After a 30-year career litigating for Kirkland & Ellis, author Steven J. Harper is an adjunct professor at Northwestern University School of Law. Most important, he is a keen and meticulous observer of the perils of short-term thinking, by both law school deans and law firm partners. The parallels he draws between the failure of American law schools and the collapse of some of America's largest law firms are stunning. The root cause of both, he demonstrates, is simple greed for short-term gain.
The bubble of overproduction by American law schools began with the competition created by the numerical rankings
U.S. News & World Report published in 1987, aided and abetted by the American Bar Association's accreditation standards. Harper offers one startling example after another of how law schools responded to the race to move up in the rankings by manipulating the data, measuring their success by the annual increase in applications. The way to move up the ladder was obvious: Raise tuition and hire more full-time professors. The glut of promotional literature and intense recruiting of applicants promised each student a future reserved for only a tiny proportion of graduates of the most elite law schools, practically guaranteeing most law graduates a high level of dissatisfaction with their chosen profession. The easy availability of loans to finance the increasing tuition fed the bubble, much like lax mortgage lending fueled the housing bubble that burst in 2008.
The undoing of the prevailing model of law firm employment began with the numerical rankings of annual profits per partner first published in 1985 by Steven Brill's
The American Lawyer magazine. That year, the average annual profit per partner in the top 50 law firms was $300,000. In 2011, it was $1.6 million. This result was achieved by creating two tiers of law firm partnership, reserving equity shares to a shrinking number of rainmaker partners. The most sinister element feeding this frenzy of greed was and is associate attrition. The statistical chance of a new associate ever achieving the pinnacle of equity partnership is minuscule, yet the increasing demand on associates to produce billable hours is what produces those profits per partner. Harper's detailed descriptions of the demise of huge law firms like Finley Kumble, Heller Ehrman, and Dewey & LeBoeuf are depressingly similar stories of greed at the top. The ideals of loyalty and professional pride seem to go out the window when managing partners become obsessed with where the firm ranks in
AmLaw's annual list.
Harper does offer some models of innovation at law schools: the accelerated two-year programs at L.A.'s Southwestern Law School and Chicago's Northwestern University, and deans such as Frank Wu of UC Hastings who have begun downsizing by cutting enrollment. But Harper suggests a dismal future for most public law schools, as state governments no longer consider the training of lawyers as a public good, and these institutions are forced into privatization by increasing reliance on tuition revenue.
Harper also offers examples of law firms that are bucking the trend of continuing destabilization, like Los Angeles-based Munger, Tolles & Olson. But the overall outlook for the legal profession, he concludes, is bleak. Just as our political system seems to reward short-term thinkers who kick the can of problems down the road, the lawyer bubble is a product of a baby-boomer generation making bad long-term choices. The bubble, he suggests, will not suddenly burst but gradually deflate. "Rather than providing what economists call equilibrium solutions, this bubble will continue to create instability."
Still, Harper concludes, the resulting turmoil will create opportunities: "Those willing to replace a myopic focus on the near future and business-school-type metrics with a longer vision and reasoned judgment could value things that cannot easily be measured. Community, collegiality, mentoring, a shared sense of institutional purpose that extends beyond the current K-1 partner income statement, and many more are there for the taking. Those willing to bet on the future can change the face of the profession for the better."
As the lawyer bubble collapses, law schools need to rethink their relationship to the practicing bar, directing more of their energy to reshaping the way legal services are delivered. The most creative law schools are already looking at sponsoring law cooperatives, in which their graduates can be harnessed to the huge, unmet need of the middle class for legal representation.
Gerald F. Uelmen is a professor at Santa Clara University School of Law. He is chairman of California Lawyer
's editorial advisory board.
Kari Santos
Daily Journal Staff Writer
