Sunday, December 16, 2012
A colleague passed along a link to a thought-provoking blog post by Dr. Andrew Clark, a veterinary doctor who runs a consulting practice on the business of veterinary medicine. His business gives him a bird's eye view of the forces roiling the industry.
Suffice to say, what is happening in the veterinary education, and the broader vet industry, is eerily close to the problems in legal education and the legal profession.
Here is an excerpt of Dr. Clark's in-the-trenches view. The post is titled, "Student Debt ... Our Best Thinking Got Us Here":
If you follow my blog or have worked with me, you already know that one of my favorite sayings is “our best thinking got us here.” That is certainly the case with the Veterinary Student Debt situation. We need some new thinking regarding what generates student debt and what hampers the ability of students to pay back the debt.
In the course of my management consulting business, I am fortunate to work at the interaction intersection between Veterinarians, Veterinary practices, Veterinary Colleges, Veterinary Students and Businesses that provide services and products to the veterinary profession. One of the most common and sincere concerns expressed by people in all of the groups is concern over the impact of student debt on the profession. The student debt situation is a circular process involving Veterinary students, Veterinary colleges, the AVMA, lenders and Veterinary Practices (employers).
I don’t have a solution to the problem but I have some observations and ideas that could be woven into the fabric of a different strategy for financing veterinary education. Although it may happen, my intent is not to offend everyone in the entire veterinary profession with one blog but rather to stimulate creativity and innovation.
Because the most common theme in discussions involving student debt is “Veterinary jobs should pay more,” I will enter the circle at the Veterinary Practice (employers) point. The assumption seems to be that every Veterinary business is profitable enough to pay whatever is necessary to cover student loans. When graduate Veterinarians enter the workforce a huge majority become employed by small businesses. No amount of marketing, posturing, denial or wishful thinking will change the fact that small businesses success or failure is driven by supply and demand.
From my position in the industry, in the economy in which we all work, the demand for veterinary services appears smaller than the supply of veterinarians. I routinely look at the financial statements of over 50 veterinary practices; equine, mixed and companion animal. Those financial statements demonstrate that practices do not generate enough profit to pay Veterinarians sufficiently to repay student loans under the repayment terms commonly available. That is a remarkably bad situation since the successful transfer of the Veterinary Profession from one generation to another is dependent upon the next generation being solvent and content.
Many practices are changing management practices to become profitable. That will help when practices generate enough earnings to add higher veterinary compensation to the cost structure of the business and remain solvent. Clearly compensation is not a realistic short term ‘fix’ until supply and demand for veterinary services shifts back to favor the Veterinarian.
Lenders are rightfully concerned about security when they loan anyone money including students. Bankruptcy on student loans used to be a big loss for lenders. However, under the new regulations, student loans cannot be discharged by bankruptcy so there is significantly less risk now. [I wonder if the veterinary industry has its own Matt Leichter.]
When the dust all settles, Veterinary Colleges are in the business of selling Veterinary Medical Degrees to students who buy a degree with the intention of using it to make a living. In the age of austerity, Veterinary colleges have faced massive budget cuts. One response has been to increase class size, generating tuition revenue for the school. In effect, the colleges are generating more customers for their product and increasing the supply of veterinarians.
From my perspective and experience, the veterinary profession is upside down as far as supply and demand goes. We have inadequate demand for Veterinary services to support the number of veterinarians in practice. Increasing class size diminishes the earning potential and therefore the value of a Veterinary Medical degree yet the cost of the degree continues to escalate. That strategy only works for schools because student loans are easy to acquire and young consumers following their life’s dream are still willing to borrow the money to purchase the degree at an ever higher price with challenging terms. ...
It is difficult for me, a person working in ‘the business trenches’ of veterinary medicine, to understand the timing of the AVMA’s decision to accredit more schools. This clearly increases supply of veterinarians in the face of decreasing demand for veterinary services thereby reducing the value of a veterinary degree and the earning power of a veterinarian, both of which contribute to student debt management challenges.
Another component of accreditation that is an integral part of the challenge of rising student debt is the requirement to have a research program in order for a school to be accredited by the AVMA. The paradigm that effective teaching of veterinary students requires faculty involved in a research programs has never been assessed to be of measurable benefit to student success in general or even specialty practice.
