The Legal Whiteboard

Less Talk of Disruption, More Talk of Creation

There is a natural tendency in people to lament what is familiar and good but now fading away. We are in one of these cycles in law, largely because law firms and law schools are no longer on the familiar path of smooth and steady growth.  As a group, lawyers are very good at being pessimistic and dour.  But enough already.  We're intelligent people.  It's time to move on.

If you're looking for intelligent, constructive, realistic ways to view the future of the legal industry, I would commend you to Noah Waisberg's guest post over at 3 Geeks and a Law Blog. Waisberg is CEO of Kira Systems, which deploys technology to assist in corporate M&A and contract management.  Waisberg is also a lawyer.  Nonetheless, he sees tremendous opportunity in law to do both good and well.  In his own words:

Law practice today is a land of opportunity. This is due to the combination of

1. underserved legal consumers, and
2. technologies and processes that make legal work more efficient, which make serving these consumers possible.

Lawyers who embrace efficiency have the opportunity to do more law for their clients. And make more money in the process.

We lawyers sell to a market that is not getting anywhere close to all the legal services it needs.  Underserved legal consumers fall into three categories:

1. Access to Justice. People without means to pay premium prices for a lawyer needing access to legal services.
2. Middle class legal needs. Many decently-well-off people don't spend money on legal services that would help them. How many people use lawyers to resolve their disputes, negotiate their employment contracts or write their wills?
3. Corporates. Most companies, even the biggest ones, do not obtain anywhere close to all the legal services they need.

This spread between latent demand and supply represents opportunity to sell more. Unfortunately the current techniques for delivering and selling legals services are so expensive and inefficient that these underserved consumers can't or won't pay for them.

My hats off to Waisberg for seeing through and past the dominant narrative to find the reset button.  If we focus on the needs of clients and customers, rather than what is going away and being lost, we can begin to see the future.  And it's a good one.

Constitutional Pilpul (Or The Second Amendment and Why I Despair of Reason)

After almost sixty years devoted to the life of the mind, it has come to this.  I despair of reason.  Or at least in what passes nowadays for public discourse, its degradation into something that resembles pilpul - a Talmudic form of argumentation that justifies a desired outcome by linkage to a fixed text.

This is about guns and absolutism of ideas.  I'm a pretty passionate moderate.  Generally speaking, the nutty right and the nutty left both make me cringe.  Mostly the nutty left wants me to feel bad for having money or because I'm a white male, and I can deal with that.  But the nutty right wants nutty people to have the right to have not just guns, but guns that provoke the image of Neo at the end of The Matrix (Tank: "So what do you need besides a miracle?"  Neo: "Guns.  Lots of guns.")

I have pretty scrupulously avoided getting involved in constitutional debate (a) because it's a crowded field already, and (b) what I'm about to say has always underlain my "meta" feelings about many (or most) of the debates.  But having been sickened once again by a mass shooting, having no affinity for guns whatsoever (never held a real one, I don't think), and believing that what sounds like legal reasoning is instead a means of justifying or rationalizing an unchangeable and absolute position by linkage to an antecedent text, I'm going to (at least) dip my toes in the water.  

As I have said to several people in the last few days, I'm pretty sure I have a right under the Second Amendment to keep a musket (and maybe even a couple dueling pistols) to grab when the Massachusetts Militia calls on me to resist an invasion of Birkenstock-clad Catamounts from Vermont, but every right beyond that calls on lawyerly argumentation and dialectic for its justification.  And I've spent a good part of my brief but intense academic career thinking and writing about lawyerly argumentation and dialectic, at least as it compares and contrasts with making judgments, and particularly in the business arena.

So how is it that what most people seem to think - that there ought to be reasonable restrictions on gun purchase and ownership - can't get past the absolutists?  It's because reason is no longer part of the discussion, and debate isn't about what makes sense but about Law with a capital L as though we were dealing with the words of a constitutional deity.

Let me try to explain my despair (in this particular instance, about gun control, but more generally about what passes for the reasoning process) by talking about pilpul.  

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Lawyers' Contribution to Organizational Behavior

My good friend Bruce MacEwen of Adam Smith Esq. recently ran across a training manual providing instructions on proper behavior within organizations. Bruce thought that some of the advice appeared to be very similar to how law firms make decisions.  Likewise, when I read it, I thought it described some of the natural propensities of law professors.  Is it possible that law partners and law faculty provide the model behavior for all other organizations?

Hold on.  The book is serious. And so is the advice.  Read the "how to" advice below, which is quoted verbatim from the original source. Then click on the hyperlink where Bruce shares the author and title. 

(a) Organizations and Conferences

(1) Insist on doing everything through “channels.” Never permit short-cuts to be taken in order to expedite decisions. 

(2) Make "speeches." Talk as frequently as possible and at great length. Illustrate your "points" by long anecdotes and accounts of personal experiences. Never hesitate to make a few appropriate [loyal] comments.

(3) When possible, refer all matters to committees, for “further study and consideration.” Attempt to make the committees as large as possible – never less than five.

(4) Bring up irrelevant issues as frequently as possible.

(5) Haggle over precise wordings of communications, minutes, resolutions.

(6) Refer back to matters decided upon at the last meeting and attempt to re-open the question of the advisability of that decision.

(7) Advocate “caution.” Be “reasonable” and urge your fellow-conferees to be “reasonable” and avoid haste which might result in embarrassments or difficulties later on.

(8) Be worried about the propriety of any decision – raise the question of whether such action as is contemplated lies within the jurisdiction of the group or whether it might conflict with the policy of some higher echelon.

The above is for the rank and file.  Here is some of the advice given to middle management:

(b) Managers and Supervisors

(2) ... . Ask endless questions or engage in long correspondence about instructions. Quibble over them when you can.

(7) Insist on perfect work in relatively unimportant products.

(11) Hold conferences when there is more critical work to be done.

And the source?  See here.

The Opaqueness of Bar Passage Data and the Need for Greater Transparency

There has been a great deal of discussion lately over at The Faculty Lounge regarding declines in law school admissions standards, declines in bar passage rates, and the general relationship between LSAT scores and bar passage. Much of this discussion is clouded by the lack of meaningful data regarding bar passage results.  In this blog posting I will delineate several questions that just cannot be answered meaningfully based on the presently available bar passage data.

The national first-time bar passage rate among graduates of ABA-accredited law schools fell significantly in 2014. According to the NCBE’s statistics, the average pass rate from 2007-2013 for July first-time test-takers from ABA-accredited law schools was 83.6%, but fell to 78% in 2014. (2015 data won’t be available until next Spring when it is released by the NCBE.)

While there might be some reasons to believe these results were somewhat aberrational given that the objective criteria of the entering class in 2011 was only modestly less robust than the objective criteria of the entering class in 2010, and given the ExamSoft debacle with the July 2014 bar exam, the results are concerning, given that the objective criteria of the entering classes in 2012, 2013 and 2014 showed continued erosion. As the last two years have seen declines in the median MBE scaled score among those taking the July bar exam, the changes in entering class credentials over time suggest further declines in median MBE scaled scores (and bar passage rates) may be on the horizon.

In 2010, there were roughly 1,800 matriculants nationwide with LSATs of 144 or less. In 2012, there were roughly 2,600 matriculants nationwide with LSATs of 144 or less. In 2014, there were roughly 3,200 matriculants nationwide with LSATs of 144 or less. Recognizing that law school grades will be a better predictor of bar passage than LSAT scores, I think it is safe to say that entering law students with LSATs in this range are more likely than entering law students with higher LSATs to struggle on the bar exam.  Because the number of those entering law school with LSAT scores of 144 or less has grown substantially (particularly as a percentage of the entering class, more than doubling from less than 4% in 2010 to more than 8% in 2014), many are concerned that bar passage rates will continue to decline in the coming years.

While there has been a great deal of discussion regarding declines in admission standards and corresponding declines in bar passage standards, this discussion is profoundly limited because the lack of meaningful bar passage data presently provided by state boards of law examiners and by the ABA and ABA-accredited law schools means that we do not have answers to several important questions that would inform this discussion.

1. What number/percentage of graduates from each law school (and collectively across law schools) sits for the bar exam in July following graduation and in the following February? Phrased differently, what number/percentage of graduates do not take a bar exam in the year following graduation?

This is a profoundly important set of questions as we look at employment outcomes and the number/percentage of graduates employed in full-time, long-term bar passage required positions. Given that only those who pass the bar exam can be in full-time, long-term bar passage required positions, it would be helpful to know the number/percentage of graduates who “sought” eligibility for such positions by taking a bar exam and the number/percentage of graduates who did not seek such eligibility. It also would be helpful to understand whether there are significant variations across law schools in terms of the number of graduates who take a bar exam (or do not take a bar exam) and whether those who do not take a bar exam are distributed throughout the graduating class at a given law school or are concentrated among those at the bottom of the graduating class. At present, however, this information simply is not available.

