The Wall Street Journal delivered the sad news today to the Henny Pennies, Duckey Daddles, Goosey Loosies, and Turkey Lurkies that reside in what I affectionately call “Legalritaville.” According to its article, “Hard Case: Job Market Wanes for U.S. Lawyers,” (subscription required), the sky is falling as a result of increasing supply, decreasing demand, and the negative effect of leverage in the form of student loans: “Graduates who don’t score at the top of their class are struggling to find well-paying jobs to make payments on law-school debts that can exceed $100,000.00.” Among other things, the article noted:
Many students “simply cannot earn enough income after graduation to support the debt they incur,” wrote Richard Matasar, dean of New York Law School, in 2005, concluding that, “We may be reaching the end of a golden era for law schools.” . . .
Now, debate is intensifying among law-school academics over the integrity of law schools’ marketing campaigns.
Too add insult to injury, “For graduates of elite law schools, prospects have never been better. Big law firms this year boosted their starting salaries to as high as $160,000.” Wow – as I’ve noted before, a small number of law school graduates who when they get out of school can deliver little or no value to clients are getting paid as much as $160,000 for their on-the-job training (with clients footing the bill in most cases); while according to the WSJ article, “Yet economic data suggest that prospects have grown bleaker for all but the top students . . .”
How can one fix a crisis of this proportion – one that with a cursory view appears to involve haves and have-nots and questions of marketing integrity and that one day might rival the “subprime mortgage crisis” that appears to posses similar characteristics and might push the latter off the front pages in the minds of lawyers and law students? Well, the legal industry could turn to Senators Chris Dodd, Dick Durbin, and Charles Schumer for a government bailout since the senators are lawyers and are at the front of the sound-bite posse proposing the use of the public treasury (directly and indirectly) to solve the subprime crisis and in a similar fashion ask them to pursue legislation that would guarantee all law school graduates the job of their choice – as long as the legislation is sought during an election year. Or, perhaps the industry would be better served to pursue 2 other avenues by developing:
- An education that better prepares law school graduates to contribute to value delivery to a client from day 1.
- A new perspective on finding young legal talent by emulating Billy Beane - the general manager of the Oakland A’s who developed a new perspective on finding baseball talent and was the focus of Moneyball – The Art of Winning an Unfair Game, the great management and sports book by Michael Lewis – by looking for and exploiting market inefficiencies.
My law school education prepared me to “think like a lawyer” and to do legal research – and not much else. In no way did it prepare me actually to be a lawyer, in the sense of what the demands of the job required. And it certainly didn’t prepare me to be a contributor to the delivery of value to a client. That took a lot of “on-the-job” training. Although it’s been 31 years since I graduated from law school, I believe little, if anything, has changed in that regard. Some 15 years after I graduated from law school, I went back to school and earned an M.B.A.; so, I’ve had the benefit of experiencing the “case” teaching method employed by both law and business schools. For my money (and believe me, a lot was spent on both degrees!), the M.B.A. business case method was far superior to that of the law school case 
method. Why? Because the M.B.A. business case method was more “real-world” oriented in its approach. Issues to be addressed (and teaching points to be made) generally were presented in the context of complete systems rather than just as the dissected part under analysis. Study groups were real teaching tools where teams were required to handle (and teams were graded on) on-going multiple projects simultaneously – which required not only division of labor within projects for a team but also division of projects within a team – and were not simply the “outlining” tool of The Paper Chase. Finally, and it should come as a surprise to no one, law school graduates generally were – and are - woefully uneducated in the business matters around which most legal issues swirl (but it’s been my experience this deficiency has not prevented any lawyer from aggressively advocating a particular business point on behalf of a client, even to the detriment or embarrassment of the client or the lawyer). Unless law schools modify their curricula as well as their teaching methods to give law students more real world skills that they readily can use upon graduation, only “Big Law” (a term used by the WSJ’s Law Blog and others typically to refer to the firms in the The American Lawyers’ AmLaw 200) will be able to afford the OJT necessary to make “real” lawyers out of law school graduates (although it may become more costly to the firms if clients increasingly refuse to utilize or pay for young lawyers to work on their matters); and, if “Big Law” continues its long-held recruiting practices, those graduates chosen will come solely from – to employ terms used by today’s WSJ article - the “top of their class” at the “elite law schools.” This can do nothing but contribute to the increasing pressure that is being brought to bear on legal industry business models, about which I’ve written several times in the past (e.g., Those Cotton Pickin’ Business Models Again and Overcoming Paradigm Blindness). Which, of course, now leads me to Billy Beane and Moneyball.