In general, Assistant, Associate and Full Professor ranked positions are allotted 50% FTE (Full Time Equivalent) in non-teaching functions which include research. Who is paying for that 50% of their time? Many veterinary schools have chosen to hire instructor level individuals that are nearly 100% FTE in teaching to release higher ranked faculty to do research. Why are these instructors that do no or very little research acceptable as educators, when the need for research to enhance education is the paradigm?
The world is changing around us and we need to have a fresh look at research program requirements for accrediting schools. It is impossible to understand how the cost of faculty in 50% FTE positions is not passed along to the student in the form of tuition fees, etc. That component of tuition is financed by student debt. ...
This blog is aggregations of realities that I observe in the course of helping veterinarians manage their businesses and new graduates manage their debt. Although I am not in a position to resolve these challenges, I am in a position to share my observations and invite people in policy making capacities to use some new thinking. After all, our best thinking got us here. ....
[posted by Bill Henderson]
According to this article in Popular Mechanics, virtual lawyers speaking crowdsourced wisdom is one of 110 predictions that will come to pass over the next 110 years. The occasion is the 110th anniversary of this revered magazine. Here is the blurb:
A virtual lawyer will help you plan your estate. "I don't mean avatars," Cisco's Dave Evans [Cisco's chief futurist] says. "I mean virtual people—self-contained, thinking organisms indistinguishable from humans." Sounds crazy, right? But surely you've seen the magic of CGI [Computer Generated Imagery]. What's to say you can't attach a lifelike visage to an interface fronting the crowdsourced wisdom of the Internet? Give it a nice head of hair, teach it how to smile, and you're looking at a brilliant legal eagle with awesome people skills.
If this makes you worried, note that the magazine also predicts annual physicals being done through a cellphone app.
Sunday, December 2, 2012
Wednesday, November 21, 2012
From far away, knowledge workers in India appear to be a formidable and growing threat to American college graduates. But according to Mohit Chandra's essay, "An Open Letter to India's Graduating Classes," which appeared in the India Ink section of the NY Time/International Herald Tribune, the current generation of Indian university and professional school graduates is hindered by a serious skills and values gap. Indeed, the author, a partner at KPMG in Delhi, chastises the newly minted 2012 graduates for being spoiled and behaving unprofessionally.
There are two crosscurrents at work here that are quite difficult to untangle: (1) the process of globalization, which is linking together the economies--and thus the cultures--of India and the U.S.; and (2) workplace generational frictions, which apparently are just as vexing in India as they are in the U.S. As a mid-career Indian professional with an MBA from Ohio State and a work history that includes KPMG, Capital One, McKinsey & Company, and Ernst & Young, Chandra sits on top of both of these faultlines.
I think Americans might be surprised by both the content and tone of Chandra's letter, which cannot be judged by western standards. The letter reveals as much about the U.S., and humanity, as it does about India. Quite a read.
Dear Graduates and Post-Graduates,
This is your new employer. We are an Indian company, a bank, a consulting firm, a multinational corporation, a public sector utility and everything in between. We are the givers of your paycheck, of the brand name you covet, of the references you will rely on for years to come and of the training that will shape your professional path.
Millions of you have recently graduated or will graduate over the next few weeks. Many of you are probably feeling quite proud – you’ve landed your first job, discussions around salaries and job titles are over, and you’re ready to contribute.
Life is good – except that it’s not. Not for us, your employers, at least. Most of your contributions will be substandard and lack ambition, frustrating and of limited productivity. We are gearing ourselves up for broken promises and unmet expectations. Sorry to be the messenger of bad news.
Today, we regret to inform you that you are spoiled. You are spoiled by the “India growth story”; by an illusion that the Indian education system is capable of producing the talent that we, your companies, most crave; by the imbalance of demand and supply for real talent; by the deceleration of economic growth in the mature West; and by the law of large numbers in India, which creates pockets of highly skilled people who are justly feted but ultimately make up less than 10 percent of all of you.
So why this letter, and why should you read on? Well, because based on collective experience of hiring and developing young people like you over the years, some truths have become apparent. ...
There are five key attributes employers typically seek and, in fact, will value more and more in the future. Unfortunately, these are often lacking in you and your colleagues.
1.You speak and write English fluently: We know this is rarely the case. Even graduates from better-known institutions can be hard to understand.
