ADR as a First Career: Stories from the Field

Tell Your Story!

This invitation comes from one of my very ambitious ADR colleagues. Please take her up on the invitation to share your stories.

Hi all,

I wanted to share with you a new video blog project I started focusing on ADR as a first career. This video blog is a place to share and read about individuals who chose to begin their professional career in the ADR field. Check it out at here.

The purpose of the blog is to explore how successful the next generation of ADR professionals has been in pursuing careers in ADR straight out of law school or graduate school. To do so, I am trying to gather ADR as first career stories by encouraging folks to upload videos about their own experiences or schedule an interview with me in which I will create a video to upload on their behalf. It is very simple to do (you can see others have already started participating), and you can even create your own video straight from the blog itself.

I’d love it if you would share your story – if you need any help with creating a video, just let me know. And please pass along this announcement to colleagues who might like to share their story or ask them to contact me directly.

Indisputably.org just shared a guest post where I went into much more detail about the video blog. You can check out that post here.

Thanks and I look forward to watching your videos!

Alyson

Change in the Headcount at BigLaw Firms

BigLaw 

Headcount Strategies

Adam Smith Esquire's Bruce McEwen, well-known blawger, in a post entitled, Where Do You Want Your Firm to be in 2020?, reports some data on the strategic planning horizon of large law firms, which he argues does not extend beyond one, two, or three years.

Interestingly, he reports the following figures for the changes in headcount at large law firms.

[C]onsider the little-remarked but sobering figures on how the proportionate composition of lawyers at the largest 250 law firms in the US based on headcount has changed over the last decade:

• Associates: from 55% to 47% (down 15%).

• Equity partners: from 31% to 26% (down 16%).

• Non-equity partners: from 7% to 16% (up 129%).

• Other’ lawyers (staff, of counsel, contract, etc): from 7% to 10% (up 43%).

He comments on these changes later in the post:

And what, exactly, is the point about the aforementioned morphing composition of lawyers at large law firms? Simple, I believe:

• First, that shrinking pool of associates. Associates require investment in training, professional development and, yes, time write-offs. (Don’t be tempted to jump to the conclusion that firms have merely responded to client preferences by cutting associates since 2008, when clients began to get serious about refusing to pay for juniors. The decline at top 250 US firms was almost entirely before that, from 2000 [55%] to 2008 [48%].)

• Yes, associates can cost money, but they are, or ought to be, the future of the firm.

• Equity partners, also down, are costly in another way: to firms’ reported profits per equity partner (PEP). If the top line and the bottom line are essentially flat year after year (putting aside inflation and headcount growth), what’s a body to do? Cut the denominator of the PEP calculation.

• Non-equity partners and "other" lawyers, both up dramatically, can provide a particularly quick jolt to the income statement. Realisation rates for both are high, because experienced non-equity partners enjoy few write-offs and "other" lawyers are inexpensive to begin with. Firms can plausibly and sincerely claim they are simply being responsive to the market – clients like experienced lawyers with kinder and gentler rates than full partners – but what do they contribute to the next generation of leadership?

Worse, keeping a large swath of non-equity partners around too often results from managerial failings when it comes to performance reviews, or a cowardly preference for avoiding awkward conversation. Yet their growing ranks deprive associates of complex work, short-circuiting the associates’ professional development, impeding their career paths, and ultimately contributing to voluntary and involuntary attrition. Yet again, we have found an ingenious technique to pay the present while mortgaging the future.

I've blogged on this topic here and here. 

More on the Legal Job Equilibrium: The National Jurist Provides its Calculations

Refining the Data Analysis Further 

and 

Adding Assumptions

The National Jurist, as promised, has followed up its December 2013 article (apparently no longer available if you don't have a subscription) with the data on which it relied to predict that an equilibrium between new legal jobs and new law grads would come in 2015.  Here is the link.

This article also predicts jobs will exceed law graduates for the graduating class of 2016, but reaches that conclusion by applying an historic average for full-time employment in "bar-passage required" jobs of 69 percent. It says:

The analysis by both [Profs. Young and Merritt] assumes that the number of [new] jobs remains flat and that the balance point between supply and demand is 100 percent full-time legal employment by graduates within nine months of graduation. 

But since NALP began tracking data in 1985, the percentage of recent graduates who were employed in full-time legal jobs has never exceeded 84.5 percent. 

In fact, from 2001 to 2008, the number of full-time bar-passage required jobs averaged 69 percent, and the number of full-time bar-passage jobs and J.D.-advantaged jobs averaged 75 percent.  That is because some graduates chose not to pursue legal employment, and others found it difficult to land a job when they failed the bar exam.  In 2012, 77 percent of all first-time takers in the U.S. passed the bar exam, a percentage very similar to the number who found full-time employment between 2001 and 2008. 