2. What is the first-time, bar passage rate for graduates from ABA-accredited law schools?

One might think this would be known as ABA-accredited law schools are required to report first-time bar passage results. But the way in which first-time bar passage results are reported makes the data relatively unhelpful. Law schools are not required to report first-time bar passage for all graduates or even for all graduates who took a bar exam. Rather, law schools are only required to report first-time bar passage results for at least 70% of the total number of graduates each year. This means we do not know anything about first-time bar passage results for up to 30% of graduates of a given law school. Across all law schools, reported results account for roughly 84% of graduates, leaving a not insignificant margin of error with respect to estimating bar passage rates.

People would have been flabbergasted if the ABA had required reporting of employment outcomes for only 70% of graduates. Now that the ABA is requiring reporting on employment outcomes for all graduates, there is no good reason why the ABA should not be requiring bar passage accounting for all graduates, requiring law schools to note those who didn't take a bar exam, those who took and passed a bar exam, those who took and failed a bar exam, and those for whom bar status is unknown.  (Up until recently, some boards of law examiners were not reporting results to law schools, but my understanding is that the number of state boards of law examiners not reporting results to law schools is now fairly small.)

Notably, for 2011, 2012, and 2013, the average bar passage rate for first-time takers from all ABA-accredited law schools based on data reported by the law schools was consistently higher than the data reported by NCBE for the corresponding years (2011 – 83.8% v. 82%, 2012 – 81.8% v. 79%, 2013 – 82.4% v. 81%. (Moreover, first-time takers are not measured equivalently by the ABA and by the NCBE. The ABA reporting requirement focuses on graduates who took any bar exam for the first-time. The NCBE defines as first-time takers any person taking a bar exam in a given jurisdiction for the first-time. Thus, the NCBE set of first-time takers is broader, as it includes some people taking a bar exam for the second time (having taken the bar exam in another jurisdiction previously).

3. What is the “ultimate” bar passage rate for graduates from ABA-accredited law schools?

Even though a number of commenters have noted that “ultimate” bar passage is more important than first-time bar passage, there is no publicly available data indicating the ultimate bar passage rate on a law school by law school basis for the graduates of each ABA-accredited law school. What number/percentage of graduates of a given law school who take a bar exam pass after the second attempt? What number/percentage of graduates of a given law school who take a bar exam pass after the third attempt? What number/percentage of graduates of a given law school never pass a bar exam? This information just is not publicly available at present.

While Standard 316, the bar passage accreditation standard, allows schools to meet the standard by demonstrating that 75% or more of those graduates who sat for a bar exam in the five most recent calendar years passed a bar exam, this “ultimate” bar passage data is not publicly disseminated. Thus, while first-time bar passage data is limited and incomplete for the reasons noted above, “ultimate” bar passage data on a law school by law school basis is actually not available.

The modest amount of information available on “ultimate” bar passage rates is not very helpful.  The LSAC National Longitudinal Bar Passage Study contains some analysis of "ultimate" bar passage rates, but it focused on the entering class in the fall of 1991, which it described as being “among the most academically able ever to enter” law school based on entering class statistics (page 14), a description that could not be used with the classes that have entered in the last year or two or three. It also does not contain any information about "ultimate" bar passage for graduates of individual law schools.  In addition, Law School Transparency has recently received some information from at least one law school that has requested anonymity. Much better “ultimate” bar passage information is needed to better inform many of the discussions about the relationship between entering class credentials and bar passage.

4. How can we compare bar passage results from one jurisdiction to another?

Most state boards of law examiners do not present data regarding bar passage that allows reasonable bases for analyzing the results in ways that provide meaningful insight and a meaningful basis for comparison. Fewer than one-third of states publicly provide information in which a delineation is made between first-time takers and repeat takers on a law school by law school basis and only a few of these provide information about MBE scores on a school by school basis. Accordingly, it is very difficult to make meaningful comparisons of year-over-year results in the months following the July bar exam, because data is rarely reported in a consistent manner. The NCBE does provide statistics annually (in the spring) which includes a delineation of bar passage rates by state based on first-time test takers from ABA-accredited schools, but the NCBE does not provide MBE scores on a state by state basis (although it seemingly should be able to do this).

Conclusion

There is a need for much greater transparency in bar passage data from boards of law examiners and from the ABA and ABA-accredited law schools. It well may be that some law schools would be a more meaningful investment for "at-risk" students, those whose entering credentials might suggest they are at risk of failing the bar exam, because those law schools have done a better job of helping "at risk" students learn the law so that they are capable of passing the bar exam at higher rates than graduates of other law schools with comparable numbers of at risk students. It may well be that some jurisdictions provide "at risk" students a greater likelihood of passing the bar exam.  At the moment, however, that information just isn’t available. Much of the disagreement among various commentators about the relationships between admission standards and bar passage rates could be resolved with greater transparency – with the availability of much better data regarding bar passage results.

"PwC expands into legal market"

That's the headline from the Financial Review, a leading Australian business newspaper.  The plot is nearly identical to a September post regarding accounting firms in India. See India, Big 4 and Elite Law Firms in Direct Competition for Highly Lucrative Advisory Work, LWB, Sept 16, 2015.   The salient point is not that accounting firms are outmaneuvering the law firms -- they're not, as both stories report a robust flow of laterals in both directions.  Rather, it's that the accounting firms are in the game at all. 

The story reports:

"There are bigger issues - alternative legal providers, the changing demands of what our people want in terms of non-lineal career paths, the cost pressures on our clients and the demands they place on their lawyers," Baker & McKenzie national managing partner Chris Freeland said.

"That's what keeps me awake at night," he said.

Behind closed doors, however, [the law firms] are genuinely worried about the accounting firms cutting into compliance, due diligence, employment and taxation work, and mergers and acquisitions advisory particularly in infrastructure and inbound investment.

Large law firms identified the accountants as their main rivals in a recent Macquarie Group legal benchmarking survey.

Some law firms are quietly shifting work to boutique accounting firms because they refuse to be in bed with their emerging adversaries.

The Australian legal market liberalized several years, making it possible for nonlawyers to own and control legal enterprises.  In contrast, India has rules that are much closer to the U.S.  Yet, when it comes to the accounting firms, the official rules don't seem to matter much, as the competitive dynamics vis-a-vis big accounting firms in these two countries are very similar.  

A simple explanation is that bar authorities in any country are loath to pursue unauthorized practice of law actions when the clients are multinational corporations and the providers are large accounting firms.  That is too big a fight.  Further, the rules on unauthorized practice are in place to protect clients, not the guild.  Thus, it is not surprising that the accounting firms are getting bolder.  

 The chart below (from The Economist) put things into perspective:

See Attack of the Bean-Counters, Economist, Mar 21, 2015.

The UK's Apprenticeship Levy -- a helpful reset to the legal labor market?

The Law Society Gazette reports a new apprenticeship levy that will be imposed in 2017 on UK employers with more than £3 million in payroll.  The Gazette notes that the levy, which totals .5% of payroll, will sweep in nearly 200 legal employers. 

The program has a potentially clever twist that could prove to be an effective economic stimulus for the UK economy. Employers get a credit for the cost of their current apprenticeship programs.  For the UK legal industry, this means that the bigger firms will be fully paid up just by running their current training contract programs. Yet, the article also notes that "the levy may force a number of firms to develop apprenticeship programmes so that they get their money back."

This is an idea that draws on both liberal and conservative principles.  It's liberal because it mandates, through a tax, a strong national policy that favors human capital creation. Yet, it's also conservative because it lets employers opt out of the tax by running their own apprenticeship programs.  The result is an increase in paid entry-level training for young people and, invariably, some infrastructure being developed around ongoing apprenticeship programs, likely from nonprofits and trade associations who serve or orbit around specific industries. 

In the United States, there are roughly 3,000 law firm employers with a payroll of $5 million or more.  They account for roughly half of the $91 billion annual payroll of all US law firms (NAICS 541110 Offices of Lawyers).  Many law firms are not hiring because client demand is sluggish and it's perceived as more cost effective to use senior personnel who are already trained.  As a result, the US legal profession is graying significantly.  See Is the Legal Profession Showing Its Age, LWB, Oct 12, 2014; What is Driving the Demographic Gap between BigLaw Leaders and their CEO/GC Clients?, LWB, Sept 1. 2015.  

Consider the benefits of a program like this operating in the US.  A .5% apprenticeship levy on $45 billion would mean that no less than $225 million per year would be invested in entry-level training contracts in the legal field, with a significant number of legal employers getting off the sidelines to create their own programs.  Astute bar associations would likely step in to provide logistical and administrative support.  Further, the US Department of Labor already has a detailed legal framework around apprenticeships.

