselfishness and world class poise.  If that is leadership, I am ready to follow. 

[Posted by Bill Henderson.]

March 26, 2012 in Blog posts worth reading, Cross industry comparisons, Video interviews | Permalink | Comments (0)

Sunday, March 25, 2012

Is College a Scam? Probably Not, But Calling It One Would Make the Suffering Meaningful

Posted by Jeff Lipshaw

I apologize to Bill Henderson, a first-rate student of empirical method, for what is to follow, but it's at least a sliver of data from which I'm going to spin a little perspective, which itself will be cold comfort to those caught in a particular population cohort at a particular moment in history on a particular segment of the macro-economic cycle.  

A short piece in today's New York Times Sunday Magazine, entitled "Hello, Cruel World," is a survey of the 2011 graduating baccalaureate class of Drew University in Madison, New Jersey, which the Times characterizes as follows:  "For all its merits - including a much admired theater department and a prestigious Wall Street internship program - Drew ranks 94th among 178 private liberal-arts colleges on U.S. News & World Report's annual list.  The middle of the collegiate pack is not where you want to be when you're competing for a diminishing number of entry-level jobs."  

Now I don't think there's a perfect analog between undergraduate education and professional education when it comes to a causal link between the tuition investment and post-graduate employment.   If you read the survey and the student comments, however, it's clear that there's an expectation that going to college has something to do with putting yourself in a better position to compete for employment.  Does this sound familiar?  39% of the Drew class have full time jobs.  Phi Beta Kappa students from Drew's senior class can't find non-menial jobs.  An anthropology major works as a dog groomer.  An English major can't earn enough money to make the monthly payment on $128,000 in educational loans.  (If I read this correctly, the Times spoke to 226 of Drew's 309 graduating seniors in December 2011.  Of the 226, only 4 are in law school as compared to these numbers for other graduate programs:  education - 11; health care - 7; psychology/social work - 7; business - 5; liberal arts - 5; sciences -5.) 

What I don't see in the comments from the students interviewed is the idea that college is a massive conspiracy cooked up by faculties and administrators to feather their own nests with government-funded student loans, leaving students to bear the cost over the remainder of their working lives.  (I grant it's likely that undergraduate schools don't publish post-graduate employment statistics, but I think Judge Schweitzer probably got it right in his skepticism about the causal relationship between those statistics and the decision to go to law school.)  I don't mean at all to minimize the hardship of having a lot of debt without a job to provide the income to repay it, but this information is really telling us that the lifetime mortgages placed on young people by college and professional school tuition debt are a far broader issue than merely the so-called law school "scam."

Here are several theses, briefly stated and barely explicated:

1.  It's really hard to assess causation, "but-for" or proximate, for this kind of hardship from the midst of the hardship.   I think lawyers (and law students) self-select as finding meaningful causative links in what other people refer to as "blame":  "okay, something bad happened, who's responsible, and can we have a perp walk?"  (I've written about this in connection with the financial crisis:  "The Financial Crisis of 2008-09:  Capitalism Didn't Fail, But the Metaphors Got a 'C,'" and "The Epistemology of the Financial Crisis: Complexity, Causation, Law, and Judgment.") (That's not to say there are never perps, but the availability heuristic triggered by the Andy Fastows, Bernie Ebbers, and Bernie Madoffs makes us think there are more real ones than there really are.)

2. It's really hard to make policy from the midst of this kind of hardship.  My sense is that the problem is not so much the debt but the economic prospects, or at least the ratio of the debt to the prospects.  In other words, this wasn't an issue before the downturn, but the debt still existed.  What springs to mind is our family's experience as baby boomers raising children in the millennial baby boomlet of the late 80s and early 90s.  The problem was lack of capacity in the elementary and middle schools at a time when you could drive around a suburbs and see dozens of unmistakably 1950s and early 1960s former school buildings that had been sold off in the zero population growth culture of the late 1960s and 1970s.  Matching up macro-demand and macro-supply, particularly looking forward rather than backward, is hardly science.  (From a Drew graduate in the survey, now at Georgetown Law:  "I'm hoping that the job market will pick up in the three years I spend at law school, because a lot of lawyers are getting laid off.")

3.  No institutions are immune from Schumpeterian creative destruction, including AOL, Yahoo!, Google, Microsoft, General Motors, AIG, Dewey Leboeuf, or law schools.  (Of the 25 largest U.S. corporations in 1900, only two existed in the same corporate form in 1963.)   That doesn't make living in the midst of the destruction and re-genesis any easier.   

4.  Quietism or "manure happens" (as we horseback riders like to say) is not an appropriate leadership or management philosophy, but there are no silver bullets either.  No proposed solution is immune from the mysterious leap of hypothesis that occurs when we try to translate our experience of the past into predictions of the future.  I mentioned to Bill offline that I think his recent industry analysis of legal education is spot-on, but I share his optimism only in the macro, not the micro.  I agree with Bill that we'll likely look back in five or ten years, having experienced the shake-out, and agree that the profession and its schools are in a better place that they were in 2012, with those smart enough or lucky to have made the right moves - i.e., see the first sentence in this paragraph - being around to write the history.  I can't be optimistic that nobody is going to be caught in the micro of the shake-out.  As to them, it's going to be really hard to assess causation, "but-for" or proximate, for their kind of hardship from the midst of the hardship. But that won't stop people for searching for the perp.