I first introduced Moneyball into my blog writings months ago in a posting when I said:
Sometimes it helps to bring a different perspective to something in order to understand it better and to benefit from the mistakes of those who don’t. In Moneyball, Michael Lewis wrote about a different perspective that has been brought to baseball. Lewis said that he began his writing with a simple observation: “Some baseball executives seemed to be much better than others at getting wins out of dollars.” When he finished the book (one about baseball and business that I highly recommend), he had captured how the Oakland A’s in a manner more akin to exploiting inefficiencies in financial markets had set about looking for inefficiencies in baseball and, by using a form of systematic scientific investigation to separate data from perception that was based on long-held individual images and beliefs, developed both a different way to value baseball talent and different metrics or key performance indicators for baseball. These new metrics took advantage of what behavioral finance scholars have noted in the cognitive psychology part of their discipline – people make errors in the way they think and make decisions. The A’s found that, just like financial investors, baseball talent investors generalized wildly from their own experience playing the game, were overly influenced by the most recent performance by a player, and were biased toward what they’d seen (or thought they’d seen) with their own eyes.
In some ways, law firm hiring reminds me of the major league baseball hiring practices scoffed at by Beane. Major league baseball scouts typically drooled over, and paid outrageous bonuses to, high school players (especially pitchers) because of their “potential” and ignored college players, despite the fact that (according to Moneyball) high school pitchers were twice less likely than college pitchers and 4 times less likely than college position players to make it to the majors and the fact that much more information about college players existed. As Lewis noted, “[H]igh school pitchers were so far away from being who they would be when they grew up that you could imagine them becoming almost anything.” Or, with respect to position players, scouts tended not to correlate the fact that the most critical number in baseball is 3 – as in 3 outs, after which a team cannot score runs in an inning – and that on-base-percentage is a better indicator than batting average with respect to a player’s likely ability to decrease the likelihood of making the 3rd out. Beane brought a different perspective to baseball that effectively looked for baseball market inefficiencies. The issue in law firm hiring isn’t so much where law firms look for young lawyers; it’s more about paraphrasing Lewis’ simple observation and making it a question: “Is there another way that law firms can get better young lawyers that contribute to value delivery to clients quicker out of the dollars the firms spend?” When looked at that way, other questions follow, like: Are there schools that aren’t necessarily the “elite” schools that better prepare their students to be practicing lawyers that contribute to value delivery to clients quicker? Are there students that aren’t necessarily in the top (fill in the number) % of their class that would be practicing lawyers that contribute to value delivery to clients quicker? Would it be better for other firms to provide the OJT to the law school graduates and then for your firm to hire them as laterals?
Although developing an education that better prepares law school graduates to contribute to value delivery to clients quicker and/or emulating Billy Beane and his approach of bringing a new perspective to finding talent and to looking for and exploiting market efficiencies might not cure what today’s WSJ article described as the “supply-and-demand imbalance that’s suppressing pay and job growth,” it well might alter the distribution of jobs among recent law school graduates and might curtail the outrageous escalation in beginning lawyer salaries fomented generally by large firms (typically those in AmLaw 200) competing to hire students whose currently demonstrable talent only is that they’re at the “top of their class” at the “elite” law schools.
