Sunday, October 13, 2013

Measuring the Value of Law Firm Pedigree

General counsel from large legal departments are becoming increasingly skeptical of the value provided by leading brand-name law firms, such as the AmLaw 20 or the Magic Circle.  That is the conclusion of some compelling research just posted on the HBR Blog Network, the online idea forum run by Harvard Business Review.

AdvancelawThe research was conducted by AdvanceLaw, which is a company that vets law firms and lawyers on an as-requested basis on behalf of legal departments.  Some of AdvanceLaw's clients include Google, Nike, Sherwin-Williams, Lenovo, Towers Watson, Mastercard, Panasonic, eBay, Mastercard, Deutsche Bank, McDonald's, Molson Coors, Nestle, Heinz, Clorox, Unilever, CSS, Starwood Hotels, etc.  

AdvanceLaw is a good example of what Richard Susskind calls a "closed legal community."  See Tomorrow's Lawyers, chapter 5.  Some essential background on AdvanceLaw is discussed below. But I am sure readers want to see the data first. The reported research was based on responses from 88 general counsel, who answered two questions:

  1. How does law firm pedigree affect their buy decision for a high-stakes matter? 
  2. Is law firm pedigree associated with more or less client responsiveness?

Below are the results posted on the HBR Blog Network:

HBRAdvanceLaw

Readers are probably wondering, "Who is AdvanceLaw and why are they asking these types of questions?"  I have some intel on this topic.

FirozAdvanceLaw was formed four years ago by Firoz Dattu, a Harvard-trained lawyer who spent time in BigLaw (Paul Weiss).  Firoz eventually found his way to the Corporate Executive Board, which a publicly traded company (NYSE: CEB) that specializes in subscription-based research organized by industry and function.  CEB uses the aggregated research for value-add services such as benchmarking and best practices.  

Because they specialize in factgathering for strategy and management,  CEB has a long history of employees leaving to start niche businesses.  That is what happened here.  Firoz helped launch, and ultimately ran, the General Counsel Roundtable (GCR), which is a CEB functional group that cuts across industries.  I have been to a GCR meeting (it is invitation-only for outsiders).  Suffice to say that a persistent theme of conversation was controlling legal costs without compromising quality.  A seemingly tall order, right?

Firoz started AdvanceLaw because of perceptions by general counsel that they were being overcharged and underserved by large firms in the major markets.  Any GC who has reviewed data from TyMetrix would quickly draw the same conclusion, as a large firm lawyer with 20-years experience in, say, Minneapolis often has a lower billing rate than a second-year at a mega-firm in NYC.  AdvanceLaw has positioned itself as a trusted advisor that can provide reliable guidance in shopping for value outside the big brand-name firms. 

So how does this service work?  As noted earlier, AdvanceLaw is an example of a closed legal community.   To get into the AdvanceLaw network, prospective law firms are run through a rigorous RFP process that evaluates things like expertise, innovation, quality, compensation systems, and track record on diversity.

If a firm makes the AdvanceLaw cut, they start getting assignments from participating legal departments.  But here is the enormous differientator.  Feedback is collected by AdvanceLaw and shared with the law firm and other AdvanceLaw legal departments.  What is the effect?  

  • For law firms, changing their behavior to (a) protect their reputations, and (b) get more work. 
  • For legal departments, to the extent they are getting value, migration of their legal work out of pedigreed law firms in the major markets to lower cost yet high quality regional and super-regional firms.  The savings are roughly 30-40% with no loss in quality and better responsiveness. Some of the winners in the AdvanceLaw tournament are listed here

AdvanceLaw also has a globalization overlay, which has been created with GC assistance.    For instance, in Argentina and India, AdvanceLaw works with quite prominent firms who also exhibit efficiency. In the UK and Canada, the firms are substantial players, but are slightly less pedigreed than the Magic Circle and Seven Sisters, respectively.  

So let's boil down AdvanceLaw's business model into its simplest terms: It gathers information so they legal departments don't pay excessive prices for the CYA (cover-your-ass) benefits of hiring high-prestige Big Law.  

CYA still matters, of course.  But through AdvanceLaw, pedigree is being given a more accurate valuation.  A likely large second-order effect of AdvanceLaw is the acceleration of AFAs through AdvanceLaw firms, as feedback (on quality) and publicity (to drive volume) is what is needed to make that transition.  

Susskind is right.  Closed legal communities are going to be major disruptors in the legal marketplace. 

October 13, 2013 in Blog posts worth reading, Cross industry comparisons, Important research, Innovations in law, Legal Departments, New and Noteworthy, Structural change | Permalink | Comments (0)

Friday, October 11, 2013

Understanding Trends in Demographics of Law Students – Part One

Analysis of Differential Declines in Law School Applicants Among Top-240 Feeder Schools

Some people recently have noted the decline in applications to law school from graduates of relatively elite colleges and universities - here and  hereThis suggests that different populations of potential applicants to law school are responding differently to market signals about the cost of legal education and the diminished employment prospects for law school graduates in recent years.  

In this blog posting, I analyze the changes in applications among the LSAC's Top 240 Feeder Schools between 2010 and 2012, documenting the extent to which the response to market signals about legal education has been different among graduates of elite colleges and universities when compared with graduates of less elite colleges and universities.  In Part Two, I will look at a different set of data regarding changes in LSAT profiles of applicants.  In Part Three, I will offer some possible explanations for the different responses to market signals among different groups of applicants.

Overview

Between 2010 and 2012, the total number of applicants from the Top 240 Feeder Schools fell from 55,818 to 42,825.  In both years, the Top 240 Feeder Schools were responsible for roughly 63% of the total pool of applicants (63.5% of 87,900 in 2010 and 63.1% of 67,900 in 2012).  But the decline in applications was not uniform across all of the Top 240 Feeder Schools.  There are a few different ways one can look at this information to get a sense of the different responses among different populations of potential applicants. 

Differential Declines Among Feeder Schools with Law Schools Ranked in Different Tiers

First, one can look at declines across the Top 240 Feeder Schools that have law schools.

One might surmise that potential applicants who are graduates of colleges and universities with a law school might be particularly well aware of the increasing costs of legal education and the challenging employment environment for recent law school graduates and assume that feeder schools with law schools would generally see similar declines in applications.  In fact, however, the percentage decline in applications between 2010 and 2012 varied significantly by the ranking of the law school at the feeder school.

Among feeder schools with law schools ranked between 1-50 in the most recent USNews rankings, the average percentage decline in applicants between Fall 2010 and Fall 2012 was 28.08%.  Among feeder schools with law schools ranked between 51-100, the average percentage decline in applicants between Fall 2010 and Fall 2012 was 20.27%.  Among feeder schools with law schools ranked between 100-146, the average percentage decline in applicants was 18.14%.  But among feeder schools with law schools that are ranked alphabetically, the average percentage decline in applicants was only 3.31%.   

Given that most of the top ranked law schools are at colleges and universities that also are considered elite colleges and universities, and most of the alphabetically ranked law schools are at colleges and universities that are not considered elite colleges and universities, this analysis suggests that graduates of elite colleges and universities are responding to the market signals regarding legal education differently than graduates of less elite college and universities.  (This may seem particularly paradoxical, given that the percentage decline in applicants generally is greater at colleges and universities with more highly ranked law schools (whose graduates generally experience more promising employment outcomes) while the percentage decline in applicants is lowest at colleges and universities with less highly ranked law schools (whose graduates generally experience less promising employment outcomes.))