[Cross-posted at Legal Profession Blog.]

March 25, 2012 | Permalink | Comments (0)

Unsustainable Law Student Debt

TamanahaAt Balkanization, Brian Tamanaha (Washington University) continues to shine a bright light on law student loan statistics.  See The Quickly Exploding Law School Debt Disaster

Viewing recently released 2011 data, Brian cites 17 law schools where the average debt exceeds $135,000 per student.  The vast majority of students at these schools will be forced into Income Based Repayment (IBR), which is, functionally, a federally administered insurance program for indebted law school graduates who fail to make a high five-figure or low six-figure income. It caps debt payment at 15% of income above some basic poverty level threshold. (In future years, it will drop to 10%.)  The downside of IBR is that unpaid interest is quickly capitalized, so a graduate's total debt load explodes upward, making it very difficult to afford things like a car or a home using debt finance. Then, as Brian suggests, buyer's remorse is going to set in for a whole generation of law school graduates. 

As a political issue, this is not going away.  I agree 100% with Brian's final line:  "This financial insanity will not stop until significant changes are made to the federal student loan program."  When this happens, every law school in the U.S. will be be affected.  As I said last week, it is time we get our houses in order.

[posted by Bill Henderson]

March 25, 2012 in Blog posts worth reading, Current events, Data on legal education, Structural change | Permalink | Comments (0)

Thursday, March 22, 2012

European legal profession news

One part of the restructuring of the legal industry is going to be the need to pay attention to what is happening in the industry. Bill has given me several key blogs to follow, here's a website that is both fascinating and fun: RollOnFriday

A somewhat irreverant look at the legal profession in Europe (mostly in England), Asia, and the US, including "a rich collection of colourful incidents that have helped make the name of the website that went from curiosity, to irritant, to eventually earn an almost affectionate place in the City legal community." (From "Friday's Children" in LegalWeek - an incredibly expensive newsletter that has a short free trial period). LW reports the monthly audience for the blog is 125,000. It has 2 full time reporters working for it, active discussion boards on life as an associate and other topics, and regularly jabs both firms and law schools. The best part: "a guiding principle behind the site is that increased transparency is a good thing for the profession." (again from LW).

[posted by Andy Morriss]

March 22, 2012 | Permalink | Comments (0)

Transparency on Employment Data is Like Cancer Treatment

Medical-symbolOver the last several months, I have reluctantly concluded that law school employment transparency is a lot like cancer treatment:  it can beat back symptoms and buy time, but it won't necessarily cure the disease. 

This is not a flip comment.  My mother died of cancer two years ago, and chemotherapy extended her life for several months.  Lots of wonderful things happened as a result.  Relationships got healed.  We crossed things off the bucket list. We laughed and cried.  And more than anything, we stayed in the moment.

Over the last 18 months, three separate ABA groups -- the Questionnaire Committee, Standards Review Committee, and the Council on Legal Education -- have given sincere and focused attention to the law school employment controversy.  Frankly, I am in awe of the breadth and depth what they have accomplished.  Going forward, prospective students will get, at a school-specific level:

  • Type of Practice Setting.  Law firms (#, broken down by size), business and industry, government, public interest, judicial clerkship (federal, statel, local by size), employed in academic, pursuing graduate degrees, unemployed (various types) and status unknown. 
  • Duration and Quality.  For the first time, jobs will be broken out by: (1) full-time versus part-time, (2) long term versus short term; (3) number of law school funded jobs, (4) whether JD is required; (5) whether JD is preferred; (6) whether the job is professional or nonprofessional
  • Uniform Web Reporting.  All of this information, plus tuition, fees, employment data, scholarship (including renewal rates), entering student credentials, will be in a relatively standardized format on the schools' websites.

What's controversial about the ABA's decision?  Law schools will not be required to report any salary data (on the theory that they are too incomplete on the bad outcomes side to be reliable).  This omission upset Kyle McEntee, the Executive Director of Law School Transparency, who expressed frustration and disappointment in an article in the National Law Journal.  See Karen Sloan, ABA Backs Off Making Law Schools Report Graduate Salaries

I have a slightly different perspective.  Back in Dec. 2010, I was with Kyle at the Questionaire Committee Meeting in Fort Lauderdale, Florida -- a month before the first David Segal article broke. Is Law School a Losing Game?   Suffice to say, the prospects of reform did not look bright. Yet, less than a year and a half later, ABA-accredited law schools are poised to become the most transparent institutions in the history of professional education.  And this sea change occurred in large measure due to the tireless efforts, moral fortitude, and deft statemanship of an underemployed Vanderbilt law grad named Kyle McEntee.

Kyle, you've just hit for the cycle! This is a once or twice in a career event, and you did it in your rookie year.  For God's sake, forget about the popout at the end of the game.  It's time to admire the lopsided scoreboard.  Moreover, your constituents at LST will still get regional and practice setting salary information pooled across law schools--and those data, while not school specific, will have the virtue of being relatively reliable.  So even your outfield popout managed to score a run.

With the ABA getting its house in order, and yesterday's dismissal of the alleged deceptive employment data against New York Law School (albeit there are cases pending against other law schools under different consumer protection laws), it is possible to begin conceiving of US legal education in a new post-scandal era. This is all very good.

