Sunday, February 10, 2013
Do the Best Lawyers have Excellent "Slow" Brains?
We were born with a fast brain, but we need a slow one to advance civilization, among other things. I am talking about insights of behavioral economics being applied to lawyer decisonmaking and judgment, and I think the answer to my question is "yes". Indeed, I think the insights of behavior econonomics put a whole new and important gloss on the tired adage, "Thinking like a lawyer."
We cover the basics of this topic in my 1L Legal Professions class. Apparently, it resonated with one of my many attentive students, as he/she sent me this amazing science video. It boils down all of Dan Kahneman's brilliant Thinking, Fast and Slow treatise into four very engaging minutes. This is a vegetable that tastes like chocolate. (H/T to a wise anonymous 1L at Indiana Law.)
[posted by Bill Henderson]
Saturday, February 9, 2013
"LPOs Stealing Deal Work from Law Firms"
That is the title of this video interview of law firm consultant Kent Zimmermann of the Zeughauser Group. In the interview, Zimmermann relates a story from a recent large law firm retreat in which one of the partners raised her hand and said that one of her major clients in the healthcare industry recently used Axiom in an M&A deal. Not for due diligence. They used Axiom for the whole deal.
For what it is worth, I think we have a language / perceptions gap at work here. At least in the winter of 2013, the phrase "Legal Process Outsourcers" tends to connote masses of low-level attorneys toiling away doing low-level work in India, the Philippines, South Africa or in small or middle market cities in the U.S. -- i.e., a simple labor arbitrage play.
But Axiom's competitive advantage is in understanding the clients' needs and working backwards to a solution. The value here is in (a) listening carefully to the client (e.g., "we want the same or better quality but lower and more predictable pricing"), and (b) in designing and building a system that delivers that outcome.
For background on Axiom, read this eyeopening article, "Disruptive Innovation", from The American Lawyer. Axiom has backing from Sandhill Road venture capital and Wall Steet private equity. One of their investors is quoted, “Axiom has an opportunity to disrupt an industry that hasn’t materially changed in a century. ... With a worldwide legal market that is a trillion dollars each year, there is plenty of running room to build a successful business."
Water runs downhill. There is a lot of money to be made by making law more efficient and affordable. Lawyers need to facilitate this outcome, not obstruct it, as society needs and wants better, more affordable access to legal solutions. Process-driven legal services and legal products are the future. Indeed, as the cyberpunk science fiction writer, William Gibson, once quipped, "the future is already here — it's just not very evenly distributed."
For my own views on the incipient revolution that threatens 100 years of established hierarchy, see "Losing the Law Business," Cayman Financial Review (Jan 2013); for the implications for legal education, see Section II.C of A Blueprint for Change.
[posted by Bill Henderson]
February 9, 2013 in Blog posts worth reading, Current events, Data on the profession, Innovations in law, Law Firms, Legal Departments, New and Noteworthy, Structural change, Video interviews | Permalink | Comments (3)
Monday, February 4, 2013
"We Need a New Kind of Learner"
Via the Big Think, [though I added in the references to law students]
The 21st century requires a new kind of learner—not someone who can simply churn out answers by rote, as has been done in the past, but a student who can think expansively and solve problems resourcefully. The traditional academic skills of reading, ’riting, and ’rithmetic must be replaced with creativity, curiosity, critical thinking and problem solving, and collaborative and communication skills in order to solve the complex problems of tomorrow. ...
[I]magine that knowledge is a multisided box. When we teach [law students] to simply memorize material so they can pass tests, we give [law students] access to the knowledge on only one side of the box. So when life tosses this box up (as it certainly will), it may not land on a side that is visible and accessible. In this case, the [law students] don’t have access to the knowledge. ...
[Students] need to learn to navigate the course of acquiring knowledge—essentially, to get to the answers by being curious and coming up with a lot of questions, a lot of whys. They need to get accustomed to learning from different directions, playing with concepts, and figuring out how to ask the whys in order to gain access to knowledge. This process is more important than having the knowledge itself
The author is Ainissa Ramirez. She is an author and science evalengist who recently wrote the ebook Save our Science: How to Inspire a New Generation of Scientists. I think the identical issues apply to law students. Education needs to be cheaper, yes. But to hold our society together, it also needs to be better.
[posted by Bill Henderson]
Saturday, February 2, 2013
Who Are These Companies?
Below is a photo of the exhibitor list at the LegalTech New York trade show. [Click on to enlarge]
There was a lot of money sloshing around this trade show. What do these companies sell? How do they make money? Who are their clients? Who founded these companies and who financed their growth? Are lawyer-employees a key part of their business models? These are the questions I am asking.
[Posted by Bill Henderson]
Tuesday, January 29, 2013
Washington & Lee is Biggest Legal Education Story of 2013
Here it is in a nutshell. There is empirical evidence that Washington & Lee’s experiential 3L curriculum is delivering a significantly better education to 3L students—significantly better than prior graduating classes at W&L, and significantly better than W&L’s primary competitors. Moreover, at a time when total law school applicants are on the decline, W&L’s getting more than its historical share of applicants and getting a much higher yield. When many schools are worried about revenues to survive next year and the year after, W&L is worried about creating the bandwidth needed to educate the surplus of students who enrolled in the fall of 2012, and the backlog of applicants that the school deferred to the fall of 2013.
[This is a long essay. If you want it in PDF format, click here.]