With this kind of financial and administrative support, it is plausible to imagine the US legal profession moving to a true apprenticeship model where training contracts replace the 3L year of law school.  I acknowledge this all sounds very fanciful, but a relatively modest employer apprenticeship tax may be better national policy that asking young people to take on more education-related debt. 

What is the impact of longer hours on lawyer satisfaction?

Every lawyer, law professor, law student, and legal commentator has an opinion on this question. Today we can test our views against actual data. 

This fall, Lawyer Metrics was given the opportunity to analyze survey data supplied to us from by The Indiana Lawyer, the paper of record for the Indiana legal profession.  The sample included 516 respondents drawn from the paper's readership.  My colleague at Lawyer Metrics, Evan Parker, sliced and diced the data in a way the gave us some useful insights into the hours/satisfaction question, at least for a broad swath of lawyers in one midwestern state.

Below is a graphic that shows the average level of satisfaction on various dimensions for Indiana lawyers working 60+ hours per week.  

After the jump are graphs showing averages for lawyers working fewer hours per week.  But before clicking on the hyperlink, answer this question: Are Indiana lawyers with more moderate schedules on average more satisfied or less satisfied than their 60+ hour counterparts? Also, be a good sport and write down your reason why.  

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A Critical, Existential, Sisyphus-ean View of Business Associations (and Maybe Lawyering)....

I'm participating this week in a micro-symposium sponsored by the AALS Section on Agency, Partnership, LLCs, and Unincorporated Associations, taking place online at our sister Business Law Prof Blog. The topic concerns alternative business structures, and whether their focus on private ordering (in comparison to the corporate form) is good, bad, or indifferent.  Other participants include Joan MacLeod Heminway, Dan Kleinberger, Mohsen Manesh, and Sandra Miller.

My contribution is first up.  I would call it ... grumpy.

If I were being more charitable, I would call it "existentially-influenced."  Larry Solum posted one of his "Lexicon" entries yesterday on binaries and scalars in the law, and it gave me pause.  For somebody who's spent a career creating complex structures - corporations, partnerships, LLCs, contracts, mergers - on paper, I'm hardly overwhelmed by their significance.  (In highfalutin terms, I'm skeptical on an ontological basis.)  In my usual fashion, as I was walking the dogs this morning, and thinking just what I did believe was important, I decided it was the fact that we have to decide over and and over and over again what to do.  The relevance of this to contracts and business forms is that, having created them, they only marginally limit the fact that we have to keep deciding over and over and over again what to do.

Then, like a flash it dawned on me!  Binaries and scalars.  Is our consciousness, the place where we do that deciding, in physics terminology, a wave (i.e. metaphorically scalar) or a series of particles (metaphorically binary)?  True to the quantum insight, I decided it was both (even though the dogs were clearly alive at the time).  

That is, life feels like it flows along classically, according to the structures (like contracts and corporations) we build, but in fact it is a series of discrete yes-no moments in which we are deciding at every one of them to do or not to do (just as now I am deciding not to grade term papers and instead am procrastinating with useless cogitation).

Why spend so much time creating the structures if I'm so cynical about them? That's the Sisyphus part. Hey, pushing the boulder up the hill is a living.  But I do get to think about it while walking down to pick it up again.

The Power of Focus

Several years ago an Indiana Law alum told me about a video on the Internet that I needed to watch. It was a 1997 Q&A session with Steve Jobs at a conference of Apple developers.  Jobs had been fired by the Apple board 12 years earlier but at the time of the video had just been rehired to help turn the company around.  

"It's amazing because Jobs essentially describes cloud computing and smartphones nearly a decade before they had entered the market," the alum, who was very successful in business, told me. "To turn them into actual products, Jobs talks about the power of focus and the necessity of always working backwards from the customer. This video is important because it reveals the Jobs playbook before anyone knew it was actually going to work."

Back in my home office, I watched the video several times.  And every six months or so I have watched it again (like this morning) to help me evaluate the extent to which I have internalize the core insights.  As it turns out, focus and working backwards from students and clients is not my natural mode of thinking. Fortunately, as the video suggests, Jobs developed this mindset through the gradual process of trial and error. In short, it was learned.

The November issue of The American Lawyer contains an essay where I review the Jobs video and apply its core insights to the struggle over market share that is enveloping the large law firm sector.  I think my essay is good, but the video itself is timeless.  Hence, I am posting the video on The Legal Whiteboard.  If you are interested in why most things fail, but a handful of things succeed in a really big way, I encourage you to watch it.

 

(H/T Pete Yonkman, Indiana Law '98).

Part IV: Alumni Surveys, The Varied Career Paths of Law School Graduates

This is Part IV of a blog series that focuses on alumni surveys based on data for Northeastern Law alumni who graduated between 1971 and 2012 (n = 833, 21% response rate).  Prior posts covered data related to the pre-law (Part II) and law school (Part III) experience.  This final installment summarizes data on the careers of Northeastern alumni. 

Varied Careers

One of the most significant post-law school findings from the Northeastern alumni survey is the sheer breadth of careers.  Sure, we all know in a general sense that lawyers have very diverse careers, yet I found the sheer magnitude of that diversity both striking and surprising.

Below is a graphic that summarizes the percentage of Northeastern alumni who have worked in a particular practice settings,by decade of graduation.

% Alumni/ae who have worked in Practice Setting, by Decade of Graduation

To interpret this graphic [click on to enlarge], it is important to understand the composition of the underlying data.  The survey question asks, “Describe your previous employment history starting with your most recent employer first.”  Some graduates have only one job to report -- the one they started after graduation; others have had many.  These jobs are then classified by practice setting and binned into the six categories shown in the above graphic.  Note that bars total well beyond 100%. Why?  Because alumni are changing not just jobs, but also practice settings—on average, at least once, but sometimes two, three, or even four times over the course of several decades.

The graphic above conveys several significant pieces of information:

General point.  Legal careers are extremely varied.  As it has tightened up, the entry level market has become an area of intense scrutiny, and rightly so because it affects early career lawyers and law school applicant volume.  In contrast, the chart above reflects the longer view. It suggests that very able, motivated people who attend law school go on to varied careers that no one could have predicted at the time of enrollment, including--most significantly--the entering student.  These generational cohorts are a versatile group that comprise a disproportionate number of leaders in industry, government, and the nonprofit world.  Law schools cannot take full credit for this; we admit people of enormous potential.  Yet many alumni tell me that their legal training and knowledge has given them an enormous leg up. One law grad who is now a successful business executive recently asked me, "Why is it JD-advantaged? Why not the advantage of the JD?" 

Northeastern.  It is somewhat surprising that for Northeastern alumni who graduated during the 1970s, 80s, and 90s, 48% have worked in government.  That is a big number.  Northeastern’s mission and faculty emphasize public service. This same emphasis appears to be reflected in the careers of its graduates.

Changing Legal Ecosystem.  As noted in Posts II and III, because the Northeastern alumni survey spans multiple decades, it is possible that responses will be influenced by changes in the underlying legal economy. Stated simply, career opportunities and competition may have changed substantially between 1971 and 2012.  Such a pattern appears to be present here.  Specifically, 30% or more of graduates of the 1990s and 2000s have worked in private industry compared to 24% or less for those graduating in the 1970s and 80s.  This would be consistent with the incomplete absorption theory discussed in Part III.  See also Henderson, “Is the Legal Profession Showing its Age,” LWB, Oct 12, 2015.

Practicing versus Non-Practicing Lawyers

Another significant finding that flows from the Northeastern alumni survey are the workplace experiences of practicing versus non-practicing lawyers. 

Approximately 25% of respondents were not practicing lawyers but working, with no significant difference by decade cohort. The chart below compares these two groups based on 19 dimensions of workplace satisfaction. The question is drawn directly from the AJD Wave III:  “How satisfied are you with the following aspects of your current position?” 

Dimensions of Workplace Satisfaction, Practicing vs. Non-Practicing Lawyer

 

Choices ranged from 1 (highly dissatisfied) to 7 (highly satisfied).  The chart above summarizes the differential between the two groups.  For example, on Intellectual Challenge, we subtracted the non-practicing attorney average from the practicing attorney average.  The result is +.35 difference for practicing attorneys, meaning that they are more likely to find intellectual challenge in their work.  Likewise, the same results holds for the substance of one's work.  

In contrast, on workplace diversity, non-practicing lawyers were significantly more satisfied – on average, roughly 2/3 of a response point.  In fact, non-practicing lawyers were more likely to rate their workplaces higher on several surprising factors, including social value of work, performance reviews, work/life balance, and pro bono opportunities.

Can we generalize from these findings?

The results presented in this blog series reflect the collective experience of one law school’s alumni base – Northeastern.  There is no way to know if these results can be fairly generalized to the larger law graduate population, though there is a reasonable basis to believe that at least some of them can (e.g., the changing ecology of the legal job economy).  Yet, why speculate when the cost of collecting and analyzing the data is going down and the value of such applied research is going up?

