TNR writer sticks to his guns: Big Law is dying

There seems to be a battle between former New Republic writers now working for the Washington Post and current New Republic writers who believe that Big Law is on the ropes. Look here and  here for earlier posts, but basically TNR's Noam Scheiber -- not a name known to me -- contends that Big Law's business model is dead and almost none of the major firms that have relied on that model for decades will continue to do so. Nor will the big firms bounce back:

This is why, to move to the third objection, it doesn’t strike me as very plausible that the industry will simply bounce back the way it has after previous recessions. The world I describe in the piece is basically the world the legal profession has been drifting toward for two decades.* In fact, there are good reasons to think the trajectory has taken a turn for the worse lately—that the legal profession won’t even grow at the same rate as the economy. For example, legal expenses didn't used to be a big enough share of a corporation’s bottom line to be worth vetting very closely, which encouraged firms to pad their bills. Now, according to The Wall Street Journal, clients are using sophisticated legal software to do the job for them, allowing them to effortlessly flag all sorts of dubious charges. That can’t be good for big law firms.

Scheiber's view that the practice of law will change in response to changes in technology and economics -- especially the practice of law on the multi-million dollar corporate scale, where even small efficiency advances can save millions -- shouldn't be shocking. Contract attorneys already are seeing jobs disappear or be shortened by some of the technological changes Scheiber talks about:

Similarly, corporations now have more alternatives to hiring law firms than ever before—like contract attorneys and the “legal process outsourcers” who procure them—and they’re using them increasingly often. Between 2004 and 2010, according to data collected by Bill Henderson of Indiana University, law firm employment dropped by 4 percent, or about 47,000 jobs. During the same period, employment in “all other legal services” (like outsourcers) increased by 50%, or about 8,000 jobs. Obviously, some of that change was driven by the pinch of the recession. But it’s hard to imagine clients reversing these trends as the economy recovers. Recent history suggests that outsourced jobs tend to stay outsourced, whatever the original reason for the move.

All in all, I think it trends out as bad news for everybody thinking about spending -- or who already spent -- lots of money on a law degree. The Big Law jobs are going away, and the new, efficiency- and technology-based model is going to provide more contract attorney jobs, but not necessarily with the kind of hours and rates that used to make contract work attractive, to the extent anything did.  How's that exit strategy coming?

Hat tip to Instapundit for this article.

Of course, WaPo could be wrong

I am not normally a big fan of the uber-lefty New Republic. However, I find it ironic that the WaPo author of the article about  a study claiming law school is totally worth the money is a former New Republic author (as are all but one of the other authors on that WaPo "blog") in light of this article in, you guessed it, The New Republic. In this article, a writer for TNR makes the case that the high-paying Big Law jobs that make it possible for the WaPo-cited study to contend that law school is worth the money are, in fact, disappearing.

“Stable” is not the way anyone would describe a legal career today. In the past decade, twelve major firms with more than 1,000 partners between them [sic] have collapsed entirely. The surviving lawyers live in fear of suffering a similar fate, driving them to ever-more humiliating lengths to edge out rivals for business. “They were cold-calling,” says the lawyer whose firm once turned down no-name clients. And the competition isn’t just external. Partners routinely make pitches behind the backs of colleagues with ties to a client. They hoard work for themselves even when it requires the expertise of a fellow partner. They seize credit for business that younger colleagues bring in.

And then there are the indignities inflicted on new lawyers, known as associates. The odds are increasingly long that a recent law-school grad will find a job. Five years ago, during a recession, American law schools produced 43,600 graduates and 75 percent had positions as lawyers within nine months. Last year, the numbers were 46,500 and 64 percent. In addition to the emotional toll unemployment exacts, it is often financially ruinous. The average law student graduates $100,000 in debt.

 I guess there are studies that can prove either side of this case. But I don't think one-third of medical school graduates find themselves no working as doctors. Just sayin'. My advice to anyone thinking about going to law school remains, "You call that thinking?"

Editor's note: The reason I put in the [sic] notation above is to let you know that the use of "between them" was in the original text. When discussing aggregate numbers involving 12 separate entities, the proper usage would be "among them." And the Ninja Grammarian strikes again.

WaPo: Law school totes worth the money, if you can get a job

This is a couple weeks old, but I've been meaning to comment on it because it is so full of shit. The author -- I hesitate to call him a blogger, because he is an employee of the Washington Post and simply publishes on what loosely qualifies as a blog -- manages to find a study that shows, apparently, that everybody should go to law school because it is so totally worth it. First, of course, they set up the bad news:

The numbers the skeptics cite are sobering: 12.8 percent of members of the class of 2012 were still unemployed in February 2013. Only 64.4 percent got jobs that actually required passing the bar. The median starting salary — $61,245 — was about 15 percent below the 2009 median. At law firms, starting salaries were down 30.8 percent.

Then they let you know that all that bad news doesn't matter:

That all sounds really bad. But they get away from the central question here: is the amount of money law graduates make greater than the amount they would have made if they hadn’t gone? And is that premium greater than the cost of law school? The answer to both questions, a new study finds, is yes. Seton Hall’s Michael Simkovic and Rutgers’s Frank McIntyre conclude, “For most law school graduates, the net present value of a law degree typically exceeds its cost by hundreds of thousands of dollars.”

Value versus cost, right? Well, the study has already established that  more than 35 percent of 2012 law school grads fucked up -- they spent a lot of fucking money to get a degree that did nothing to help them get the job they got. Except, of course, for the 12.8 percent who really fucked up by spending all that money on law school and didn't get a job at all. But hey, no problem, right, because they acknowledge that law school has costs. The argument, apparently, is that those costs are outweighed by the benefits:

Of course, law school has costs too. But the average tuition for three years is about $90,000, far less than even the 25th percentile of law school grads earn. Even if you assume an annual tuition of $60,000 — above what even the most expensive law schools charge for tuition, fees, and books — that comes to $180,000, below the $350,000 premium that students at the 25th percentile get. The annual rate of return at the median, in real terms, is about 13 percent, well above, say, stock or bond returns. “These results suggest that even at the 25th percentile, the value of a law degree exceeds typical net-tuition costs by hundreds of thousands of dollars,” the authors write.

The problem with that logic is that "students at the 25th percentile" have to go to the most expensive schools to have any shot at the high-paying jobs, and those high-paying jobs are becoming more and more scarce.

No one seems to disagree that there are fewer law jobs at all levels. This study seems to say law school is worth it if you get a job, ignoring that a disturbing -- and growing -- percentage of law grads aren't getting the law jobs that make law school worth it. Just ask that barrista with a J.D. next time you go to Starbucks.