Exhibit No. 1: Below is an actual excerpt from a résumé we received from a “highly qualified and educated” person. This is the applicant’s “objective statement:”
“To be a part of an organization wherein I could cherish my erudite dexterity to learn the nitigrities of consulting”
Huh? Anyone know what that means? We certainly don’t.
Thursday, September 20, 2012
Newgeography focuses on trends in urban affairs and economic geography. Eds and Meds are of interest to this group because these two sectors have been such a critical part of maintaining or restoring many regions' economic vitality. Why? Universities and hospitals generally pay high wages, don't lay people off, and are perceived as long term drivers of growth because more degrees and longer life spans are two trends that will probably continue.
But the author, Aaron Renn, presents compelling trend data suggesting that America can no longer to afford extra large helpings of Eds and Meds. As shown in the chart below, these sectors have been growing faster than virtually all other sectors for a long, long time.
Renn points out the healthcare is on its way to consuming 20% of our GDP by the year 2021. And the growth in the higher education sector has been substantially fueled by student loans. Unfortunately, even college grads are subject to the pressures of outsourcing and competition with very able professionals from around the globe. So the ability to repay all that debt can't be taken for granted. What can't go on forever, won't.
Here is another chart presented by Renn, this one presenting the rates of inflation occuring in Eds and Meds sectors as compared to the overall CPI:
There is an opportunity here. I would be extremely bullish on innovations that produce productivity gains in the Eds and Meds sectors. I recently listened to this HBR Ideocast discussion with Robert Kaplan, the Harvard Business School professor best know for developing the Balanced Scorecard. Kaplan is now turning his considerable intellect toward the problem of cost-containment in healthcare.
What the key insight? Measuring how much patient treatment actually costs--to date, there has been almost no sophisticated cost accounting in healthcare. Most of the brainpower has gone to dealing with (and maximizing) third party reimbursements. Under Kaplan's system, fortunately, we can actually identify the points in the system that cost way too much and thus begin the reengineering process.
The same thing may soon be happening in higher ed. Another Harvard Business School professor, Clayton Christiansen, who authored the renowed business book, The Innovator's Dilemma, recently co-authored a letter that called for colleges and universities to quit chasing prestige and start focusing on innovations that improve educational quality without increasing price. Remarkably, the letter was included in a mass mailing by the American Council of Trustees and Alumni -- going to 13,000 trustees! See Inside Higher Ed, Distruption's Strange Bedfellow, July 12, 2102. Another Insider Higher Ed story suggests that this may be the true faultline driving the University of Virginia controversy. See Disruptive Innovation: Rhetoric or Reality?, June 26, 2012.
The world appears to be changing, even in Eds and Meds sector.
[posted by Bill Henderson]
Sunday, September 2, 2012
That is the message delivered by Patricia Milligan, president of Mercer's human capital business. Who are the workers she is talking out? Managers, technicians and executives working inside the world's biggest companies.
I realize that many lawyers and law professors are likely to be skeptical of the pronouncements of human capital consultants.
But for a moment, let's take Milligan at face value. So, what are the skills in short supply? Milligan does not answer that question in the above video. But in the video on this webpage she suggests that such skills are a combination of communication, colloboration, and data analytic skills.
Note that Milligan thinks the talent shortage problem is too big for employers to solve on their own. This is leading to collaborations with academic institutions. Are law schools ready for such a step?
[posted by Bill Henderson]
Saturday, September 1, 2012
For the Labor Day weekend, I thought I would post this video of Henry Rollins, an American singer and artist who has continually reinvented himself since he left his job as a manager of a Hagen-Daaz ice cream store in 1981 to become the lead singer in Black Flag.
The point of posting this video is not to glorify Henry Rollins, but to consider, on its own terms, the life narrative of one interesting person. Rollin's formula of "application, discipline, focus, repetition" sounds a lot like deliberate practice. Based on my own research, I have broken this process into two steps:
- Identifying the core elements needed to be become an expert or master in a specific domain -- Jeff Lipshaw was alluding to this in his post on Donald Schon and reflective practice;
- Practicing, through thousands of hours of effort, on elements that one lacks in order to move along the continuum to mastery. Number 2 works best when the person has the benefit of feedback and coaching. Of course, they also have to be willing to do the work.