Alas, now we know: There is a market for high quality legal education. It consists of college graduates who don’t want to cast their lot with law schools who cannot guarantee students entree to meaningful practical training. Some might argue that W&L is not objectively better-- that the 3L curriculum is a marketing ploy where the reality falls well short of promotional materials and that, regardless, prospective students can't judge quality.
Well, in fact there is substantial evidence that the W&L 3L program delivers comparative value. The evidence is based on several years' worth of data from the Law School Survey of Student Engagement (LSSSE). I received permission from Professor James Moliterno, someone who took a leadership role in building W&L’s third year program, to share some of the key results (each school controls access to its LSSSE data.) They are below.
But before getting into empirical evidence, I want to put squarely on the table the most sobering finding that likely applies to virtually all of legal education. It is this: On several key LSSSE metrics, W&L has made impressive gains vis-à-vis its own historical benchmarks and its primary rival schools. But even for this leader, there remains enormous room for improvement. More on that below.
Here is the bottom line: Traditional legal education, when it is measured, does not fare very well. Yet, as W&L shows, substantial improvement is clearly possible. We law professors can respond to this information in one of two ways:
- Don’t measure, as it may disconfirm our belief that we are delivering a great education.
- Measure—even when it hurts—and improve.
I am in the second camp. Indeed, I don’t know if improvement is possible without measurement. Are we judging art work or the acquisition of key professional skills needed for the benefit of clients and the advancement of the public good?
Moving the Market
I doubt I will ever forget Jim Moliterno’s September 2012 presentation at the Educating Tomorrow’s Lawyers (ETL) conference at the University of Denver. He presented a single graph (chart below) showing W&L actual applicant volumes since 2008 versus what would have happened at W&L if its applicant volume had followed national trends.
While law school applicants crested a few years ago, W&L enjoyed a large run-up in volume of applicants, presumably due to the launching of their new 3L program. This larger applicant pool effectively served as a buffer when applicant declines began in 2011 and 2012. Since 2008, overall law school applicants are down -19%, yet W&L is up overall +33%.
But much more significantly, after their experiential 3L year was up and running and the overall legal job market continued to stagnate, W&L yields spiked. Ordinarily they would enroll 135 students. But for the fall of 2012, they received enrollment commitments from well over 260 students. Indeed, at the ETL conference Jim Moliterno said the school had to offer financially attractive deferments to get the class to approximately 185 incoming students -- a 50 student bulge.
When Jim Moliterno showed the above graph and explained the corresponding changes in yield, my good friend Gillian Hadfield, a skeptical, toughminded, evidence-demanding economist who teaches at USC Law, leaned over and said to me, “that is the single most important takeaway from this entire conference.” I agreed. The market for a legal education with practical training is, apparently, much more inelastic than the market for traditional JD programs.
Yet, what is perhaps most remarkable is that a large proportion of incoming students at W&L were enrolling based on little more than faith. Nobody knew for sure if W&L had the ability to pull off their ambitious 3L curriculum. The program relies on a large cadre of adjunct professors, after all, and W&L is located in remote Lexington, Virginia. Many law faculty outside of W&L, and perhaps some inside, thought (or perhaps think) that the program could not live up to the hype. Well, as shown below, the program appears to have produced meaningful gains.
The only data-driven critique anyone can muster is that the gains remain significantly short of perfection. But that critique bites harder on the rest of us. To use a simple metaphor, W&L is tooling around in a Model-T while the rest of us rely on horse and buggy. What ought to be plain to all of us, however, is that, just like automobile industry circa 1910, we are entering a period of staggering transformation that will last decades. And transformation will be roughly equal parts creation and destruction. See Schumpeter.
W&L Data, Internal Historical Benchmark
LSSSE is a phenomenally rich dataset – nearly 100 questions per year on a wide variety of topics related to student classroom experience, faculty interaction, type and quantity of assessments, time allocation, and perceived gains on a variety of dimensions related to personal and professional development. The survey instrument is online here.
Aside from a host of questions related to demographics, career goals, and debt, major sections in the LSSSE include:
- Section 1, Intellectual Experience (20 questions)
- Section 2, Examinations (1 question)
- Section 3, Mental Activities (5 questions)
- Section 4, Writing (3 questions)
- Section 5, Enriching Educational Experiences (9 questions)
- Section 6, Student Satisfaction (7 questions)
- Section 7, Time Usage (11 questions)
- Section 8, Law School Environment (10 questions)
- Section 9, Quality of Relationships (3 questions)
- Section 10, Educational and Personal Growth (16 questions)
W&L deserves to be a detailed case study. But frankly, legal education can’t wait. So I will do the best I can to cover the landscape in a blog post. I hope every law faculty member who reads this post makes a strong plea to their dean to enroll in LSSSE. Why? So your school can benchmark itself against the detailed LSSSE case studies that are bound to flow out of W&L and other innovative law schools. Though they don’t get much press, there are, in fact, other innovative law schools.
Friday, January 18, 2013
A Blueprint for Change
Brian discusses the bleak employment prospects of law schools, but (through no fault of his own) understates the nature of the structural change that is occurring in the U.S. and global market for legal services. In Part II, I will write about some logical next steps for law schools looking to get ahead of the coming tsunami.
I tried to write Part II, but a blog post just was not up to the task. Further, I sensed that my colleagues were in no mood for half-baked solutions. There has been enormous criticism of legal education on the blogs and in the media, but very little in the way of detailed prescriptions to improve the situation. I felt an obligation to back off on the criticism and focus on solutions. So, in essence, Part II of my Tamanaha review became an article.
