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)

Thursday, June 13, 2013

"There's A Lot of Money in that White Powder" - Telemarketing Edition

Posted by Jeff Lipshaw (cross-posted at PrawfsBlawg)

  UnknownThose were Sonny's words when the Don asked his view of the narcotics proposal Virgil Sollozzo was bringing to the Corleone Family.  The estimable Tom Hagen was more fulsome in his assessment:

Well, I say yes. There's more money potential in narcotics than anything else we're looking at. Now if we don't get into it, somebody else will. Maybe one of the Five Families, maybe all of them. Now with the money they earn, they can buy more police and political power; then they come after us. Now we have the unions, we have the gambling; an' they're the best things to have. But narcotics is a thing of the future. An' if we don't get a piece of that action, we risk everything we have -- I mean not now, but ah ten years from now.
There are many of us who believe that The Godfather is an inexhaustible source of appropriate metaphor, and this morning I apply it to a telephone marketing scheme from what you would think was an otherwise reputable company.   And with a certain humility given the number of decisions like this in which I was involved in my corporate career (one only hopes for the better - i.e. "there but for the grace of God go I"), I'm prepared to pass judgment on this one below the break.

Continue reading

June 13, 2013 | Permalink | Comments (0)

Wednesday, June 5, 2013

Empirical Evidence of Competencies Necessary for Advancement in Law Firms

For those trying to better understand how legal education can better prepare law students for the world that awaits them, I would encourage you to take a look at the draft article my colleague, Neil Hamilton, Director of the Holloran Center for Ethical Leadership in the Professions at the University of St. Thomas School of Law, recently posted on SSRN. The article is entitled Law-Firm Competency Models and Student Professional Success: Building on a Foundation of Professional Formation/Professionalism. Here is some of the description from the abstract:

A law student who understands legal employer competency models can differentiate him or herself from other graduates by using the three years of law school to develop (and to create supporting evidence to demonstrate) specific competencies beyond just knowledge of doctrinal law, legal analysis, and some written and oral communication skills. . . .

In Part I below, this essay analyzes all available empirical research on the values, virtues, capacities and skills in law firm competency models that define the competencies of the most effective and successful lawyers. Part II examines empirical evidence on the competencies that clients evaluate. Part III evaluates the competencies that make the most difference in fast-track associate and partnership promotions. These data and analyses lead to several bold propositions developed in Part IV:

1. Law students and legal educators should identify and understand the values, virtues, capacities and skills (the competencies) of highly effective and successful lawyers in different types of practice (one major example is law firm competency models analyzed below in Part I);

2. Each student should use all three years of experiences both inside and outside of law school (including the required and elective curriculum, extracurricular activities, and paid or pro bono work experiences) to develop and be able to demonstrate evidence of the competencies that legal employers and clients want in the student’s area of employment interest;

3. Law schools should develop a competency-based curriculum that helps each student develop and be able to demonstrate the competencies that legal employers and clients want; and

4. Both law students and law schools should understand that the values, virtues, capacities and skills of professional formation (professionalism) are the foundation for excellence at all of the competencies of an effective and successful lawyer.

The article presents far more useful information than can be summarized here, and different readers may be struck by different things discussed in the article. One of the most significant takeaways for me, however, is the convergence around an array of competencies frequently not taught in law school. The article analyzes competency models used to assess associate development at 14 medium to large law firms in the Twin Cities and compares that with some other literature on competencies clients look for in attorneys. The analysis demonstrates that in addition to traditionally understood technical skills – legal analysis, oral and written communication, and knowledge of the law – there is significant convergence around several competencies frequently not taught in law school – 1) Ability to initiate and maintain strong work and team relationships; 2) Good judgment/common sense/problem-solving; 3) Business development/marketing/client retention; 4) Project management including high quality, efficiency, and timeliness; 5) Dedication to client service/responsive to client; and 6) Initiative/ambition/drive/strong work ethic.

Whether law schools are going to be able to find efficient ways to offer students opportunities to develop these competencies, it is imperative that we make our students aware that they need to be developing these competencies to give themselves the greatest likelihood of professional success.

[posted by Jerry Organ]

June 5, 2013 in Data on legal education, Data on the profession, Important research, Innovations in legal education, Law Firms, Scholarship on legal education, Scholarship on the legal profession | Permalink | Comments (0)

Friday, May 31, 2013

A Summer Graduate School for E-Discovery

That's right, law students now have an opportunity to add hands-on e-discovery training to their skill set.  Surely, a first-of-its-kind program is being offered by one of the 200 ABA-accredited law schools struggling to adapt to a changing legal market, right?

Bryan-University-SealWell, actually, no.  It is being offered by Bryan University, which began life in 1940 in Los Angeles as a stenography school for court reporters.  It subsequently evolved into Bryan College, which offered associates degrees in various vocational tracks.  More recently, it has received accreditation as a university, with a masters degree in applied medical informatics and a cetificate program in e-discovery.  Both are offered exclusively online.

The e-discovey certificate program has some interesting features (press release here). 

  1. It's an actual graduate program.  Enrollment is limited to law students who have completed a course in civil procedure (so, functionally, 2Ls and 3Ls) or, at most, completed their JD studies in 2013. 
  2. It's real-world relevant.  The program is organized around the Electronic Discovery Reference Model (EDRM), which is a detailed yet evolving set of industry standards that flow from nearly a decade of meetings involving literally hundreds of major and minor players in the litigation industry -- law firms, tech start-ups, Fortune 500 companies, consultants, etc.  I have been at an EDRM meeting.  Just learning the arcane, technology language of this massive subfield could itself a big value-add for students. 
  3. Students learn how to use tools.  The program is an immersion experience in which students will learn how to use high-end software related to predictive coding and machine learning; after that, they move to human review using another industry software suite.  This event is supported by several legal vendors, mostly software providers, because they want their tools to become industry standards. Lexis and Westlaw used this same playbook 30 years ago.
  4. It's compact and efficient. The program meets online in real-time two hours a day, four days per week, for four weeks.  

The faculty is comprised of practitioners and technicians in the e-discovery business, not full-time law professors.  The tuition is $1,495 (very cheap if measured by contact hours), which can be paid online via credit card. Alas, May 30th was the last day of registration!

Signficance of the Bryan University program

Is the Bryan University e-discovery certificate program evidence of law's slide into vocationalism, or are 200+ ABA-accredited law schools missing the boat on the future of law?  This may frame a provocative debate among academics, but it gets us quickly onto the wrong track. 

Let's separate changes in the legal economy from debates over academic identity, which tend to arouse our emotions.  In other words, let's respond to these circumstances like level-headed lawyers and acknowledge the substantial evidence that the world of lawyering is changing in dramatic ways.  If this is true, by extension significant changes to legal education are likely on their way.

Exhibit #1

If we focus on facts, Exhibit #1 has to be access to justice.  Resolution of disputes through state and federal courts --the paradigmatic work of lawyers -- has become prohibitively expensive for the vast majority of U.S. citizens.  Further, it is now getting a too rich even for major corporations.  Part of the problem is proliferation of electronically stored information (ESI). Finding and analyzing the law, it turns out, is the easy part.  We teach that in law school.  But in this permanently digital world, facts never get lost.  Rather, they accumulate.  This creates large problems for litigants.

Instead of redesigning our judical system to deal with this challenge -- something a conservative legal profession is loath to do without a decade or two of deliberation -- we are now witnessing the rise of a massive industry of legal vendors trying to make electronic discovery more efficient. 

Exhibit #2

Exhibit #2 in our factfinding journey is that a huge proportion of these new legal vendors are owned and controlled by nonlawyers.  See Henderson, Losing the Law Business.  It turns out that the MR 5.4 ban on fee-splitting is, to a large extent, not much of a barrier at all.  Virtually everything up until the courthouse door or the client-counseling moment can be disaggregated and turned into a process or product delivered by a nonlawyer vendor adept at technology and systems engineering.  Because there is so much money to be made by the application of technology and process to legal problems, the nonlawyer genie is not going back into the bottle.  It is time to accept that fact.

Below is a chart I use in a lot of presentations to law schools and bar associations.

Legalindustry

The point of this chart is very simple.  A legal services industry has arisen around the traditional legal profession.  Now, increasingly, the word "service" is falling out because products and mechanized processes are taking their place, driving up quality, and driving down cost and cycle time. Society wins.  Lawyers adapt.