For an individual, it may not be necessary to formally break down the core elements into specific pieces. Instead, these pieces can be obtained iteratively through trial and error and reflection. I think this is what Rollins has done. It is a formula that works for one highly determined person. But can it be scaled?
As an educator, I am interested in making the components of practice mastery more explicit and transparent--this is step #1 above. To accomplish step #1, we still need to do foundational research that deconstructs the careers of outstanding lawyers into sets of specific skills, abilities, and competencies--i.e., the things to be practiced. (Notice I said "sets" -- outstanding lawyers often master different domains.) At present, the Shultz-Zedeck Effective Lawyering study is the only solid published research that is even adjacent to this topic.
Once these components of effective lawyers are identified--i.e., a law school identifies the skills, abilities and competencies it wants to develop over the course of three years--we move to step #2. This step raises complex questions of order (which competencies first, which come second, etc.) and pedagogy (best and most cost-effective methods) and measurement (how do we know we have made progress?). I think the answers would have to come iteratively, through trial and error.
Any educational institution pursuing this strategy would have to commit itself to studying and continuously improving the educational process. For law schools, this would be new. At the vast majority of law schools, we mostly teach legal knowledge, we don't articulate our intended educational outcomes, we let students pick their courses ala carte with minimal guidance, and we don't engage in serious measurement. But we could. I think this is the next great frontier--an enormous opportunity for any law school willing to think for itself, to experiment and to change. The data needed would come from one's own alumni, ideally supplemented with data sharing within a law school consortium.
[posted by Bill Henderson]
Friday, August 10, 2012
NPR's Planet Money has a story on interplay between higher college and university tuition and changes in financial aid. As shown in the graphic below (from the College Board), the federal government is assuming a larger role in finaning higher education. Every other source of funding is shrinking its a proportionate contribution to financial aid. Despite favorable bankruptcy laws enacted in 2005, the federal takeover of higher ed financing has almost completely muscled out the private lenders.
"At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained" - March 28, 2007.
Two days ago, Bernanke said:
"I don’t think student loans are a financial stability issue to the same extent that, say, mortgage debt was in the last crisis because most of it is held not by financial institutions but by the federal government" - August 7, 2012
Now take a look at the federal government's holding of consumer debt (overwhelmingly student debt that has piled up since the 2010 legislation). See Henderson & Zahorsky, The Law School Bubble, ABA Journal (Jan. 2012).
Student loans are viewed as "assets" by the federal government ... until they become uncollectable, in which case the value of the assets eventually has to be adjusted through write-downs, just like mortgages in the mortgage crisis. Extensive use of Income-Based Repayment makes it possible for a student loan to be simultaneously uncollectable but not in default.
Folks, I am an unapologetic New Deal Democrat. But the current "system" of federal higher education financing is near perfect insanity. We set tuition and, no questions asked, the federal government writes us checks in exact proportion to students' willingness to sign loan papers. For young people who have never worked, it is all like Monopoly money.
The only way the math works is if the real earnings go up en masse for virtually all college and professional school graduates. In a rapidly globalizing world in which our students are competing against Chinese and Indian professionals, the assumption of mass rising real incomes is implausible. See, e.g., views of economist Alan Blinder in this NPR article.
Right now we--higher ed and the nation as a whole--are maintaining the illusion of prosperity through debt financing heaped on naive young people. This is immoral in the extreme. Moreover, in the long run, it is economic and political ruination.
The only long term solution is cost containment imposed on higher ed by reforming the terms of federal financing. The financing has to incentivize educational productivity -- i.e., fewer tuition dollars expended to obtain better skills and learning as measured by marketplace earnings and innovation. No more $100,000 checks from the federal government for sorting students by standardized test scores. Our graduates will actually have to think, collaborate, communicate and problem-solve at a very high level. How many of my fellow law professors grasp the depth of our problems? Not enough.
[Posted by Bill Henderson]
Tuesday, July 17, 2012
With the passage of the Legal Services Act 2007, the UK began the process of liberalizing its market for legal services. The UK legal market and all of legal education is now regulated by the Legal Services Board, which is presided over by a nonlawyer civil servant named Chris Kenney.
The LSB's regulatory objectives are set out in Section 1 of the Act. They include: "(a) protecting and promoting the public interest"; "(c) improving access to justice"; "(d) protecting and promoting the interests of consumers"; "(e) promoting competition in the provision of services within subsection (2)"; and "(g) increasing public understanding of the citizen's legal rights and duties[.]"