I just posted to SSRN an article entitled "A Blueprint for Change" forthcoming in the Pepperdine Law Review. It is both a diagnosis and a proposed solution -- a solution I am actively pursuing. Here is the abstract:
This Article discusses the financial viability of law schools in the face of massive structural changes now occurring within the legal industry. It then offers a blueprint for change – a realistic way for law schools to retool themselves in an attempt to provide our students with high quality professional employment in a rapidly changing world. Because no institution can instantaneously reinvent itself, a key element of my proposal is the “12% solution.” Approximately 12% of faculty members take the lead on building a competency-based curriculum that is designed to accelerate the development of valuable skills and behaviors prized by both legal and nonlegal employers. For a variety of practical reasons, successful implementation of the blueprint requires law schools to band together in consortia. The goal of these initiatives needs to be the creation and implementation of a world-class professional education in which our graduates consistently and measurably outperform graduates from traditional J.D. programs.
I have a large backlog of shorter articles and analyses that I have not posted because I wanted my own detailed solution in the public domain. I hope to tie all of these ideas together over the coming weeks.
Thank you, Brian Tamanaha, for writing an book that required me to think in terms of solutions.
[posted by Bill Henderson]
January 18, 2013 in Current events, Data on legal education, Data on the profession, Innovations in legal education, Scholarship on legal education, Scholarship on the legal profession, Structural change | Permalink | Comments (2)
Thursday, January 10, 2013
A Great Story About Our Shared Humanity
Rarely do I get a gush of exhilaration and hope from a news story, but it happened today. NPR has a wonderful story about journalist Paul Salopek embarking on seven-year, 21,000 mile journey on foot. The route he will take is based on the migration out of Africa by early humans. But, says Salopek, the journey is less about the past and more about the future.
"It's about how we've changed the world, and how the world is being radically altered in our view by such things as the Internet. I'm starting out this walk with about 35 percent of the world wired. By the time I reach Patagonia in 2020, about 80 to 90 percent will be wired."
Below is a graphic of Salopek's journey.
I really believe that a journey like this has the potential to create a shared focal point that will remind us what we have in common -- our pasts and our futures as members of the human race -- rather than our differences.
I am sure many many people would love to join Salopek on this journey. To my mind, it is a pilgrimage -- i.e., a journey of moral and spiritual significance.
[posted by Bill Henderson]
Thursday, January 3, 2013
Bill Henderson is the 2d Most Influential Person in Legal Education - National Jurist Magazine
We knew it all along. (HT: John Steele)
Saturday, December 29, 2012
How Do Law Professors Learn About the Intersection of Law and Technology?
Here is my best guess: We show up at the intersection and we listen to lawyers, judges, regulators and vendors talk about the issues of the day. Alas, this is not original to me. It is the "soak and poke" research method pioneered by the renowned political scientist, Richard Fenno (photo to right). See Fenno, U.S. House Members in Their Constituencies: An Exploration, 71 Am. Polit. Sci. Rev. 883, 884 (1977) (seminal article that describes the "soaking and poking" methodology as one that "befits the earliest stages of exploration and mapping") (HT to my PhD colleague Jay Krishnan, who explained this all to me).
Earlier this month, there was a major conference in Washington, DC on developments in the world of electronic discovery -- the very thing that has added enormous cost and complexity to civil litigation in this country, impacting access to justice, and producing a restructuring of how corporations buy and manage a significant portion of their legal services. If there is a burgeoning legal technology revolution, the frontline is the world of e-discovery. Lawyers and clients can no longer cope with the rapidly growing volume of electronically stored information (ESI). Going forward, technology and nonlegal expertise are a permanent part of the legal industry.
This major conference was organized by the Advanced eDiscovery Institute, which is part of Georgetown Law's CLE operations. According to its website, the conference (now it its ninth year) has "gained a reputation among judges, practitioners, and vendors as the leading eDiscovery conference of its kind in the United States." Notice that "law professors" and "legal educators" are entirely absence from this description.
If you leaf through the lengthy roster of speakers and organizers, you'll see:
- A dozen federal judges, including the busiest and most influential district courts (SDNY, ND Illinois, SD Texas, District of Columbia)
- Lawyers from the FTC, DOJ, SEC, and US Commodity Futures Trading Commission
- Several state courts and state agencies
- Partners from a huge swath of the corporate bar
- In-house lawyers from Google, Raytheon, Pfizer, Tyco, Motorola, Genentech, Apple, Deloitte Financial Advisory Services, Honda, UBS Financial, United Technologies, and many other Fortune 500 companies
- The National Institute of Standards and Technology
- The Sedona Conference
- Several leading eDiscovery vendors
This is a very serious crowd. Yet, I located only one full-time law professor in the mix: John Carroll, who is Dean of the Cumberland School of Law at Samford University. Yet, even Dean Carroll is not your typical legal academic. He is a Vietnam veteran, a 1974 graduate of Cumberland Law, a former federal magistrate judge, and a current member of the Sedona Conference. Kudos to Dean Carroll, whom I suspect knows quite a bit about cutting edge issues in eDiscovery. But where is the next generation of legal academics soaking up all this valuable institutional knowledge?
Nearly 10 years ago I showed up at the Indiana Solo & Small Firm Conference. I was there to gain some basic insight for a course I was putting together called "The Law Firm as a Business Organization." As the organizers will tell you, a law professor had never before ventured into their conference. What was their reaction? A very kind, "It's about time!" I was immediately drafted onto the organizing committee and in subsequent years conducted two major surveys for the ISBA Solo & Small Firm Section. To this day, the lawyers I met at that first Solo & Small Firm Conference remain an important part of my professional network. Ironically, several years ago the small firm crowd was issuing a clarion call on the importance of law and technology -- for them, it was all about survival.