So, at a practical level, what does all of this mean?

Let's start with the good news.  Law is not going away.  In a highly interconnected, complex globalized world, law is actually becoming more important. 

But here is the realistic inner lining.  Law is also suffering from a productivity imperative.  The average citizen -- including the typical lawyer -- can't afford to engage the services of an artisan lawyer. And large firms filled with high-priced artisan lawyers are becoming a less attractive option for even large corporations.  They want better, faster, and cheaper legal solutions.

So, for law professors anyway, here is the bad news: Training artisan lawyers -- what U.S. law schools do -- is indeed a mature industry.   The U.S. economy can't fully absorp 45,000 law graduates per year, at least not doing traditional artisan-type legal work.  So, if we want reliable employer demand for our graduates, some retooling needs to take place.  Is the retooling process hard and complicated?  Absolutely.  Does this type of change occur in other industries?  Yes, as reliably as the sun rising in the east.  Now is our turn. 

How do we retool?

CheeseThe most difficult hurdle is just accepting the need to change.  It's purely an emotional obstacle.  The cheese has been moved.  It's gone.  It will not reappear. We need to find new cheese.  Not familar with the reference?  See Who Moved my Cheese.

The next step is just showing up to industry events and accepting the fact that we are not the smartest person in the room, at least when it comes to intersection of technology, process design, project management, knowledge management, big data analytics, machine learning, and modern law practice, etc.  Instead, it is time to just soak and poke.  Practically speaking, this means listening to others and trying to decipher patterns that simplify and unify what we are observing. 

Third, with the help of some adjuncts we deputize along the way (both lawyers and nonlawyers), we design and offer some new courses that capture these new realities.  Fumbling through a very crude version of this methodology, I taught project management back in 2010.  Not only was it a lot of fun, I learned new skills, both as a problem solver and as a teacher, made dozens of industry connections that opened doors for my students, and obtained a more realistic view of the legal profession.  In short, it changed my life -- for the better.  

Fourth, a subset of the legal academy needs to really dive into the topic of institutional design.  The rise of the e-discovery business is entirely a artifact of how our legal system is structured.  Perhaps it is time to think about better ways to resolve disputes and facilitate transactions.  See, e.g., Disputes in the credit care industry.  To me, law schools are the exact right places to think about, and wrestle with, these critically important issues.  These are mountains just waiting to be climbed by the next iteration of law schools and law professors.

Fifth, with some smaller victories under our belts, we need to collaborate with colleagues to begin the messy process of organizing our new insights into a coherent curriculum that produces graduates with the most valuable skills sets in the shortest supply.  With a world ramping up in complexity, I doubt these will be vocational skills.  That said, we are probably a decade or two away from a more settled law school curriculum.   But we will get there, and when we do, we will be incredibly proud of what we have accomplished.

[posted by Bill Henderson]

May 31, 2013 in Blog posts worth reading, Cross industry comparisons, Current events, New and Noteworthy, Structural change | Permalink | Comments (2)

Thursday, May 30, 2013

PROJECTIONS FOR LAW SCHOOL ENROLLMENTS AND PROFILES FOR FALL 2013

APPLICANTS -- In my November blog posting, I noted that for the three-year period from 2010-2012, the number of applicants in each admissions cycle represented an average of 92.9% of the tests administered in June/October.  There were 63,003 June/October test-takers in 2012.  I noted that if this admissions cycle results in 92.9% of June/October test-takers turning into applicants, law schools could anticipate there being roughly 58,530 applicants to law schools for fall 2013.

In January, that estimate seemed like it might be high, as LSAC projections were running more in the 53,000 to 54,000 range.  LSAC’s January 25, 2013 Current Volume Summary showed 30,098 applicants at a point in the previous year when the applicant total represented 56% of the preliminary final applicant count.  That projected to an applicant total of roughly 53,750.  But the most recent LSAC Current Volume Summary dated May 17, 2013, shows 55,764 applicants, at a time in the cycle which last year represented 95% of the preliminary final applicant count.  That means there has been an increase in applicants in recent weeks compared to the same period last year.  If the present count truly represents 95% of likely applicants, we can expect roughly 58,700 applicants for fall 2013.  If late applications continue to come in at numbers higher than last year, this number could go even higher.  For purposes of these projections, however, I will assume 58,700 applicants.

ADMITTED APPLICANTS -- Of the projected 58,700 applicants for fall 2013, how many will be admitted?  Notably, the LSAC Volume Summary shows that from 2003-2011, law schools never admitted fewer than 55,500 applicants, but also never admitted more than 71% of applicants.  The LSAC has not posted the 2012 numbers, but it is likely that law schools only admitted approximately 52,000 of the 68,000 applicants, the smallest number in over a decade, but with the highest admit rate in over a decade -- an estimated admit rate of over 76%.  (For the period from 2003-2011, an average of roughly 82% of admitted students became LSAC matriculants.  If we assume enrollment declined 8% from fall 2011, that would result in roughly 42,500 LSAC matriculants in fall 2012.   One reasonably could project that roughly 52,000 applicants were admitted to generate those 42,500 LSAC matriculants.)

What will the admit number and rate be for fall 2013?  That is a great mystery.  Even as many law schools move closer to open enrollment, the reality is that some percentage of applicants is truly inadmissible – with significant character and fitness issues and/or LSAT/GPA profiles that are just too low to believe the applicant can be successful in law school and on the bar exam.  Perhaps 3% of applicants have significant character and fitness issues (between 2008 and 2011, at least 3% of applicants with an LSAT of 170 or higher were not admitted).  In addition, several thousand applicants have an LSAT below 145, many with GPAs that are less than 3.0, resulting in indices that should be problematic for most law school admissions offices that are attentive to whether applicants can be successful in law school and on the bar exam.

If we assume that collectively law schools will find 10,000 applicants to be truly inadmissible, that would leave 48,700 applicants that might be admissible.  Assuming everyone who is admissible is admitted somewhere, that would be a national admit rate of 83%.  But what if the number of truly inadmissible applicants is more like 12,000?  That means there would be only 46,700 applicants that might be admissible.  Assuming everyone is admitted, that would be a national admit rate of just under 80%. 

MATRICULANTS – As noted above, the average rate at which admitted students became LSAC matriculants between 2003 and 2011 was roughly 82%.  If the admit-to-matriculant rate remains at 82% for fall 2013, then the 48,700 likely admitted applicants would translate into roughly 39,900 first-year students.  If there were only 46,700 admitted students, with an admit-to-matriculant rate of 82%, then one could expect roughly 38,300 first-year students.  If the assumptions about the numbers of admitted students set forth above are accurate, and if the assumption that the admit-to-matriculant rate remains at 82% remains is accurate, law schools should expect somewhere between 38,300 and 39,900 first-year students to enroll this fall, an enrollment decline of roughly 6-10% from the estimated 42,500 LSAC matriculants in fall 2012 noted above.

UNEVEN REDUCTIONS IN ENROLLMENT – The law schools ranked in the top 15 only saw an average decline in enrollment of roughly 5% between 2010 and 2012, while the alphabetical list of law schools saw an average decline in enrollment of roughly 18%.  Law schools ranked 16-145 saw an average decline in enrollment of roughly 15% (14% for those 16-50, 15% for those 51-100, and 16% for those 101-145).  If the fall 2013 LSAC matriculant number declines by 2,600-4,200 from fall 2012, one could anticipate that the decline once again would impact the law schools ranked in the top-15 only slightly, but would significantly impact a number of law schools ranked between 16 and 145, and even moreso, those ranked alphabetically. 

Within each ranking category, however, there are likely to be some law schools hit harder than other law schools, as reflected in the information posted yesterday indicating that over 70 law schools saw first-year enrollment decline more than 20% between fall 2010 and fall 2012. 

Moreover, the fall 2013 admissions cycle is the first admissions cycle in which the ABA’s school-specific employment outcomes data will have been available for prospective law students to make meaningful school by school comparisons.  It also is the first admissions cycle in which law schools have had to publish scholarship retention information and include such information in scholarship award letters.  It will be very interesting to see the extent to which those law schools with relatively poor employment outcomes for the Class of 2011 and/or Class of 2012 suffer greater declines in enrollment or in LSAT/GPA profile.  It also will be very interesting to see the extent to which those law schools with relatively low scholarship retention rates suffer greater declines in enrollment or in LSAT/GPA profile.