Comparisons of Outlier Schools – Those Schools More than One Standard Deviation from the Mean

Second, one can look at “outlier” schools and see how negative outliers compare to positive outliers.  The average percentage decline in applicants across the Top 240 Feeder Schools between 2010 and 2012 was 19.76%.  The standard deviation was 18.67%.  How do those schools more than one standard deviation from the mean compare with each other?

There are a total of 13 schools that saw a decline in applicants between 2010 and 2012 putting them below the mean by more than one standard deviation – schools with a decline in applications greater than 38.44%.  There are a total of 26 schools that saw an increase in applications or such a modest decline in applications that their increase/decline was more than one standard deviation above the mean – a decline of less than 1.09% or an increase.  How do these schools compare? 

Eight of the 13 feeder schools that saw the most significant declines in applications had a law school with an average rank of 69.  (These schools include NYU (6), Virginia (7), Cornell (13), George Mason (41), Marquette (94), Akron (119), Loyola (New Orleans) (126), and Univ. of San Fran. (144). Four of the eight were top-50 law schools, while none were alphabetically ranked.) 

Thirteen of the 26 feeder schools that saw the least significant declines in applications (or saw increases in applications) had a law school, including four that were ranked alphabetically.  Among just the nine law schools in this category that are ranked, the average rank is 104.  (These schools include Denver (64), UNLV (68), Loyola (Chicago) (76), Rutgers (91), Florida International (105), Wyoming (113), CUNY (132), Southern Illinois (140), and Suffolk (144), along with Florida A & M, North Carolina Central, Nova Southeastern, and Southern (all alphabetical).  Notably, only four of the thirteen were ranked in the top-100 law schools (none in the top-50).)

Again, in this analysis, with a few exceptions, those feeder schools that saw significant declines in applicants generally represent a more elite slice of American colleges and universities, while those with the most nominal declines in applicants (or increases in applicants) generally represent a less elite slice of American colleges and universities.

Outliers More Broadly – Comparing Schools with Declines Greater than 30% and Less than 10%

Third, if one wanted to look at a broader pool of feeder schools at the bottom and the top, one could look at all schools down 30% or more in applicants and all schools that were down 10% or less in applicants between 2010 and 2012 (roughly 10% above and below the mean), two sets that account for nearly half of the Top 240 Feeder Schools.

There were 68 schools down 30% or more in applicants, 46 of which had a law school, of which 29 were ranked in the top-50, with only one school ranked alphabetically.  The average rank of the 45 numerically ranked law schools was 48.  The other 22 feeder schools in this category include several highly regarded schools – including, for example, Rice, Vassar, Miami University, Brown, Amherst, Johns Hopkins and Princeton.

There were 51 schools with a decrease in applicants of 10% or less, 25 of which had law schools, only two of which were ranked in the top-50, with six schools ranked alphabetically.  The average rank of the 19 numerically ranked law schools was 94.  The other 26 feeder schools in this category include mostly less elite colleges and universities – including, for example, Kenesaw State University, University of Texas at San Antonio, and Florida Gulf Coast University, along with University of Phoenix and Kaplan University.

Conclusion

All three approaches to analyzing the changes in applicants among the Top-240 Feeder Schools point in the same direction.  Graduates of elite colleges and universities are opting not to apply to law school at a greater rate than graduates of less elite colleges and universities.  One might suppose that this translates to a greater decline in the number of applicants and matriculants with really high LSATs (165 or above) as compared to those with relatively low LSATs (149 and below).  In Part 2, I explore whether this supposition is accurate.

Posted by Jerry Organ

October 11, 2013 in Data on legal education, Scholarship on legal education | Permalink | Comments (0)

Wednesday, October 2, 2013

Enduring Hierarchies in American Legal Education

Because the U.S. News & World Report ranking era has been associated with so much turmoil and bad behavior, many of us in legal education tend to think of the magazine as the source of woes.  In fact, the evidence compiled in an new paper on SSRN, "Enduring Hierarchies in American Legal Education," suggest that our desire (or propensity) to establish a legal education pecking order predates the U.S. News rankings by century or so.  Vanity of vanities, all is vanity -- at least that is what the data seem to suggest.

 My brilliant and industrious colleagues, Funmi Arewa and Andy Morriss, led the charge on this.  For many, a major contribution of this research will be the detailed 40+ tables compiled at the end of the article.  Now that all that fact-gathering work is done, others can use it.   Below is the paper's abstract:

Although much attention has been paid to U.S. News & World Report’s rankings of U.S. law schools, the hierarchy it describes is a long-standing one rather than a recent innovation. In this Article, we show the presence of a consistent hierarchy of U.S. law schools from the 1930s to the present, provide a categorization of law schools for use in research on trends in legal education, and examine the impact of U.S. News’s introduction of a national, ordinal ranking on this established hierarchy. The Article examines the impact of such hierarchies for a range of decision-making in law school contexts, including the role of hierarchies in promotion, tenure, publication, and admissions, for employers in hiring, and for prospective law students in choosing a law school. This Article concludes with suggestions for ways the legal academy can move beyond existing hierarchies and at the same time address issues of pressing concern in the legal education sector. Finally, the Article provides a categorization of law schools across time that can serve as a basis for future empirical work on trends in legal education and scholarship.

Posted by Bill Henderson

October 2, 2013 in Data on legal education, New and Noteworthy, Scholarship on legal education | Permalink | Comments (0)

Tuesday, October 1, 2013

A Podcast Conversation on the Rise of the Legal Tech Sector

The Legal Whiteboard was created to focus on "facts, trends, and ideas on law and legal education."  Well, nothing is more salient these days than the rise of the legal tech sector which -- trust me here -- is growing rapidly and will soon hit a tipping point.  What happens at the tipping point?  The tastes of clients and highly talented workers shift, leaving old institutions very vulnerable.  

If you are interested in this topic and want a time-efficient primer, check out this ABA Journal podcast, which went live yesterday.  It is 15 minutes long and can be downloaded.  Thanks to good questions from ABA editor Reg Davis, and some editing magic, the interview is a pretty good starting place for the uninitiated -- the only downside is that you have to listen to me, as interview keys off the "Who's Eating Law Firms' Lunch" story (Oct ABA Journal).

Our conversation is also transcribed.

October 1, 2013 in Current events, New and Noteworthy, Structural change | Permalink | Comments (0)

Wednesday, September 25, 2013

Mark Harris of Axiom Answers Hard Questions

Somehow I missed this interesting Bloomberg Law interview of Mark Harris, CEO of Axiom Law.  Anyone interested in the future of the legal industry ought to be watching and listening to Mark.  Why?  Because his company -- which now grosses north of $150 million per year -- has the ear and the pocketbook attention of the general counsel of the world's largest companies.

In the 15 minute video interview below, Mark answers several hard questions: 

  • Is Axiom Law a law firm?  No.  That is why it can take outside non-lawyer investment. 
  • Is Axiom Law competing with BigLaw?  In some contexts, the answer is clearly yes. 
  • Is Axiom Law considering an IPO?  Not now, but perhaps someday in the future.  "There would be some advantages to being a public company."