One of the fruits of the new LSB regime is this just released empirical study on how British citizens evaluate and make decisions about their own legal needs. In a nutshell, they often go in alone without the benefit of a lawyer. Further, only about 20% of this unmet legal need fall in the domain of "reserved legal activities," which require a licensed legal professional.
Although the report does not come out and says this, the implication of the myriad statistics is that the British consumer market is ripe for commodification through technology and mass distribution channels. When confronted with a legal need, face-to-face counseling with a skilled professional may be the ideal, but that is far from the reality for most British citizens.
[posted by Bill Henderson]
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]
Sunday, May 20, 2012
Entrepreneur Peter Thiel (Stanford Law '92) is financing twenty $100,000 scholarships for young people who agree to "stop" their formal education for two years to pursue or join a real world project broadly related to some aspect of business, innovation or technology. See Thiel Foundation's "The 20 Under 20 Fellowships."
Thiel is a former federal judicial clerk turned securities trader turned entrepreneur (founded PayPal) turned hedge fund manager/venture capitalist (he bet big on Facebook and won). Thiel believes that the key skills for innovation are not taught very well in universities. Further, because Thiel believes we are in the midst of a serious higher education bubble, he argues that the debt incurred by students only hobbles their ability to pursue activities that would redound to the benefit of the U.S. economy. Thus, as a nation, we are stuck in a very unhealthy spot.
Saturday, May 19, 2012
That's the headline of a story in the Sunday edition of The Age, one of Australia's leading daily newspapers. Here is the nut:
ALMOST two-thirds of Australia's law graduates are not working as lawyers four months after they have completed their degrees, according to a study.
The Graduate Careers Australia survey of 1313 recent graduates from all over the country found that 64 per cent were not practising law between 2010 and 2011.
There was ''no way'' law firms could accommodate all the graduates from Australia's 31 law schools, La Trobe University's director of undergraduate studies, Heather King, said. ''It's a well-acknowledged fact that 40-50 per cent will not end up in a traditional law practice.''
These statistics may seem even bleaker than those that describe the U.S. legal market. Yet, for two key reasons, these Australian students are far better off. First, the Australias follow the LLB model, which has some substantial advantages. According to my Australian colleagues, a law undergraduate degree is often combined with a major in another field or discipline, such as business, accounting, sociology, or literature. So a student's commitment to law as career is often tentative and, in many cases, hedged by another career interest. Second, higher education in Australia enjoys a large national subsidy. So law graduates typically graduate with little or no debt.
Ironically, as the story reports, some Australian universities are moving toward the J.D. model, essentially concluding the law is best taught to more mature students as a graduate discipline.
I agree that students ought to have a cost-effective way to opt out of law. I also agree that law is best taught as a graduate discipline to students with some substantial life experience. I don't, however, see an easy way to cost-effectively achieve both. The fact that the solution is not easy will, conversely, make the solution quite valuable.
[posted by Bill Henderson]
Saturday, April 28, 2012
A just released study by the Yale Law Women documents that class participation at Yale Law tends to be disproportionately male (H/T to Jeff and Lior Strahilevitz at Prawfblawg). Although the report offers prescriptive advice for Yale faculty and students on how to close the gap, it does not offer an empirically grounded explanation for why the gap exists in the first place. Coincidentally, I recently read another empirical study that appears to offer an answer.
In an article in the 2012 volume of Adminstrative Science Quarterly, Yale School of Management professor Victoria Brescoll provides compelling evidence that different power rules apply to women than men. Brescoll's article, "Who Takes the Floor and Why: Gender, Power, and Volubility in Organizations," found that when women possess the same objective measures of power as men, they are reluctant to use that power to speak up (i.e., be voluble) in organizational settings.
Why are powerful women less likely to speak up? Because of fear of backlash. Further, the fear is justified. Specifically, holding the objective measures of power constant, Brescoll found that when women were more voluble in meetings, they tended to be viewed as less likeable and deserving--and here is the kicker, less likeable and deserving at roughly the same levels by both male and female peers. In contrast, when powerful men were more voluble, their peers--both males and females--viewed them as more likeable and more deserving.
