Does the Legal Profession Need Radical Change?

In September, a group of high level leaders in the legal profession will convene in New York City to “solve the worst legal job market in 20 years.”   Those invited to the meeting by New York City Bar Association President Carey Dunne will be asked to identify the causes for these woes and to make recommendations to the New York City Bar within a year.  Is a year fast enough to address the dramatic changes occurring?  Will the analysis provoke tough conversations about tough issues?  Will the recommendations be bold?

The trends that are just now gaining attention are very sobering as summarized in many recent posts and stories.  According to the National Association for Law Placement (NALP):

• Only 49.5% of the Class of 2011 found full-time jobs in law firms
• New lawyer hiring has declined significantly at most law firms
• Starting salaries at law firms have dropped 35% in two years, the median declining from $130,000 for the class of 2009 to $104,000 for the class of 2010 to $85,000 for the class of  2011.

As reported in the posting “Bad Numbers Revealing Worse Trends”, when one digs a little deeper, the trends look a lot worse, especially in the large firm/highest salary bracket.  The figures reveal that only 8% of 2011 graduates were employed in large firms (250+ lawyers) and that the high, starting salaries of $160K represented only 16% of those employed in 2011, down from 25% in 2009.

A recent NPR report noted that law schools report declining enrollment, and yet tuition for law school is at an all time high, so graduates enter the workforce often with six figure debt.  Remember that only 55% who graduated in 2011 found a full-time position that actually required a law license (law degree plus the bar exam).

So what is the answer?  Hopefully, the venerable group that convenes in New York will develop some good solutions.  In order to do so, however, it will be necessary to explore and expose the root causes of the declining need for new lawyers.   Until recently, many of the leading firms, law schools and perhaps clients have believed that the pendulum will swing back, that when the economy recovers, there again will be ample jobs and healthy salaries for newly educated lawyers.  I think most in the profession now understand that those days will not return.

Too often, we tend to focus on what is broken with the current model. I don’t think we actually can “fix” the current model enough to make a significant impact on the downward trend, because the trend is dictated by changes in the marketplace, not by law schools or firms or in-house departments.  We actually need to turn the current model on its head and really look hard at where things are going from the outside in.   What has changed about:

• Laws and regulations, who drafts and enacts them, who monitors and regulates them?
• What part of legal services must be provided by licensed lawyers only, and why? What alternatives already exist for different delivery solutions, e.g., technology, software and knowledge sharing platforms, content providers, paralegals, patent agents, project managers, analysts, LPOs, consultants, accountants, research and discovery professionals, financial advisers?
• How are new lawyers being educated to be proficient in law practice of the future? What additional or alternative skills and career paths are being developed?
• Should we consider a different education model for lawyers that bears more resemblance to apprenticeships and residencies used for doctors and architects in the US and lawyers in the UK and Australia that require at least two years of practical experience before sitting for the licensing exam in order to qualify?
• What do clients really need from their lawyers?  Should all lawyers be educated or trained the same way even given the different career models which will become necessary or available?
• How should law firms structure themselves to provide the level and type of value clients need? How will this affect recruiting, training, compensation, promotion?

Unfortunately, given supply and demand economics, no one could disagree that there is a glut of lawyers in the market for what is needed at the present time.  It is likely that the glut may be at the partner level in most firms and that de-equitizing partners and promoting senior associates into a non-equity partner category has created a bottleneck, preventing opportunity for new associates.  I agree with Jordan Furlong in his “Generation eXit” post that we still need bright and talented young people to become lawyers and that firms are being short-sighted by drastically cutting back. However, we may need new lawyers to be employed as experts in new skill areas as well as or perhaps instead of those traditional courses still taught in law schools.  Alternatively, we may need them to get degrees in business, finance, project management, analytics or pricing.

I still believe that going forward, we will need to reduce the number of traditionally educated lawyers, focus on new models of and skills for education and training, better define career paths and options that will now include things like project management, pricing and process improvement, discovery using algorithmic technology, etc.  It is likely that the traditional law firm model and all that it entails in terms of hiring, training, advancement and profit-sharing, to say nothing of firm management and ownership, will no longer be what it has been.  Creating solutions to the downward trend requires a fresh and market-facing, market-driven look at where law practice is going in the future.  Those solutions are likely to require some radical and difficult change.