All of this adds up to a lot of potential disruption.  Mark uses that very word.  For additional background on Axiom Law, see American Lawyer story, "Disruptive Innovation."

September 25, 2013 in Cross industry comparisons, Innovations in law, Structural change, Video interviews | Permalink | Comments (0)

Monday, September 23, 2013

"This is just an education design problem"

A few years ago I had the good fortune of teaming up with Rachel Zahorsky for a series of feature stories in the ABA Journal, including  "Paradigm Shift" (July 2011), "The Law School Bubble" (Jan 2012), and "The Pedigree Problem" (July 2012). The fourth article, "Who's Eating Law Firms Lunch," is now online; and without a doubt it is my favorite.  

KatzjpgWhy?  Because of the final vignette in the story, which features Dan Katz of ReInvent Law fame.  We were sitting at the bar at the January 2013 AALS Conference in New Orleans when Dan told me this story. My jaw just dropped.  Dan has faith in his students, just like Bellotti had faith in him.  Dan believes, so Dan just does.  No fear.  No bullshit.  It was, suffice to say, quite refreshing.

I am reposting the whole vignette in the hope that a few more academics, lawyers, and law students will read it.  The title of the post is the last line in the story.  To my mind, that Dan Katz line sums up the next ten years of innovation in legal education.  Please keep reading until you get to that final line.  The insight is worth the effort.

For the past two years, MSU’s Katz was the only full-time law professor who spoke at the LegalTech conference. Katz and Knake are creating a curriculum relevant to the emerging law and technology sector, albeit primarily for companies like Novus Law and Recommind, whose competitive advantage is rooted in process and technology.

Within the legal academy, Katz is an anomaly. Aside from his JD, he has a PhD in political science and public policy from the University of Michigan. However, he focused almost all of his graduate study on complex systems. It’s a relatively new scientific field that uses mathematical modeling to understand how a multitude of human and nonhuman factors interact and influence one another. Human society and the human brain are two examples of complex systems. Neither can be effectively modeled by conventional math or statistics.

The late Larry Ribstein at the University of Illinois was one of Katz’s early mentors. When he went into teaching a few years ago, Katz says, Ribstein told him: “I bet you must feel like an alien. I greatly admire your work. You are definitely on the right track. But the rest of the legal academy is just not ready for you.”

In June 2011, Katz joined the faculty at MSU Law. Michigan State partnered with the Detroit College of Law in 1995 and moved the law college into a building in East Lansing two years later. Though the school’s rebranding efforts did raise its profile, to most of the profession, MSU Law remains a nonprestigious regional law school located in the heart of the Rust Belt.

None of this dissuades Katz from his sincere belief that it is possible to turn any institution into the preferred recruiting grounds for the nation’s emerging law-and-tech industry.

“When I was 18 years old,” explains Katz, “I had the privilege of joining a transformative organization”— as a kicker for the University of Oregon football team, the Ducks. “We were in the Pac-10, but it’s in Eugene, Ore., where it is often cloudy and raining. We had no shot at all with the top recruits from Southern California. So coach Mike Bellotti had to figure out ways to stretch and optimize what some might call second-tier talent.

“Oregon is now a national powerhouse, but the seeds of that success were sown much earlier. It was difficult to be bigger or faster than USC or UCLA. So Coach Bellotti decided we would be better on the details of the game. We would be better conditioned and we would pay significant attention to special teams. Our emphasis on special teams got us better field position. And by the third or fourth quarters, our opponents would have their hands on their burning legs. But because of our conditioning regimen, we had more stamina. Our success became contagious. Over time, we were able to get prized recruits. It was a culture of innovation.”

During Bellotti’s tenure at Oregon, from 1995 to 2008, the Ducks had only one losing season, blotting out decades of mediocre performance. The year that Katz graduated, the Ducks were co-champions of the Pac-10, a feat that makes him beam with pride.

Katz’s “secret sauce” for ReInvent Law is arguably much more important than a degree in complex systems. He looks at the 25 students entering the ReInvent Law Laboratory as raw human potential. Katz also actively recruits potential law school applicants to his program, though he declines to discuss his strategy.

Katz understands that the most attractive candidates for the law and technology sector are those with special skills that are often obtained through prelaw work experience. “But there is no reason why some of those key skills and experiences cannot be learned and obtained right here,” Katz says of the MSU program.

He notes that virtually all law students have high cognitive ability. He feels the key to their future success is mastery of domain-specific knowledge—often in areas that are complementary to law—and the ability to collaborate across disciplines. This requires engagement and an immense amount of time spent on the task. So how does one develop the educational program that will prepare the law student for legal-tech jobs—some that may not yet exist?

“This,” Katz says, “is just an education design problem."

September 23, 2013 in Blog posts worth reading, Current events, Innovations in legal education, New and Noteworthy, Structural change | Permalink | Comments (0)

"Big Data is the Big Opportunity" for Legal

BigdataSo says a just published article in the Global Legal Post by Sandeep Sacheti, an executive with Wolters Kluwer Corporate Legal Services.   The article is called "The legal industry's new reality."

Perhaps the key insight is that "data by itself is useless. To extract value from it, you need the ‘three Ts’:  talent, technique and transformation.  

  • Talent.  "When you start out, you don’t need the top experts to start making sense of your data. You may just need people with curiosity, good statistical skills and a desire to learn. These are the kind of people who will quickly see how data can be managed and packaged to solve problems. And once they do, they will want to get better at it."
  • Technique.  "Big Data needn’t mean Big Complexity. ... [A]nalytical techniques can be sophisticated, but it’s also possible to keep it simple – especially at the start of the journey. Get the basics right first, and then you can become more advanced as you get better at it."
  • Transformation.  "Becoming a data-driven legal team – law firm or corporate – is a journey. Change is slow, so don’t expect an overnight transformation. The best approach is to bring the whole organisation with you - if everyone from the partners and CEOs to the interns buy into your data strategy, it will start delivering returns faster."

So who will be the big winners when it comes to Big Data?  Definitely some start-ups become they they don't have to transform -- it's a clean sheet operation from the very beginning; they also have more patience and tolerance for trial and error.   Yet, BigLaw is sitting on top of a lot of the essential data, so there will be some winners there too.  To my mind, it will turn on the ability of some BigLaw shops to leverage talent and technique into some early victories that will aid the tranformation project.  If it works, it will be a case study in strategic leadership and effective change management. 

By the way, Wolters Kluwer Corporate Legal Services is a sophisticated place.  They own TyMetrix, which is the perhaps the best current example of BigData operating in the BigLaw ecosystem.  TyMetrix's Real Rate Report is being used to agressively control lawyer billing rates.

September 23, 2013 in Cross industry comparisons, Current events, Innovations in law, Law Firms, Legal Departments, New and Noteworthy, Structural change | Permalink | Comments (0)

Sunday, September 22, 2013

Revolving Door Among First Generation Legal Innovators

Disruption in the legal industry appears to be crossing an important milestone -- the emergence of the revolving door among the first generation innovators.  Evidence comes from this press release published on the Wall Street Journal website.