Now law and technology is on nearly everyone's radar. New tools and work processes are opening the door to better, faster, and cheaper legal solutions -- solutions that bear little resemblance to the artisan method of lawyering taught in US law schools. Unfortunately, there are no classes to turn any of us into experts--the practicing bar itself is struggling to comprehend the implications of the new world we are entering. During a paradigm shift, the job of academics is going to messy and chaotic. At this juncture, we have to educate ourselves by showing up, talking to people, and observing. Cf. Susan Helper, Economists and Field Research: "You Can Learn A Lot Just by Watching", 90 Am. Econ. Rev. 228 (2000). It is time to get to work.
Interested in a primer on law and technology? Consider the NYC LegalTech, which runs from Jan 29-31. Early bird registration ends Dec 31, 2012. I will definitely be at ReInvent Law Silicon Valley 2013, which is March 8 at the Computer History Museum. Other high quality options -- I am told by people more knowledgable than me-- are the ABA Techshow, which runs from April 4-6 in Chicago this year, and the International Legal Technology Association annual conference, which runs August 18-22 in Las Vegas this year. I would love to get together with other law professors who will be attending these important industry meetings.
- How Law & Society Research is Part of the Solution to Structural Change, Apr 11, 2012.
- Why Are We Afraid of the Future of Law?, Sept 6, 2012.
- DennisKennedy.com, a blog writen by Dennis Kennedy, a lawyer and legal technology expert. Dennis has a strong following among individual lawyers to want to leverage technology to improve their practice.
- Strategic Legal Technology, a blog written by consultant Ron Friedmann, a brilliant and generous person with 30 years of experience and perspective. Ron was there at the genesis of law and technology. At some point, I hope his career is written up. Ron is a guru on knowledge management and enterprise-level technology.
- Law Technology News, a great electronic resource edited by Monica Bay. LTN is part of American Lawyer Media. I predict that LTN is going to go mainstream rather than niche in the very near future.
- Computational Legal Studies, which is a blog founded by Professor Dan Katz at Michigan State. Dan is preparing for a whole new way of conceptualizing legal problems and legal practice.
- Law21, a blog written by lawyer, journalist, and consultant Jordan Furlong. Tech is a common theme for Jordan. He is a great translator who puts things into a broader perspective.
[posted by Bill Henderson]
Friday, December 28, 2012
The Nuances of Cost in the Legal Supply Chain
Posted by Jeff Lipshaw
My colleague, Carter Bishop (left), just sent over some comments by a friend of The Legal Whiteboard, Paul Lippe (below right). Among other things, Paul contributes to The New Normal blog for the ABA Journal. Much of the discussion over there centers around the current upheaval in the way sophisticated users of legal services (mostly big companies) interact with their suppliers (mostly big law firms).
A post from Patrick Lamb (below left), the New Normal's other proprietor, not only captures a primary thesis of that blog, but also reflects something my non-lawyer corporate management team colleagues were saying to me in the executive suite almost twenty years ago: "Lawyers Are Not Special - The Rules That Apply to Other Businesses Apply to Us."
Carter's e-mail concerns comments from Jeffrey Carr, the GC of FMC Technologies to this effect: outside lawyers do four primary things: Advocacy, Counseling, Content, and Process. The first two have relatively high value, and lawyers are pretty good at it. The second two are the kinds of things that don't, on their surface, seem to have much value to the client, like legal research or document preparation, and which, in the New Normal, are getting outsourced to places like Wheeling, West Virginia and Bangalore, India.
Notwithstanding the fact that I was thoroughly inculcated in the New Normal twenty years ago, I was intrigued by Paul's very recent observation to the effect that lawyers still resist the jargon of Six Sigma and lean enterprise, that "this 'industrial' language is anathema to many lawyers, even though nobody seems to substantively rebut the New Normal analysis." (Well over twenty years ago, the then-GC of Motorola, Richard Wiese, came to talk to my law firm about Six Sigma, and he got precisely the same reaction from a good number of my partners.)
Anyway, Carter asked what I thought, and he may have been surprised. I think one aspect of the fundamental truth that "Lawyers Are Not Special" is that companies can't simply beat the crap out of law firms (in the long run) any more than they can beat the crap out of other suppliers. Here's what I noted:
1. What has facilitated the "New Normal" is the migration of smart lawyers into corporate management, and the resulting syncretism of business like value propositions into the market for legal services. That's a reflection of lean business management philosophy generally, which is that we develop entitlements or expectations of value and productivity to be derived by any investment of resources, whether the investment is money, time, property. Value is what the user is willing to pay. Productivity is the ability to produce output (value) with the fewest possible inputs. When I was in the business world, the mantra was "growth and productivity." That is, you made money by expanding the reach of your value proposition (growth) and adopting the best possible cost position (productivity).