Let me reiterate my suggestion from Part I that a consortium of law schools should begin this effort under the aegis of the American Bar Foundation (the prime architect of the AJD Project).  Northeastern has agreed to donate the survey and research tools we created as part of the Outcomes Assessment Project.   Such an initiative would enable researchers to draw stronger conclusions from these data, including potentially laudatory school-level effects that can help the rest of legal education. 

I have been researching legal education for many years.  I have spent enough time with alumni at Indiana Law, Northeastern Law, and several other law schools to gain a strong impression that law school graduates are having, on balance, important, satisfying and high-impact careers.  Further, there is strong evidence that the legal industry is undergoing a significant structural change – that is much of what the Legal Whiteboard catalogs.  This structural change topic is of great interest to prospective students, lawyers, and the mainstream press.  Yet, these two themes--the careers of alumni and structural change--are related. 

If legal education wants to influence the narrative on the value of the JD degree, it is far better to rely on data rather than rhetoric.  My sense is that data on our alumni will tell a rich, balanced story that will enable us to make better decisions for all stakeholders, including prospective law students. Further, if we don’t gather high quality facts, we can expect to get outflanked by a blogosphere and a mainstream press that are armed with little more than anecdotes.  To a large extent, that is already happening.  Now is the time to catch up.

Credits

This blog post series would not have been possible without the dedication and world-class expertise of my colleague, Evan Parker PhD, Director of Analytics at Lawyer Metrics.  Evan generated all the graphics for the Northeastern Alumni/ae Survey and was indispensable in the subsequent analysis. He is a highly talented applied statistician who specializes in data visualization.  Evan, thanks for you great work!

For other “Varied Career Path” findings, see the full Alumni/ae Survey Report at the OAP website. 

Links:

Part I:  What Can We Learn by Studying Law School Alumni? A Case Study of One Law School

Part II, Alumni Surveys, Before-Law School

Part III: Alumni Surveys, During Law School

Part III: Alumni Surveys, Responses on the Law School Experience

Part II of this blog series reported that the top motivations to attend law school have remained the same for over four decades, at least for Northeastern University School of Law (NUSL).  Alumni reported the same underlying desire: to build a satisfying, intellectually challenging career where they could help individuals and improve society. This may be an image forged by pop culture and the idealism of youth, but it is also likely sincere.  It is the better side of our human nature. 

Part II also showed two motivations to attend law school – the desire for “transferable skills” and “eventual financial security"-- that did appear to be shifting over time.  I suggested that these shifts are more likely about a changing ecosystem than a fundamental shift in the type of people applying to law school.  

A similar ecological theme can be observed in the "During Law School" data. For example, since its reopening in 1968, Northeastern Law has required every graduate to complete four 11-week cooperative placements, usually in four different practice settings (e.g., government agency, public defender, large firm, public interest organization). As noted in Part I, students can be paid during co-op because it is a university rather than an ABA requirement. Cf. Karen Sloan, “The ABA says No to Paid Student Externships,” Nat’l L J, June 10, 2014.

One series of questions in the alumni survey specifically focused on the co-op experience, including co-op quality, what was learned, and whether they were paid.  The chart below reveals a steady, four-decade decline in the number of paid co-ops.

 

In the early 1970s, essentially all four co-ops were paid.  By the mid-80s, the average was down to three. Since the 2000s, the average has been two or fewer paid co-ops.

To my mind, the above trendline is compelling evidence of a steady, systemic shift in the legal ecosystem. I have written about this pattern in the past, suggesting that the rate of absorption of law grads into the licensed bar has been going down since the 1980s.  See Henderson, “Is the Legal Profession Showing its Age,” LWB, Oct 12, 2014 (noting that between 1980 and 2005, the average age of licensed lawyers increased from 39 to 49).  

When I saw this downward trendline for the first time, I recalled my numerous interviews with NUSL alumni/ae from the 1970s. In describing their co-ops, they spoke of opportunities that were plentiful and varied. I often heard the refrain, “I paid for law school mostly with my income from co-op.”  Note that during the 1970s, graduating from college was much less prevalent than today.  Law firms were also growing, with 1970 becoming a major inflection point in the rise of the large law firm. See Galanter & Palay, Tournament of Lawyers (1991) (seminal text collecting and analyzing data on the growth of large firms).

The trendline on paid co-ops also made me rethink what I heard from NUSL co-op employers. The school has roughly 900 employers who regularly or semi-regularly participate in co-op.  I heard several regular employers express strong preferences for “third or fourth co-ops." Why?  Because third or fourth co-op students already had significant legal experience and needed less training to be valuable to the employer.  Training is costly. Even if the trainee is unpaid, the lawyer-as-teacher is expending their own valuable time.  If an employer is going to provide training, they need a way to recapture that investment. Unpaid labor for eleven weeks is one potential way; if the labor is already partially trained, that is even better.

Unfortunately, doing a great job for a co-op employer does not guarantee permanent employment or even a modest wage for temporary work.  The legal ecosystem does not reliably and consistently support those outcomes. Yet, 20, 30, or 40 years ago, the dynamics were far more favorable. 

Obviously, in the year 2015, law grads are having a difficult time finding permanent, long-term professional employment (bar passage-required, JD-advantaged, or non-legal professional jobs).  The shortage of high-quality entry level jobs has given rise to criticisms that legal education needs more practical training.  The implicit assumption is that such a change will cure the underemployment problem.  I am skeptical that is true. 

A more likely explanation for law grad underemployment is that the supply of trained lawyers is in excess of demand, partially due to demographics and partially due to the inability of most citizens to afford several hours of a lawyer's time.  This is a very difficult problem to fix. But misdiagnosing the problem does not help.

To the extent a legal employer is looking for a practice-ready law grad, Northeastern’s co-op model is as likely to deliver that outcome as anything else I have observed.  My in-depth review for how co-op affects professional development is written up in OAP Research Bulletin No. 3.  Ironically, what may be the best practice-ready model among ABA-accredited law schools is a 50-year old program that most critics may not know exists. But see Mike Stetz, “Best Schools for Practical Training,” Nat’l Jurist, March 2015 (ranking Northeastern No. 1).

The experiential education crowd will be heartened by another “During Law School” finding.  Among 833 alumni respondents, there were more than 3,200 co-ops identified by practice setting.  Alumni were asked to identify their most valuable co-op and provide a narrative as to why. 

Below is a chart that plots the difference between the baseline frequency of a particular co-op practice setting and how often that practice setting was picked as the most valuable.  The scale is in standard deviation units, with “par” meaning that the practice setting was most valuable in the same proportion as its frequency in the overall sample.

 

It is not hard to see the common theme.  Co-ops where students can observe lawyers in action – or better yet, get stand-up time in court – were rated as much more valuable.  The table below captures some of the underlying narrative comments.

For other “During Law School” findings, see the full Alumni/ae Survey Report at the OAP website. 

Links:

Part I:  What Can We Learn by Studying Law School Alumni? A Case Study of One Law School

Part II, Alumni Surveys, Before-Law School

Part IV: Alumni Surveys, The Varied Career Paths of Law School Graduates

Part II: Alumni Surveys, Pre-Law Characteristics and Motivations

Building on the introduction (Part I) of this blog series, our alumni survey of Northeastern University School of Law yielded cross-sectional data that span graduates from 1971 to 2012.  Because of the large time span, some of the most interesting responses to questions tend to fall into two buckets:

1. What is staying the same?  Here we are looking for response patterns that are relatively stable and constant across age cohorts.
2. What is changing?  Likewise, we are also interested in responses that appear to be changing as a function of time of graduation.

In the portion of our analysis that looked at pre-law characteristics and motivations, our most striking findings tended to fall into bucket #1. 

For example, below is a graphic summarizing responses to the question, “How important were the following goals in your decision to attend law school?” Responses are organized by decade of graduation.  They are ordered by most important to least important for respondents who graduated in 2000 or later.

                              Goals for Attending Law School, by Decade of Graduation

One of the most striking features is that the top three responses are essentially identical for all four age cohorts.  For each group, the desire to have a satisfying career, help individuals, and improve society were all, on average, very important in the decision to attend law school. 

Although there are differences across age cohorts, there remains relatively clear clustering by decade of graduation. (Query: would this same pattern hold true at other law schools?  One of the advantages of pooling data across schools is the ability to isolate a self-selection effect that operates at the school level.)

Yet, some factors appear to be changing over time, such as the importance of transferable skills and eventual financial security.  With each decade cohort, respondents are rating these factors progressively more important to their decision to attend law schools. Likewise, “other goals” appear to be progressively less important. 

These patterns (and others survey results I will report in Parts III and IV) suggest gradual changes in the knowledge worker ecosystem that require students to be more deliberate and focused in their decision to attend law school.  For example, costs of all of higher education are going up at the same time that the financial payoffs of traditional graduate and professional education are becoming less certain.  This is an ecological effect that is bound to have an influence on students and student decision making.  Although legal education would be part of this shift, the shift itself would not be unique to law.