Huron_logoIn 2010, a BigLaw partner leaves BigLaw (DLA Piper) to take a high-level job at Axiom, the most well-known disruptor in the legal industry.  Then, 2.5 years later, he leaves to run the Discovery Services practice at Huron Consulting Group.  Huron Consulting, by the way, is a publicly traded company (NASDAQ: HURN) with $626 million in revenues in 2012.  Legal is one of Huron's core industries.  It currently has 1,500 "seats" for conducting 24/7 document review services in the U.S., Europe, and India.  

Let's summarize: BigLaw to legal start-up to publicly held company trying to expand its wedge in the legal industry.  Granted, career moves are motivated by a wide range of factors, not just a string of successes that create better oppportunities.  Outsiders can only speculate why someone changes jobs.  That said, in a start-up environment where the market opportunity is large but the know-how to tap into it has to be developed through trial and error,  false starts are just part of the learning curve -- the building block of future success.  Indeed, there are books and articles on this topic.  

What is revealed by the emergence of the revolving door among legal innovators is that there is tremendous opportunity to make traditional legal services better, faster, and cheaper.  Talented people are persisting and betting their careers on it.  The biggest unknown is timing -- it is risky to get there too early, and disastrous to get there too late.  Alas, it is better to wrestle directly with the issue of timing than to deny that the change is real. 

September 22, 2013 in Cross industry comparisons, Current events, New and Noteworthy, Structural change | Permalink | Comments (0)

Saturday, September 21, 2013

A Clockworks Approach to Lawyer Development

Lawyers can successfully adapt to the disruption of the Information Age just like we adapted to the legal challenges of the industrial era -- build a system to create the human capital that is in short supply.  This was original logic of the Cravath System, which created teams of specialized business lawyers who could handle the legal needs of rapidly growing industrial and financial clients in the early 20th century. This Clockworks approach still works, but the specifications of the system need to be updated. At the end of this presentation, I offer a prototype of what we might include in a 21st century Clockworks approach to lawyer development.

Presented at the "Innovations in the Law: Science and Technology" Conference, Oregon District of the Federal Bar Association (Sept 20, 2013)

September 21, 2013 in Current events, Innovations in legal education, Law Firms, Structural change | Permalink | Comments (0)

Tuesday, September 17, 2013

Dan Katz on Legal Prediction and Legal Metrics

This presentation by Dan Katz is worth reviewing.

posted by Bill Henderson

September 17, 2013 in Blog posts worth reading, Cross industry comparisons, Current events, Innovations in law, New and Noteworthy, Scholarship on the legal profession, Structural change | Permalink | Comments (0)

Monday, September 16, 2013

The Trend Toward Legal Onshoring -- What It Tells Us about the Future of Law

The trend toward outsourcing of legal work to India may be giving way to "onshoring."  What is the attraction of moving legal jobs back to the US?  The wage gap between India and the US is closing, but more importantly, innovation and continuous improvement are significantly aided by proximity. 

I heard this perspective from a friend of mine who was part of the management team of a successful LPO that was sold (at a substantial profit) to a much larger legal conglomerate.  Indeed, he contemplated getting back into the business, but this time running an onshoring operation. 

BlackHillsIP-logo-RGB-2color-xsThis identical perspective is on display in a recent Minneapolis StarTribune story on Black Hills IP, a 2.0 legal process outsourcer that provides various types of managed services for all things related to intellectual property.   According to its website, Black Hills IP is a "US-based IP paralegal service that is faster, more accurate and more cost-effective than in house departments and off-shore providers."  The company appears to be growing, as it did a PR-blitz to commemorate its 100th client.  The company was originally started in Rapids City, South Dakota but has since expanded to Minneapolis.

Cpa globalWhat make this story especially interesting is that many of the folks who started Black Hills IP were sophisticated Minneapolis corporate lawyers who created a company in the early 2000s called Intellevate, a 1.0 LPO that was sending legal work to India.  In 2006, Intellevate became part of CPA Global, a much larger LPO.  In other words, the folks at Black Hills IP are industry players with much better information than the rest of us who are making bets with their own money. 

Unlike traditional law firms, these types of legal vendors are growing rapidly.  Their secret sauce appears to be combining high-quality processes with capable, motivated paraprofessional talent. 

McCrackinThe challenge for law schools and many practicing lawyers is getting our heads around the fact that, from a pure market perspective, bright legal minds may be less valuable than well-designed and well-executed legal processes and systems.  This state of affairs is just as much an opportunity as it is a threat.

One last interesting note suggesting that companies like Black Hills IP are part of the same ecosystem as traditional law firms and law schools: The CEO of Black Hills IP is Ann McCrackin, a former professor of law at Franklin Pierce (now University of New Hampshire School of Law), where she was director of the Patent Prosecution and Procedure Program.  Prior to that, McCrackin was a shareholder in Schwegman, Lundberg & Woessner, a large patent law firm based in Minneapolis that specializes in high technology.

posted by Bill Henderson

September 16, 2013 in Current events, Data on legal education, Data on the profession, Innovations in law, New and Noteworthy, Structural change | Permalink | Comments (1)

Thursday, August 29, 2013

Faculty Hiring Announcement - Suffolk University Law School

SUFFOLK UNIVERSITY LAW SCHOOL in Boston invites applications for a tenure-track position starting in the 2014-2015 academic year.  We seek entry-level and pre-tenure laterals with strong academic records and a demonstrated commitment to excellence in teaching and scholarship. Our search will focus on candidates with expertise or developing interest in business law, including but not limited to business entities, corporate finance, banking law, or securities regulation. Candidates’ teaching and research areas may also include advanced business topics in business planning or similar transactionally-oriented business subjects. Candidates may also be asked to teach a first year course. Suffolk University is an equal opportunity employer. We encourage applications from women, persons of color, sexual orientation minorities and others who will contribute to the diversity of the faculty.  Interested candidates should contact Professors Jessica Silbey and Robert Smith, Co-Chairs, Faculty Appointments Committee, at jsilbey@suffolk.edu and rsmith@suffolk.edu, with a copy to bmello@suffolk.edu, or mail their materials to Co-Chairs of the Appointments Committee, c/o Babs Mello, at Suffolk University Law School, 120 Tremont Street, Boston, MA 02108-4677.

August 29, 2013 | Permalink | Comments (0)

Thursday, August 22, 2013

The First Day of Law School - From My Side of the Podium

During the summers, I usually spend a lot more time around horses and dogs than I do around students.  About this time of year, probably because of the impending transition back to the classroom and dealing with humans, it seems like I always go back to one of my favorite movies, Buck, about the horse trainer Buck Brannaman.  

51rrqhjvvl_aa160__med_hrFive minutes into the movie, he's beginning a "colt starting" class, in which horse owners are learning how to get horses who've never been saddled, much less ridden, to accept the rider.  He narrates:  "Colt starting is always interesting because most of the youngsters never been saddled, never had anyone on their back, or a bit in their mouth, so there’s a lot of fear in both the horse and the human."  

