1.5 cheers for Segal's article

Over a rainy Sunday, I commented heavily over at Prawfsblawg on the NYT article by Segal. Here's a more concise view of my take on it. [I've added a few edits to the post and tried to put them in brackets.]

For an article pitched to a general audience, Segal got lots of stuff correct.

We’ve heard all this before, so let’s not over-react just because it’s now front-page news.

Yes, for a more nuanced analysis, read Henderson, Ribstein, Tamanaha, etc. But also recognize that Segal is writing for a general audience.

His potshots at law review articles with seemingly funny titles was an over-reach.

Segal didn’t argue that the recent hiring troubles are simply a matter of schools not teaching practical skills and no one believes it’s that simple. But, if he did argue that, he was wrong, because it's more complicated than that.

[University-based] schools haven’t taught practical skills for a long time—or, perhaps, never really have in the last 100 years

As Brad and other have pointed out, there was lots of fevered hiring of new graduates in recent times—even if practical skills weren’t being heavily taught in law schools.

But, even when that recent hiring was happening, corporate GC’s were doing what they could to avoid paying for first year associates’ time. There just wasn’t much that the GCs could do about it, especially when we were in economic up-cycles.

Those of us who were in heated discussions with client GCs even back in the 1990s about the costs of first year associates know that this is not a recently invented concern. It’s been brewing for a while. (I’ve used ppt slides to make this point in my Legal Professions course for over a decade now.)

While the concern has been around for a while, there was nothing GC’c could do to stop it—except complain. They now have options, as discussed below.

We’re being hit by a double-whammy: (1) we’ve had a huge downturn in the national economy, and (2) the boundaries of the legal profession have become significantly more porous.

Some people think we’re simply in a slightly longer than usual down-cycle that will become an up-cycle at some point. While we’re in the down-cycle, corporate GCs have lots more leverage over law firms.

Others (including me) think [that there is also a second change afoot]: a variety of factors have combined to undermine the way big law firms have done business for the last 25-30 years. Those factors include the disaggregation of legal services, the huge build-up of human capital inside corporate law departments, the globalization of certain legal and quasi-legal services, and the corporate clients’ use of sophisticated cost containment techniques. (I was speaking to law firm GCs about "disaggregated" legal work and "hollowed out" work back in 2007-08.)

If the latter factors explain some of what’s going on, then there will be a new normal of some type even when the economy picks back up.

If the latter factors explain some of what’s going on, it will have a lasting impact on the economics of law school.

On top of that double-whammy, law schools have heaped economic pressure on law school students. Law school tuition has increased and schools have used a combination of financial aid and IBR to essentially squeeze as much revenue from law students as the schools can squeeze.

Back when I went to law school, investing in the degree was a no-brainer as an investment.

These days, lots more law students are buying degrees that may not be sound investments. [See the new article by Herwig Schlunk.]

Compounding the difficulty of deciding if the degree is a sound investment has been the practice of some schools to “puff” or “blow smoke” or outright lie about the economics of their graduates.

The law degree will remain a terrific investment for lots of students but may have become a bad investment for more students than ever before. If so, law schools will be taking some heat. (“[Loyola 2L,]” where are you?)

The complaints about the lack of value add by recent graduates aren’t an ideological conspiracy, or propaganda, or the unfair shifting of costs from law firms to law schools [or attacks written in support of the 1%.]  [links added] The market is changing and the law schools have to adjust. How could it be otherwise?

This is a healthy development, not a sinister movement. Lighten up, guys.

Law schools ought to be sensitive [and attentive] about adding value.

Law schools, being significantly insulated from market pressures for some time now, have done what just about everyone would do in that situation: they’ve spent money on themselves and have chosen to spend their money on the things that they particularly value. [Professor's satire on this point here.] What law faculties value isn’t [necessarily] what corporate clients value. (For example, right now there’s a vogue in law schools for “interdisciplinary” studies. I can’t speak to the academic value, but I predict that the market will be underwhelmed by that.)

[Successful rent-seekers tend to generate and internalize justifications as to why their control over price, output, qualities, and terms is a public benefit showered on the rest of us. The rest of us don't have to buy those justifications. Once you've internalized those justifcations, it's easy to view market pushback as some sort of [vicious] attack. It isn't.]

Law schools control the accreditation process and, not surprisingly, have used that power the way any rent-seeker would. If the market is now pushing back against that rent-seeking, let’s not consider that a conspiracy. Successful rent-seeking isn't a [moral] entitlement.

Adding practical skills is part of the answer but certainly not all of it. Students heading for the top end of the profession need to understand the new “disaggregated” legal services market and thrive in it.

One obvious [albeit partial] solution is to permit an educated, enlightened student body to have much greater say over the curriculum.

One crazy solution is to bring back the LLB and let undergraduates study law the way they now study accounting and business management. (I'd like to see this. For example, if San Jose State were to add an undergrad law degree, we'd have lots more diversity in the profession and the students wouldn't be burdened by debt.)