Going back to the cancer metaphor, however, the ABA industry-level transparency efforts are going to beat back a lot of symptoms of what ails us.  But they won't provide a permanent cure.  Further, the relief will be, at best, temporary. Going forward, every ABA-accredited law school needs to seek out additional aggressive treatment in order to increase our odds of beating back the long term threat.  On this score, we legal educators cannot lose sight of the fact that the lack of transparency was precipitated by structural problems in legal education that aren't going away:

  1. Our costs are too high
  2. The market for traditional legal jobs is stagnant and likely in long term decline
  3. There is industry overcapacity (50,000+ 1L seats per year)
  4. Public subsidies are going away
  5. Near total financial dependence on loans from the US Dept. of Education
  6. Law is on the precipice of a radical information revolution led by technology, knowledge management, and process engineering
  7. Tenured faculty control hiring and curriculum and have a limited appetite for retooling
  8. We law professors don't understand that we are running a business
  9. Our rankings are based on high costs and admissions sorting
  10. Thus, based on #9, there is no market reward for innovation or value-add in legal education.  In fact, the concept--that education can trump sorting--still needs to be proven.

In the short to medium term, industry-level transparency will have two effects that pull in opposite directions. First, the legal education industry, at least at the ABA self-regulation level, will have clean hands.  That really matters.  But second, and pulling in the opposite direction, transparency will give rise to a whole new rankings industry that will rival and potentially supplant US News.

Why? Because law students don't really care about rankings per se-- instead, they care about the number and quality of employment options created by their law school investment.  In the US News rankings, top law schools rankings are highly correlated with a multitude of wonderful options.  But in the new transparency era, it will be possible to use hard data to make more precise decisions for all the other law schools.  For example:

  • Why go to a law school ranked #60 and pay twice as much when the new Employment Transparency Rankings show essentially identical employment outcomes for a lower ranked school?
  • More perniciously, why go to Law School X or Y at all when over half of their graduates routinely fail to obtain full-time legal or professional employment 9 months after graduation?
  • And the potential death blow, why should the DOE continue to fund such miserable outcomes when the U.S. taxpayers are ultimately on the hook for the bill?

Transparency will not create law jobs for law school graduates.  Instead, it will reveal in minute detail the value proposition of every ABA accredited law school. Everything needed for the new Employment Transparency Rankings will be in the public domain.  (Note to LST: this is a business opportunity.)

I am an avid reading of industry history.  The one commonality of iconic but failing industries is denial among its beneficiaries.  Our mind is framed by success, so we believe in the rebound rather than face the unpleasant tradeoffs needed to save 40% or 50% or 60% of the franchise that can survive in the new competitive landscape.  This has happened to architects, journalists, airline pilots, and Eastman Kodak.  Similarly, the cable networks knocked out the broadcast networks; and now cable networks are on the ropes. Well, the same forces of creative destruction apply to law schools.  See Henderson, The Hard Business Decisions Facing US Law Faculty.

For those of us who accept change as the one bankable constant, change is less a threat than an opportunity.   Over the next five to ten years, maybe slightly longer, a more sustainable Post-Langdellian business model for legal education will emerge.  This new model will likely place a higher emphasis on communication, collaboration, and problem solving, which are the skills needed to price, allocate, manage, or engineer around legal risk or legal problems.  Winning a case in court is only a sliver of the calculus.  Technology and new pedagogy will pack a much better education into three years.   At least some scholarship will be highly applied.  And at the best schools, teaching, service and scholarship will merge, and the most valuable faculty will be less ivory tower.   It will be an exciting place for students, professors and alumni.

If we pursue the right treatments, we can survive to help create and experience this new era.

[Posted by Bill Henderson]

March 22, 2012 | Permalink | Comments (3)

Monday, March 19, 2012

The Bug of Self Interest

My Legal Professions class is now covering the conflicts of interest. In the usual march through the rules, it is easy for students to draw the inference that avoiding a conflict of interests is just a matter of knowing Rules MR 1.7 to 1.12 and their accompanying comments.  But far and away the biggest danger is the Bug of Self-Interest.  And, I have to break it to my students that none of us enjoys complete immunity from its noxious effects.

In his book,  Advise and Invent:  The Lawyer as Counselor – Strategist (1990), the renowned M&A lawyer, James Freund, has a brilliant cartoon that depicts the Bug of Self-Interest and the many client and career dangers its breeds.   Because it is such a compelling visual -- and made more powerful because it reflects on Freund build his law practice -- I figured it deserved its own spot on the Internet.  [Click to enlarge.  It's worth it.]

Bug of Self Interest

Freund was a remarkably prolific author during his long and distinguished career as a practicing lawyer.  Early in his career, Freund wrote Anatomy of a Merger (1975), which is still in print 37 years after its original publication.  Four years later, he wrote Lawyering: A Realistic Approach to Legal Practice (1979), which to my mind is the single best resource for the understanding how to manage relationships and build a law practice while staying entirely loyal to clients, fellow partners, and one's self.  It goes for $55 used on Amazon -- and its worth it.  

In addition to Advise and Inventother worthwhile Freund books include The Acquistion Mating Dance (1987), Smart Negotiating (1993), and The Smell Test: Stories and Advice for Lawyers (2006).  In addition to his successes, Freund reveals a lot of his own mistakes in these books.  This adds to their value and usefulness.