FURTHER REDUCTIONS IN LSAT/GPA PROFILES – In November I noted that there are two competing tensions law schools must weigh in making admissions decisions in a declining market – revenue and profile. Some schools may have made conscious decisions in 2011 or 2012 to try to hold enrollment to generate revenue while taking a hit on profile or to take a hit on enrollment (and revenue) in an effort to hold profile, but as noted above, a significant number of law schools saw both a significant decline in enrollment (and revenue) AND a decline in profile.

Having taken hits on revenue over the last two years as a result of an overall 15% decline in first-year enrollment, with at least 73 law schools down more than 20% in enrollment, and facing a shrinking applicant pool again, many law schools are going to have to be focused largely on revenue, on simply trying to get as many students as possible in the door to minimize revenue shortfalls.  As a result, LSAT/GPA profiles are likely to take significant hits across the board.  (One exception might be Kansas, which recently announced that it likely will have only 120 students this fall and in the foreseeable future, down from a first-year class of 165 in 2010 (a decline of more than 27%), partly to right-size so that it can be more selective in the future.  (In shrinking from 165 to 141 between 2010 and 2012, Kansas gave up a point at each LSAT indicator, but gained slight ground on each GPA indicator.))

Even law schools ranked in the top-50 are going to have profile challenges.  In 2012 there likely were roughly 7800 first-year law students with LSATs of 165 or higher.  (In previous years, roughly 85% of the applicants with LSATs of 165 or higher became first-year students.  For fall 2012, there were roughly 9200 applicants with LSATs of 165 or higher, which would translate to roughly 7800 first-year students with LSATs of 165 or higher.)  Of the 7800 who likely became first-year students in fall 2012, I would estimate that roughly 6800 might have found their way into top-50 law schools (based on an analysis of LSAT profiles for top-50 law schools).  

Based on the current projections from LSAC for fall 2013, however, there likely will be only about 7600 applicants in the fall 2013 applicant pool with LSATs of 165 or higher, which might mean only about 6450 first-year students with LSATs of 165 or higher (if 85% become first-year students).  That means there just are not going to be enough high LSAT students for every top-50 law school to hold its 2012 profile, even with a decline in enrollment.  As these schools seek to fill their classes by taking applicants with slightly lower LSAT and GPA profiles, that is likely to have a cascading effect on profiles throughout the rankings. 

 When one looks more closely at the LSAC Current Volume Summary data, one discovers that  82% of the growth in applicants from January through May (21,041 of 25,666) has been from those applicants with LSATs below 160 and over 43% (11,124 of 25,666) has been from those applicants with LSATs below 150.   In 2012, over 44,000 applicants had LSAT scores of 150 or higher.  Present projections suggest that perhaps as few as 38,000-38,500 applicants will have LSAT scores of 150 or higher, some of whom will be inadmissible because of character and fitness issues or really low GPAs.

In yesterday’s blog posting, I noted the decline in average LSAT/GPA profile between 2010 and 2012 and noted that the number of law schools with a median LSAT in the 140s has more than doubled from 9 to 19 between 2010 and 2012.  There are 17 more law schools in the list of alphabetical law schools with median LSATs of 150 or 151 in fall 2012 who could also slide into the 140s.  It is possible that some law schools ranked 100-145 also will see their median LSAT slide to 149 or 148.

Fall 2013 is going to be another year in which many law schools see significant enrollment declines while most law schools see further declines in their LSAT and GPA profiles. This will be an admissions season in which “success” may be measured by not doing quite as poorly as others in terms of enrollment and profile.

And what about fall 2014?  That is an even greater mystery that will have law school admissions personnel and law school deans and university presidents thinking long and hard about budgetary realities.

May 30, 2013 | Permalink | Comments (0)

Wednesday, May 29, 2013

UPDATED UNOFFICIAL COMPARISON of 2010 and 2012 ENROLLMENT and PROFILE DATA AMONG LAW SCHOOLS

            There has been a bit of a flutter recently regarding law school admissions in light of data from the LSAC Current Volume Summary for May 17, 2013,  suggesting that the size of the applicant pool will be larger than earlier projections had suggested.  It appears that a larger number of applicants are showing up later in the application cycle than last year.  This has generated blog postings on TaxProf Blog, The Faculty Lounge and Lawyers, Guns & Money.  While I will be posting my projections for the fall 2013 entering class on this blog in the next couple of days, I first wanted to recap (to the extent available data allows) the situation in which law schools have found themselves as of the fall 2012 entering class.

            In November, I posted a preliminary, unofficial comparison of enrollment data for 140 law schools and profile data for 128 law schools that had such information posted on their websites as of November 15, 2012.  Now, several months later, I have an updated analysis based on enrollment data from 188 law schools and profile data from 173 law schools that had published on their websites sufficient profile data on which to make meaningful year-to-year comparisons as of May 28, 2013.  Please note that this data remains unofficial, having been taken from law school websites, not from any ABA publication.  When the ABA posts the digital version of the Official Guide in the coming weeks, I will be able to run an official comparison across all schools.

DECLINING ENROLLMENT – Between 2010 and 2012, 147 of the 188 law schools with available enrollment information (roughly 78%) had a decline in enrollment of at least 5%.  Of these 147 law schools down at least 5% in enrollment, nearly half – 73 --- were down 20% or more:

    -52 of the 188 law schools with available enrollment information (nearly 39%) had a decline in enrollment of between 20% and 30%.

    -21 of the 188 law schools with available enrollment information (roughly 11%) had a decline in enrollment of 30% or more, with 11 seeing a decline in enrollment between 30% and 40% and 10 seeing a decline in enrollment of more than 40%.

Notably, only 16 schools declined between 2% and 5%, only 16 schools were flat (a change between -2% and +2%) and only 9 schools had an increase in enrollment of at least 2%.  Across these 188 schools, first-year enrollment declined from 47854 in 2010, to 44141 in 2011, to 40297 in 2012, an overall decline of 7557 or 15.8% between 2010 and 2012.

DECLINING PROFILES -- Among the 173 law schools with complete profile information available for their fall 2012 entering first-year class, the average LSAT profile has declined over the last two years, from a 160.6/158.3/155.4 to 159.8/157.2/153.8.  The average GPA profile also has declined, from a 3.64/3.43/3.15 to 3.62/3.40/3.13.  In addition, the number of law schools with a median LSAT in the 140s has more than doubled from 9 to 19 between 2010 and 2012. 

DECLINING ENROLLMENT WITH DECLINING PROFILES – Perhaps most significantly, of the 73 law schools with declines in enrollment of 20% or more, 52 of those schools also saw a decline in their LSAT/GPA profiles between 2010 and 2012.  That means roughly 30% of law schools with available enrollment and profile information for 2012 (52/173) had declines in enrollment of 20% or more and saw their LSAT/GPA profile decline. Notably, seven of these 52 law schools were in the 2012 USNews top-50, 13 were ranked between 51-100, 13 were ranked between 101-145 and 19 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.

As noted above, I am planning on posting a projection on fall 2013 first-year enrollment in the coming days.  I also am planning on posting an analysis of scholarship retention information across all law schools sometime in the coming days.

[Jerry Organ]

May 29, 2013 in Data on legal education | Permalink | Comments (2)

A Serious Debate over the Problems Facing Law Schools

Matt Bodie has noted my recent article in the National Law Journal, "The Calculus of University Presidents," and written a response that says, essentially, I am pushing the envelope too far.  Matt cites a lot of shortcomings with my article.  I will limit my response to three points: 

  1. I was given a 1,000 words by the National Law Journal. So I am going to fail to address or consider a lot of relevant points, including many points cited by Matt.  Oh well.  See Parts II and II of my Blueprint of Change for a more serious treatment of this topic.
  2. I am closer to the financial conditions of law schools than most law school faculty, and the problems are indeed serious at many places.  The 15% application drop and a $1.5 million budget shortfall were made up for the purposes of the essay. These figures are not critera, or my criteria, for anything, including the closure of law schools.  That is all I am going to say about that.
  3. I have offered one possible response to the large scale structural change taking place -- I wrote it up in detail last fall because I felt it was irresponsible to write up the bleak news on law schools without offering at least one comprehensive action plan.  See Legal Whiteboard, January 18, 2013.  That's it.  Other ideas are welcomed.