Wow. This is quite a problem. Brescoll observes that "the presciptions for powerful men's and women's behavior may be much more comprehensive than originally hypothesized (i.e., power men should display their power, while powerful women should not)." This differential in power rules is not something amenable to a quick, simple fix. Its root cause appears to be buried deep in both the male and female subconscious. It's hard to fix what we don't understand.
Over at Work Matters (H/T), Bob Sutton posted the perfect cartoon to summarize the Brescoll study:
It is worth noting the Yale Law Women describe social norms at Yale that essentially mirror Brescoll's results. On page 24 of the report, a YLS professor is quoted, "I think there’s an in-group dynamic where when women are gunners, they get punished more than men for doing it. Their classmates’ reactions are harsher.” The report continues, "This observation finds widespread support in the student survey among both men and women. Multiple students mentioned that there are norms about participation and women are either more likely to abide by the norms or are more likely to receive criticism for breaking them." The Brescoll study lends substantial support to this explanation. Again, not an easy problem to solve.
Some readers might be interested in a more in-depth description of Brescoll's research design. So here it goes. Brescoll results are based on the findings of three interconnected empirical studies. She starts with the established empirical fact that powerful people tend to assert their power through commanding more time--i.e., being voluble--in organizational settings. As a historical matter, most power has been held by men. Now that women have obtained some measure of social/organizational power, we want to know whether women, holding objective measures of power constant, are equally voluble.
- Study 1. Is volubility a function of power alone, with equal volubility among males and females with comparable power? According to Study 1, which studied patterns of floor time among male and female U.S. Senators (2005 session, controlled by Repulicans and 2007 session, controlled by Democrats), the answer is no. The connection between more power and more volubility was observed only among male Senators. In contrast, more power was not associated with more floor tiime taken by female Senators.
- Study 2. Following up on Study 1, Study 2 essentially asks, "why are equally powerful females more reticent than their male counterparts?" Using a controlled experiment format with male and female participants with workplace experience (average age 38, most with at least "some college" education), participants were asked to simulate an organizational meetings in which important decisions needed to be made. Holding levels of power constant, female participants were much less likely to speak-up. The primary explanatory variable was fear of social backlash.
- Study 3. The question that flows from Study 2 is essentially, "Is the female fear of backlash justfied?" Study 3 used a similar controlled experiment design to ascertain how male and females reacted to powerful CEOs. The only two variables were volubility in meetings and gender of the CEO. Remarkably, for both male and female study participants, male CEOs who dominated a meetings were viewed as competent and deserving. In contrast, for female CEOs, the opposite was true--more volubility led study participants to view powerful female CEOs as less competent and less deserving.
Very important research.
[posted by Bill Henderson]
Friday, April 20, 2012
That is the title of an essay posted on blog of the The Atlantic magazine. Jordan Weissman, a journalist who formerly worked in the business operations side of a major law firm, reviews the profitability of the most elite law firms pre-crash (2001-2007) and post-crash (2007-2010). [See charts below] The slide into lower profitability is what is causing the run-on-the-bank at Dewey LeBoeuf, a storied firm on the brink of collapse.
Dewey LeBoeuf, like the Howrey firm which failed slightly over a year ago, are almost certainly on the lefthand side of the 2007 to 2010 profitability chart. Weissman's conclusion is pretty simple: the industry is running out of gas. More failures are likely. Unfortunately, I agreed.
For the record, legal education's problems are no less severe. There are not enough qualified students to fill the number of 1L seats, so as an industry, our revenues (akin to law firm profits) are going to go down. The entire legal services and legal education industry is undergoing a major disruption. All of this talk of structural change is going to move from the abstract, where we contest it the premise, to the concrete, which induces panic among the unprepared. It is going to be very tough. Our character is going to be tested.
Paradoxically, making decisions based on our professional values rather than self-interest will be the key to survivial. More on that later. I have to prepare for the Lawyer of the Future Conference at Pepperdine University School of Law.