[Posted by Bill Henderson]

March 19, 2012 | Permalink | Comments (0)

More False Binaries: Teaching versus Experience

Posted by Jeff Lipshaw

Apropos of Bill's post on whether "cooperation" can be taught, the Wall Street Journal's special Monday section today featured a series of "yes-no" debates relating to small business, including the question:  "Can Entrepreneurship Be Taught?"   Not surprisingly, a Harvard Business School professor takes the affirmative and a Silicon Valley venture capitalist takes the negative.

Yes-no questions of this kind, like law school rankings, make for fun reading and water cooler debate, but ultimately try to digitize the analog.  The problem in both cases comes from confusing (a) the model with the reality, and (b) the data marshalled for argument (the "is" or the "descriptive") with theorist's theory (the "ought" or the "normative").   Indeed, rankings and binary debate questions emphasize the twin problems differently.  With rankings, the more apparent issue is the former:  confusing the model with the reality.  The more subtle issue is whether the theory of the ranking holds water, even as to data relatively immune from manipulation (e.g., is peer reputation a self-reinforcing loop?)  When looking at a debate question like "Can entrepreneurship be taught?", the more apparent issue is the latter.  It's pretty easy to spot the normative focus.  What is more subtle is the falsity of the "yes-no" model itself - as though "teaching," "experience," and "entrepreneurship" have objective definitional boxes such that it's meaningful even to debate the issue in that form.

As I reflect back on my career in corporate management, it occurs to me that part of my job was to puncture false binaries in organizational disputes over things like territories, responsibilities, causation, credit, or blame, often by recasting the question from "us or them," "inside or out," "team or individual," "cash or stock," "employees or shareholders" into another conceptual model (i.e., another theory of the problem).  As I observe my present career in academia, I see the same kinds of false binaries in doctrine, pedagogy, and administration.  Are lawyers, by training, unusually inclined to delight in just such conceptualizations?  No, talk to an engineer - mechanical, civil, electrical, organizational, financial, or transactional cost (pace Ron Gilson) some time.  Nevertheless, are false binaries a problem among lawyers and in legal education?  If so, who is competent to deal with them?

[Cross-posted at Legal Profession Blog.]

March 19, 2012 | Permalink | Comments (1)

Saturday, March 17, 2012

A Reply to the Empiricists at NWU Law

My blog post from last week, "Too Good for BigLaw: The Statistician Edition" has resulted in a minor kerfuffle with some of the distinguished empiricists at Northwestern Law.  See Dan Rodriguez, Law School Sorting and the Partnership Track:  Northwestern Empiricists Weigh In, Word on the Streeterville [The Blog of NWU Law Dean].  NWU Law folks were not impressed with my analysis.  Dan Rodriguez was gracious enough to send me the link at the same time his post, quoting the views of his colleagues, went live.  He has also encouraged me to reply publicly. 

I am happy to do that.  Let me start with big picture issues.  Then, for those folks with the curiousity and stamina to wade through arcane details--and experience tells me this is a small group--I will directly address, point by point, the the issues raised by Kate Litvak and Max Schanzenbach.  But at the outset, I will say that I am not conceding any ground.

Big Picture

First off, it is important to understand why this topic generated so much traffic.  See Above the Law, ABA Daily Journal, TaxProf, InstapunditAdam Smith

It all started with a provocative blog post by Vivia Chen, the columnist for The Careerist.  Vivia reviewed hiring and promotion data from the NLJ 250 Law School Hiring Survey and noted that elite law school graduates were becoming partner in very low numbers when compared to the hiring pipeline. Vivia editorialized on the numbers in a way that played into readers' fragile egos and insecurities.  Of course, that is her job, which she does very well.

In a nutshell, here is why people care -- or more precisely, get anxious -- about this topic:  it is conventional wisdom that graduation from elite law schools produces better career outcomes.  When that expectation is countered by actual marketplace data, people are surprised.  See, e.g., Bruce MacEwen,  "The Best & The Brightest" at  Adam Smith Esq. (leading blog on law firm economics).  Surprise is the first reason this issue got so much play.  Emotion is the second.

Emotion matters because very few lawyers and law professors are dispassionate on this topic.  When it comes to conventional wisdom on law school pedigree, we all have horses in the race.  Because we are human beings, we lawyers and law professors don't wait for balanced market data to develop our own entrenched worldviews.  When the conventional wisdom favors us, we go with it -- albeit we aren't really conscious this is happening. So when data upset the apple cart and potentially make us look complacent, our passions get aroused. 

The folks at Above the Law have built a entire business model around such predictable lawyer foibles.  The more chum thrown in the water, the higher the ad revenues.  It's just that simple.

Vivia's primary point, stated through metaphor, is that regional schools (such as Chicago Loyola) seem to be making partner at higher rates than the elite schools (such as Chicago).  This is a reasonable inference because the ratio of associates hired to partners promoted appears to be consistently high for elite law schools and very low for a large number of regional law schools.  This very point was made independently by Bruce MacEwen, who is a very sophisticated guy who advises law firms on strategy.

