Friday, June 29, 2012
Posted by Jeff Lipshaw
Bill and I rarely consult about our posts, so I get as pleasantly surprised as other readers when I refresh my RSS feed. I just played the Ignite presentation Bill highlighted below. He's right: it's fun. Watch it yourself.
I'm pretty sure Bill meant to demonstrate the engaging form of the presentation. It worked. I listened to the substance of Michael Bossone's entire pitch about lawyers and technology.
Coincidence isn't a fact; it's a perception, but Michael's focusing on doing, on clicking, on pushing the button, seemed designed just for me, given that I just posted an article on "lawyerly" thinking versus "actorly" doing on SSRN, and posted it about it on PrawfsBlawg. Here's a reprise of the reprise from the other post:
Reflections on the Two-Handed Lawyer: Thinking versus Action in Business Lawyering, is now available on SSRN.
It occurred to me as I was letting [the article] go live that it was a demonstration of the thesis: there is something fundamentally different about perceiving something (like a problem) and analyzing it versus deciding and actually doing something. You can think all you want about this paragraph or that, this footnote or that, this abstract or that, but when you click the button, you've acted, and made a commitment, and are obliged to deal with the consequences (if any).
Anyway, it's a consideration of thinking versus doing, and why "thinking like a lawyer" and doing like a decider might be ships passing in the night. The abstract follows the break.
Perhaps the article is a little theoretical for some practical tastes (it's certainly less energetic than the Bossone presentation), but I've interspersed what I think are some pretty good stories, including one of my early professional come-uppences - the humility (or humiliation!) in learning that I didn't know as much as I thought I did.
The fact I can say what I just said proves Bossone's point.
Ignite rules are simple: a talk with 20 PowerPoints that advance automatically every 20 seconds. Six minutes to make your point. It you don't know your material, it's a disaster. If you are prepared and you understand how to connect with your audience, you educate and inspire -- in a word, you ignite the audience.
Below is an example of Ignite done very well, by Michael Bossone (Miami Law, co-founder of Law Without Wall). This presentation just got a rousing ovation at the Law Tech Boot Camp in London. I saw it happen live. It was awesome.
[posted by Bill Henderson]
Wednesday, June 27, 2012
The U.S. Census Bureau just released its 2010 data for the County Business Patterns (CBP) dataset. CBP compiles payroll and employee headcount data by sector for all employers operating within the U.S. CBP is what is know as universe data. It is not a sample; it's a census.
The news for the legal sector is not good. Law Offices (NAICS 54111), which comprise 93.1% of the U.S. legal services industry, shrank by 21,600 jobs between 2009 and 2010. Total payroll also sank by $113 million. As shown on the chart below, the high water mark for U.S. law office employment was in 2004 (1,122,723 jobs). That was eight years ago, four+ years before the recession hit.
There is another sector, called "All Other Legal Services," that is relatively small yet worth paying attention to because it continues to grow. Using 1998 as a base (the first year of the NAICS coding system) the chart below compares Law Offices to All Other Legal Services (NAICS 541199):
"All Other Legal Services" seems to be doing pretty well, adding jobs while the number law office jobs declines. What is in "All Other Legal Services"? Almost certainly registry services for contract lawyers (doing e-discovery on a temp basis) and the domestic operations of legal process outsourcers. See here. The average job in this sector pays less than $46,000 per year compared to $79,900 in the law office sector.
What does all this mean? For law firms, it means a brutal competition over marketshare. Survival will require innovation. Yet, many lawyers are in denial. For law schools, it means the same thing -- there are too many law graduates chasing after a shrinking number of opportunities.
We legal educators have a really hard time getting our head around this changing market -- naively, we think the solution is a grand idea that will surface during an academic conference. That's not going to happen. Instead, to survive, each law school is going to have to get more than its proportionate share of high quality jobs for its graduates -- you don't have to outrun the bear, just the other law schools.
The key drivers here are: (a) what we teach, (b) how we teach it, (c) relationships with employers, and (d) relationships with alumni -- our best, friendliest windows on the real world. To turn this corner, a school needs great leadership that can move recalitrant faculty toward a difficult and complex new reality. Good luck! Time to get back to the work of Indiana Law. For additional analysis, see The Hard Business Problems Facing U.S. Law Faculty.
[posted by Bill Henderson]
Tuesday, June 26, 2012
Just a few days ago, the ABA Section on Legal Education and Admission to the Bar posted on its website, in downloadable spreadsheet format, the employment outcomes for the Class of 2011 (here). In a few short years, these data are going to fundamental reshape our industry. The changes will make the industry better and stronger, but the journey to this better place is going to painful and disorienting for all law schools—that’s right, even the elite national law schools will be affected.