I grew up in Cleveland, Ohio during the 60s, 70s, 80s and witnessed the slowness of the region to accept that its industrial glory days were behind it.  All people, including really smart people, have a hard time accepting large-scale institutional change--emotion obscures a reasoned analysis of the facts.  This is why Who Moved by Cheese, My Iceberg is Melting, and other change management classics are written as fables.  And yes, I see the same slowness to respond within the legal academy.  That slowness has costs. 

I am not the only academic who sees the world this way.  One prominent law school dean tells the same story--often publicly--of his years as a youth growing up in Rochester, NY, home of now-bankrupt Eastman Kodak.  The president of Eastman Kodak was on his paper route. When asked about the truthfulness of rumors that photographs could indeed be saved and displayed on a computer, the president brushed aside the question and instead waxed about the virtues of chemical film that built their bocolic neighborhood.

Truth be told, I probably did risk some reputational capital writing "The Calculus of University Presidents."  But I am deeply worried about the future of legal education, and using the history of other industries as a guide, we are likely to underestimate the realities of the emerging legal landscape.  See Richard Susskind, Tomorrow's Lawyers (discusing this future in intricate detail). So why not risk some of my reputational capital?  I will make some people, like Matt, angry, but I might spur others to actions sooner rather than later.  So be it.  The purpose of tenure is to facilitate these judgment calls.  I can live with that.

[posted by Bill Henderson]

May 29, 2013 in Current events, Structural change | Permalink | Comments (0)

Friday, May 24, 2013

University of Montana School of Law Dean Search

Professor Anthony Johnstone, a member of the Search Committee, sends along this announcement:

ImagesThe University of Montana invites applications and nominations for a Dean to lead its School of Law as it begins the second century of its distinguished history. Founded in 1912, the School of Law is an established leader in legal education, preparing students for serving people in the practice of law through effective integration of theory and practice. Beyond preparing students for practice, our curriculum emphasizes areas of law significant to the Rocky Mountain West including natural resource law, environmental law, and Indian law. At a challenging time for legal education, the success of Montana’s model in training and placing lawyers has earned it recognition as one of the best-value law schools in the nation. Montana is one of a handful of law schools to attract significantly more applicants this year than last.

The successful candidate must hold a Juris Doctor degree, or its equivalent, from an ABA-accredited law school, demonstrate the ability to lead the School of Law’s faculty, staff, and students, and have the following additional qualifications:
- Distinguished professional achievement in legal practice;
- Successful administrative experience, including personnel supervision and financial administration;
- Strong listening, communication, and consensus-building skills;
- A commitment to legal scholarship; and
- A commitment to diversity.

TO APPLY: Visit http://umjobs.silkroad.com/ to view full description and apply online. Candidates will be asked to upload: a statement of interest; a current resume or C.V.; and contact information for at least three professional references.   Review of applications will begin on August 1, 2013; application review will continue until the position is filled.

ADA/EOE/AA/Veteran's Preference Employer

Professor Johnstone adds:  "We are a small, agile school with a long tradition of innovation. We've also managed to provide quality, affordable legal education that employers appreciate. It includes a well-established curriculum that begins with an innovative skills-based law-firm program in the first year, continues with intensive trial and transactional simulation courses in the second year, and finishes with a required third-year clinical program offering professional placements at both in-house law clinics and government and public-interest law offices.

"We're thriving relative to most schools--at last count our applications are up 10.5% this year--but we want to continue to stay ahead of the curve!"

[Jeff Lipshaw]

May 24, 2013 | Permalink | Comments (0)

Monday, May 20, 2013

The Calculus of University Presidents

Money-bagsThis week's National Law Journal has a Special Report section on the challenges facing law schools.  Karen Sloan has several stories on how law schools are finding alternative sources of revenues beyond tuition dollars for JD degrees (masters's degrees for nonlawyers, online LLMs, and lawyer executive education).  

I contributed an essay entitled "The Calculus of University Presidents."  Although the essay is posed as the letter I would write to a university president seeking advice on how to handle a significant, unexpected shortfall in law school revenues, the intended audience is lawyers and legal educators seeking to get a handle on the brutal economics that are now threatening the survival of a large swath of law schools.  

From the perspective of many, it would be nice if things would go back to the way they used to be. But that is not going to happen.  Good lawyers understand that we gain no long-term advantage from hiding from these facts. Instead, we need to confront them honestly and proactively.

[posted by Bill Henderson]

May 20, 2013 in Blog posts worth reading, Current events, Data on legal education, Data on the profession, New and Noteworthy, Structural change | Permalink | Comments (2)

Saturday, April 27, 2013

Why to Believe in Others

Below is 1972 video of Viktor Frankel, a renowned psychologist and author best known for his book, Man's Search for Meaning.   Frankel's greatest accomplishment was becoming an unflinching realist and idealist -- a person who simultaneously sees what is and what could be.   To my mind, it would be impossible to get both concepts into proper focus without reading Frankel's book, which I found to be one of the most emotionally jarring and difficult, yet necessary and valuable, experiences of my life. If you are wondering how this could be, read the book.

In the rare footage below, Frankel explains how we harm the world by not hoping for and expecting the very best in others.  

I think the point Frankel makes here has special significance for educators. [posted by Bill Henderson]

April 27, 2013 in Current events, Video interviews | Permalink | Comments (3)

Friday, April 26, 2013

Is Law School Reform Going to Come Top Down or Bottom Up?

Earlier this week, I participated in the ABA Taskforce on the Future of Legal Education (see NLJ coverage here). Ordinarily when I am part of a deliberative meeting of a regulatory or accrediting body, I don't write about it, as it would be a breach of decorum and chill a candid exchange of views, at least prospectively.  But this event was different -- it was webcast live and internet archived, and thus a public meeting. See ABA website.

These programs are laudable and, from an institutional perspective, necessary.  But will an ABA taskforce, or AALS, LSAC, or some other industry group taskforce produce substantial change?  History suggests that the answer is no and that, instead, meaningful change will come from the bottom up rather than the top down.  Change will occur at the bottom from either the desire to survive or the opportunity to do something great.  Other similarly situated institutions that feel less urgency or inspiration will eventually perish.  It is just that simple

The accreditation system we have created is an anchronism.  But if we think the ABA Standards are holding back the forces of innovation in legal education, we are kidding ourselves. Any law school or law professor who wants a better way can have one -- we are all like Dorothy and her red slippers in the Wizard of Oz: we have had the power all along.

To illustrate this point, I am going to share some personal history that I rarely discuss among my academic colleagues because, well, it would never come up in the course of ordinary conversation. Before I went to law school at age 35, I was a firefighter-paramedic for nine years.  For the last five, I served as our Local's union president.  To this day, I proudly pay union days so I can stay retired-active.  

When I look at the ABA Accreditation Standards, I am reminded of Ohio Revised Code 4117, which is the state's collective bargaining law for public employees.  For police and fire, unlike teachers, we had binding interest arbitration for collective bargaining.  What does this mean?  Basically, if we were unhappy with the offer made by the city -- and we always were -- we took our case to a state-mandated arbitrator, compared our wages and working conditions to firefighters who were getting a better deal (the city would do the opposite), and we got a decent wage & benefits increase, every time.  It was not if we would get a raise, but how much.  The teachers, in contrast, had to go on strike.  The effect of this law was not lost on me. My sister was a teacher in an adjacent city, and over time I made a lot more than her.  

This law was in place because those who came before me organized themselves into an interest group, lobbied, and got a favorable law put on the books to benefit them.  My fire chief, Joe Sweeney, was one of those elders -- he would point to the union charter posted in the hallway to remind me that he was one of original signatories.  By forming a union and working for over ten years to pass 4117, Joe and others ended the era of "collective begging." The resulting union wages enabled him to raise six kids and enjoy a decent pension.  And in exchange for that, Chief Sweeney, when he was a captain and later as a chief, demanded, absolutely demanded, that we comport ourselves as public servants.   

In truth, the public-private deal struck by 4117 only advanced the public interest when we had guys like Joe Sweeney who lived and breathed a sense of fairness.  Joe, just through how he led this life, kept several dozen firefighters honest and focused.  As the old guard retired, and our pay kept getting ratcheted up, it became harder to educate the new guys about how this great job came to be.  Many believed they "earned" their positions through merit because, after all, they rose to the top of a competitive hiring process.  So, through the way we behaved, the public interest case for 4117 was made marginally weaker.