This interpretation is consistent with our focus group discussions with Northeastern alumni.  This group queried whether the term “transferable skills” was even part of the lexicon when they were graduating from college.  Likewise, the group commented that the decision to attend law school during the 1970s and 1980s was not difficult because tuition was relatively low and jobs, including paid co-op jobs, were relatively plentiful. Although the legal market may be tighter and more complex than in earlier decades, the Northeastern alumni commented that the tradeoffs were changing for all knowledge workers.  

For other “Before Law School” findings, see the full Alumni/ae Survey Report at the OAP website. 

Links:

Part I:  What Can We Learn by Studying Law School Alumni? A Case Study of One Law School

Part III: Alumni Surveys, During Law School

Part IV: Alumni Surveys, The Varied Career Paths of Law School Graduates

Part I: What Can We Learn by Studying Law School Alumni? A Case Study of One Law School

Several years ago, as the legal academy was beginning to work its way through the implications of the landmark “After the JD” Project (AJD), one of the principal investigators, Bryant Garth, commented to a group of fellow law professors that “within a few years it will be educational malpractice for law schools to not study their own alumni.”

Garth had special standing to make this claim, as he had launched the AJD during his long tenure at the American Bar Foundation and then went on to serve as Dean of Southwestern Law School in Los Angeles. While at Southwestern, Garth taught a short 1L course about legal careers that combined AJD findings with live interviews with Southwestern alumni. Despite decades of research studying lawyers, Garth gushed at how much he personally learned from these interviews and how the narratives were often surprising and inspiring, particularly for Southwestern students filled with apprehension at what the future might hold.

I had occasion to remember Garth’s observations in early 2011 when Emily Spieler, then the Dean of Northeastern University School of Law (NUSL), suggested that I study her alumni.

Northeastern Law

Northeastern is an interesting case study because for nearly 50 years the school has required four 11-week cooperative placements (or “co-ops”) as a condition of graduation. To facilitate completion within three years, the 1L year at Northeastern is taught in semesters while the 2L and 3L years are taught over eight alternating quarters. Summer-winter co-op students take classes during the fall and spring quarters, while fall-spring co-op students attend classes in the summer and winter quarters. Because co-ops are not for academic credit – they fulfill Northeastern University rather than ABA-accreditation requirements – students can be paid for the full 11 weeks. (More on that in Part III of this series.)

Dean Spieler wanted a third party to study Northeastern because, in her experience as dean, her many encounters with Northeastern alumni suggested to her that the School’s unusual education model was accelerating the professional development of its students and enabling them to make better, more informed career choices.

Acceleration of profession development is a very difficult effect to measure, but it is certainly plausible. In fact, the entire experiential law movement is largely premised on this claim. So I signed onto a multi-year initiative that we called the Outcomes Assessment Project (OAP).

The premise of the OAP was very unusual. Through a generous but anonymous benefactor, the research tools and templates developed for the OAP would be made available to other law schools interested in studying graduates. The intent is for law schools to accumulate data using similar methods and instruments, driving up the value of the data (because it is comparable across schools) while driving down the cost of collection and analysis.

There are many phases to the OAP, including those focused on admissions, the student experience, and co-op employers. Here, however, I wanted to write about what we learned from a survey of Northeastern’s alumni.

Last fall, we sent a survey instrument to Northeastern alumni who graduated from the law school between 1971 and 2012 (~4,000 law grads for which NUSL had a current email address). The survey instrument was substantially based on the AJD Wave III survey instrument, which was sent to a representative sample of law graduates from all ABA-accredited law schools who took the bar in the year 2000.

In contrast to the AJD, which has produced remarkable knowledge about law school grads from the year 2000, the OAP Alumni/ae Survey included four decades of law graduates from a single law school. Although this is not a true longitudinal sample, which samples the same people over time, this methodology enables cross-sectional comparisons between different cohorts of graduates (e.g., by decade of graduate or pre/post AJD).

The response rate of the Northeastern alumni survey was 21% (833 total completed questionnaires), which is relatively high for a long online survey. Because the resulting sample substantially mirrored the baseline data we had for Northeastern alumni practice areas and years of graduation, we were confident that the resulting sample was both representative and reliable.

Applied Research

Similar to the AJD, the OAP Alumni/ae Survey produced enough data to keep researchers busy for several years. Hopefully, these data will eventually be archived and aggregated at the American Bar Foundation or a similar institution in order to facilitate a broader and deeper understanding of legal careers.

However, the OAP was largely set up to be applied research. What does this mean? Here, the goal is, at least in part, to obtain data that is operational in nature, thus enabling a law school to examine and test fundamental assumptions and generate insights related to its stated goals and mission. In a word, to improve.

Further, when skillfully boiled down using data visualization, the findings themselves tend to be of great interest to all law school stakeholders, including alumni, faculty, administrative staff, current students, and prospective students. Interest is particularly piqued during times of transition and uncertainty, such as now, when law schools and the practicing bar are looking to each other to provide potential answers and support.

To makes results as accessible as possible, we decided to present the preliminary Alumni Survey results in a simple three-part framework:

• Before Law School: pre-law characteristics and motivations
• During Law School: the law school experience
• After Law School: job mobility and satisfaction

This week, I am going to give a sampling of findings from all three sections – findings that will likely be of interest to a non-Northeastern audience of law faculty, practicing lawyers, and students. If you are interested in reading the entire preliminary report, it can be found online at the Northeastern OAP website.

Links:

Part II, Before-Law School

Part III: Alumni Surveys, During Law School

Part IV: Alumni Surveys, The Varied Career Paths of Law School Graduates

Is there a right way to respond to the "Law School Debt Crisis" Editorial?

Amidst all the other newsworthy topics, the New York Times editorial board made law school debt the lead editorial for today's Sunday edition. And the story line is not good.  

The editorial starts with the bleak statistics for Florida Coastal Law School -- low median LSAT scores and high debt loads, casting doubt on whether its graduates can pass the bar exam and repay their federally financed student loans.  The editorial highlights Florida Coastal' for-profit status but goes on to note that the rest of legal education is not much better. 

A majority of American law schools, which have nonprofit status, are increasingly engaging in such behavior, and in the process threatening the future of legal education.

Why? The most significant explanation is also the simplest — free money.

The editorial details changes in federal higher education finance that created the Direct PLUS Loan program, which, over-and-above Federal Stafford Loans, underwrites up to the full cost of attendance as determined by each law school.  The combination of poor job prospects and high debt have depressed applicant volume.  As the Times editorial notes, the systemic impact has been to lower admissions standards to sweep in students who will, as a group, struggle to pass the bar exam following graduation.  Virtually all of this is financed by DOE loan money.

I don't think the typical member of the legal academy understands the precarious financial condition of legal education.  The precariousness exists on two levels: (1) our financial fate is in the hands of the federal government rather than private markets; and (2) the Times editorial suggests that we have a serious appearance problem, which draws down the political capital needed to control our own destiny.  With the political winds so goes our budgets. 

I think it is important for the Association of American Law Schools (AALS) to take some decisive action in the very near future.  In this blog post, I explain where the money comes from to keep the law school doors open and why, as a consequence, we need to pay closer attention to the public image of legal education.  I then offer some unsolicited advice to the AALS leadership. 

(1) Who pays our bills?  

Over the last decade, the federal government has, as a practical matter, taken over the financing of higher ed, including legal education.  

Here is how it works.  Any law student who needs to borrow money to attend law school is strongly incentivized to borrow money from the Department of Education (DOE).  Although the DOE loans carry high interest rates -- 6.8% for Stafford Loans and 7.9% for Grad Plus -- they include built-in debt relief programs that functionally act as insurance policies for the risk that a graduate's income is insufficient to make timely loan repayments.  Law school financial aid offices are set up around this financial aid model and make it very easy for students to sign the loan documents, pay their tuition, and get disbursements for living expenses.

In the short to medium term, this is good for the federal government because the loans are viewed as income-producing assets in the budgets that get presented to and approved by Congress. But in the longer term this could backfire if a large portion of students fail to repay their full loans plus interest.  Federal government accounting rules don't require projections beyond ten years.  But already the government is beginning to see the size of the coming write-downs for the large number of graduates who are utilizing the Public Service Loan Forgiven program, which has a ten-year loan forgiveness horizon. And it is causing the feds to revise their budgets in ways that are politically painful.  With the loan forgiveness programs for private sector law grads operating on a 20- to 25-year repayment window, the magnitude of this problem will only grow.  

The enormous risk here for law schools is that Congress or the DOE will change this system of higher education finance.  For example, the Times editorial calls for capping the amount of federal loans that can be used to finance a law degree.  Currently, the limit on Stafford Loans for graduate education is $20,500, but Grad Plus loans have no limit at all.  If the DOE were to cap Grad Plus at $29,500 per year, leading to a total three-year federal outlay of $150,000 per law student, this would have an enormous adverse impact on the typical law school budget.