That said, there was ample opportunity for readers to draw spurious inferences from Vivia's metaphor-driven blog post.  Thus, to avoid any school-specific claims (a 1-year crossectional sample is not suitable for such a purpose), I pooled the schools by U.S. News ranking, drawing a line between elite and non-elite at the T14 mark.  Why T14?  Because these schools have played a closed loop of musical chairs for 20 years in the U.S. News rankings.  These schools would be viewed by most employers as "national" law schools.  

Here is what the data showed:

  • Pipeline in:  53.7% T14, 46.3% non-T14
  • Partners Promoted: 29.4% T14. 70.6% non-T14.

That is, well, an enormous skew. In 2011, for every 5.43 elite grads hired, a senior associate from an elite school makes partner.  For non-elite schools, that corresponding statistic is 1.95.  Vivia found these numbers surprising and somewhat counter-intuitive.  So did Bruce MacEwen, Above the Law, ABA Journal, etc.

There are ways to break down these numbers to gain additional insights, but the key point here is one of magnitude.  Elite law graduates are supposed to be smarter and more capable -- no one expects these folks to be on short side of any race, tournament or desired outcome.  The magnitude of hiring/promotion gap is the surprising fact that needs to be explained.

I had observed roughly the same skew several years ago (pooled 2007 and 2008 data) and alluded to it in this article, "Why is the Job Market Changing," Nat'l Jurist (Nov. 2010).  I also follow other relevant studies, such as The After the JD, which have noted differences between elite and non-elite graduates.   So I had a head start in thinking through possible explanations. I thus offered five theories, all of which could work in concert, to explain the large skew in the data:

  1. Selection effects
  2. Differences in first jobs
  3. Intergeneraional privilege
  4. Influence of admission criteria on the associate pipeline
  5. "A Better Plan B" for elite grads

So, to be very clear, I am not using the NLJ 250 data to support the above theories.  It is the reverse: I am offering the above theories as a likely explanation for the very large skew between elite and nonelite grads.  Framed as a open-ended research question, it might be written, "why are elite grads not becoming BigLaw partners in numbers commensurate with hiring patterns and general presumptions of their higher ability?"  That is a mystery and a puzzle.

Statistics Minutiae  [After the jump ...]

Continue reading

March 17, 2012 in Blog posts worth reading, Data on legal education, Data on the profession, Law Firms, New and Noteworthy, Scholarship on legal education, Structural change | Permalink | Comments (3)

Friday, March 16, 2012

Counter-Intuition in the Legal Academy (and Life)

Posted by Jeff Lipshaw

Larry Kramer, Stanford's dean, was in Boston yesterday, and we had lunch.  (Full disclosure:  I am an unabashed Larry Kramer fan.)   I've previously lauded the efforts of Larry and the Stanford faculty to reform the second and third year curriculum, primarily to provide more interdisciplinary and joint degree opportunities as between the law school and other arms of the university, like the business school, med school, engineering school, and so on.   Larry reported that the program was moving ahead nicely, but that students were still tending to select more traditional classes, presumably in reaction to the contracting job market over the last couple years, and on the theory that a more traditional transcript would be more attractive to employers in a tight market.

We agree this was a natural flight to safety, but that the more appropriate reaction, perhaps counter-intuitive, would be to double-down on the interdisciplinary opportunities.   In our conversation, I suggested to Larry the following as an illustration of his point.

A free-lance reporter called me the other day wanting to understand a contract lawsuit recently filed by the operator of the Park City ski resort in Utah.  In a nutshell, the operator as lesseee had a fifty year lease, and apparently the right to renew it for another fifty years.  I don't have the underlying contract, only the complaint, but it's clear the party were negotiating amended terms of a renewal, and in the process, the operator created some ambiguity over whether it had exercised the renewal option precisely and literally according to the terms of the agreement.  It also appears that the lessor said something in the negotiations to the effect that the lessee hadn't properly renewed, and was subject to being evicted.  Nevertheless, the lessor has not yet sought to terminate the lease or the occupancy, and is still collecting rent.  Moreover, the case is a declaratory judgment action filed by the lessee, seeking a determination that it indeed renewed the lease.

Now I think this may well be a lovely case for demonstrating the interplay of express and implied conditions as a matter of doctrine, but it seems to me a perfect example of how little you know if all you know is contract doctrine or even litigation strategy.   In the past, I've used the metaphor of a ricocheting bullet for the unintended consequences of a hardball action, particularly the filing of a lawsuit.  Deciding to escalate, and to escalate publicly, invokes not just legal doctrine (i.e., a prediction how a third party decision maker might rule), and not just trial strategy (i.e., how do we put ourselves in the best position to win the litigation), but business strategy, public policy, public relations, psychology, finance theory, and other disciplines, all mediated by a well-grounded view of human nature.

I don't think a law student gets more "practice-ready" or more attractive to an employer by taking more old-style doctrinal classes that do things like focus solely on the kernel of legal doctrine that may lie at the heart of a problem.  I can think of a bunch of metaphorical terms for this reaction to change, crisis and uncertainty:  bunker mentality, cocooning, circling the wagons, etc.  Of course, I'm already in hot water with the contract professors union for suggesting that the universe as we have come to know it will not end with a reduction from six credit hours of contract law doctrine in the first year.  That too strikes me as circling the wagons.