I see the the same dilemma when I review the ABA Accreditation standards.  For example, take a look a Standard 405, which pertains to "Professional Environment."  

(a) A law school shall establish and maintain conditions adequate to attract and retain a competent faculty.

(b) A law school shall have an established and announced policy with respect to academic freedom and tenure ... 

(c) A law school shall afford to full-time clinical faculty members a form of security of position reasonably similar to tenure ... 

(d) A law school shall afford legal writing teachers such security of position and other rights and privileges of faculty membership ...

These provisions were the result of the same type of collective action that produced 4117.  And their purpose, just like 4117, is to lock-in privilege.  We academics can offer a plausible justification for this privilege -- for example, without 405(b), writing this essay could cost me my job.  But the fact is we need to justify that privilege through our behavior; otherwise, just like now, we become vulnerable.

At the behest of the ABA Task Force, the formal rules governing legal education may or may not change.  But that is largely irrelevant to what the public, including prospective students, perceive as the value of legal education. And that value is, in the aggregate, quite low.

Reform in legal education is not a light switch.  It is mindset that affects how we spend our time and who we spend it with. If we want reform, well, let's work on it and actually get something done that will inspire others. Eventually it will take hold and take off, with or without changes to the ABA governing standards.

[posted by Bill Henderson]

April 26, 2013 in Current events, New and Noteworthy | Permalink | Comments (3)

Alternative Litigation Funding and the "Ick" Factor

Posted by Michele DeStefano

Last week I was at a conference at DePaul University on Tort Law and Social Policy: A Brave New World: The Changing Face of Litigation and the Law Firm Finance.

Brave new world
The conference was centered on Alternative Litigation Funding [ALF] - also known as Third Party Litigation Funding or Financing, Third Party Funding or Financing.

ALF is when parties, unrelated to a lawsuit, provide funds to a claim holder to help fund the party’s pursuit of a potential or pending lawsuit and there is no recourse if the claim holder loses. Arguably, ALF has been around (in some form or another) for years in the United States - in the form of non-recourse loans, transfer of claims in bankruptcy proceedings, transfer of patent law claims, and contingency fees.

In the past few years, ALF has received more and more popular press and begun to attract the attention of more and more law professors like Anthony Sebok, Vicky Waye, Susan Lord Martin, and Maya Steinitz to name a few. When I first began writing about and consulting on the industry, many law professors did not know it was allowed in more than 50% of U.S. States - let alone that it existed. (This was true as recent as in 2011 when I presented an article that used ALF as an example of the importance of non-lawyer influence on lawyers). The recent attention ALF has received has heightened awareness of the existence of ALF in the U.S. but also the importance of the debate about whether and how it should be allowed and regulated.

At the DePaul conference, experts in the industry, along with experts in tort law reform, approached the debate in different ways.

Instead of evaluating ALF from a traditional, formalist view (cranking through the ethics rules to see if there is a violation), Nora Freeman Engstrom took a functionalist perspective to see how ALF will affect the tort marketplace.

Michael Abramowicz conducted a neoclassical and economic market analysis about how rational parties would or ought to act.

Keith Hylton developed a simple economic model to analyze the welfare implications of third party funding of legal claims.

Charles M. Silver compared ALF to insurance arguing that both serve similar purposes and that many of the objections made against ALF are similar to that made against liability insurance and therefore ALF should not be abandoned.

I took a more operational approach analyzing how litigation funding interacts with our legal system and doctrines of confidentiality like the attorney-client privilege, work product doctrine, and their doctrinal derogations (e.g., the NDA) (Click here to see my slide presentation).

Abraham Wickelgren analyzed whether admitting consumer financing agreements to the court and making it part of the case record would improve the quality of litigation and/or decrease the interest rates by third party lenders to plaintiffs.

W. Bradley Wendel took a different approach altogether. He explored an undercurrent in the opposition to ALF that he described as the “ick” factor.(Many of you might have been introduced to the the “ick” factor in a Friends episode in the 90s).  Here the "ick" factor is "justice for sale."

Essentially, Wendel made the point that historically there is a distaste (and/or distrust) of the commodification of any aspect of litigation and that this distaste of commodification drives some of the opposition to ALF.   Although Wendel points out that ick-factor objections shouldn't be taken seriously, they continue to be made.   See the comments made by representatives of the Chamber of Commerce (here) and the American Tort Reform Association (here) and a recent article in Forbes (here).  Press on cases like the one involving Burford and Chevron contribute as well. (Ironically, this article came out the last day of the conference).

Although most (if not all) of the presenters were proponents of ALF in some form, most acknowledged and attempted to address the legitimate concerns and arguments against third party funding. Some proposed regulation; others proposed doctrinal revisions.

But as to Wendel’s identified “ick” factor, however, a solution to that force is yet to be found.  Perhaps the next group of scholars to meet at a litigation funding conference will tackle that one.

April 26, 2013 | Permalink | Comments (1)

Wednesday, April 17, 2013

The Fromm Six

Last month, The National Jurist published an article I wrote that was a tribute to Leonard ("Len") Fromm, Dean of Students at Indiana Law from 1982 to 2012.  Len passed away in February. The editors at The National Jurist supplied the official title, which I thought was spot on: "What Every Law Student Needs to Excel as an Attorney: Introducing the Fromm Six." [original PDF]  I am republishing the essay here because I want as many people as possible to know the story and contribution of this truly great man. [posted by Bill Henderson]

Introducing the Fromm Six, National Jurist (March 2013).

FrommOne of the greatest people in legal education that you have never heard of is a man named Leonard Fromm.   Fromm served as Dean of Students at Indiana University Maurer School of Law from 1982 to 2012.  On February 2, 2013, Dean Fromm passed away after a relatively short battle with cancer.

I want to discuss an innovation that Dean Fromm contributed to legal education—a contribution that, I predict, will only grow over time.  This innovation is a competency model for law students called the Fromm Six.  But first, let me supply the essential background.

After several years in counseling and adult education, Dean Fromm joined the law school in 1982 to preside over matters of student affairs.  Over the course of three decades he quietly became the heart and soul of the Maurer School of Law.  Dean Fromm was typically the first person that new students met during orientation—the law school administrator who completed character and fitness applications for state bar authorities and the voice that called out their names at commencement (with an amazing, booming tenor).   During the three years in between, Dean Fromm counseled students through virtually every human problem imaginable.  His most difficult work was done in his office with his door closed and all his electronic devices turned off.  It was private work that was not likely to produce much fanfare.

During his tenure at Indiana Law, Dean Fromm’s title was expanded to include Alumni Affairs.   The change did not expand his duties in any significant way—Len was already working 70 hours a week in a job he loved. Rather, the change reflected the fact that Indiana Law alumni associated (and often credited) Dean Fromm with the deepest and most abiding lessons of law school—overcoming self-doubt; confronting self-destructive behavior; recognizing the importance of relationships; finding the courage to try something again after disappointing failure; or discovering the ability to see the world through the eyes of one’s adversary or opponent.

One of the cumulative benefits of Dean Fromm’s job was the ability to track the full arc of lawyers’ careers, from the tentative awkwardness of the 1L year, to involvement in the school’s extracurricular events and social scene, to coping strategies for students not at the top of their class, and the myriad, unexpected turns in our graduates’ professional careers.  During his tenure he interacted with nearly 6,000 students and stayed in contact with a staggering number of them after graduation.  Invariably, he saw the connection between law school and a student’s subsequent success and happiness later in life (noting, in his wise way, that professional success and happiness are not necessarily the same thing).

In 2008, I started collaborating with Len on a project to construct a law school competency model.  Our first iteration was a list of 23 success factors  which we constructed with the help of industrial & organizational (IO) psychologists.  Although valid as a matter of social science, the list was too long and complex to gain traction with students.  In 2010, the faculty who taught Indiana Law’s 1L Legal Professions class got together and reduced the list of competencies to 15.  Once again, we found it was too long and complex to execute in the classroom.  

During the summer of 2011, as we were debriefing the challenges of another year in our competency-based 1L Legal Professions course, Dean Fromm said, “I have an idea.” A short time later, he circulated a list of six competencies that were appropriate to 1Ls and foundational to their future growth as professionals.   Finally (or At last), we now had a working tool!  Moreover, none of the professors teaching the Legal Professions course, including me, wanted to revise a single word—a veritable miracle in legal academia. 

