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In his 1993 book, The Lost Lawyer, the Dean of Yale Law School, Anthony Kronman lamented the changes in the legal profession, which, he believed had caused the collapse of the lawyer-statesman ideal. He worried that large firms had become too commercialized with highly specialized practice areas. He also worried that the ties that existed between law firms and lawyers were disappearing. Big firm lawyers were beginning to routinely move from one firm to another in search of higher salaries. Kronman was worried that all the lateral movement was weakening the culture of law firms and turning the law business into a greedy enterprise, with little nobility in it. He saw a dark future for the law business.
In the twenty-year period since 1993, almost every bad thing predicted by Dean Kronman came true. Big firms have grown so large that they have no cultural identity. Training for associates has disappeared. Firm partners are loyal only when they are well-paid. They leave firms when there is the slightest sign of trouble.
Twenty years later, Steven Harper has written The Lawyer Bubble, which discusses the one major development missed by Dean Kronman, the enormous overproduction of law graduates and the resulting misery of the young lawyers.
After a distinguished career trying cases, Harper retired from Kirkland and Ellis a few years ago. He has spent the last several years teaching and writing. Much of his writing centers on the problems of the legal profession. Harper writes a blog, known as The Belly of the Beast, which discusses large firms and law schools. The Lawyer Bubble is unique in that it compares and contrasts the problems of law schools and large law firms. Like Kronman, Harper does not think the legal profession is on a good course. He thinks things are bad and that they are getting worse.
Harper argues that the problems of both Law Schools and big firms stem from elevating short-term profitability at the expense of long-term goals. He argues that the law schools pursuit of greater revenues has allowed the total number of students to exceed the number of available jobs. In turn, the law firms have suffered because they have also pursued short-term goals, such as profits per partner (PPP) a measure of profitability made famous by the American Lawyer rankings. The American Lawyer ranks firms in many ways, but the main ranking tool is PPP, which encourages firms to have fewer equity partners and more associates and income partners. This process, in turn, leads to widespread dissatisfaction with the law firm life for most of the lawyers who work in large firms.
Harper is correct that the law schools also became greedy. They added too many students to the their classes. When graduates began suffering poor employment outcomes, many law schools engaged in Enron-style tactics in reporting their employment numbers. By managing the numbers the graduates employment track records were made to look far better than they really were. Ironically, Harper notes that many large firms have given false profit information to the American Lawyer to enhance their rankings and reputation. Thus, in his view, the entire profession has become corrupted - when the law schools start fudging employment numbers, their graduates have continued the process at large law firms. Law schools and firms pay lip service to "honesty" and "integrity" but do not follow those concepts in real life.
Harper's analysis of the problems with legal education is largely consistent with the argument made by Professor Brian Tamanaha in his 2011 book, Failing Law Schools.
The book unambiguously recognizes that there is a lawyer bubble - that there are far too many graduates from law school each year and that many of them are unable to find work or unable to find work that will allow them to repay their loans. Harper's analysis is unflinching and honest.
The problem is that law schools have become profit centers for Universities. Many law schools are required to "share" 25% of their revenue with the larger university. Thus, law school tuition supports the science lab and the art school in addition to the law school.
Harper notes that the average law school graduate has over $100,000 in law school student loan debt. Worse still, the average debt figures have been growing faster than inflation at the same time that students opportunities for employment and career satisfaction have begun to disappear. Harper's writing is lean and elegant:
Average law school debt for the graduating class of 2011 broke six figures, and that number has been growing in tandem with unemployment rates for new graduates. Even if a career in the law turns out to be the right path, the financial burden can be staggering. If the law ends up being the wrong path, then debt becomes the rock that Sisyphus had to push uphill for the rest of his life.
Harper correctly argues that the problems with legal education are the result of oversupply of graduates and government loans. Each year about one-half of the law school graduates find permanent work requiring bar passage. The other half are left to struggle in temporary positions or jobs outside the law business. Each time the law schools have expanded enrollment they have inflicted increasing misery on their graduates.
Sadly, the taxpayers are left footing the bill for law school student loans that graduates cannot repay.