One obvious problem from all this: the law degree will be seen as a sound investment by the people most able to pay the upfront costs and then recoup them over a long period of time. My guess is that the 50,000 new enrollees [each year] will not be getting any more diverse and presumably will get marginally less diverse. If so, that means that 10, 20, 30 years from now we will have a limited pool of experienced people for the top slots in our society.

Comments

[Bill Henderson]

John, You are right on the money.

We law professors don't help ourselves by arguing how Segal got the facts wrong. One of my favorite lines for John Kenneth Galbraith reads:

"The man who makes his entry by leaning against an infirm door gets an unjustified reputation for violence. Something is to be attributed to the poor state of the door."

Legal education has become an unfirm door. High costs, structural change in the employment market, angry activist students, and near complete dependent on federal loans means that it is time for us to extend an olive branch.

Let me add this to your remarks: "Lighten up ... because being defensive only makes it worse." We are in political waters. There are consequences to overplaying one's hand. This is not an academic debate. The outcome does not turn on clever arguments. Arguing is 100% counterproductive.

[Milan Markovic]

There is a lot to agree with here, but the only aspect of the changing legal marketplace that Segal addresses in his article is the increasing unwillingness of GCs to pay for the services of new lawyers.

As John recognizes, this is not really a new phenomenon although he is undoubtedly correct that corporate purchasers of legal services have added bargaining power these days. But to what extent should law schools seek to produce lawyers that add immediate value to large law firms and in-house legal departments given that the vast majority of students at even top law schools will not work for Biglaw or in the legal departments of large companies? In my view, law schools already do a far better job of training future corporate litigators and M&A attorneys than they do solo practitioners, for example, and there are far more business law courses as part of the typical law school's curriculum than there were ten years ago.

Perhaps the point is that law schools have no choice but to train for BigLaw or corporate jobs because the high cost of law school is dependent on a high percentage of law graduates receiving 160k salaries. But almost everyone agrees that there will be fewer jobs of this type in the future so presumably the academy would be better off focusing on lowering tuition costs, which is definitely not compatible with additional clinical offerings and increased skill training that GCs and large law firms seek.

I also think that Brad makes a very important point in his post when he notes that businesses seek to associate themselves with elite academic institutions. It is for this reason that firms like Drinker Biddle will generally only hire from the Top-25 law schools even though there are arguably many schools that are not as highly ranked that do a better job of teaching practical skills (and where faculty faculty might not be as interested in law & ____ scholarship).

All of this is to say that while law school reform is needed, I think it's fair to ask whether that reform should respond to the demands of the most powerful constituencies as Segal appears to believe.

[Elizabeth Chambliss]

Three cheers for bringing back the LLB.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1945764

[John Steele]

@everyone: thanks for posting.

@liz: interesting article. btw, my grand-dad went from high school to georgetown law school and it worked out just fine.

[Ben Cooper]

John:

I really appreciate the rational, level-headed analysis that you have brought to the discussions of the NYT article here and on other blogs.

Was the article flawed? Absolutely. But, as you say, does it raise some important points about legal education? We are burying our heads in the sand if we don't acknowledge that it does. Like you and Professor Henderson, I find the defensive response of some law professors to the article troubling. We need to be looking carefully at what we are doing at law school and make sure that we are serving the best interests of our students. First and foremost, we have to clean up our own house. We need to be absolutely 100% fair and accurate in the information that we provide to our students and prospective students about their job prospects and in all other information that we are providing (LSAT numbers, etc.) to US News, NALP, and everybody else so that prospective students can make a rational, informed decision about which law school to go to and whether to go to law school at all. It's a shame that I even needed to write those last two sentences. Second, as you and Professor Henderson and others have been saying, we need to look at the education that we are providing to our students and ask if it is as good as it can be to prepare them for this changing legal market. I don't think that any law professor at any school can say that there isn't room for improvement.

Best,
Ben

[John Steele]

Thanks, Ben. Am at a loss to provide a charitable interpretation of many of the responses to Segal's article.

[Daniel Martin Katz]

John I really appreciate this analysis. In general, this really strikes the right tone.

"Law schools, being significantly insulated from market pressures for some time now, have done what just about everyone would do in that situation:
they’ve spent money on themselves and have chosen to spend their money on the things that they particularly value. What law faculties value isn’t [necessarily] what corporate clients value. (For example, right now there’s a vogue in law schools for “interdisciplinary” studies. I can’t speak to the academic value, but I predict that the market will be underwhelmed by that.)"

I would just note that there is a wide variety of “interdisciplinary” work - from the uber serious to the downright nonsensical. The serious stuff and serious people will connect what the market values. I have been arguing that scholarship and training law students better understanding information technology, computation, data analysis, finance, design and HCI, supply chain mgmt, etc. are some of those things.

While some schools will continue to hold the status quo (you know the whole is only a recession rhetoric), expect schools (at least some of those who are on the ball) to try to shift priorities.

Arbitrage Opportunities abound ...

Best,
Dan

[John Steele]

Dan, thanks. I've been wondering how many entrepreneurs will flourish in law school. I'm hoping it happens.

[Jim Chen]

John, kudos to you, Bill Henderson, Daniel Martin Katz, and everyone else who has been willing to engage this issue on its merits.