Then the film cuts to his opening remarks to the owners who are themselves going to have to teach their horses:

“The way I do these colt classes, you guys, you’ll have to get ’em exposed to a lot of things that seem perfectly normal to you but it doesn’t seem normal to the horse.
“You walk up to ’em smelling like a Big Mac, you know, or somethin.’ Your diet is gonna make you smell different to the horse.
“And then you’re gonna tell the horse, ‘don’t worry, I want to crawl on you’ … in a similar posture to how a lion would attack and kill a horse. They jump right up in the middle of them and they reach their front claws around and as they’re biting down on their spine they’re cutting their throat with their claws. You’re asking the horse to let you be in that posture and crawl on him.
"And then about the time he says, ‘Alright, maybe,’ and then you say, ‘Oh one more thing. I want to strap some hides of other dead animals around you before I crawl on you.’
"Damn sure have to have some trust. He’s got to believe in you to let you do that. And amazingly enough, they’ll let you do it.”
I'm pretty sure there's a lesson there for all teachers, but particularly law professors facing a class of 1Ls on the first day. 

August 22, 2013 | Permalink | Comments (1)

Monday, August 5, 2013

Help Wanted: To ReInvent Bar Associations -- August 9th in San Francisco

Scale_of_justice_2_newTwo constituencies are really worried about their futures.  The first is law students and recent law graduates --  they are worried about jobs.  The second are state and local bar associations  --  they are worried about being relevant to the next generation of lawyers.  

So here is my idea.  The new guard and the old guard should be talking to each other.  It does not take a rocket scientist to see the real opportunity for synergy.  If  all of us are willing to step outside our comfort zone -- just a little -- we can create new types of bar association events where young lawyers come to have fun, contribute to the community and profession, and develop relationships that put their careers on a clear upward track. 

BossoneToward that end, this week's ABA Annual Meeting in San Francisco provides us with a golden opportunity.  On Friday, August 9 at 8 a.m. at the Hilton SF Union Square, Michael Bossone (co-creator of LawWithoutWalls) and I will be facilitating a plenary session entitled, "A New Age for the Legal Profession Requires a New Age for Bar Associations."  

Well, we could not preside over a session where panels of white guys, 50 and older (my own demographic), sit at a head table and opine on the likes and needs of millennial lawyers.  So we have invited a large cadre of law students and recent law grads to take part in a more interactive session. The session is big -- nearly 300 bar association presidents and executives from around the country.  And we need 1 to 2 students or recent grads per table -- perhaps for the first time, you are the subject matter experts.  Michael and I are looking for a few more qualified volunteers. Interested?

If you are proximate to SF and looking to meet some well-connected lawyers from around the nation who are genuinely interested in listening to your (constructive) point of view, please send me an email with #NewAgeBar (our Twitter hashtag) in the subject line.  We have a few slots left -- RSVPs are mandated for this event, as space is limited and name tags are required.

GettingajobIf you are a law student or recent law grad and you think going to a bar association event early on a Friday morning is a grand waste of time, I suggest that you read  Mark Granovetter's classic book, Getting a Job.  This book is a vivid empirical demonstration of Granovetter's seminal 1973 article, "The Strength of Weak Ties," which is one of the most cited social science articles of all time (23,000+ citations and counting).

An example of a strong tie is you and your sorority or faternity friends. Not too good for getting a job.  An example of a weak tie might be an acquaintance in the same profession but part of a different generation or living in a different part of the country.  As Granovetter shows, these "weak" ties act as bridges and are profoundly influential in opening doors for people.  Believe it or not, academic knowledge can accelerate your career.  Get out of your comfort zone and give it try.

[posted by Bill Henderson]

August 5, 2013 in Current events, Fun and Learning in the classroom, New and Noteworthy | Permalink | Comments (1)

Sunday, July 28, 2013

Child of "How Not to 'Retire and Teach'"

Posted by Jeff Lipshaw

UnknownIn my last post, I mentioned the update to Memo to Lawyers:  How Not to Unknown-1 "Retire and Teach."  That was a short essay I wrote in 2006 and 2007 about the odd experience of being somebody who practiced for twenty-six years and only then set out to join a law school faculty as a tenure track professor.

This summer I've been working on the look back - Version 1.0 predates the "Great Retrenchment. I've reflected on that change as well as examples of my earlier naivete or "I didn't know what I didn't know" in "Retire and Teach" Six Years On, a draft of which is now up on SSRN.  Here's the abstract:

This is a follow up to a 2007 essay I wrote about what it might take for a well-seasoned practitioner to join a law school faculty as a tenure track professor. Having now wended my way up (or down) that track for six years plus, my intended audience this time includes the original one, those seasoned veterans of the law practice trenches who may think but should never utter out loud the words “I would like to retire and teach,” but now also my colleagues in academia who are facing what looks to be the greatest reshuffling of the system in our generation. Much of what I said in the earlier essay still holds. This essay, however, includes (a) a more nuanced look at the strange hybrid creature that is the scholarly output of academic lawyers; (b) a more respectful appreciation of what it takes to become a good teacher, with some notes about what worked for me, and (c) an attempt to reconcile the interests in scholarship and the interest in teaching after the “Great Retrenchment” of the legal profession and legal education, with some brief thoughts about the opportunities that may bring for the aging but not ossifying academic aspirant.

I suppose I ought to dedicate it to the Chief Justice because it gave me a chance to talk about the influence of Immanuel Kant on evidentiary approaches in 18th century Bulgaria.

Photo credit (John Roberts):  newyorker.com

July 28, 2013 | Permalink | Comments (1)

Wednesday, July 24, 2013

The $1,000,000 Law Degree Kerfuffle: Getting in Touch With My Inner Kahneman

Posted by Jeff Lipshaw 

ValuefunUntil the phrase "$1,000,000 law degree" started filling my RSS feeds, I had paid about as much attention to the issue as I did to the Royal Baby (which, by the way, a new study will show shortly has a .00000000112% chance of being named "Jeff" but is twice as likely as that to be named "Geoff").

Something Brian Tamahana wrote in his most recent post caught my attention, however, so I went back and skimmed Mike Simkovic's paper just to confirm what I'm about to observe.  Brian asked in so many words, knowing this data, even if accurate, would you advise somebody to go to law school?

Funny, because I have two children in their mid- to late twenties, both of whom are in the midst of making a job or career change.  I occasionally joke about their going to law school.  (The older one had any desire to be a lawyer whipped out of her by way of the year she spent as the typical "just out of Ivy League school - going to go to law school next" litigation paralegal in a mega-mega NYC based firm that will remain unnamed.)  I think I said, "Only go if you go to Harvard, Stanford, or Yale."  That reflects mostly elitism and arrogance on my part, and not my inner Kahneman, which I've gotten in touch with, but unless I've missed something (let me know if I have) I don't see in the discussion that anybody has gotten in touch with theirs.

 The point is that even if we take all of Mike's data as saying what he purports it to say, it still doesn't say anything about how people look at the prospects of gain (income) and debt (loss).   I'm a skeptic about whether understanding prospect theory actually helps you make a decision (i.e., if I understand my own heuristics, will that counter the bias and cause me to calculate my expected utility - I don't think so), but I don't think you can debate this issue with at least acknowledging that people don't make decisions involving prospective risk or loss by stepping back and viewing the final outcome - the expected utility - over their entire lives.

