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Law schools (and law firms) are beset by unmanageable change.

By August 12, 2011law practice

Law students are now suing law schools, claiming that the schools misrepresent recruiting statistics. The students allege that the law schools inflated their postgraduate job prospects by advertising the percentage of graduates who get any kind of job within nine months of graduation–even jobs that don’t have anything to do with the law.

The New York Times recently explained the economics of law schools and how profitable they are for Universities that have them:

It is one of the academy’s open secrets: law schools toss off so much cash they are sometimes required to hand over as much as 30 percent of their revenue to universities, to subsidize less profitable fields.

In short, law schools have the power to raise prices and expand in ways that would make any company drool. And when a business has that power, it is apparently difficult to resist.

So, law students should understand that law schools who want to keep the cash flowing will have a really difficult problem to solve. Somehow, the law schools need to change the economics of finding a good law job. Good luck with that!

The Wall Street Journal reports that companies that used to depend on elite law firms to hire, and then train, new lawyers are now bypassing the middleman. Companies are hiring directly from law schools. HP’s general counsel, Michael Holston, said he believes it’s the “wave of the future.” Not surprisingly, law firms these days are sharply downsizing the summer programs.

The Wall Street Journal article points out(subscription req’d):

“Billing for work by junior lawyers has long been a major profit center for law firms. The average hourly rate for a non-partner associate lawyer at a law firm rose to three hundred seventy-eight dollars in the second quarter, from $338.03 years earlier, according to data from Peer Monitor, a unit of Thomson Reuters.”

Mr. Holston points out that HP believes the training provided to its newly minted lawyers is almost equivalent to the training they get in a large law firm.

“We like to think that you can do anything you’d like to do at HP that you can do at a law firm, although you won’t get trial experience.”

Of course, that assumes that young lawyers would actually get trial experience working at large firms. Maybe that used to be true, but it clearly no longer is. If you want trial experience you have to go to work for a small firm, or work for yourself. That’s assuming you can get a job at a small firm, or make it on your own.

In the same edition of the Wall Street Journal is another article about law schools pushing recruiters to place their students (subscription req’d). The article notes that “only about one quarter of last year’s graduating law school classes, down from 33% in 2009, landed positions with big law firms, according to the National Association for Law Placement.”

More bad news for law students.

“Recruiting has… dropped significantly, due to the recession as well as more lasting changes to the industry, including new technologies that enable law firm partners to do more work with less help from junior lawyers.”

In other words, the economics of law practice is radically changing. Market forces, and technology, are combining to create something previously unheard of in the practice of law: efficiency. Law schools have no reason to care about how law is actually practiced, or how the practice might be changing. And even if they cared, they’re not equipped to address the change. How many law professors or administrators spent significant time (if any) actually practicing law?

Change is now driven by clients and technology.

Clients realize that they can train their own lawyers more cheaply, and get better assistance in the long run. Law firms, especially big ones, now realize that they can’t afford to hire as many young lawyers. So how are law schools going to keep accepting as many applicants as they used to?

I don’t know, but greed has a tendency to distort your moral compass. And that’s true of institutions as much as it is for individuals.

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