Upon reviewing the list I kidded Len that the new IU competency model should be called “The Fromm Six”, which was a play on the famous “Big Five” personality model that forms the bedrock of scientific personality testing. (Len had a Masters degree in Counseling Psychology as well as a law degree.)  He just laughed.  But the “Fromm Six” had a lot of resonance with the rest of us so the label stuck.

In May 2012, Dean Fromm retired from his position as Dean of Students and Alumni Affairs.  At age 70 he was preparing to join us in teaching the 1L Legal Professions course.  This was to be in addition to his usual Negotiations class, where he was a master.  Instead, within a few weeks of retirement, Len was diagnosed with a virulent cancer that never let go.  

None of us can make sense of Len’s death as it abruptly ended a life of complete, unselfish service to a large community of students, faculty and graduates.  But, as best I can, I am inclined to pay tribute to his life.  And to my mind, there is no greater tribute than to publish and publicize the Fromm Six so that another generation of lawyers can benefit from his wisdom, grace and kindness. 

Here are the Fromm Six:

Self-Awareness Having a highly developed sense of self. Being self‐aware means knowing your values, goals, likes, dislikes, needs, drives, strengths and weaknesses, and their effect on your behavior.  Possessing this competence means knowing accurately which emotions you are feeling and how to manage them toward effective performance and a healthy balance in your life. If self‐aware, you also will have a sense of perspective about yourself, seeking and learning from feedback and constructive criticism from others.

Active Listening The ability to fully comprehend information presented by others through careful monitoring of words spoken, voice inflections, para‐linguistic statements, and non‐verbal cues. Although that seems obvious , the number of lawyers and law students who are poor listeners suggests the need for better development of this skill.  It requires intense concentration and discipline. Smart technology devices have developed a very quick mode of “listening” to others. Preoccupation with those devices makes it very challenging to give proper weight and attention to face‐to‐face interactions. Exhibiting weak listening skills with your colleagues/classmates/clients might also mean that they will not get to the point of telling you what they really want to say.  Thus, you miss the whole import of what the message was to be.

Questioning The art and skill of knowing when and how to ask for information. Questions can be of various types, each type having different goals. Inquiries can be broad or narrow, non‐leading to leading. They can follow a direct funnel or an inverted funnel approach.   A questioner can probe to follow up primary questions and to remedy inadequate responses.  Probes can range from encouraging more discussion, to asking for elaboration on a point, to even being silent. Developing this skill also requires controlling one’s own need to talk and control the conversation.

Empathy Sensing and perceiving what others are feeling, being able to see their perspective, and cultivating a rapport and connection. To do the latter effectively, you must communicate that understanding back to the other person by articulating accurately their feelings. They then will know that you have listened accurately, that you understand, and that you care. Basic trust and respect can then ensue.

Communicating/Presenting The ability to assertively present compelling arguments respectfully and sell one’s ideas to others.  It also means knowing how to speak clearly and with a style that promotes accurate and complete listening.  As a professional, communicating means persuading and influencing effectively in a situation without damaging the potential relationship.  Being able to express strong feelings and emotions appropriately in a manner that does not derail the communication is also important.

Resilience The ability to deal with difficult situations calmly and cope effectively with stress; to be capable of bouncing back from or adjusting to challenges and change; to be able to learn from your failures, rejections, feedback and criticism, as well as disappointments beyond your control. Being resilient and stress hardy also implies an optimistic and positive outlook, one that enables you to absorb the impact of the event, recover within a reasonable amount of time, and to incorporate relevant lessons from the event.

April 17, 2013 in Blog posts worth reading, Innovations in legal education, New and Noteworthy | Permalink | Comments (0)

Sunday, April 7, 2013

Shameless Commerce Division: A Promo for Unincorporated Business Entities, 5th Edition

Posted by Jeff Lipshaw

If you teach unincorporated business entities (LLCs, partnerships, and agency), you may be interested in the LexisNexis promo in which I shamelessly plug the thing.  My overall reaction:  a face made for radio, but what I'm saying is accurate.

 

April 7, 2013 | Permalink | Comments (2)

Thursday, April 4, 2013

A Law Video that is Destine to go Viral ...

So we might as well face the music now.  This incredibly powerful video was produced by www.rethinklaw.org.   And who created Rethink Law?  The same folks discussed here.

Rethink Law (US) from Liana Guzman on Vimeo.

The revolution is here.  It is going to happen. For a detailed analysis of the rise of what I call "Susskind's World" and the new legal entrepenuers, see Part II.C of The Blueprint for Change.

April 4, 2013 in Current events, Innovations in law, Law Firms, New and Noteworthy, Structural change | Permalink | Comments (5)

Tuesday, April 2, 2013

"Wireless Medicine" -- Is Law Next?

by William Henderson

A good friend of mine, Ed Reeser, who is a lawyer, sent along this video on the "Wireless Medicine" movement, which is apparently led by Dr. Eric Topol, one of the nation's leading cardiologists, author of the book, The Creative Destruction of Medicine.  Its subtitle is, "How the Digital Revolution Will Create Better Health Care."  

Seeing a connection to the burgeoning intersection of law and technology, Ed wrote:

"I don't send videos like this around, especially to busy people like yourselves. But this is a much better way to make a point on how technology is totally changing the landscape, and why it is so critically important to understand where it is going and why.  .... The prospect for massively improved capabilities for quality service at lower cost are just beginning to emerge, and this is where the early adopters of the right approaches will have advantage. Understanding which will be right......is just the beginning of the game.  If you think law is being impacted by technology.....watch this. Then, go back to your reflections on law and rethink the possibilities of where technology is going to impact law and how to become a positive driver of change with it, rather than roadkill in resisting it. "

Visit NBCNews.com for breaking news, world news, and news about the economy

April 2, 2013 in Cross industry comparisons, Structural change, Video interviews | Permalink | Comments (0)

Monday, April 1, 2013

Question Authority: Law students have an important role to play in the future of legal education

National-jurist-logoI continue to be grateful to the National Jurist for giving me an opportunity to write a column targeted directly to law students.   As an educator, I have found these assignments very useful toward developing a better understanding of my own students at Indiana Law. In the process, I hope I am providing some useful, realistic guidance to the next generation of lawyers

In my 2013 column, I urge law students to ask us law professors tougher questions about the current state of legal education, albeit with respect.  If they ask tough questions, we will all be better off.  It is republished below. [Original PDF]

Question Authority: Law students have an important role to play in the future of legal education, National Jurist (Jan. 2013)

by William D. Henderson

I recently gave a keynote address in which I admonished a large group of law students to “question authority.”  It certainly sounds cliché – after all, it was the rallying cry of countercultural icon Timothy Leary during the 1960s.  A decade later, it was mainstream bumper sticker. But the admonition has a much more distinguished pedigree.  Benjamin Franklin is reported to have said that “the first responsibility of every citizen to question authority.”  

I wish I had known the source of the quote when I gave the speech.  But regardless, it fit the context. Today’s law students are embarking upon an uncertain future.  Although I can understand the impulse to trust your elders, there are times of extreme upheaval when they cannot be counted upon to deliver wise counsel.  

Reluctantly, through the passage of time, I have become an elder.  And for the legal profession and legal education, we are entering one of those periods of great tumult.   To come out the other side, better and stronger, we need two things from the up-and-coming generation of law students. 

 First, we need your skepticism to question our methods and our motives.  The legal marketplace is undergoing significant changes.   We did not adequately anticipate these disruptions.  In addition, we do not fully understand their breadth and depth.    Because we are human, we are reluctant to admit our confusion.   Even worse, we may even deny there is a problem.  After all, the confluence of high student debt and a soft legal market happened on our watch. 

Second, we need your youthful energy to refashion legal education in a way that is much more consistent with our professional ideals.  All lawyers covet prestige, but over the last decades we have confused prestige with money and rankings.  As a historical matter, lasting legal reputations are disproportionately traceable to a lifelong willingness to doggedly and creatively advance the welfare of others.   Even today, the best lawyers find ways to faithfully serve their clients while simultaneously advancing the public good. We need your generation to lay the foundation for a renaissance in which our collective behavior more closely hews to our ideals. This is a goal worthy of your time and talent.

 If you are going to be effective at questioning authority (and unless you are going to be effective, why do it all?), you need to practice.  Well, I am 50-year old tenured law professor.  I create the syllabus, I decide how you will be evaluated, and I assign student grades.  Much to my chagrin, I have accumulated some authority.  So feel free to practice your questioning on me. 