Law School Transparency reports that the average law school debt load for a 2014 law graduate is $118,570, but we know very little about the full distribution.  Because of the pervasiveness of the reverse Robin Hood policy, which uses tuition dollars of low credentialed students to finance scholarships for their high credentialed peers, there is likely a significant percentage of students at most law schools who graduate with more than $150,000 in law school debt.   Further, according to US News, there are twelve law schools -- including three in the T14 -- where the average law school debt load is more the $150,000.  Although there are no statistics on the percentage of law students graduating with greater than $200,000 in law school debt, law students tell me this amount is common. 

I have translated this meager public information into the chart below. The area in green is the volume of money that could disappear from law school budgets if the federal government imposed a hard limit on federally financed law school lending.

Why would this money be at grave risk?  Two reasons:

First, private lenders will be reluctant to cover the entire shortfall.  For decades, private lenders played an important roll in law school finance.  But these lenders got pushed out of the market by the changes in federal higher ed finances described above.  Unfortunately, in the intervening years, the ratio of earning-power-to-debt has gotten too far out of whack.  To come back into this market, private lenders would need to be confident that loans would be repaid.  That likelihood is going to vary by law school and by law student, raising the cost of lending.  This means that, to varying degrees, virtually all law schools would have to sweat over money.  Unlike Grad Plus, private lenders may balk at financing full sticker tuition for lower credentialed students trying to attend the highest ranked school that admitted them.

Second, private lenders will not offer the same loan forgiveness options, such as IBR and Public Service Loan Forgiveness, currently offered by the federal government.  With the curtailed scope of these functional insurance programs, some portion of prospective law students will likely be unwilling to sign loan documents in excess of the federal lending cap.  Even very elite schools will feel the pain here.

(2) An appearance problem in the world of politics

I would bet a lot of money that law faculty have been emailing the Times editorial to one another, criticizing its lack of nuance.  But here is our problem.  We are not in a court where a judge will listen to our elegant presentation of facts and law.  Nor are we in the world of private markets where we can expect people to reliably follow their own economic self-interest.  We are in the realm of politics where sides get drawn based on appearance and political expediency.  To make matters worse, the legal academy just got lambasted by the paper of record on the left.

It is hard to argue that a cap on federal funding of legal education would be bad policy for students, the legal profession, taxpayers, or broader society.  Such a change would:

1. Reduce the number of law grads going into a saturated labor market;
2. Reduce the number of low credentialed students admitted to law school who will one day struggle to pass the bar;
3. Reduce the risk of nonpayment of students loans currently borne by US taxpayers;
4. Put in place serious cost-containment on legal education.

For law schools, however, such a change would produce layoffs and pay reductions.  And that may be the fate of the luckier schools.   It is widely known that most law schools are running deficits.  Central universities are looking for ways to wait out the storm.  But the cliff-like quality of a federal cap on law school lending would call the question of how much support is too much.  

What's the solution?

Legal education has a cost problem, but so does the entire higher ed establishment. Here is my unsolicited advice.

The leadership of the AALS needs to take a very strong public position that the trend lines plaguing higher ed need to be reversed.  This is not risky because it is so painfully obvious.  The AALS should then, in conjunction with the ABA, send a very public delegation to the Dept of Education. The delegation should be given a very simple charge:  Help the DOE

1. Outline the systemic problems that plague higher education 
2. Articulate the importance of sound policy to the national interest
3. Formulate a fair and sustainable solution. 

I have faith that my legal colleagues would do a masterful job solving the problems of higher education.  And in the process, we'll discover that we have become the architects of a new system of higher ed finance that will be fair and equitable system for all stakeholders, including those employed in legal education.  That's right: act decisively to ensure a fair and equitable deal.  The only drawback is that it won't be the status quo that we'd instinctively like to preserve. 

"Called On": A Novel by Lisa McElroy

I learned that friend Lisa McElroy (Drexel) has published her novel Called On with friend Alan Childress's (Tulane) Quid Pro Books.  From the blurb:

Libby Behl and Connie Shun are both at Warren Law because they want to make the world better. First-year student Libby’s got a lot to learn about law — not to mention love, long nights, and low-grade coffee. Through a difficult year, her professor Connie starts to question what she knows about how law — and justice — work. Witty and insightful, Called On is an insider’s peek into the struggles of learning law and the satisfaction of finding a new path in life.

The book is available in a Kindle edition.

Quid Pro also publishes Lawrence Friedman's (not just a historian, but a novelist too) "Frank May" mysteries, the latest of which is Dead in the Park.

Part Two - The Impact of Attrition on the Composition of Graduating Classes of Law Students -- 2013-2016

In late December 2014, I posted a blog entitled Part One – The Composition of the Graduating Classes of Law Students – 2013-2016.  That blog posting described how the composition of the entering classes between 2010 and 2013 has shifted.  During that time, the percentage at or above an LSAT of 160 dropped by nearly 20% from 40.8% to 33.4%.  Meanwhile, the percentage at or below an LSAT of 149 increased by over 50% from 14.2% to 22.5%. 

But this reflects the composition of the entering classes.   How do the graduating classes compare with the entering classes?  This depends upon the attrition experienced by the students in a given entering class.  This much belated Part Two discusses what we know about first-year attrition rates among law schools.

I have compiled attrition data from all of the fully-accredited ABA law schools outside of Puerto Rico for the last four full academic years.  I have calculated average attrition rates for the class as a whole and then broken out average attrition rates by law schools in different median LSAT categories – 160+, 155-159, 150-154 and <150.

In a nutshell, overall first-year attrition increases as the median LSAT of the law school decreases.  Over the last few years, while “academic attrition” has declined for law schools with median LSATs of 150 or greater, “other attrition” has increased modestly, particularly for law schools with median LSATs <150, resulting in a slight increase in overall first-year attrition between 2010 and 2013.

Overall First-Year Attrition Rates Have Increased Slightly

In calculating attrition rates, I wanted to capture those students who are no longer in law school anywhere.  Thus, for these purposes, “attrition” is the sum of “academic attrition” and “other attrition.”  “Academic attrition” occurs when a law school asks someone to leave because of inadequate academic performance.  “Other attrition” occurs when a student departs from the law school volitionally. Both of these categories exclude “transfers.”

The following chart shows that despite the declining “LSAT profile” of the entering classes between 2010 and 2013, there has been no meaningful change in the average “academic attrition” rate.  The modest increase in overall first-year attrition over this period, from roughly 5.8% to roughly 6.6%, is largely due to a growth in the “other attrition” category from roughly 2.5% to roughly 3.2%.

Overall First-Year Attrition for Classes Entering in 2010, 2011, 2012, and 2013

	Beg. Enrollment	Academic Attrition	% Academic	Other Attrition	% Other	Total Attrition	% Attrition
2010-11	50408	1673	3.32	1256	2.49	2929	5.81%
2011-12	46477	1551	3.34	1262	2.72	2813	6.06%
2012-13	42399	1461	3.45	1186	2.8	2647	6.25%
2013-14	38837	1316	3.39	1236	3.18	2552	6.57%

 (Calculating attrition rates for 2010-11, 2011-12 and 2012-13, is a little more complicated than one might think.  For ABA reporting years of 2011, 2012, and 2013, “academic attrition” was reported separately, but “other attrition” included “transfers out.” Thus, to generate the real “other attrition” number, one needs to “subtract” from “other attrition” the numbers associated with “transfers out.” Because some schools occasionally listed transfers out in “second year” “other attrition,” this analysis should be understood to have a little fuzziness to it for years 2010-11, 2011-12 and 2012-13.  For ABA reporting year 2014, transfers out were not commingled with “other attrition,” so the calculations were based solely on the sum of “academic attrition” and “other attrition.”  Beginning with reporting this fall, “academic attrition” will include both involuntary academic attrition as well as voluntary academic attrition (students who withdrew before completing the first-year, but were already on academic probation).)

Academic Attrition Rates Increase as Law School Median LSAT Decreases

Notably, there are different rates of attrition across law schools in different LSAT categories.  The following chart breaks down attrition by groups of law schools based on median LSAT for the law school for the entering class each year.  For each year, the chart shows the average first-year attrition rates for law schools with median LSATs of 160 or higher, for law schools with median LSATs of 155-159, for law schools with median LSATs of 150-154 and for law schools with median LSATs less than 150.  In addition, it breaks out “academic attrition” and “other attrition” as separate categories for each category of law school and for each year and then provides the total overall attrition rate each year along with the four-year average attrition rate.