This is worth explaining in very simple and concrete terms. The Class of 2011 employment data consists of 134 variables on 200 ABA-accredited law schools-- 26,800 discrete data points, which is enough fill a phonebook. For a long time, the policy of the ABA was to do just that – publish a phonebook of data in the form of the ABA-LSAC Official Guide to Law Schools. Well, decisions on where to attend law school are not free. They require time and effort. When a prospective student has to wade through a phonebook to assemble relevant data to make important decisions, many (most) will forgo the exercise altogether.
This has two very important effects:
- The quality of enrollment decisions goes down because, from the student perspective, the costs are too high. That’s error #1. But it is forgivable—decisionmaking is a skill taught in a top-notch legal program, not a prerequisite for applying.
- To simplify their decisions, students gravitate to U.S. News ranking, which is a compact 4-page table that contains easy-to-understand comparative data.
Yes, the U.S. News has serious flaws; and every year, overreliance on them produces tragic consequences in the form of excessive student debt. Now, with the ABA employment "phonebook" in spreadsheet format, those a with modicum statistical skills and an internet connection can analyze, simplify and publish relevant statistics that will better inform the decision to attend law school.
Consider the chart below:
When I created this simple pie chart, I started with a simple premise: If I am applying to law school, my minimum hope is that nine months after graduation I will be able to obtain a full-time, permanent professional job. The phonebook has three columns of data that speak to this hope:
- Bar Passaged Required Jobs, FTLT (i.e., Full-time, Long-Term)
- JD-Advantage Jobs, FTLT
- Professional Jobs, FTLT.
All the other myriad data columns, parsing things by part-time, short-term, non-professional, unemployed, unknown, etc., do not meet the minimum hope. So they are lumped together as “Other Outcomes.” Clearly, for 1/3 of the Class of 2001, their full-time, permanent professional ambitions have not yet materialized.
A reasonable next question is how these figures vary by U.S. News rank. The answer is reflected in the chart below.
- Least surprising. The outcomes are better at “national law school”--almost 90% are FTLT professional jobs. I used the T14 cutoff because the composition of this group has not changed in two decades of U.S. News rankings. Few people would disagree that these schools have strong pull among legal employers.
- Most surprising. There is a whole lot of Purple--i.e., “Other Outcomes”--throughout Tiers 1, 2, 3, and 4. For over 90% of law schools, this is a very challenging legal market.
- Biggest reality check. The JD-Advantaged and Professional jobs appear to be, on balance, less desirable than those requiring bar passage. They increase nearly three times in relative proportion as we move from T14 to Tier 1 to Tier 2. Many are likely compromise jobs—not as good as practicing law, but better than non-professional alternatives.
With these relative benchmarks in place, a prospective law student can look for law schools that are outperforming their U.S. News rankings. And there are quite few.
For example, in Tier 4, St. Mary’s (Texas) has 78.3% Bar Passage Required placement; Mississippi College’s figure is 75.3%; and Campbell (NC) is 71.4%. These schools aren’t feeding BigLaw, but their graduates appear to be full-time practicing lawyer nine months after graduation. What accounts for their success? Most of their graduates are probably in cities and towns far away from corporate practice. Nonetheless, these schools have a clear niche they are filling.
In contrast, there are 20 schools in Tiers 1 and 2 that have less than 50% Bar Passage Required jobs. What do they have in common? Many are in big cities in the Northeast and Mid-Atlantic or California--large urban markets that are attractive for young professionals. It is likely that too many young lawyers are chasing after a finite set of legal jobs. It is worth noting, however, that these same schools also have rates of placements in JD Advantage and Professional jobs that are higher than other law schools at statistically significant levels.
So many young law graduates are voting with their feet. Better to stay in the city as a non-lawyer professional than to move to the South to be country lawyer doing small firm practice. Although I suspect a large proportion of these grads will fare quite well, it is important to keep in mind that JD-Advantaged and Professional jobs are not a panacea—they are also in short-supply. At most schools in Tiers 1, 2, 3, and 4, between 30% and 42% of graduates are either unemployed and underemployed in jobs that are either nonprofessional, part-time, or short-term. Indeed, 4.3% (1,874) of all jobs for the Class of 2011 were funded by the law schools themselves!
So what is going to happen? Notwithstanding the heady optimism of the “Kaplan kids”, the ABA employment data, thanks to the blogosphere, is going to reduce information costs, making it easier for prospective law students to determine whether law school is a good investment. The needle is going to move, just not as fast as a Chicago School economist might predict.
Further, expect students to aggressively negotiate for scholarship money. Whether schools become more generous in merit aid, admit fewer students, or both, all signs point to shrinking budgets for law schools.
The utter transparency of a changing and stagnant legal market has potentially more dire consequences for law schools. The lifeblood of the entire legal education establishment, including elite law schools, is federal student loans. Our students get the same generous terms as graduates of medical and dental schools, who are not struggling to make six figure incomes. The graphs above suggest that a large proportion of our students will be on Income-Based Repayment (IBR), which is – functionally – insurance in the event a high income fails to materialize in the years following graduation. The downside risk of that insurance – lack of repayment of expected principal and interest—is borne by U.S. taxpayers.