I will let others, if they want, spend more time explaining the relevance of the above graph to the issue, but it has to do with how being risk-adverse or risk-seeking affects your decision depending on whether you are faced with high probabilities of losses relative to gains, or high probabilities of gains relative to losses.  (The exercise I do every year with my students is take a secret ballot vote on whether they would prefer $1,000 in cash or a one in ten chance of $10,000 at the end of class - risk aversion being such that invariably close to 100% chose the former even though the expected utility is exactly the same.)

I've been noodling around with my update to How Not to "Retire and Teach," and have been thinking the odd hybrid of explanation and advocacy that arises when lawyers argue either about what is or what should be.  The fancy phrase is that all knowledge beyond pure perception is theory-laden; the equivalent is "lies, damned lies, and statistics."

July 24, 2013 | Permalink | Comments (3)

Tuesday, July 23, 2013

Me on Gilson and Ribstein

Posted by Jeff Lipshaw

Images-1Earlier this summer, I posted elsewhere about two of my summer projects, writing essays for symposia this coming academic year (1) at Illinois in October honoring the memory of Larry Ribstein (left), and (2) at AALS in January commemorating the 30th anniversary of Ron Gilson's (right) publication of his iconic Value Creation by Business Lawyers article in the Yale Unknown Law Journal. I've finished readable (I think) drafts of both, and have posted them on SSRN.  What inspired my particular spin in both essays was physicist Lee Smolin's new book, Time Reborn, in which he criticizes the aspect of timelessness in the mathematical models that physicists use.  Both Gilson and Ribstein based much of their work on transaction cost economics.  I perceived similar issues of timelessness both in what transactional lawyers see themselves doing, and how law professors go about describing it in economic models. 

The piece about Value Creation is entitled What Is It Like to Be a Beetle?:  The Timelessness Problem in Gilson's Value Creation Thesis.  Here is the abstract:

This is a contribution to the 2014 mini-symposium honoring the thirtieth anniversary of the publication of Ronald Gilson’s seminal article Value Creation by Business Lawyers. In it, he coined two powerful metaphors: that of lawyers as "transaction cost engineers" and as beetles studied by their entomologist brethren in the legal academy. As a former lawyer-beetle and a current academic-entomologist, I am quite sure that the transaction cost economics he used to explain why business lawyers stay in business missed something important about the subjective and real world experience of being a lawyer-beetle. In this essay, I (a) summarize two different but significantly related critiques of theory, (i) the physicist Lee Smolin’s powerful argument for the unreality and therefore timelessness of algorithmic models of the universe – i.e., why physics as generally practiced is "physics in a box," and (ii) the philosopher Alasdair MacIntyre’s controversial argument for the unreality of modern conceptions of utility, rights, and efficiency, (b) borrow from both critiques in order to understand the difficulties in transposing timeless economic and legal conceptions ("utility" and "rights," respectively) to real transactions that occur in real time, (c) criticize the tendency of the legal profession, in both the academic and practicing arms, to teach and practice a scientific "law in a box," and (d) suggest a vision of what it means for a wise business lawyer not to be so constrained.

The piece for the Ribstein conference is entitled Trust and Law (In a Box):  Do Organizational Forms Make a Difference?  Here is the abstract:

In this contribution to the University of Illinois College of Law’s 2013 Larry Ribstein Memorial Symposium, I assess Professor Ribstein’s approach to both to trust and the “uncorporation.” My thesis is that his disciplinary commitment to a transaction cost economics model resulted in an overstatement of the extent to which business association forms matter in the real world. In contrast to Professor Ribstein’s view that mandatory law (which includes corporate law) “crowds out” trust (implicitly making uncorporations more amenable to trust), I see the orderliness of modern and abstract business structures (of any kind) as distinct from, yet operating at the same time and in the same space as, the usual gamut, for better or worse, of human emotions. Even if, as a matter of economic theory, uncorporations do a better job of corporations in permitting owners to control manager agency costs, the theory leaves out (for otherwise good reasons inherent in doing any kind of rigorous science) virtues like trust and vices like greed, fear, panic, all of which seem just as likely to operate in the uncorporate as the corporate setting.

July 23, 2013 | Permalink | Comments (0)

Wednesday, July 3, 2013

Conditional Scholarships and Scholarship Retention for 2011-12

             As a result of the ABA’s revisions to Standard 509, Consumer Information, there is now a much greater universe of publicly available information about law school scholarship programs, specifically conditional scholarship programs and scholarship retention.  Based on a review of law school websites conducted between March 19 and May 29, 2013, I have compiled a complete list of schools with conditional scholarship programs, with only one-year scholarships, with good standing (or guaranteed) scholarships and with only need-based scholarships. 

            The availability of this data now gives each admitted scholarship recipient some meaningful basis for assessing the likelihood that any given scholarship will be renewed.   (That said, within a given cohort of conditional scholarship recipients at a given school, those at the top end of the entering class profile likely retain their scholarships at a higher percentage than reflected in the law school's overall data while those further down the class profile likely retain their scholarships at a lower percentage than reflected in the law school's overall data.)

            What do we know about the conditional scholarship programs in place for students entering law school in 2011-12?  There were 140 schools with conditional scholarship programs.  The average retention rate across all law schools was 69%.  In total, 12,735 students who entered law school in the fall of 2011 and continued into their second year of law school at the same school entered with conditional scholarships and 4,387 students lost those scholarships, a retention rate across individual students of 66%. Across the 194 law schools on which I compiled data, the Fall 2011 entering first-year class totaled 46,233, so roughly 27.5% of the students in the Fall 2011 entering first-year class were on conditional scholarships and roughly 9.5% of the students in the Fall 2011 entering first-year class failed to retain their conditional scholarship as they moved into the second year of law school.

            The distribution of scholarship retention rates by deciles across all 140 schools reporting conditional scholarship programs is set forth in Table 1.  Table 1 shows the largest number of law schools grouped around the overall average retention rate, with 30 law schools in the 60-69% range and 24 law schools in the 70-79% range; nearly 40 percent of law schools with conditional scholarships fall in these two ranges.  Interestingly, the decile range of 90% or better is the second largest decile range, with 26 law schools (nearly half of which are ranked 50 or better in the USNEWS ranking).  Notably, 23 law schools had scholarship retention rates of less than 50%.

 Table 1: Number of Law Schools Reporting Retention Rates by Decile Range 

Retention Rate

Number

Brief Description

Less than 40%

8

Four of the eight were law schools ranked alphabetically

40-49%

15

Eight of the 15 were law schools ranked between 50 and 99

50-59%

20

16 of the 20 were law schools ranked 100 or lower, while only two were in the top 50

60-69%

30

23 of the 30 were law schools ranked 100 or lower, while only one was in the top 50

70-79%

24

13 of the 24 were law schools ranked in the top 100, but only three of those were in the top 50

80-90%

17

12 of the 17 were law schools ranked between 50 and 145

90% or better

26

12 of the 26 were law schools ranked in the top 50

             As shown in Table 2, law schools ranked in the top-50 in the U.S.News 2012 Rankings had the smallest percentage of law schools with conditional scholarship programs, with only 20 law schools – 40% -- having conditional scholarship programs, directly impacting only 1,674 students who had conditional scholarships (12.8% of the 13,109 first-year students at these law schools) and only 192 who failed to retain their scholarships (11.5% of the 1674 conditional scholarship recipients and only 1.5% of the 13,109 first year students).   By contrast, across the balance of law schools, over 80% of the law schools had conditional scholarships with 11,061 of the 33,124 first-year students (33.4%) having conditional scholarships and 4,195 (37.9% of those on scholarship and 12.7% of first-years at the balance of law schools) losing their scholarships after their first-year of law school.