2. The New Normal purchasers are better able to distinguish, or unbundle, those aspects of legal work that have high value propositions. I do think the long term/short term distinction is meaningful. When I was full bore hard charging toward a business objective, I at least had the capability of hearing what the lawyers were describing as the long term risks. I didn't always take their advice because I was in a better position to balance long term and short term (for example, as a seller, I would not generally not want to let a debate over the caps, baskets, and limits of the indemnification provisions to the buyer take dollars off the purchase price). But getting sophisticated legal advice is more complex than it looks. People like David Katz at Wachtell or Peter Atkins at Skadden, whose M&A advice is probably worth well more than whatever they charge per hour, or Steve Newborn at Weil or Helene Jaffe at Proskauer, whose antitrust/merger analysis is the same (to name several whose advice I've valued or counseling I've admired), don't just pop into existence. The infrastructure of the firm creates people like that. So costing is more nuanced than just saying "I only want to pay for Katz's or Atkins's time."
3. In business, sophisticated purchasers want their suppliers in the supply chain to be profitable. For example, auto parts manufacturers need stampers to provide steel stampings. You can put enough price pressure on a stamper, even an efficient one, to drive it out of business. The trick is to design the supply chain so that the stamper makes what you need at a price appropriately reflecting its value to you, and productively enough to make a fair profit. What you do is work with the supplier to remove the non-value added stuff to the extent you can. If we can reduce the material cost on that stamping by engineering it in a different way, the price AND cost go down.
4. That's pretty much what you are seeing in the market for legal services. It seems to me the appropriate balance is when I, as GC, say to the Big Law firm - this is about how much I'm willing to pay for the deal, given that I need a mix of high value and low value services, and when the Big Law partner says that I'm going to charge you for the low value stuff to the extent necessary to allow the firm to continue to produce the high value stuff. It's a decent position on the law firm partner's side to say to a buyer - I'll strip as much out and send it to West Virginia or India as I can, but it's a legitimate part of my overhead to charge you for some training, because my value to you is actually about $50,000 an hour (or something like that - I just made the number up).
5. So my working philosophy as a GC was to be smart, not to be doctrinaire: to push when I thought it made sense to push, but also to back off and be responsive to the long term health of my best suppliers.
Wednesday, December 26, 2012
Shoveling Snow and Grading Exams
Early this morning Bloomington, Indiana got the upper estimate of snow predicted by the National Weather Service -- roughtly a foot of very wet, heavy snow. So I did the prudent thing: I started shoveling before my driveway froze into something akin to glacial ice when the temperature drops later today. (My youth in Cleveland prepared me well for snow storms.)
Of course, my motives were not pure. I was anxious for a legitimate excuse not to grade exams.
I hope to find other more pleasant ways to procrastigrade before Jan 1, which is my scheduled completion date.
[posted by Bill Henderson]
Wednesday, December 19, 2012
Announcement for ABF Visiting Scholars
The American Bar Foundation (ABF) invites scholars to join our intellectual community for the 2013-2014 academic year. We encourage national and international scholars on leave or sabbatical to take advantage of our diverse community and excellent facilities. We offer an office, telephone, and computer, but no stipend.
Preference will be given to visitors whose scholarship coincides with the research agenda of the ABF, and who will be in residence full-time for all or part of the year. Summer visits are possible. Visitors are expected to participate in the intellectual life of the ABF, including a weekly seminar.
If you have an interest in this opportunity, please send an email to Jothie Rajah at firstname.lastname@example.org, Subject Line: Visiting Scholars Program, which states (1) the topic on which you are working, (2) the preferred dates for residence, (3) the days each week you would expect to be at the ABF, and (4) attach a CV. Applications should be received by April 1, 2013. Applications will be considered as space allows. The ABF Appointments Committee will review applications and prospective visitors will be notified accordingly.
Tuesday, December 18, 2012
Jeremy Telman on Legal Education
I have been remiss in not linking to a series of six blog posts by Jeremy Telman (Valparaiso) on the subject of legal education over at Contracts Prof Blog.
By all rights, given procrastigrading, I should have linked this several days ago. I have no excuse.
Sunday, December 16, 2012
Job Meltdown and Debt Crisis Among Veterinary School Graduates
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]
A Virtual Lawyer Speaking Crowdsourced Wisdom
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.
Thursday, December 6, 2012
Stealth Restructuring in Legal Education
Three years ago, in the depths of the economic recession resulting from the mortgage meltdown, the vast majority of major law firms in the country were engaged in significant restructuring, frequently called “downsizing” or more euphemistically “rightsizing.” This was a regular news item in legal publications such as The American Lawyer and on blogs. Each week brought news of a few or several major law firms that were planning to cut staff, cut associates or even cut partners. Indeed, some of the major law firms, such as Howrey and Dewey LeBeouf, ultimately didn’t survive the economic downturn.
While the large firm legal marketplace was in turmoil in 2009 and 2010, law school enrollment and tuition continued to climb, even as law school graduates increasingly were having difficulty finding employment. According to the LSAC Volume Summary, in the last two years, as prospective students have become increasingly aware of the challenging employment outlook for law school graduates, and the increasing cost of law school, the number of applicants to law schools has declined by over 20%, from 87,500 to roughly 68,000. According to the ABA, the number of first-year students has declined by over 8000, a decline of 15%. Assuming an average net tuition of $25,000 per student (a rough estimate of average sticker price tuition less a rough estimate of average scholarship) this decline of roughly 8000 in first-year enrollment means law schools probably are missing roughly $200 million in first-year revenue for the 2012-2013 academic year as compared to the 2010-2011 academic year.
Of course, just as some law firms were more impacted by the economic downturn in 2009 than other law firms, some law schools are more impacted by the decline in first-year enrollment than other law schools. Comparing school-specific enrollment data between 2010 and 2012 for the 140 law schools which have published enrollment data for their entering class in fall 2012, 59 schools – over 40% of those with available enrollment data – have seen a decline of 20% or more in their first-year enrollment, and 15 of those 59 have seen a decline of 30% or more.