Average Attrition Rates by Category of Schools Based on Median LSAT

	2010-11			2011-12			2012-13			2013-14
Median LSAT	Acad	Other	Total	Acad	Other	Total	Acad	Other	Total	Acad	Other	Total	Four-Year Average
160+	0.6	1.7	2.3	0.6	1.9	2.5	0.4	2.0	2.4	0.3	1.5	1.8	2.3
155-159	2.9	2.6	5.5	2.2	2.8	5.1	2.1	2.9	5.1	1.7	3.2	4.9	5.2
150-154	6.3	3.8	10.1	6.2	3.4	9.6	6.0	3.7	9.7	4.2	4.3	8.5	9.4
<150	10.1	2.4	12.5	9.4	3.8	13.2	9.1	3.0	12.2	9.7	4.7	14.4	13.1

 

When looking at this data, some things are worth noting. 

First, across different LSAT categories, overall attrition increases as you move from law schools with higher median LSATs to law schools with lower median LSATs, going from an average over the four years of 2.3% for law schools with median LSATs of 160+, to 5.2% for law schools with median LSATs of 155-159, to 9.4% for law schools with median LSATs of 150-154, to 13.1% for law schools with median LSATs of <150.  “Academic attrition” consistently increases as median LSAT decreases, while “other attrition” is mixed. (Although this analysis is focused on four LSAT categories, the trend of having overall attrition increase as median LSAT decreases continues if you add a fifth LSAT category. In 2010-11 there was only one law school with a median LSAT of 145 or less, with only 320 students.  By 2013-14, however, there were nine law schools with a median LSAT of 145 or less, with 2,075 students.  The overall first-year attrition rate (encompassing academic attrition and other attrition) at these nine schools in 2013-14 was 15.9 percent.  The overall attrition rate at the other 24 law schools with a median LSAT less than 150 was 13.6 percent.) 

Second, over the period from 2010-2013, “academic attrition” generally appears to be flat to decreasing for schools in all LSAT categories except for 2013-14 year for law schools with median LSATs <150, where it increased slightly (largely because of the larger number of schools with median LSATs of 145 or less).  By contrast, “other attrition” presents more of a mixed record, but generally appears to be increasing between 2010 and 2013 for schools in most LSAT categories.  Nonetheless, average overall first-year attrition is lower in 2013-14 for law schools in the top three LSAT categories.

Third, if you are wondering why the average overall attrition could be increasing while the overall attrition rates for the top three LSAT categories are decreasing, the answer is because of the changing number of students in each category over time.  As noted in Part I, the number of students and percentage of students in the top LSAT category has declined significantly, while the number of students and percentage of students in the bottom LSAT category has increased significantly.  This results in the average overall attrition rate increasing even as rates in various categories are decreasing.

Thoughts on Attrition Rates

It makes sense that “academic attrition” increases as law school median LSAT decreases.  It seems reasonable to expect that law schools with median LSATs of <155 or <150 will have higher “academic attrition” rates than those with median LSATs of 155-159 or 160 and higher. 

It may make less sense, however, that “academic attrition” generally decreased across all four categories of law schools between 2010-11 and 2013-14 (with the exception of law schools with a median LSAT <150 in 2013-14), even as the LSAT profile of each entering class continued to decline.  With an increase in the number and percentage of law students with LSATs of <150, particularly those with LSATs of <145, one might have anticipated that the average rate of “academic attrition” would have increased, particularly among law schools with median LSATs of 150-154 (who might have seen an increase in the number of students with LSATs less than 150) and among law schools with median LSATs of <150, given the increase in the number of law schools with median LSATs of 145 or less. 

Cynics might argue that from a revenue standpoint, law schools are making a concerted effort to retain a higher percentage of a smaller group of students.  But this assumes a degree of institutional purposefulness (coordination among faculty) that is rare among law schools.  Moreover, my sense is that there are much more benign explanations.

First, if law schools have not adjusted their grading curves to reflect a different student profile, then the standard approach to first-year grading – which involves a forced curve at most schools -- is likely to produce a similar percentage of “at risk” students year over year even though the objective credentials of each entering class have declined. 

Second, with the decline in the number of applicants to law school, one might surmise that those choosing to go to law school really are serious about their investment in a legal education and may be working harder to be successful in law school, resulting in fewer students facing academic disqualification, even though the credentials for each entering class have been weaker year over year.  This may be particularly true in law schools with robust academic support programs which may be helping some students on the margin find sufficient success to avoid academic attrition.

Third, and perhaps most significantly, however, is the reality that “academic attrition” and “other attrition” are related.  Indeed, that is why I have reported them together in the charts above as two components of overall attrition.  Some students who might be at risk for “academic attrition” may decide to withdraw from law school voluntarily (and be classified under “other attrition” rather than “academic attrition”). In addition, it is possible that other students, particularly at law schools with median LSATs <150, may be voluntarily withdrawing from law school because they have decided that further investment in a legal education doesn’t make sense if they are performing relatively poorly, even though the law school would not have asked them to leave under the school’s policy for good academic standing. 

The fact that the percentage of students in each entering class with LSATs of <150 and even <145 has increased substantially between 2010 and 2013, while the rate of overall first-year attrition has increased only modestly over this time period, suggests that the composition of graduating classes (based on LSATs) will continue to weaken into 2016 (and probably 2017 if attrition patterns did not change in 2014-15).  As a result, the declines in the median MBE scaled score in 2014 and 2015 could be expected to continue in 2016 and 2017.  Some law schools also are likely to see bar passage rates for their graduates decline, perhaps significantly, in 2015, 2016 and 2017.

Unanswered Questions

This analysis focuses on first-year attrition.  There continues to be attrition during the second year and third year of law school, generally at lower rates, perhaps 2-3% of second-year students and 1-2% of third-year students.  (On average, the number of graduates in a given class has been around 90% of the entering class.)  It is not clear yet whether attrition among upper level students follows similar patterns across different categories of law schools.  The publicly-reported attrition data also does not provide any information regarding the gender or ethnicity or socio-economic background of students leaving law school.  Therefore, we don’t know whether there are different rates of attrition for women as compared with men or whether students of different ethnic backgrounds have different rates of attrition.  We also don’t know whether first-generation law students experience attrition at greater rates than other law students, or whether students of lower socio-economic status experience attrition at greater rates than students of higher socio-economic status. 

(I am very grateful for the insights of Bernie Burk and Scott Norberg on earlier drafts of this blog posting.)

William H. Neukom Fellows Research Chair in Diversity and Law

On the heels of the ABF Research Professor job announcement, here is a second career-making opportunity from our friends at the American Bar Foundation.

William H. Neukom Fellows Research Chair in Diversity and Law

The American Bar Foundation (ABF) invites applications for its William H. Neukom Fellows Research Chair in Diversity and Law. This is a one-year, visiting position for the 2016-17 academic year. The ABF anticipates that the Neukom Chair will become a long-term position in the future.

We seek an outstanding scholar with a distinguished record of scholarship in law and the social sciences who is conducting empirical research on diversity and law, broadly conceived. Topics of interest include, but are not limited to, diversity in the legal profession and other institutions of justice; the impact of diversity on legal processes, legal institutions, and public policy; the roles of race, gender, disability, and sexuality in legal institutions and legal processes; and the interaction between legal processes and inequalities of race, gender, disability, and sexuality. Applicants from all social science fields, history, and law will be considered.

In addition to pursuing their own research, the Neukom Fellows Research Chair will have the opportunity to participate in the ABF’s expanding program of research in diversity and law. During the visit the Neukom Chair will be expected to be in residence at the ABF, and to make at least one formal presentation on the work they are doing at the ABF.

The ABF is an independent, scholarly research institute committed to social science research on law, legal institutions, and legal processes. Its faculty consists of leading scholars in the fields of law, sociology, psychology, political science, economics, history, and anthropology. The ABF is strongly committed to diversity in hiring.

Review of applications will begin on November 15, 2015, but the search will be ongoing until the position is filled. We ask that applicants submit a letter of application, a curriculum vitae, a brief (no more than 2-page) description of current research and a list of three references.

Application letters should be addressed to Ajay K. Mehrotra, Director, and sent in electronic form to Erin Watt, Executive Assistant, at [email protected] with the subject line “Faculty Search.” Queries about the application process can be directed to Ms. Watt at (312) 988-6582.

The American Bar Foundation encourages diversity in its workforce and seeks to provide equality of opportunity for all applicants and employees. All persons are considered for positions on the basis of job-related requirements. All decisions regarding recruiting, hiring, promotion, assignment, training, termination, and other terms and conditions of employment will be made without unlawful discrimination on the basis of race, color, national origin, ancestry, sex, sexual orientation, gender identity or expression, religion, age, disability, veteran status, pregnancy, or marital status, in accordance with the ABF’s commitment to equal opportunity and all governing laws.