 Table 2: Number and Percentage of First-Year Students in 2011 Having Conditional Scholarships and Losing Conditional Scholarships by US News Rankings Categories 

 

Top 50 Law Schools

Law Schools Ranked 51-100

Law Schools Ranked 101-146

Law Schools Ranked Alphabetically

Total Number of Law Schools

50

50

46

48

Number (%) of Law Schools with Conditional Scholarship Programs

20 (40%)

40 (80%)

36 (78.3%)

43 (89.6%)

Total First-Years at These Law Schools

13,109

11,592

9,293

12,239

Number (%) of First-Years with Conditional Scholarships

1,674 (12.8% of all first-year students in top-50 schools)

4,176 (36% of all first-year students in schools 51-100)

2,754 (29.6% of all first-year students in schools 101-145)

4,131 (33.6% of all first-year students at alphabetically-ranked schools)

Number (%) of Conditional Scholarship Recipients NOT Retaining Scholarships

192 (11.5% of conditional scholarship recipients and 1.5% of first-years)

1,454 (34.8% of conditional scholarship recipients and 12.5% of first-years)

1,044 (37.9% of conditional scholarship recipients and 11.2% of first-years)

1,697 (41% of conditional scholarship recipients and 13.7% of first-years)

            A number of law schools switched to non-conditional scholarship programs for 2012-13 or will be switching to non-conditional scholarship programs for the 2013-14 academic year. As a result, for the 2013-14 academic year, there will be 131 law schools with conditional scholarship programs, five law schools with non-renewable one-year scholarships, four that only offer need-based scholarships, and 54 law schools with good standing (or guaranteed) scholarships.  Of the 194 schools on which I was gathering information, therefore, as of the 2013-14 academic year, 70% will have conditional or one-year scholarship programs (136/194), while nearly 28% will have good standing (or guaranteed) scholarships (54/194), with 2% (4/194) having only need based scholarship assistance. (Note that some law schools with conditional scholarship programs also offer some scholarships on a non-conditional basis and/or offer some need-based assistance.)

            Those who might be interested in a more detailed analysis of conditional scholarship programs, may want to look at the draft article I have posted on SSRN – Better Understanding the Scope of Conditional Scholarship Programs in American Law Schools

[posted by Jerry Organ]

July 3, 2013 in Data on legal education, New and Noteworthy, Scholarship on legal education | Permalink | Comments (0)

Sunday, June 30, 2013

The Competition is for Full-Time, Professional Law-Related Jobs, Part II

As noted in Part I of this post, the competitive dynamics among law schools are about to change due to a combination of two factors: (1) the ABA's collection and publication more granular data on school-level employment outcomes, and (2) the decision by U.S. News to make JD Bar Passage Required and JD Advantaged the primary measures for the employed-at-9-months input to its rankngs formula.

The histogram below reveals a near perfect bell curve for this revamped US News input [click on to enlarge].  This is a huge change from prior years when schools were all bunched at the 95% level because employment of any kind was all that mattered.  Under the old methodology, any law school that limited itself to full-time, professional law-related jobs would have plummeted in the rankings 10 to 50 spots. 

USNewsjobsinput2013
Because spring 2013 was the first year with the new methodology, the impact of the change is not well understood.  The most stark fact of the new environment is that the full-time, professional law-related jobs are in short supply.  Among the class of 2011 (the stats used for the 2013 rankings), this desirable outcome was achieved by only 63.0% of graduates.  When we subtract out full-time, long-term law-related professional jobs funded by law schools -- a luxury that only a small number of mostly first-tier law schools can afford -- the total drops to 61.9%.

Digging deeper, some other significant patterns emerge. 

800px-California_in_United_States.svgRegional labor markets really matter

The vast majority of law schools feed into the regional labor markets where they are located.  In places like California, those markets are saturated. 

Among the ABA-accredited law schools in California, 46.5% of the class of 2011 obtained full-time JD Bar Passage Required jobs. The comparable figure for the remaining ABA-accredited law schools was 56.0%.  Likewise, there is also a disparity for JD Advantage jobs: 6.2% in California versus 8.3% for schools in all other states.  In fact, among the 19 ranked California law schools, only four -- Stanford, UC Berkeley, USC, UCLA -- are above the 63.0% average for full-time, professional law-related jobs.

Based on these data, it should come as no suprise that no law school located in California went up in the 2013 U.S. News rankings. Stanford, USC, and Santa Clara hung onto their ranking, but 11 California law schools dropped, with an average decline of 11 spots.  Five other Calfornia schools remained in the unranked fourth-tier category. 

In contrast, some of the biggest winners in the methodology change were flagship public law schools that are relatively big fish in smaller regional markets.  Students at these schools tend to stay in-state and get JD Bar Passage Required jobs at rates far higher than the 54.9% average for the class of 2011 average. 

Below are the top 15 non-national public law schools based on the proportion of FT Bar Passage Required jobs. 

Barpassagejobs

Between 2012 and 2013, the average rankings gain for the above schools was +9 spots.  Among this group, the only school to go down in the rankings was ASU Law (-3).  And that decline was largely due to the fact that ASU reported a 98% employed-at-nine-months figure for the class of 2010--a figure that drew suggestions of aggressive gaming.  See Brian Tamanaha, When True Numbers Mislead, Balkanization, April 2, 2012.

The heavier weighting for JD Bar Passage Required jobs also benefits a handful of lower-ranked private law schools that are practice-oriented and tend to feed smaller firms within their regional areas.

  • Campbell (71.4% FT bar passage jobs) went from unranked to #126. 
  • South Texas (64.4% FT bar passage jobs) went from unranked to #144
  • St. Mary's (78.3% FT bar passage jobs) went from unranked to #140.

Part-Time Law Schools Dominate JD Advantaged Jobs

JD Advantaged Jobs count the same as JD Bar Passage Required Jobs.  But what, exactly, is included in this category?  According to the ABA,

A position in this category is one for which the employer sought an individual with a J.D., and perhaps even required a J.D., or for which the J.D. provided a demonstrable advantage in obtaining or performing the job, but which does not itself require bar passage or an active law license or involve practicing law. 

See ABA Class of 2012 (definitions).  Many professionals enroll in law school on a part-time basis to improve their career prospects.  It should be no surprise, then, that schools with part-time programs tend to be the largest producers of graduates with full-time JD Advantage jobs.  In many cases, it is the full-time job that the student held during law school -- and presumably retains upon graduation -- that confers the advantage. 

Of the top 10 schools based on the percentage of JD Advantage law school jobs, eight had part-time programs and the other two were located in a state capital, which tends to increase the number of opportunities related to government and public policy.

JDadvantagePTFT

The schools listed above gained an average of 3.5 spots in the rankings, albeit the average is pulled down by the inclusion of Southwestern, which had to weather the brutal California legal market. 