One strength of this book is its analysis of the problems of large law firms, including several firms that imploded including Finley Kumble, Heller Ehrmann and, most famously, Dewey LeBeouf. In each case the firms tried to increase leverage by merging or adding lateral partners. This process worked very well for the equity partners, but it produced large-scale layoffs for the service partners and associates. When the firms ran into trouble, few of the new partners were loyal to the firms. Instead, those partners who had large client billings simply went to other firms and the three firms eventually filed for bankruptcy.
Harper describes the dissatisfaction of many large firm associates and the high turnover that this dissatisfaction creates. Harper discusses the huge and growing divide between the equity partner and income partner and he eloquently describes how the increased leverage in law firms (more employed lawyers and less equity holders) has destroyed any sense of culture in the firms. He recognizes that many students work hard in school only to join firms where they are miserable because of the long hours and the poor treatment they receive from partners.
In particular, Harper is critical of the recent trend for large firms to hire lateral partners from other firms. This has harmed the culture of many firms. If a partner joins a firm solely to obtain an increased salary, he is not likely to make any sacrifice to allow the firm to survive. Worse still, the partner who is searching for the highest paying position has no reason to mentor young associates or to show any loyalty to the institution. Thus, firms built by acquiring lateral partners often fail. When there is trouble in the economy or a client terminates the firm, the partners have little incentive to make shared sacrifices for the firm. Instead, the lateral partner is likely to brush up his resume and begin a new job search. Like Dewey LeBeouf, the firm will then collapse as the lateral partners find new places to work.
Harper urges firms to focus on culture, training young lawyers and reducing leverage. While those reforms have a short-term economic cost, they bring long-term economic benefits to the firms and the lawyers.
Harper is also highly critical of the billable hour, which contributes to large bills to clients and inefficient work by lawyers. He notes that the large firms typically require 2000 to 2200 billable hours for each associate and that the firms often pay bonuses for associates who bill more than 2000 hours.
In Harper's view, the billable hour causes problems. Lawyers are encouraged to work more hours on a matter, instead of being efficient. Law firms are encouraged to have more lawyers work on matters than are necessary. Worse still, the measure of associate productivity, hours, is really a measure of a lack of productivity. No one is rewarded for getting a job done at a modest cost. Because firms focus on hours billed, they are not able to focus on associate training. By contrast, fixed fees for tasks would encourage lawyers to drop discovery disputes and get the case ready for trial. Harper notes that in a recent bankruptcy case, 43 lawyers in one firm billed hours to the case at rates equal to or exceeding $1000. Worse still, the Supreme Court and lower courts have given the billable hour a stamp of legitimacy, which is unfair to clients and encourages waste and inefficiency.
Harper is correct that the legal profession is doing poorly. According to scholarly articles, about half of the recent graduates do not have income sufficient to pay their loans and live normal lives. Many other graduates are trapped in large firms by their students loans, so they are not able to devote their talents to public service because they cannot afford to.
My only criticism of the book is the discussion of possible reforms. In the first part of his book, Harper is bold and unflinching. When discusses possible reforms, he grows somewhat cautious and wary.
For law schools, Harper is unwilling to recommend the creation of a two-year program for law school, which could cut the costs of educating lawyers and, in turn, leave the young lawyers with more manageable debt loads. Harper does not discuss the proposal of some academics to make law an undergraduate major, thus eliminating law school all together.
Harper supports reasonable limits on student loans for law students. He also argues that loans from private lenders should be dischargeable in bankruptcy. In that fashion, lenders would have reason to worry about that the graduate would not repay the loan. Cautious lenders would decline to make loans to some students. This would reduce the lawyer bubble. Harper is a bit vague when it comes to recommending solutions to the lawyer bubble.
Everyone considering law school should read The Lawyer Bubble before they sign the paperwork for student loans. The student should consider what they want to do with the law degree. Most of all the student should recognize that the more debt they take on the more pressure they will have to join a large firm to earn enough money to pay that debt.
In sum, this is the finest book on the legal profession since The Lost Lawyer was published in 1993. The book is well-written and thoughtful. Perhaps the book's greatest strength is the strong moral voice of Steven Harper, who, like others before him, exhorts us to work together to improve our profession and pursue its highest ideals.
Edward X. Clinton, Jr.