Flights to safety and control are the typically intuitive (and, in my view, wrong) reaction to change and uncertainty (e.g., banning laptops or cutting off wireless access as the means by which teachers seek to control the attention of students in a classroom).   We already know or what we've previously done feels safe and controlled.  Being interdisciplinary is, by definition, unsafe and uncontrolled, by virtue of the fact that there are no intra-disciplinary authorities to tell you that what you are doing is okay.  (If there's an interdisciplinary authority, then the interdiscipline has really become its own discipline.)  But is the intuitive flight to safety and control the right one?

[Cross-posted at Legal Profession Blog.]

March 16, 2012 | Permalink | Comments (0)

Tuesday, March 13, 2012

The Eye Contact Revolution

Several years ago, a student wrote in my teaching evaluations that I had a hard time with eye contact; the context was office hours.  I had not really thought about it,  but upon reflection, I realized that he/she was right.  More recently, in organizing peer evaluations of student presentations in my Legal Professions class, the topic of eye contact kept coming up.  And I agreed.  Students who maintained audience eye contact seemed more confident, competent and memorable.

This morning, via the Big Think, I read that we are -- or could be, if we got our act together -- in the midst of a eye contact revolution.  Here is an excerpt:

Michael Ellsberg, author of  The Power of Eye Contact: Your Secret For Success in Business, Love and Life, and The Education of Millionaires: It’s Not What You Think, and It’s Not Too Late thinks most of us are getting it wrong, eye-contact wise. Good eye contact, he argues, is as important to connecting meaningfully with others (at play or at work) as is, say, bathing. What’s needed, says Ellsberg, is a soft, open gaze – one that neither intimidates nor communicates anxiety on the part of the gazer.

[Why does this matter?]
Ellsberg’s “eye contact revolution” is aimed not only at careerists, but at the social and spiritual heart of our glowing screen-obsessed world. Looking up from our smartphones and into each other’s eyes, he believes, will increase the quality of every aspect of our lives.

Ellsberg suggests trying out his techniques in low stakes interactions, such as sales clerks and waiters and waitresses. 

This reminds me of Warren Buffett's experimentation with Dale Carnegie's techniques for making friends and influencing people.  In his teens, Buffett practiced the Carnegie methods for several weeks and tracked the results.  Then he reverted to his former self and agained tracked the data.  At the end of the process, he compared the statistical output and realized that the variation could not be explained [reasonably] by chance.  So thereafter, he committed himself changed.  See Alice Schroeder, The Snowball: Warren Buffett and the Business of Life (2008).

Below is a Big Think video of Ellsberg discussing his ideas.

[Posted by Bill Henderson]

March 13, 2012 in Blog posts worth reading, New and Noteworthy, Video interviews | Permalink | Comments (1)

Monday, March 12, 2012

Considering the Med School Analogy

Posted by Jeff Lipshaw

Bill is as usual too kind, but indeed we have been friends since that fateful lunch in Bloomington six IMG_0230years ago this month.  I'm immensely flattered that Bill and Andy have seen fit to hand me the dry erase marker, and the first thing I did with it was draw a far more accurate self-portrait than the picture Bill managed to dig out of some P.R. file somewhere.

I flew out to San Francisco from Boston yesterday.  About an hour into the flight, the flight attendant asked over the PA whether there was a medical professional on board, and I saw somebody up near the front of the plane hit the call button.  I had been discussing this very situation with my third-year medical student son a couple weeks ago, reacting to a post from my friend Howard Wasserman at PrawfsBlawg.  Howard told the story of a newly-graduated doctor flying in fear of being called on in such a situation, believing that she didn't have the practice skills to intervene.  Howard's point, if I can restate it, was that pointing to medical education as the model for "practice-ready" lawyers was a mistake, and that newly-minted doctors were just as "unpractice-ready" as newly-minted lawyers.

I wouldn't want a newly-minted doctor to perform neurosurgery on anybody I liked, but I thought Howard had overplayed the meaning of the anecdote.  My son advises me that invariably what you need on an airplane is an EMT, not a doctor.  (He tells me all med students are CPR-trained, but he'd be far more competent to diagnose a cough or a rash than to apply the CPR.)  If the only person on the plane to step up was a third year med student, I'd still think that person was more qualified to act as a GP doctor, relatively speaking, than the typical doctrinally-trained law grad would be to act as a GP lawyer.  Others may feel differently.

Having said that, and having observed my own education, my son's, and the education I'm now employed to help provide, I am still convinced that medical education, apart from internship and residency, effectively creates "doctors" by the time med students are in their third year. The great bulk of medical education takes place in three years - the first two in the classroom (culminating in the USMLE Step 1 exam), and the fourth being largely devoted to rotations in specialties and the residency placement process. The third year is the one that is brutally intense. On a outpatient service, the students spend something 10.5 hours a day, five days a week in the clinic, then go home and study for 2-3 hours more. On inpatient rotations, they go from 6:30 am to 5:00 pm in the hospital, and again go home to study for 2-3 hours. They have an exam at the end of each rotation.

There is an important institutional difference in medical education.  There's no doubt that med students get the benefit of public and private funding of the health care systems, but they are also care providers - they do things that if they didn't others would have to do.  Finding legal institutions capable of replicating this kind of intensity for law students is a problem (particularly for non-litigating lawyers), but the point is that no law student is going to approach the kind of practice readiness I perceive in a med student of equivalent tenure by doing fifteen credit hours (three hours a day of class time) a semester of even the most pragmatic skills oriented course work. Are students, faculties, administrators, law firms, courts, corporations prepared to create the kind of full-time (I mean thirteen hours a day) experience for the final two years of law school that might well leave one thinking "that's somebody who's a lawyer"? Because to do both the theory and the practice (as the med students do) would take that kind of commitment from all concerned.