[posted by Bill Henderson]
Tuesday, April 10, 2012
I recently posted an essay that explains structural change in the legal profession uses a historical narrative and simple supply-demand framework. Unlike my other academic work, this essay is short and accessible (not a single table or chart). Many thanks to the many faculty workshops that helped shorten and sharpen the message. The abstract:
A simple framework for understanding the U.S. legal profession is gradual progression through three generations of lawyers: the generalist, the specialist, and the project manager. The transition from one generation to the next is driven by the familiar story of supply and demand. The generalist era (colonial period to the end of World War II) gave way to the specialist era (post-War to early 2000s) because of a shortage of sophisticated business lawyers capable of serving the needs of large, growing, and increasingly regulated industrial and financial clients. Over a period of several decades, leading local practitioners with business expertise transformed their small local practices into regional and national powerhouses. The common feature of all these transformations was an associate-partner training model, which enabled firms to build sufficient human capital to keep pace with -- and thus profit from -- the legal needs of their clients.
In contrast, the U.S. legal profession is now in transition from the specialist to the project manager era. This era is driven by the need for clients to obtain more and better legal work at a lower and more predictable cost. To keep pace with these new client needs (i.e., demands), lawyers working for large corporate clients will increasingly layer their specialized legal knowledge with the skills of the project manager. To the extent that outside lawyers and law firms resist this gravitational pull -- perhaps because they are too wedded to the success and prosperity of the specialist era -- they will lose their seat at the economic table. Thus, as the project manager era unfolds, old hierarchies in the U.S. legal profession will fall and new hierarchies will be created.
[Posted by Bill Henderson]
Monday, March 26, 2012
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.]
Monday, March 12, 2012
Posted by Jeff Lipshaw
Bill is as usual too kind, but indeed we have been friends since that fateful lunch in Bloomington six years 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)
Saturday, March 10, 2012
One 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]
Monday, February 13, 2012
What type of blogger would write a post titled, "Lawyer-Client Communication is Just Another Process to Improve"? To my mind, a very forward-thinking one. His name is Ron Friedmann, and he is an expert on technology and law. His post just appeared on this blog, Strategic Legal Technology. In my Google Reader, Ron's blog is in a Top 10 spot because, frankly, everything he writes is worth reading.
In his post, Ron makes the point that you can't improve something that you don't understand. So step #1 is taking the time to deconstruct and analyze. Drawing an example from a recent article in the Association of Corporate Counsel (ACC) Docket, Ron writes:
[J]ust saying “you have a 60% percent change of winning” raises three problems. First, unless a client faces multiple similar cases, it’s hard to understand what that single probability measures. Second, this probability - whether or not accompanied by another common measure, expected value - does not communicate the range of possible outcomes. An 80% chance of winning may be irrelevant if there is a 5% chance of a company-killing outcome. And third, our word choice influences how we think and how we decide.
On this third factor, Ron cites an example from the recent book by Nobel Laureate Dan Kahneman, Thinking, Fast and Slow, where numerous studies have shown that medical patients respond in very different way to "90% chance of success" versus "10% chance of mortality." A host of "fast-thinking" processes are at work that keep the mind from treating these two statements the same -- fast thinking being a blend of emotions and mental short-cuts that don't bother to check for logical consistency.
Kahneman demonstrates that these errors are a recurring part of the human condition -- indeed, he and his long-time co-author, Amos Tversky, agreed that they would not study a cognitive bias unless it first passed a single test: the bias had to be observable in Kahneman's and Tversky's own thinking. As Kahneman admits in the book, "We were studying ourselves." So good luck to lawyers who think they are too smart to make mistakes.
The host of cognitive biases gumming up lawyer-client communications reminded me of this wonderful cartoon that was included in my Legal Project Management and Process Improvement Seminar I took back in 2010 [click to enlarge -- it's worth it].
I think Ron is 100% right. It is possible to turn lawyer-client communication into a process, or more precisely, a set of interdependent processes. It requires a whole lot of thinking up front -- to many law firms, this is a quandary because the time cannot be billed. But hey, it is a multi-million dollar problem.
Further, when the processes are complete and deployed (note: processes are never really complete, so let's call this the 2.0 version), it won't feel mechanical. Instead, it will feel efficient, effective and respectful. The client who feels understood and responded to is the client who returns with more work and tells his or her friends about the experience.
[Posted by Bill Henderson]
Tuesday, February 7, 2012
Very few people will answer this question correctly. To find the correct answer, and get a good laugh, watch this video. Here is the good news -- collaboration is teachable. In fact, you used to be very good at it.
The homepage of the speaker, Tom Wujec, is www.tomwujec.com.
[Posted by Bill Henderson]