Wednesday, August 14, 2013

The Decline and Fall of Big Law

I haven’t seen very much commentary about Noam Schreiber’s New Republic article about the decline and fall of Big Law firms, but it is a very compelling read.

Schreiber recounts the story of a business model whose time has come and gone.  

Law school admissions are down. Law school graduates are having serious problems finding jobs. While some industries have recovered from the Great Recession, Bit Law does not seem to be one of them.

A job at a big law firm used to a ticket to prosperity. Partnership was like tenure. Large salaries and security accompanied prestige and status.

Schreiber describes the good old, but now bygone days:

Of all the occupational golden ages to come and go in the twentieth century—for doctors, journalists, ad-men, autoworkers—none lasted longer, felt cushier, and was all in all more golden than the reign of the law partner.

There was the generous salary, the esteem of one’s neighbors, work that was more intellectual than purely commercial. Since clients of white-shoe firms typically knocked on their doors and stayed put for decades—one lawyer told me his ex-firm had a committee to decide which clients to accept—the partner rarely had to hustle for business. He could focus his energy on the legal pursuits that excited his analytical mind….

Perhaps more importantly, the security of the legal profession lodged itself inside our cultural imagination. For generations, the law functioned as a kind of psychological safety net for the ambitious and upwardly mobile. If you wanted to be a writer or an actor or a businessman, you could rest assured that law school would be there if your plans fell through. However much you’d maxed out your credit card, however late you were on your rent, you were never more than an admissions test and six semesters away from upper-middle-class respectability.

That was then. Now the industry is shedding partners and associates. Those who remain are fighting among themselves for clients. The old collegiality  has turned fratricidal.

Schreiber looks closely at the situation at Chicago firm, Mayer Brown. He interviewed Chairman Paul Theiss and other assorted honchos. He concludes that Big Law is entering a period of “managed decline:”

If corporate America continues to be so stingy in its legal spending, Theiss could be as well-intentioned as a Peace Corps volunteer and still not have much to offer his lawyers beyond competently managed decline—charging clients the same for more work, or less for the same work; shedding bodies, or keeping the same number and paying most of them less. Theiss talked excitedly about “the drive for efficiency.” But it was hard not to see this for what it is: the further immiserization of the legal class.

I would only highlight one other comment, especially because it emphasizes a topic that I have posted about, as recently as yesterday: small talk and schmoozing.

Schreiber writes:

Lawyers at an elite firm like Mayer Brown have typically spent their lives amassing intellectual credentials. They are high-school valedictorians and graduates of elite universities, with mantles full of Latin honors. They have made law review at top law schools and clerked for federal judges. When, somewhere between the second and fifth year of their legal careers, they discover that brainpower is only incidental to their professional advancement—that the real key is an aptitude for schmoozing—it can be a rude awakening.




9 comments:

Sam L. said...

I note, as I expect you do, zero outpouring of sympathy for lawyers.

Lastango said...

A fascinating tale of the dog-eat-dog ethos that has always been hiding in those deep pile carpets. The article's specifics and generalities apply well to the upper ranks of major business corporations too. For example, someone with the bad luck to link up with the wrong mentor or power player will find themselves on the outs, no matter what their personal aptitudes may be.

Schreiber's piece was about big law, but there's a slaughter at the lower levels too. In many cases, lawyers will find that a unionized city bus driver takes home more pay than they do.

Something else worth mentioning is the effect on women and their careers. Schreiber's piece and follow-up clarification mention the image Big Law has had of being a golden road to personal wealth. Graduate from a good school, get on with a good firm, and your future is locked in. The law bubble combined with the explosive growth of the university system and government to provide lots of lucrative, salaried, benefits-with-full-pension jobs for women. Newly minted You-Go-Girls expected to graduate into power and glory, with a nice boost from affirmative action to help them up a few steps.
That party is over, not only in the law industry but all across the parasitic, rent-seeking structures that arose during America's golden age of borrowing and spending. Just ask the Europeans -- they're getting to the bitter end a bit ahead of us. If it lives on public and quasi-public funds flows, it dies when government dries up.

Even worthwhile professions, like medicine, are feeling the squeeze. Being a doctor doesn't mean you're affluent, or even close. Often, it just means you work beastly hours to keep your family in a middle-class lifestyle.

Myself, I view the law profession as a useful bellwether for many of our economic sectors. Bubbles and mirages are everywhere. The tide is going out, and we're discovering who has been swimming naked.

Dennis said...

Having been a musician, among other things, I have had cause to meet, play with and enjoy the company of judges and lawyers. An aside here, One would be surprised how many of these people are involved in music.
Some of the best lawyer's jokes I heard were from a judge I knew who was a very fine trombone player. Most of the lawyers I knew were very decent people and did not take themselves too seriously. They took the job seriously, but knew where that part of their life ended and the rest of it began.
That being said, when a profession advertises itself as the "best and brightest," which was never true given the skills and abilities required to be successful in a large number of avocations, one is going to draw a lot of people to that profession. As a matter of course law schools are going to make the most of a growing number of students knowing a lot of these students will never get a job. Given the tendency of the profession to be to the Left it will graduate people who meet every requirement except those requisite for being a good lawyer. Many will be so blinded by the propaganda implicit in their courses.
Here one only has to look at the Department of Injustice, which appears to have little respect for enforcing laws that were passed by Congress.
When the main enforcement arm of the government acts in this manner then that disrespect for the law works its way into the general population. As I like to think of it, "When one spend enough time next to a mud puddle then one is liable to get mud on themselves."
The very large interest in all things political by the legal profession creates the internal "politics" needed to progress and that, plus the need for billable hours, which is the ability to schmooze.
At some point there comes a time when there are so many lawyers that there are not enough laws to support the over abundance of lawyers. This is why I think one sees laws such as the ACA, which is a legal nightmare destined to give the law a bad name further exacerbating the decline of law. When one reaches the point that a country, driven by the legal profession, produces laws that people will pay attention to then we are all hurt in the long run.
When the laws serves only its own interest and those of its practitioners instead of serving its clients and the citizens as a whole then it deserves to pay the price.

Lastango said...

The law education machine is integral to the government/law/university powermatrix. Here's an insightful piece on how Georgetown plays the game:

http://www.openmarket.org/2013/08/13/federal-income-based-repayment-plan-encourages-skyrocketing-law-school-tuition/

Dennis said...

I have always been struck by the "best and brightest" meme given that the legal profession depends so heavily on words. That anyone can believe that the written word can be definitive seems to go against wisdom and intellectual capacity.
The written word is, in many ways, a poor medium of communications. It is why we see so many arguments about the meaning of "IS." Without inflection a significant amount of the meaning is lost.
Add to this that lexicographers are constantly confusing language with added meanings to words in order to include modern idioms and usages. Some words have upward to 28 different meanings. This is not to include regional differences.
How a profession that should be a minor part of our lives believes that they are the "best and brightest" is beyond comprehension or any real analysis of importances to a society and its effective and efficient operation for the over all good of its citizens.
Though many of the Founding Fathers were lawyers they were also conversant in and worked in other fields. This made them aware of how laws actually affected others in the real world. I would posit that an expert in the law is now a danger to the society in which he/she lives for they have no concept of the ultimate ramification of bad, think ACA, omnibus laws, et al.
Unintended consequences is one of the prime features of a profession that says it is the "best and brightest."

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