American Bar Foundation Research Professor

For those in the academy doing interdisciplinary work in the law & society area, being a Research Professor at the American Bar Foundation (ABF)  is very close to nirvana.  Moreover, my former Indiana colleague Ajay Mehrotra is the ABF's new Director.  Based on our 12 years of working together, I can attest that Ajay would be an outstanding mentor and boss, albeit this description also describes his predecessor, Bob Nelson.  The ABF is just a great place to do potentially high impact research. 

Below is the official announcement for an ABF Research Professor opening. These positions come open only rarely

American Bar Foundation Research Professor

Pending budgetary approval, the American Bar Foundation (ABF) invites applications to join its Residential Faculty as a Research Professor. Beginning in the 2016-17 academic year, the position is an ongoing one, subject to periodic performance reviews.

We seek earlier-stage candidates with a PhD and/or JD with the potential for exemplary scholarship in law and the social sciences. Research area, discipline, and methodology are open. The ABF is strongly committed to diversity in hiring.

The ABF is an independent, scholarly research institute committed to social science research on law, legal institutions, and legal processes. Its faculty consists of leading scholars in the fields of law, sociology, psychology, political science, economics, history, and anthropology.

Research professors work independently. They are responsible for identifying appropriate topics for research, seeking external funding when possible, conducting research, and authoring books and articles to be published in scholarly journals.

The ABF offers competitive salary and benefits along with research support. If jointly appointed with law or social science faculties of Chicago-area institutions, the ABF works closely with these institutions to coordinate on matters such as salary, benefits, and other work arrangements.

Review of applications will begin on November 15, 2015. We ask that applicants submit a letter of application, a curriculum vitae, a writing sample, a brief (no more than 2-page) description of current research and plans for future research, and a list of three references.

Application letters should be addressed to Ajay K. Mehrotra, Director, and sent in electronic form to Erin Watt, Executive Assistant, at [email protected] with the subject line “Faculty Search.” Queries about the application process can be directed to Ms. Watt at (312) 988-6582.

The American Bar Foundation encourages diversity in its workforce and seeks to provide equality of opportunity for all applicants and employees. All persons are considered for positions on the basis of job-related requirements. All decisions regarding recruiting, hiring, promotion, assignment, training, termination, and other terms and conditions of employment will be made without unlawful discrimination on the basis of race, color, national origin, ancestry, sex, sexual orientation, gender identity or expression, religion, age, disability, veteran status, pregnancy, or marital status, in accordance with the ABF’s commitment to equal opportunity and all governing laws.

2015 Median MBE Scaled Score Arguably Declines Less Than Expected

Natalie Kitroeff at Bloomberg published earlier today an article with the first release of the median MBE scaled score for the July 2015 Bar Exam -- 139.9 -- a decline of 1.6 points from the July 2014 score of 141.5. 

While this represents a continuation of the downward trend that started last year (when the median MBE fell a historic 2.8 points from 144.3 in July 2013), the result is nonetheless somewhat surprising. 

The historic decline in the median MBE scaled score between 2013 and 2014 corresponded to a modest decline in the LSAT score profile of the entering classes between 2010 and 2011. 

As I discussed in my December blog posting on changing compositions of the entering classes since 2010, however, the decline in LSAT score profile of the entering classes between 2011 and 2012 was much more pronounced than the decline between 2010 and 2011.  Thus, one might have expected that the decline in the median MBE scaled score for 2015 would have been even larger than the decline between 2013 and 2014. 

But instead, the decline was only 1.6 points, just slightly more than half of the 2.8 point decline of the previous year.

Why would a demonstrably greater decline in the LSAT profile of the entering class between 2011 and 2012 (compared with 2010-2011) yield a manifestly smaller decline in the median MBE scaled score between 2014 and 2015 (compared with 2013-2014)?

This likely will remain a mystery for a long time, but my guess is that the ExamSoft debacle resulted in an aberrationally large decline in the median MBE scaled score between 2013 and 2014, such that the corresponding decline between 2014 and 2015 seems disproportionately smaller than one would have been expected.

Over on Law School Cafe, Debby Merritt has a very good description of the different factors that likely have impacted bar passage performance in July 2015.

Derek Muller has collected bar passage results for the several states that have released at least some results so far and has posted them on his Excess of Democracy blog.  Focusing only on overall bar passage rates, two states are "up," (North Dakota (6%) and Iowa (5%)), six are down between 1-5% (Missouri (-1%), Washington (-1%), Montana (-2%), Kansas (-3%), North Carolina (-4%), West Virginia (5%)), and four are down double-digits (Mississippi (-27%), New Mexico (-12%), Oklahoma (-11%), and Wisconsin (-10%).  (Last year 21 states were down 6% or more on first-time bar passage and six of those were down 10% or more.)

In India, Big 4 and Elite Law Firms in Direct Competition for Highly Lucrative Advisory Work

Lawyers may have a monopoly over the practice of law, but what exactly does the practice of law encompass?  In most common law jurisdictions, the term is not even defined.  And there's likely a self-interested reason why.  Ambiguity produces uncertainty, and uncertainty is a major source of business risk.

In the face of significant uncertainty, why would investors fund a business that encroaches on lawyers' most lucrative work when they'll have to hire a battalion of lawyers to defeat the entire universe of lawyers in front of a judge who used to be a practicing lawyer (and may be one again)? Many lawyers would get rich losing this case for you.

Well, ambiguity may not be enough to permanently fend off the invasion.  There is a controversy taking shape in India that may foreshadow the end of the lawyer guild.  Under India's Advocates Act, only lawyers can own a law firm. Likewise, only chartered accountants can audit companies.  But what about advisory services related to business?  That's a area of tremendous potential overlap between these two professions.

Globally, the Big 4 have been making inroads on lucrative cross-border deal work -- not enough to mortally threaten the major law firms, but enough to get their attention.  Yet, according to this story in the The Economics Times (the leading business paper in India), it's the elite law firms putting the hurt on the Big 4, poaching talent in some of the Big 4's most lucrative practice areas.  Here's how the Indian journalists tell it:

MUMBAI: Two months after the Delhi Bar Council sent a legal notice to top professional services firms EY, KPMG, PwC and Deloitte, the simmering hostility between the Big 4 and the legal fraternity is increasingly coming out in the open.

Earlier this month, Zia Mody's AZB & Partners [the Wachtell Lipton of India] scooped up six forensic experts from EY, a move that has been seen by industry players as part of growing competition between leading law firms and consultancies for business, encroaching into each other's traditional bastions. ...

[Zia Mody, the managing partner of AZB, commented,] "The compliance and investigation practice that we have formalised would help us in due diligence, Indian anti-corruption law investigations, asset-recovery cases, private equity-related post investment investigations and in some anti-trust investigation cases."

Top legal firms in the country are diversifying into forensic operations and undertaking commercial diligence and investigations for their clients.

This comes at a time when consultancies like EY and KPMG are bulking up their teams beyond the traditional forte of audit and tax practices to expand into advisory services. ... 

"What law firms are doing is part of their evolution into full service providers," said Lalit Bhasin, president of the Society of Indian Law Firms, which in July filed a complaint against the Big 4 with the Bar Association of India, saying that they were practicing law without authorisation.

Side note on Lalit Bhasin -- he is the most prominent spokesperson for keeping in place the longstanding prohibition against foreign law firms operating inside India.  He is obviously not too keen on Big 4 accounting firms getting into his business.  The Times quotes a senior partner of a Big 4 firm, speaking on a condition of anonymity,

"The genesis of the problem is: lawyers are a close-knit community and if you don't belong to that club, you don't get lucrative work.  ... Now, the consultancies are increasingly getting their foot in the door, and doing the work at much lower price for which the lawyers would charge a bomb."

The story notes that the law firms and accounting firm are now competing to their mutual detriment, albeit the clients are unlikely complaining:

Consultancies and law firms are competing with each other in several other areas as well, and this is hurting the bottom lines of both sides as undercutting of fees has become rampant. "They (consultants) do an investment banking deal for a mere Rs 5 lakh [~$8000 US], for which a good law firm would charge around Rs 60 lakh [$90,000 US]," said the managing partner of a New Delhi-based big law firm.

Forensic is one of the most profitable business verticals for the Big 4. The total pie for forensics in India is estimated to be around .`850 crore [~$160 million] and is growing at 15-20 per cent year on year, industry experts said. Competition from lawyers, therefore, hurts the big auditors who among themselves control about 80 per cent of the market in India. Smaller rivals such as Alvarez & Marsal, FTI and Kroll [two US-based companies] control the rest.

Suffice it to say, the Big 4 aren't afraid to fight the elite bar in virtually any jurisdiction, as they have deep pockets and a large number of lawyers on their payroll, all of whom, we can be quite sure, are not engaged in the practice of law, whatever that term means.  

This is the beginning of the end of an era, and that's a good thing.  We lawyers/legal professionals will reinvent ourselves by finding new ways to add value.  In fact, that is already happening.  In the long run, we'll feel richer for it. Below is an infographic from The Times story that summarizes the Indian lawyer-accountant standoff.