Here is the world as I see it.  I could be wrong.  But even worse, I may be partially right.  

The entry-level job market for law graduates is tough right now.  But if you had not enrolled in law school, your employment prospects would be no less murky.  As noted by the popular author, Daniel Pink (himself a law school graduate), in his book, A Whole New Mind, we are living in time where every young person must compete against three formidable forces:  Asia, Automation, and Abundance. 

The Asian continent is formidable because nations such as India and China are leapfrogging into world economy with enormous quantities of ambitious, technically competent young people. 

Automation is formidable because so much of human activity, including law, is reducible to patterns.  This means solutions can be standardized, thereby displacing a significant amount of mental analysis that lawyers now perform for clients on a matter-by-matter basis.  (See also my September 2012 column, “Why are we Afraid of the Future of Law?”) 

Abundance is formidable because the flipside of the consumer society that has given us so many cheap, high quality choices is a producer economy in which expensive university educations provide us with skills that becoming more and more fungible.  

To my mind, today’s university educators are not responsible for the challenges created by Asia, Automation, and Abundance.  These are massive structural and economic forces that are hard to forecast and impossible to control.  Yet, as university educators who benefit from your tuition dollars, we are responsible for formulating effective responses.  Although we might prefer to focus on a different set of challenges, this one should take top priority because its weight falls disproportionately not on us, but on you.

 So you need to ask us, “How well is this education helping us adapt to the challenges of Asia, Automation and Abundance?”  Some of us might reply that the threat is overstated.  Well, are you convinced?  What evidence supports this assessment?   

Alternatively, others of us might reply that the challenges are very real, but fortunately, the core elements of traditional legal education are an excellent preparation.  Well, are you convinced?  Further, is it possible that our inability or reluctance to retool may cloud our judgment and influence our reply?  The iconoclastic author and economist John Kenneth Galbraith once observed, “Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.” 

A third response may be, “I don’t know.  These are a hard set of issues.  And they need to be solved.”  When a professor responses in this way, it is hard to question their motives.  Further, you may have found someone with authority who is willing to take up your cause. 

At the beginning of this essay, I failed to mention one key proviso to my “question authority” admonition.  I told the law students that when they question authority, they should do it respectfully.  Indeed, all of my life experience has shown me that effectiveness in human relations requires a foundation of mutual respect.  Your elders did not create the challenges that lie ahead.  We are not your enemy.  Our limitation is that we are human, and therefore imperfect; and so are you. 

 Yet, if you question authority persistently but respectfully, you will be doing yourself, legal education, and the legal profession an enormous service.

 If you think my ideas and analysis are wrong, you are free to question my authority.

April 1, 2013 in Blog posts worth reading, Current events, Structural change | Permalink | Comments (1)

Wednesday, March 27, 2013

Losing the Law Business

Logo_financialreviewThe legal industry is changing in ways that very few lawyers understand.  I recently tried to explain these changes to a savvy nonlawyer, non-American audience through an essay I published in the Cayman Financial Review, entitled, "Losing the Law Business"  (original PDF).  I wanted to share this analysis first with an audience that was, frankly, not emotionally or financially wedded to the outcome--hence, they could be objective. Now I want to gauge the U.S. lawyer reaction, so  I am republishing the essay here on The Legal Whiteboard.  

Losing the Law Business, Cayman Financial Review (Jan. 2013)

by William D. Henderson

If you are not a lawyer, you may find this next sentence very good news.  We are entering a period in human history in which we are going to need fewer lawyers, at least the traditionally trained variety.  The world is becoming more interconnected, regulated and complex.  Although regulation and complexity have historically been very good for the lawyer business, something very fundamental is changing.  Clients are increasingly struggling to pay the bills of artisan lawyers who prefer to craft individual, customized solutions for each transaction and each dispute.

In essence, law is facing a productivity imperative.  To cope with globalization, the world needs better, faster, and cheaper legal output.  The artisan trained lawyer just can’t keep up.  To address the productivity imperative – or, more accurately, to turn a profit from this business opportunity—a new generation of legal entrepreneurs has emerged.

Lawyers continue to have a lock on advocacy work and client counseling on legal matters.  But an enormous amount of work that leads up to the courthouse door, or the client counseling moment, is increasingly being “disaggregated” into a series of tasks that does not need to be performed by lawyers.  Indeed, it may be best performed by computer algorithms.  Further, the entire process is amenable to continuous improvement, driving up quality and driving down costs.  This is a job that is likely more suitable for a systems engineer, albeit one with legal expertise, than a traditionally trained lawyer.

Although this change may sound radical, it is actually the logical next step in an evolutionary progression that began in the early 20th century as the practicing bar transitioned from generalist solo practitioners to specialized lawyers working together within law firms.  Now, as clients search out ways to stretch their legal budgets, specialization is losing market share to process-driven solutions, akin to how Henry Ford’s assembly line methods supplanted craft production.

To illustrate this progression, consider the U.S. legal market at the beginning of the post-War period.  At that time, 61% of all lawyers worked as solo practitioners. Not surprisingly, incomes were low.  In 1948, the average lawyer in private practice made $5,200 per year, which was several hundred dollars less than his government lawyer counterpart.   There were private practice lawyers, however, who defied this trend.  Less than 2% of U.S. lawyers worked as partners in law firms of nine partners or more, but these “large” firm lawyers made, on average, five times more than their solo practitioner peers.

Why so much more?  Because the world was becoming more regulated and complex.  And sophisticated, specialized lawyers with deep technical expertise were in short supply.  By combining into a firm, lawyers could specialize in new or existing areas of law, handle bigger and more complex matters, and otherwise coordinate their efforts to better serve clients.  Indeed, the most successful large law firms, such as the New York City firm of Cravath Swaine & Moore, organized themselves so as to optimize the training of junior lawyers in both substantive law and the ability to supervise and delegate (the “Cravath system”).  Fittingly, during the 1930s, the press dubbed these firms “law factories.”  The best junior lawyers eventually became partner; the rest obtained the benefit of excellent experience and training, thus obtaining jobs with clients or partnerships with other law firms.

For the next several decades, firms with significant business clients and a partner-associate training model tended to prosper.  As a measure of longevity of the specialist model, among the largest 100 law firms in the U.S. as measured by gross revenues (the AmLaw 100), the average name partner was born in 1895 and died in 1964 – yet the growth has marched on for another half century.  The period of greatest financial success has occurred during the last three decades.  Between 1978 and 2003, total U.S. legal expenses as a percentage of GDP increased from .4% to 1.8%.  From this growing pie, large firm lawyers where getting the biggest slice.  By the mid-2000s, the profit share of the average partner in an Am Law 100 firm was over $1 million per year.

One obvious drag on the legal industry’s reluctance to embrace innovation is the financial success enjoyed under the old model.  It is hard to convince a group of millionaires that their business model is broken.  A second drag is insularity.  The U.S./U.K system of lawyering is premised on the idea of independence.  In the U.S., ethics rules prohibit lawyers from splitting fees with nonlawyers.  Thus, only lawyers have an equity interest in law firms.  In the U.K. and Australia, in contrast, the ban on fee-splitting has been significantly relaxed, enabling the public listing of law firms and the entry of name-brand companies, such as Tesco (a supermarket retailer), into the consumer legal business.

Ironically, the insularity of the U.S. legal market may have created a more attractive target for capitalists. Among corporate clients, the combination of high law firm profits and low innovation has created discontent among C-suite executives.  They ask their general counsel, “why are legal expenses going up faster than other departments?  What value are we getting for these higher fees?”  The general counsel has no persuasive reply.

Perhaps the best example of new entrepreneurs serving corporate clients is the large number of vendors working in eDiscovery and document review. The explosion in digital data over the last 10 to 15 years has made it untenable to continue using expensive law firm associates for an exhaustive manual review. 

Initially the work went to registry services, which assembled large crews of temporary low-wage “contract” lawyers for large document review projects.  After building a sufficient data infrastructure and security controls, the work flow has gradually expanded to legal process outsourcers (LPOs) in places like India, where a fraction of the wages paid to U.S. contract attorneys could attract highly motivated and able Indian lawyers.  Having achieved sufficient success and scale, the best LPOs are now turning to process engineering, combining this highly motivated and able labor with superior technology and workflow design. 