It is worth noting that the percentage of JD Advantage jobs is negatively correlated with the percentage of JD Bar Passage Required Jobs (-.33) .The table below summarizes the differences between schools with Part-time versus Full-Time only programs.

Parttimecomparison

The higher percentage of JD Advantage jobs (10.1% versus 6.9%) for schools with part-time programs is unlikely the results of chance, as the differences in means are statistically signficant at p < .001.  But what does this inverse relationship mean?

Part-time programs tend to be affiliated with lower ranked law schools, which in turn would produce a lower average percentage of JD Bar Passage Required jobs.  Yet, part-time programs are also in larger, urban locations.  Thus, in addition to the continued employment of part-time students with their current employers, the sheer proximity to large, specialized regional economies probably increases the proportion of JD Advantage jobs.  Indeed, any school in an large metro area would be foolish to ignore the human capital needs of non-legal employers, as knowledge of the law is very helpful in navigating through an ever more complex, regulated, and interconnected world.

What is the Best Strategy for Maximizing Full-Time, Professional Law-Related Jobs?

Largely through happenstance, the ABA and U.S. News have created an environment where law schools have to ask this basic but very important question.  Part-time jobs will no longer cut it.  And few law schools have the cash to hire their own grads full-time for a year past graduation -- and if they do, there are probably better uses for the millions of dollars needed annually to prop up a school's ranking.

The new gold standard employment outcome is full-time, long-term professional law-related jobs. The issue of how to maximize this outcome is so pressing and intricate that it may warrant trade-offs in the admissions process, favoring students will lower credentials but more rock-solid employment prospects on the backend at graduation.  This is the topic I will take up in Part III. 

Part I

[posted by Bill Henderson]

June 30, 2013 in Blog posts worth reading, Data on legal education, Innovations in legal education, New and Noteworthy, Structural change | Permalink | Comments (8)

Friday, June 28, 2013

The Competition is for Full-Time, Professional Law-Related Jobs, Part I

NALP recently released the employment outcome data for the class of 2012.  The good news is that the absolute number of JD Bar Passage Required jobs went up from the prior year.  The bad news is that a significantly larger class of entry-level lawyers were competing for those jobs.  The class of 2011 totaled 41,623, versus 44,339 in 2012 (+2,716, or +6.5%).  And note, the class of 2013 is likely to be even bigger -- roughly +1.6% based on the size of the entering 1L classes in the fall of 2010 (see ABA enrollment data).

Setting aside the year-over-year flucuations, the trendlines suggest a relatively large and persistent shortfall in the number of full-time, professional law-related jobs.  I assembled the graph below from NALP data [click on to enlarge].

NALP 2007 to 2012 breakdown

[Methodological notes:  NALP used the JD-Preferred category until the class of 2011, when NALP and the ABA collaborated on the creation of the JD Advantage category.  According to NALP, the jobs in the two categories are "largely the same."  See NALP, Detailed Analysis of JD Advantage Jobs (April 2013).  The figures for 2012 are estimates of full-time employment calculated from (a) NALP's just released figures for 2012 class size and the percentage breakdowns by job category, and (b) the percentage breakdowns of full-time versus part-time from the prior year, which also relied on the new JD Advantage definition. In short, basic algebra.]

A reasonable expectation of a 3-year, $100,000+ financial commitment is that nine months after graduation, the entry-level lawyer has secured a full-time professional job. See Legal Whiteboard, June 26, 2007.  Those outcomes are reflected in the blue-red-green bars above.  Since 2007 (the first year that NALP collected data on full-time versus part-time employment), the percentage of jobs fitting these criteria has fallen from 85.0% to 73.9%.  So the overall size of the purple bar -- part-time jobs, nonprofessional, unemployment, etc. -- has grown from 15% to 26.1%.  

Unfortunately, the pain does not end there.  With a limited pool of  full-time professional jobs and the number of graduates trending upward, the law of supply and demand kicks in.  Consider this arc of median entry-level salaries of employed graduates: $65,748 for class of 2007, $72,000 for 2008, $72,000 for 2009, $63,000 for 2010, $60,000 for 2011, $61,245 for $2008.  So, in short, the odds of landing a full-time professional job have gone down, and so has the starting pay.  Yet, tuition and student debt continue to edge up.  These unsustainable trends have made law schools fair game for criticism by the media and law student bloggers.

That said, a market correction is clearly underway.   A considerable number of prospective law students are deciding (rationally) not to apply to law school -- from 98,700 when the class of 2007 enrolled in the fall of 2004 to an estimated 58,424 for the fall of 2013.  Likewise, law schools, to the extent they can afford it, are enrolling fewer students.   From the high water mark in the fall of 2010 (49,700), law schools only enrolled 41,400 1Ls in the fall of 2012, and the numbers are sure to be even lower this fall.  See Jerry Organ's estimates, Legal Whiteboard, May 20, 2013.  To weather this storm, law schools are running significant deficits or drawing down their endowments.

So, can we conclude that the market correction will be complete when the relatively small class of 2017 enters the job market four years from now?  I certainly think the smaller number of graduates will help.  But I would argue that two things have fundamentally changed:

1. Revenues versus credentials.  Law schools are struggling with the need to balance their desire to hang onto respectable LSAT/UGPA medians with a need to generate sufficient revenue to cover their operating costs.  If a law school favors revenues this year, its US News rankings could drop, affecting its applicant pool in future years.  On the other hand, the combination of shrinking 1L classes and lavish scholarships -- a strategy being pursued by dozens of law schools -- is unsustainable over the medium to long term.  A decision to enroll fewer students this year is a three-year commitment to lower revenue.  If the smaller entering class is repeated next fall, the budget pain doubles.  Do it three years running, and the revenue shortfall triples.  Many law schools are not trying to outrun the bear; they are trying to outrun other law schools in their regional market. Some law schools may not make it out of this trough.

2. Competition over full-time, professional law-related jobs. If there is one silver lining that has emerged from this troubled period in U.S. legal education, it is the willingness of the ABA to collect and publish more granular employment outcome data at the law school level.  In turn, U.S. News has incorporated these data into its rankings formula.  Instead of propping up our rankings by hiring our own students or benefiting when they got jobs nine months out working as a retail manager or a cab driver, under the new 2013 U.S. News rankings formula, only full-time, long-term jobs that are JD Bar Passage Required or JD Advantaged are given "full weight." 

It is this second point that is going to push change in how law schools do business--we now have an employment outcome in which the ranking payoff is now fully in allignment with what law students want--full-time, professional law-related jobs.

Specifically, the employed-at-nine-months input to the U.S. News rankings formula is currently given 14% weight.  According to the U.S. News law school rankings methodology, the magazine is weighting 22 of the 35 employment outcomes collected and published by the ABA.  Among these 22 factors, we don't know the internal weighting.  What we do know based on the "full weight" given to JD Bar Passage Required and JD Advantage jobs, is that the highest employed-at-nine-month scores will go to law schools with the highest percentages in these two categories. This is a completely new world for law schools -- one that incentivizes what law students care about when they make the decision to enroll.

Part II to follow ...

[Posted by Bill Henderson]

June 28, 2013 in Data on legal education, Innovations in legal education, New and Noteworthy, Structural change | Permalink | Comments (1)