Right now, it is possible to estimate the size and probability of this downside risk. All the Federal Government has to do is add-up the shortfall between the repayment of principal and interest in normal repayment versus the monies actually being collected. What percentage of graduates are on IBR? What portion of their current principal and interest are they able to pay? These are simple numbers that some enterprising journalist will eventually request. Further, they are legitmate public policy questions that we, the legal academy, should face long before the journalists get there.
Lawyers and law schools are not a favored interest group on Capitol Hill. We need to plan for the extremely high probability that the financing of law schools will be dramatically altered in the years to come. The longer we wait, the more painful and disastrous the transition. Every law school will need a damn good story to justify continued federal loans. And right now, many of us lack that story – being in Tier 1 or T14 (where debt loads tend to be the highest) won't mean anything if the math falls short.
In summary, our ivory tower is crumbling. With the ABA putting the employment data in downloadable format on its website, law schools will have to do something completely new and scary to us—we are going to have to compete to keep our jobs and stay in business. The litmus test is going to be the ability of our graduates to obtain remunerative professional work in a highly competitive global economy. This is very serious work.
[Posted by Bill Henderson]
Thursday, June 14, 2012
Posted by Jeff Lipshaw (this is a re-posting of a PrawfsBlawg post)
I'm privileged to co-blog with Bill Henderson (Indiana-Bloomington, left) at The Legal Whiteboard, with whom I've had a running dialogue about, among other things, how we can actually turn the insights of Nobel Prize laureate Daniel Kahneman (and his co-author, Amos Tversky) in guides for action. This morning, Bill has posted another of his delightful observations, this on the "dangers of being smart," and their application to faculty workshop discussions.
It turns out that this was close to the subject of my talk at Law & Society, where I apologized for sending discussant Sean O'Connor (Washington, right) at least three updated drafts of the paper in the twenty-four hours before the session, and changing the title at least a couple times. Since I got home, I've revamped it and changed the title one more time, but now I think I have it: "Reflections on the 'Two-Handed Lawyer:' Thinking and Action in Business Lawyering."
I'll include the present abstract below the break, but first I will explain why this is part of my dialogue with Bill. As I began my talk at LSA, I also worship at the altar of Daniel Kahneman. But I have always wondered about my own experience of actual decision-making, and the regress that has to occur when I reflect on a course of action. I can attribute my first, fast reaction to intuitive "System 1" thinking, and then slow down. I can use "System 2" thinking to reflect on the issue, and perhaps even think about Kahneman's recommendation, "When we can replace human judgment with a formula, we should at least consider it." (Thinking Fast and Slow, p. 233.)
Well, I've considered it, but what is the formula for replacing the heuristic about deciding whether to go with System 1 or System 2? Because Kahneman also thinks System 1 thinking produces many good results. (TFaS, p. 416.) And then all the way down.
The seed of the present paper was to assess whether disclosure remedies or Nudge-like libertarian paternalism actually got to the root of the decision-making problem in view of this seeming irreducibility. Sometime in the last couple weeks, provoked by a Mike Madison blog post and our subsequent offline dialogue, the seed came out of the larva (ick, mixed metaphors!), and it had morphed into something else: the difference between two-handed lawyering ("on one hand, but on the other hand") and the commitment to action undertaken by business people, and particularly entrepreneurs. In a nutshell, there's a point at which you stop thinking, and you act, and decision is metaphorically closer to action than it is to thought. That's not a natural act if you are "thinking like a lawyer."
Wednesday, June 13, 2012
I just read a short essay at the Big Think, "The Dangers of Being Smart," that reminded me of nearly every faculty workshop I have ever attended. In a nutshell, brilliant people -- and law faculty are filled with them -- can wax eloquent on cognitive bias, yet the deft ability to describe and comprehend does little to enable brilliant people to rein in the bias. In fact, being smart can be disadvantageous because we fall in love with the beauty and nuance of our own rationalizations and justifications.
This really hit home for me because I have witnessed hundreds of examples in which data are never sought out or consulted because the brilliant lawyers were so persuaded by their own reasoning. (And I stipulate that I am sure I have done this many times myself.) Or worse, good but not perfect data are dismissed because a lawyer or law professor could theorize a plausible flaw in the sample or methodology. The glee in finding the flaw then shortcircuits the right response, which is a simple discussion of probability -- that is, what is more or less likely based on all available evidence.
The Big Think essay reminded me of Dan Kahneman's Thinking, Fast and Slow, especially the section titled "Overconfidence." Kahneman, a psychologist, won the Nobel Prize in economics because he, along with co-author Amos Tversky, identified several predictable, recurring cognitive biases in human decisionmaking.
Kahneman later revealed that the basis for their breakthrough research was errors they detected in their own judgments. “People thought we were studying stupidity,” said Kahneman. “But we were not. We were studying ourselves.” For a wonderful primer on Kahneman's unusual worldview, see this Michael Lewis essay.
[posted by Bill Henderson]