More recently, new vendors have emerged who specialize in “predictive coding.”  In a case that considered acceptable methods of conducting electronic discovery, a federal judge in New York City reviewed studies comparing the cost and accuracy of computer-based machine algorithms (predictive coding) with manual human review.  Finding that the predictive coding was at least as accurate as manual methods and reduced the number of documents for human review by a factor of 50, the judge ruled that predictive coding was judicially reasonable in many cases involving large numbers of documents.

Although many large U.S. law firms may perceive document review as “commodity” legal work not worthy of their efforts, the new legal vendors getting into this space are remarkably well capitalized.  For example, one of the larger suppliers of contract attorneys is Robert Half, which has 26 locations through the U.S. and Canada.  Its corporate parent, Robert Half International, is publicly traded on the New York Stock Exchange (RHI).  Another company in the contract attorney space is Special Counsel, which has 36 U.S. offices.  Special Counsel is a subsidiary of Adecco Group, which is listed on the SIX Swiss Stock Exchange (ADEN).

In the LPO space, Pangea3, which opened in 2004 with $1.5 million in venture capital, was sold in 2010 to Thomson Reuters (NYSE symbol TRI) for an amount reported to be in the $35M to $40M range. [ed: I later learned from a highly reliable source that the true price was just under $100M.]  The original management team was kept intact, as the company has been growing between 40% and 60% every year since its founding.  The company now employs over 850 lawyers, mostly in India.  Because of its emphasis on process improvement, Pangea3 and other high-end LPOs are obtaining a competitive advantage beyond mere wages.  Thus, LPOs have become a much more attractive option for Indian law graduates.  Another competitor is Huron Consulting Group (NASDAQ symbol HURN), which recently announced a new document review facility in Gurgeon (a booming suburb of Delhi), bringing its total global document review workforce to 1,500 in 17 offices worldwide.  Since 2007, Huron Consulting Group’s annual revenues have nearly doubled, growing from $315 million to $606 million.

The major players in the predictive coding space are also well capitalized.  One of the leaders is Recommind, a privately held company with $15 million in revenues in 2011 and approximately 100 employees in facilities in California, London, Germany and Australia.  Similarly, Kroll Ontrack, which started in the hard disk recovery business nearly 30 years ago, has information management services that include predictive coding as part of its broader eDiscovery services.  Kroll Ontrack is owned by Kroll, Inc., which was recently acquired by Altegrity, an information conglomerate owned by Providence Equity Partners.  Providence Equity is a global private equity firm with over $27 billion under management.

Since 2008, revenues in large U.S.-based law firms have been relatively flat.  A recent article in Managing Partner magazine acknowledged that law firms are losing market share to the LPOs –which broadly includes all the companies mentioned above—as general counsel are increasingly contracting with LPOs directly.  The savings are perceived to be in the 50% range with no diminution in quality.  According to the article, the LPO business is estimated to be a $1 billion per year industry that will double in size over the next two to three years.

Unlike traditional lawyers, the competitive advantage enjoyed by these new entrants is that they have learned how to learn.  If law is like other industries, these companies will move up the value chain and find new ways to satisfy the needs of large corporate legal departments.  Law is not just for lawyers anymore.  This genie is permanently out of its bottle.

March 27, 2013 in Current events, Data on the profession, Innovations in law, Law Firms, Legal Departments, New and Noteworthy, Structural change | Permalink | Comments (1)

Sunday, March 24, 2013

Thank you to an Anonymous Alum

Each year, the instructors in Indiana Law's 1L Legal Professions class coordinate with Indiana Law's Office on Career and Professional Development (OCPD) to run the Career Choices Speakers Series -- 16 lunchtime forums on Thursdays and Fridays throughout the second semester.  It has been an enormous hit with students.  Although our 1Ls are required to attend at least three, a huge proportion of the 1Ls attend over ten.

Below is a photo of this Thursday's pizza run for the session on Direct Service Public Interest Lawyers -- 22 pizzas and the laptop/scanner used for attendance.  Over the course of semester, we will purchase well over 300 pizzas.  Who pays for all of this food and equipment (plus about a dozen dinners for students and alums that occur before and after these events)?  An Indiana Law alumni who profoundly believes in the role of ethics and integrity to achieve personal and professional success in life.  And he has done so quietly, behind the scenes, every year for the last five.

I thought our alum would enjoy seeing the pizza gurney.  Thank you!  You are opening students' eyes and helping them make better decisions, all through relationships with other lawyers.

Careerchoicepizza

[photo credit, 1L Dakota Scheu, via iPhone].  For additional information on this highly effective program, see my prior post, A New Tool for Lawyer Professional Development.

[posted by Bill Henderson]

March 24, 2013 in Current events, Data on legal education, Innovations in legal education | Permalink | Comments (1)

Wednesday, March 13, 2013

ReInvent Law is a Really Big Deal

KatzknakeI was at the ReInvent Law Silicon Valley event last week.  Following up on Jerry's thorough remarks, I can honestly say it was unlike any legal education and lawyer conference I have ever attended (the only thing close is Law Without Walls).  There is a new guard in the legal academy taking shape, and it is led -- truly led -- by Dan Katz and Renee Knake at Michigan State. 

Admittedly, Dan and Renee lean heavily toward my bias.  Most of us law professors talk.  Dan and Renee, in contrast, are doers.  Shortly after becoming assistant professors, they each moved quickly from ideas to action to actually having the audacity to attempt to build new and relevant institutions. Moreover, they both did it untenured--Dan is only in his second year of teaching and Renee just cleared the tenure hurdle earlier this year.  They did all of this without a net. To my mind, they are winning the "Game of Life."  If other junior faculty follow their example, the legal academy is going to truly change.  And right now, that is what we need.

One of my favorite Paul Lippe quotes is this, "In hindsight, the new solutions are all going to look obvious."  ReInvent Law was 40 speakers tied together by a common interest in experimentation. Were all the ideas good?  If history is any guide, and the criteria is moving from concept to implementation to financial and institutional sustainability, the answer is surely no. But it was invigorating to be in a room of doers who are all willing to risk failure.  That is the courage and leadership we need right now.  To me, it looked obvious that we need a place like ReInvent Law where insurgent ideas can be expressed with enthusiasm, even if only a handful or fewer will transform the legal landscape.

I was fortunate to be one of the presenters.  Dan Katz was kind enough to take my picture when I gave my Ted-style talk (all the talks were Ted-style or "Ignite").  If you zoom-in on me, I look ridiculous.  I am no showman.  But you have to admit that the lighting is pretty spectacular.  The green screen, by the way, is the running twitter feed, an idea that I can assure you was not stolen from the ABA or the AALS.

  ReInventLaw

Amidst all these "revolutionary" ideas, I think my presentation was probably the most conservative.  My central claim is that 100 years ago, as the nation struggled to find enough specialized lawyers to deal with the rise of the industrial and administrative state, some brilliant lawyers in cities throughout the U.S. created a "clockworks" approach to lawyer development.  These clockworks filled the enormous skills and knowledge gap.  Firms like Cravath, Swaine & Moore, through their "Cravath System," finished what legal educators started.  (I use the Cravath System as my exemplar because its elegant business logic was written out so meticulously in the firm's 3-volume history.)  

The whole purpose of the clockworks was to create a "better lawyer faster."  This is a quote from volume II.  The company I co-founded, Lawyer Metrics, incorporated it into our trademark -- the value promise is that compelling.  See the slides below.

Here is the Slideshare description:

The original Cravath System circa 1920 demonstrated the power of a "clockworks" approach to lawyer development. The system was a meticulously designed and mechanized way to create specialized lawyers who could service the needs of America's rapidly growing industrial and financial enterprises -- lawyers who were in perennial short supply because the requisite skill set could only be learned by doing. The System endured for a century because it solved the specialized lawyer shortage by making every stakeholder better off -- junior lawyers (received training), partner-owners (large, stable profits), and clients (world class service and value). 

Today's legal employers and legal educators would benefit by revisiting this system's powerful business logic. The clockworks approach to lawyer development still works. The only difference is that the specifications for a great lawyer have changed. Like the original Cravath System, a new clockworks would create a "better lawyer faster." 

[posted by Bill Henderson]

March 13, 2013 in Current events, Data on legal education, Data on the profession, Fun and Learning in the classroom, Innovations in law, Law Firms, Legal Departments, New and Noteworthy, Structural change | Permalink | Comments (0)