(Cross-posted at Legal Profession Blog)

March 12, 2012 in Cross industry comparisons | Permalink | Comments (2)

Saturday, March 10, 2012

Great Video on Importance of Intrinsic Motivation

Drive_book_pageOne of the very best books I read in 2011 was Daniel Pink's Drive: The Surprising Truth About What Motivates Us.  In a nutshell, Pink (who was trained as a lawyer but never practiced law) marshals a huge amount of social science and brain science research to demonstrate that we human beings--actually primates as a group-- have a deep, abiding desire to perform work that has its own intrinsic value. 

Pink argues that this fact has special salience to a world that rapidly transitioning to a knowledge-based economy.  Pink cites to literature showing that economic incentives work well for low-complexity repetitive task (e.g., piece work in a factory, selling cars, waiting tables, etc.).  He then presents compelling evidence that performance and creativity in a variety of higher complexity domains--the domains rising in importance in our economy--can often be stifled by management practices that place undue weight on monetary rewards.  At several points in the book, Pink singles out lawyers as a profession that is making itself miserable and creatively brainblocked by clinging to the billable hour.

If you want to get the Cliff Notes version of Drive, just watch this wonderfully produced video, which cleverly summarizes the book's central argument along with supporting evidence.

[posted by Bill Henderson]

March 10, 2012 in Blog posts worth reading, Cross industry comparisons, Important research | Permalink | Comments (0)

Jeff Lipshaw Joins The Legal Whiteboard

JlipshawI am pleased to announce that Jeff Lipshaw, a professor at Suffolk University Law School, is joining The Legal Whiteboard as a co-editor. 

Jeff and I go back several years.  Back in the mid-2000s, Indiana Law was interviewing candidates for what would eventually become the Elmore Entrepenuership Law Clinic.  Jeff was a unique candidate because he had done both litigation and transactional work in private practice.  After becoming a partner at a NLJ 250 law firm, he became the general counsel/senior V.P. at a publicly traded company.  What a skill set!  After his company merged with another large enterprise, it was time to do something new, different, and more challenging.

Jeff had a phenomenal skill set for a clinical position, but the most striking aspect of his candidacy was his passion for ideas and innovation.  Kant and Posner came up at lunch, and so did "lean" manufacturing principles and how they might apply to law.  Finally I had met someone who could walk fluidly between the theoretical and the practical--at the time, I was unsure if such a combination was even possible.  Encountering it for the first time, I found it eye-opening, refreshing, and invigorating.  Jeff was eventually flooded with other offers, but we became permanent friends.

We asked Jeff to join The Legal Whiteboard because of his unique combination of experience, passion and commitment to improving any enterprise to which he belongs.  Fortunately, this commitment includes legal education and the legal profession as whole.

With that, I am handing off a full set of Dry Erase markers to Jeff.

[Posted by Bill Henderson]

March 10, 2012 in New and Noteworthy | Permalink | Comments (0)

Friday, March 9, 2012

"Too Good for BigLaw": The Statistician Edition

ViviaMy good friend and provocateur Vivia Chen has posted a stir-the-pot column on the recent NLJ 250 Law School Hiring Survey.  The title of the column, "Too Good for BigLaw," is classic Vivia, speaking to our fragile egos as people and lawyers.  Reviewing the data on associates hired and partners promoted by law school, Vivia notes a significant shortfall in the number of elite law schools who become BigLaw partners.  One theory, suggested by Vivia, is that elite law school grads must have better options.  Regardless, the hierarchical nature of the legal profession may not be so neatly ordered after all.

I am confident that Vivia's column will create a wellspring of indignation among several thousand people who want to believe that getting into a fancy law school makes them permanently special.  And if they aren't special, the ruler must be broken.  I am the original source of the numbers, so I feel an obligation--albeit not a very big one--to reduce the anxiety level.  So below I wrote out a more dispassionate explanation of the numbers.  This is the Statistician Edition of "Too Good for BigLaw."

Vivia's Interpretation. 

The first point of clarification is that "Too Good for BigLaw" is one interpretation of the data -- one that is plausible, but others are plausible and perhaps more likely.  The virtue of Vivia's spin is that is gets your attention so she can make a simple, accurate point:  elite law school admission does not translate into Big Law partnership.  But one line is pure metaphor:  "If you want to make a safe bet ... put your money on the hardworking stiffs from ... Chicago—Loyola [rather than the 'wunderkids' from U of Chicago]."  If you are fixated on the literal, let me assure you that lots of other factors tend to intervene on the journey from law school to partner.  Hang on.  Don't panic. 

Limitations of the Data

The NLJ 250 Law School Hiring Survey is what is called a "cross-sectional" sample.  Think of a cross-sectional sample as a photo snapshot.  And, as life teaches us, snapshots can be misleading.  For example, if I said I was handsome in my 20s, ten photographs (one per year randomly drawn) would be more persuasive than a single phone.  (Given my druthers, I would prefer you look at the photo from my sister's wedding, where I was wearing a tuxedo and had a nice summer tan.)  Because snapshots are subject to random variability, the inferences to be drawn have to be properly cabined and qualified. 