For a hypothetical law school with an entering class of 200 students in 2010, a decline of 20% or more in first-year enrollment means a first-year enrollment in 2012 of 160 students or fewer. Again, assuming $25,000 in net tuition per student, that decline of 40 or more first-year students translates to at least $1 million less in first-year revenue in 2012 than in 2010. If the hypothetical law school has seen a decline of 30% or more, that would mean a decline of 60 or more first-year students that translates to at least $1.5 million less in first-year revenue in 2012 than in 2010. If similarly smaller classes are enrolled in 2013 and 2014, this hypothetical law school will be receiving $3 million to $5 million less in revenue in 2014 than it received in 2010.
There are 59 law schools with a decline in first-year enrollment between 2010 and 2012 of at least 20%, 15 of which have seen a decline of 30% or more. With that many law schools feeling significant revenue pressure, one might think we would be hearing regular news stories about layoffs or restructuring or downsizing or rightsizing among law schools, comparable to what we heard about major law firms in 2009-2010. But since the start of 2012, there have been only two news stories on law school layoffs or restructuring -- one in spring of 2012 when the University of California-Hastings School of Law announced that it would shrink its class by 20% and layoff over a dozen staff members (while increasing tuition), and more recently, when the National Law Journal published a story about budget-cutting at Vermont Law School. Notably, neither of these two law schools are among the 59 that have seen a decline of 20% or more in first-year enrollment between 2010 and 2012, as Hastings enrollment is down roughly 17% between 2010 and 2012 and Vermont enrollment is down roughly 18% between 2010 and 2012.
Law schools presently are going through the same revenue shortfalls law firms went through in 2009 and 2010. Enrollment is down significantly and revenue has declined significantly. Law schools have to be engaged in restructuring – in downsizing or rightsizing. My colleague, Mark Osler, engaged in a thought-exercise about how law schools might do this a couple of months ago on the Law School Innovation blog. But almost no one is reporting on what is actually happening at the dozens of law schools trying to deal with significant budgetary distress.
In the coming months or in the next year or two, law schools will be leaner – with fewer staff and possibly fewer faculty (if early retirement options are put on the table or if untenured faculty are released). And quite possibly, some law schools may close. While a law school being forced to close likely will be news, it appears that law school restructuring generally is less newsworthy than law firm restructuring.
As a result, we are experiencing a stealth restructuring in legal education. Please don’t tell anyone.
[posted by Jerry Organ]
Wednesday, December 5, 2012
Predictive Coding is a Disruptive Innovation that will Change How Law is Practiced
I have been reading about predictive coding for a few months now, and that is my conclusion. Predictive coding is the use of computer algorithms and machine learning to conduct the review of electronically stored information (ESI). For a useful primer, see Frederick Kopec, Predictive Coding in eDiscovery or Predictive Coding for Dummies (remarkably, there are two editions, one by Symantec and the other by Recommind, see Legal Tech Insider, A Tale of Two Predictive Coding Books).
From the client perspective, predictive coding is at least as good as first-level human review (typically junior attorneys screening for relevance and privilege) but dramatically less expensive. And note, whatever efficiency and accuracy benefits predictive coding has today, it will only improve in the months and years to come. It contrast, our processing capacity as humans is, well, static.
The big players in the space are Kroll Ontrack and Recommind. These are not insignificant companies. Kroll Ontrack started as a hard disk recovery service and evolved into the e-discovery and information management services. It now employs 1,500 workers in eleven U.S. and nineteen foreign locations around the world. In 2010, Kroll Ontrack had revenues of $250 million. A few layers up, it is owned by the Private Equity giant Providence Equity Partners.
Recommind has approximately $15 million in annual revenues and approximately 100 employees spread over facilities in Massachusetts, California, London, Germany, and Australia. According to this June 2012 story at the CIO Agenda at Computer Business Review, Recommind is gearing up to go public.
Howard Sklar, Senior Corporate Counsel for Recommind, just posted an essay entitled, Legal Acceptance of Predictive Coding: A Journey in Three Parts. The parts are: (1) acceptance that predictive coding reasonable, (2) arguments that it is better and thus must be used in this case, (3) sua sponte judicial order that it be used. The fourth part, still to come argues Sklar, is a state bar ethics watchdog issuing a ruling that failure to use predictive coding is unethical.
Here is an excerpt from Sklar's post:
There’s a certain trajectory for technology adoption. Early adopters, mainstream acceptance, laggards. But, slow or fast, adoption occurs. The law is the same way, in its own fashion. But the legal acceptance of predictive coding has had a path that’s unorthodox. From the legal perspective, predictive coding has gone through three cycles, not entirely as expected.
In cycle one, companies began using predictive coding. The efficiencies are compelling. Better end results in less time at a cost savings. An ability to better find and understand the facts embedded—sometimes hidden—in your documents. These things are crucial in today’s corporate world. Law firms were slower, but generally followed their clients into predictive coding, and soon saw the benefits first hand.
Other vendors—usually the first to adopt new technology—were laggards. They fought the adoption of predictive coding as long as they could, mainly because they didn’t have the capability to do it themselves. Eighteen months ago, the most frequent question I would get at conferences was “has there been a court case approving the use of predictive coding?” In the “ridicule it and it will go away” marketing approach, they were hoping to scare corporations and law firms away from the benefits corporations could achieve.