In the case 2012 NLJ 250 data, we lack a reasonable basis for making strong school-specific claims. So, to be crystal clear, we cannot draw the inference that Chicago-Loyola is a better partnership bet that University of Chicago.  To draw stronger, more reliable inferences, we would need to average across multiple years. That said, if you doubt the accuracy of Vivia's regional-versus-elite law school metaphor, see Ted Seto, Where Do Partners Come From? (2011).

But What We Can Say?

Although it is improper to make (literal) school-specific claims from the 2012 data, it is possible to make stronger, more reliable inferences by pooling these data on observable school-level attributes, such as elite versus non-elite status based on U.S. News ranking.  This is appropriate because the school-level variability is, for the most part, random (good and bad years cancel each other out); and what is non-random (e.g., a economic recession) tends to apply to all law schools. 

Consider the following statistics on 2011 hiring and promotions of graduates of Top 14 versus non-Top 14 law schools (why T14? because these schools have played musical chairs in the U.S. News since the dawn of the rankings):

  • Associates hired: 1,769 (T14), 1,525 (non-T14), or 53.7% to 46.3%
  • Promotions:  326 (T14), 781 (non-T14), or 29.4% to 70.6%

Using the Associate hired/Partner Promoted ratio statistics referred to by Vivia, the ratio of associates hired to partners promoted is 5.43 for T14 versus 1.95 for the non-T14.  The ratio for all schools is 2.98.  So, there is a very large skew working against the elite law school grads.  The takeaway from these numbers is very straightforward.  There is a very big pipeline between T14 and BigLaw, but at some point before partnership, T14 associates tend to get off the train in disproportionately high numbers.

(A few readers may cling to the idea that one year's worth of data is not enough to draw the above inferences.  Maybe 2011 was a Black Swan, but please don't place any bets on it. I analyzed this same data four years ago and got essentially the same results.)

So Why Aren't the T14 Grads Dominating the BigLaw Partnership Ranks?

Good question.  Based on admissions criteria, these folks tend to have significantly higher test scores. And God knows, they enjoy a huge presumption of ability during law school recruiting--law firm hiring partners are incredibly brand-conscious. If partnership were the NCAA tournament, the T14 crowd would consistently be the number 1 and 2 seeds.

I have been thinking about this topic for several years.  Here are a few plausible theories, all of which can work in concert with one another.  Some are statistical, others are sociological:

1. Selection effects.  There are enormous selections effects at work.  In effect, we are pitting the #1 to 20 persons at Chicago-Loyola against anyone at U of Chicago.  It is unlikely that factors such as personality and motivation are identical in these two populations.  Another enormous selection effect is intrinsic interest in corporate law -- does anyone really believe that the 75% of Stanford, Penn or Harvard grads who start their careers in BigLaw have a burning passion to do technical, often times repetitive legal work for the Fortune 500? 

2. First jobs.  Elite graduates, whenever given the choice, tend to start at the most elite firms possible.  And, no surprise, these shops are the most highly leveraged and have the highest wash-out rates.  See Zaring & Henderson, Young Associates in Trouble (2008). But here is the big surprise: the next stop on the train is not somewhere else in the NLJ 250. These folks are not moving down; they are moving out.

3. Inter-generational privilege.  The After the JD study has documented that elite law school graduates tend to hail from more affluent families.  They also evince less interest in corporate law.  See Dinovitzer & Garth, Not that Into You, Am. Law. (Sept 2009).  When mom and dad are both lawyers, and grandpa owned a factory, maybe it's time to focus on art and travel.   In effect, one's inheritance becomes one's safety net.

4. Influence of admissions criteria.  Over the last 20 years, admissions committees have focused more and more on LSAT and UGPA; conversely, personal statements, letters of reference, and career histories hold very little sway.  This has fundamentally altered the BigLaw pipeline with students who are (excessively?) academic and lack significant brushes with real world adversity--not ideal grooming for a high stress professional service job.  I think these "supply chain" dynamics are uniformly overlooked by employers--big mistake.  Michigan Law circa 1982 is not Michigan Law circa 2012.

5. "A Better Plan B."  I know a lot of people in the law world will cling to the notion that elite law school graduates are running government agencies, leaving the law for Wall Street, and generally living very charmed lives.   I am sure there is something to this theory.  But I doubt it is carrying the load on the BigLaw associate/partner attrition puzzle.  My own class at U of Chicago (Class of 2001) has a broad assortment of legal careers -- but nothing too markedly different than many of the alumni of Indiana Law, where I teach.  Ten years out, lawyers from decent law schools tend to be having interesting careers -- with "interesting" being the core commonality.

Perhaps it is time we focused on the skills and attributes of successful law graduates rather than the name of the law school on their diplomas.  Law professors as a group are more alike than different.  Does anyone really believe that classes at an elite law school are much different -- let alone better -- than the instruction received at 100 regional law schools taught by professors from elite law schools? 

I think law schools can have a huge impact on the lives of students, but that is a strategy that  remains largely untapped.  And a topic for a future post.

[Posted by Bill Henderson]

March 9, 2012 in Blog posts worth reading, Data on legal education, Data on the profession, Law Firms | Permalink | Comments (18)