Then came Da Silva Moore and Global Aerospace [which, against the objections of one of the litigants, ruled that predictive coding was a judicially reasonable method of conducting discovery.] ...
During this period, other vendors stopped criticizing predictive coding and started marketing it—sometimes with the capability, sometimes without. ...
After waiting for the first decision approving the use of predictive coding, we went to stage two faster than anyone had thought possible: not whether you can use predictive coding, but whether you must use it. This was the argument in the Kleen Products case. The defendants had completed their review, and the plaintiffs’ argued that the review was defective because predictive coding wasn’t used. Eventually, the parties cooperated to end that dispute, but the argument had been made. ...
We’re now in stage three: a court has sua sponte ordered the use predictive coding. And not just any court, the Delaware Chancellery Court, one of the most important corporate courts in the nation.
In the future, we’ll enter stage four: the decision by a state bar’s ethics watchdog that failure to use predictive coding is ethically questionable, if not unethical. After all, purposefully using a less-efficient, less accurate, more expensive option is problematic. I think that’s probably 18 months away. But given how fast we’ve gone through the first three states, stage four may come next week.
[posted by Bill Henderson]
Sunday, December 2, 2012
More on Big DataBelow is an interview of David Cowen by Monica Bay, editor-in-chief of ALM's Law Technology News. The topic is Big Data. The interview provides a useful glimpse on how this trend is corporate America is taking hold. It should be of great interest to lawyers because (a) it has enormous economic value, and (b) it raises novel privacy issues. Which will predominate? [posted by Bill Henderson]
Wednesday, November 28, 2012
Unofficial Comparison of 2010 and 2012 Enrollment and Profile Data and Thoughts on 2013
In August, I posted to this blog a narrative analysis comparing the 2010 and 2011 enrollment and profile data among law schools based on the data published in the 2012 ABA-LSAC Guide and the 2013 ABA-LSAC Guide. In response to recent comments on the 2012 enrollment situation, see ABA Journal Weekly Newsletter and the discussion at The Faculty Lounge, and the further drop in LSAT test-takers in June/October 2012 recently discussed at Tax Prof Blog, I thought it might make sense to update the enrollment and profile analysis to account for 2012 enrollment and profile data, to the extent that it is available, and to offer some thoughts on 2013.
As of November 15, only 140 law schools had published enrollment data on their webpages and only 128 had published sufficient profile data on which to make meaningful year-to-year comparisons. Please note that this analysis is based on "unofficial data," having been taken from law school webpages, not from any ABA publication, and having been taken from law school webpages prior to the LSAC certification of enrollment and profile data which the LSAC is undertaking this year for the first time.
ENROLLMENT IN DECLINE – Between 2010 and 2012, only 12 schools were flat (a change between -1% and +1%) or had an increase in enrollment; 128 of the 140 law schools had a decline in enrollment (a decrease greater than 1%), of which
-89 had a decline of 10% or more, of which
-59 had a decline in enrollment of 20% or more, and of which
-15 had a decline in enrollment of 30% or more.
This means over 90% of law schools for which 2012 enrollment information is available had a decline in enrollment and that more than 40% had a decline in enrollment of 20% or more.
Based on the data published in the 2012 ABA-LSAC Guide, in 2010, these 140 law schools had 33,952 first-years (68.3% of the 49,700 total 1L enrollment (LSAC matriculants)). Based on the data published in the 2013 ABA-LSAC Guide, in 2011, these 140 law schools had 31,082 first-years (68.2% of the 45,600 total 1L enrollment (LSAC matriculants)). In 2012, based on data from law school webpages, these 140 law schools had 28,380 first-years.
The decline in first-year enrollment was roughly 8.45% percent across these 140 schools between 2010 and 2011 (slightly more than the national decline of 8.25%), while the decline in first-year enrollment was roughly 8.69% across these 140 schools between 2011 and 2012.
If enrollment at these 140 schools represents 68.25% of total first-year enrollment for 2012 (the average of 2010 and 2011), that would suggest that total first-year enrollment (LSAC matriculants) for fall 2012 may be as low as 41,500-41,600, a decline of roughly 8.8% from 2011 and a decline of roughly 16% since 2010. (The LSAC certification of enrollment and profile information may come in even slightly lower than this estimate as it is going to be based on snapshots of enrollment on October 5, 2012, which would exclude students who began classes but withdrew prior to October 5, 2012. This group of students might number a few hundred if there were one to three such students at each law school.)
PROFILES IN DECLINE – Between 2010 and 2012, 93 of the 128 law schools with available profile information had a decline in their LSAT/GPA profile (more indicators down then up), 23 had an increase in profile (more indicators up then down), and 12 had a mixed profile (same number of indicators up and down).
ENROLLMENT AND PROFILES IN DECLINE – Most significantly, of the 128 law schools with both enrollment and profile information available for fall 2012, 85 law schools (nearly two-thirds) saw declines in enrollment and in their LSAT/GPA profiles between 2010 and 2012.
Of these 85 law schools, 38 law schools saw declines in enrollment of greater than 20% and saw declines in their LSAT/GPA profiles. That means nearly 30% of law schools with available enrollment and profile information for 2012 had declines in enrollment of 20% or more and saw their LSAT/GPA profile decline. It also means that over 75% of the 50 law schools with declines in enrollment greater than 20% and for which 2012 profile information is available had declines in profile for 2012.
Notably, five of these 38 law schools were in the USNews top-50, 10 were ranked between 51-100, 10 were ranked between 101-145 and 13 were in the alphabetical listing of schools. The declining interest in law school, therefore, is impacting law schools across the rankings, but is more dramatically impacting alphabetical schools than top-ranked schools.
FURTHER THOUGHTS ON 2012 – According to the LSAC Volume Summary, applications to law school slid from 87,900 in 2010 to 78,500 in 2011 to approximately 68,000 for 2012 (although the 2012 numbers have not been finalized). Over the last nine years, law schools, on average, have admitted roughly 56,800 students per year, with a low of 55,500 in 2007 and in 2008. The “admit” rate – which was only 56% for fall 2004 – had climbed to 71% for fall 2011. For the last several years, however, matriculants have averaged roughly 82% of admitted students. So if we did have 41,600 matriculants this fall (as estimated above), and if matriculants represented roughly 82% of admitted students, that would mean we had roughly 50,700 admitted students, the lowest number this millennium, with an admit rate of nearly 75%, the highest this millenium. (Alternatively, if matriculants declined as a percentage of admitted students, it is possible that a larger number of applicants were admitted.)
PROJECTIONS FOR 2013 -- June and October LSAT administrations suggest that there may be fewer than 60,000 applicants for fall 2013. There were 93,341 June/October test-takers in 2009 (for the 2010 admissions cycle) (resulting in 87,900 applicants – 94.2% of tests administered in June/October). There were 87,318 June/October test-takers in 2010 (for the 2011 admissions cycle) (resulting in 78,500 applicants – 89.9% of tests administered in June/October). There were 71,981 June/October test-takers in 2011 (for the 2012 admissions cycle) (resulting in roughly 68,000 applicants – 94.5% of tests administered in June/October).
That is a three-year average in which the number of applicants in a cycle represented roughly 92.9% of the tests administered in June/October. There were 63,003 June/October test-takers in 2012 (for the 2013 admissions cycle). If the 2013 cycle results in a number of applicants representing 92.9% of June/October test-takers, law schools can anticipate there being only roughly 58,530 applicants to law schools for fall 2013. (Notably, in the admissions cycles from 2007-2009, the number of applicants in a cycle represented, on average, roughly 111% of the June/October test-takers, so the estimate of 58,530 may understate the number of possible applicants.)
If there are only 58,530 applicants for fall 2013 (which would represent nearly a 14% decline from fall 2012 -- the third consecutive double-digit decline in applications), and if law schools admit only 50,700 of these applicants, the same as the estimate above for fall 2012, across all law schools over 86% of all applicants to law school would receive offers of admission. If 82% of these admitted students were to matriculate, that would mean a first-year enrollment for fall 2013 that once again would be around 41,500-41,600. Alternatively, if law schools remain somewhat selective and were to admit only 48,000 of the 58,530 estimated applicants, that still would be an admit rate of 82%. If 82% of those 48,000 matriculated, the first-year enrollment would decline to roughly 39,400, a decline of about 5.3% from the fall 2012 estimate set forth above.
There are two competing tensions law schools must weigh in making admissions decisions in a declining market – revenue and LSAT/GPA profile. Do you take the number of students you need to meet revenue projections (even if that means profile slides) or do you take a smaller number of students (and take a revenue hit) in an effort to maintain LSAT/GPA profile?
What the 2011 and 2012 classes demonstrate is that in the current market, for a large number of schools, even taking significantly fewer students did not allow them to maintain their profiles. Given that many schools already have lost significant revenue due to shrinking enrollments in 2011 and/or 2012 (for just one example see the recent discussion of Vermont Law School in the National Law Journal) they will be hard-pressed to shrink enrollment further to maintain profiles. As a result, I think when enrollment and profile data is evaluated in fall 2013, we will see even more widespread declines in profile than was manifested in 2011 and 2012, possibly along with some ongoing declines in enrollment. It seems likely that several more schools may experience both significant declines in enrollment and in profile.
[posted by Jerry Organ]
Sunday, November 25, 2012
The Rational Hubris of Legal Structures as Moral Agents
Posted by Jeff Lipshaw
The op-ed section of the Boston Globe this morning has a piece extolling the "benefit corporation,"* the statutory basis for which takes effect in Massachusetts this coming Saturday.
The headline reads "Virtue Inc. Can a new kind of charter give corporations a conscience?"
Interesting. That is a deeply profound question out there at the cutting edge of science and philosophy of mind. Normally it plays out in questions of the limits (or not) of artificial intelligence. Can artificial neural nets give computers consciousness - that is, an inner experience and self-awareness? Indeed, just this past Friday the New York Times contemplated how far "deep learning" programs have progressed in replicating the pattern recognition capabilities of the human mind. But will consciousness ever be reducible to scientific explanation? (See, e.g., Daniel Dennett and Douglas Hofstadter for the affirmative and David Chalmers for the negative in that debate.)
Personally, I think an entity has to be conscious to have conscience. Hannah Arendt said this:
It took language a long time until it separated the word consciousness from conscience, and in some languages, for instance in French, such a separation never happened. Conscience, as we use it in moral orlegal matters, supposedly is always present within us, just like consciousness. And this con-science is also supposed to tell us what to do and what to repent of; it was the voice of God before it became the lumen naturale or Kant’s practical reason.Corporations are legal structures. By definition they are artificial. Even if the artificial intelligence people can create a machine that passes the Turing Test and fools me into thinking it's thinking (and therefore might have a conscience), no corporation statute, charter, bylaws, or series of board resolutions is ever going to approach the algorithmic complexity of decision-making and judgment that it would take for a corporation to have either consciousness or conscience.