So if the 69 percent figure is used as the historic equilibrium point, The National Jurist analysis finds that the class of 2015 will be the first to return to it.  

In other words, in 2015, the graduating class will see the number of legal jobs equal the number of law grads.

The graduating class of 2016 will have better news.  It will graduate into a market where legal jobs will exceed graduates (when applying the historical average for employment in those jobs).

I am happy to say that I made a contribution to this conversation by being one of the first bloggers to attempt to calculate when the equilibrium might come.  Over time, later bloggers and commentators have refined those calculations (including myself). While my analysis included certain assumptions later bloggers modified (and criticized), my ultimate conclusion corresponds to the prediction of The National Jurist.  (That may show again that even a blind squirrel can find a nut.)

For my analysis of the topic, look at the following posts, which include links to other commentary and analysis in the updates.

• Prediction: Full-Time Jobs Will Exceed New Law Grads for Graduating Class of 2016
• The Red Velvet Lawyer Mentioned in National Jurist Article on the Job Equilibrium
• How Should We Count "JD Advantage" Jobs in Assessing Job Equilibrium for Law School Grads?
• So What's a "JD Advantage" Job?
• How Should We Count the Unemployed and Students Seeking Advanced Degrees in Assessing Job Equilibrium for Law School Grads?

P.S. This edition of The National Jurist also has a story entitled: Wanted: Rural Lawyers.  Need a Job? Many Rural Communities are Desperate for Lawyers.  

A number of ASL grads, as our founders intended, return to rural areas of the central Appalachian Mountains to provide much-needed legal services to residents of these small communities.  Our grads also provide political leadership and community service as the profiles of our distinguished alumni illustrate.

March 2, 2014 Update:  Professor Organ, who launched this conversation at the MAPLA conference, has provided his well-supported analysis of the future market for legal jobs here.

Nov. 18, 2014 Update: Analysis of new BLM calculation of legal market. The author suggests it inflates the need for new lawyers. 

The Red Velvet Lawyer Mentioned in AmLaw Daily

In the ongoing discussion about when law graduates and available law jobs will reach equilibrium, Matt Leichter, of the Law School Tuition Bubble blog, has continued to work with the numbers and published in the AmLaw Daily here a story called: No, It's Still Not a Good Time to Apply to Law School. (You may need a subscription to read the story but his blog posting covers all or most of the same data.)

He mentions my launch of this conversation and concludes that Prof. Merritt may have the better analysis. He looks at several more data-bases to reach that conclusion. 

As I've said before, I want prospective students to make decisions about law school using informed decision-making.  The more we talk about the numbers, the more information they have to make better choices about the careers they want to pursue.

I'd invite Leichter to expand his analysis to other professions, because the bubble may be bursting for students attending vet, dental, pharmacy, optometry, and med schools (for two practice areas: primary care and psychiatry).  What an expanded analysis might tell us is that a generation of college graduates will be shut out from using professional schools to climb into or secure a solid middle-class income.    

NALP Salary Data for 2012 Law Grads

The Bell Curve 

and 

The Spike

First, forgive the look of this blog posting.  I have reproduced the chart from the NALP website, and this blogging platform makes me keep the original formatting (in this instance).

Now, I saw this chart for the first time at the conference of the Midwest Association of Pre-Law Advisors (MAPLA).  LSAC General Counsel, Joan Van Tol, included it in her slides along with data on applications to law school. 

She explained that the chart showed two salary patterns.  The bell curve on the left hand side of the chart shows the starting salary for most (reportng) law school graduates 9-months after graduation.  Most of the jobs held by new grads pay $40,000 to $65,000.  

The second pattern appears on the right side of the chart and reflects starting salaries of graduates who land jobs with BigLaw.  Van Toll called this part of the chart "the spike."  The spike moved away from the bell curve during the dot.com era (as I recall her saying) and has been durable even through the recession, even if fewer graduates landed jobs in BigLaw.  The webpage shows charts for salary data going back to 2006.  

The Adjusted Mean and Mean tell another story.  Yes, they represent the average of all salaries for new law grads (who reported salaries to NALP), but relatively few jobs actually pay these salaries.   Instead, "the spike" pulls the average away from the bell curve towards the salary level represented by the spike.

Salary Distribution Curve

Class of 2012

For more information on the Class of 2012 salary distribution curve, see The NALP Salary Curve for the Class of 2012

Distribution of Reported Full-Time Salaries — Class of 2012

[NALP] Note: Graph is based on 20,709 salaries reported for full-time jobs lasting a year or more. A few salaries above $205,000 are excluded from the graph for clarity, but not from the percentage calculations. The left-hand peaks of the graph reflect salaries of $40,000 to $65,000, which collectively accounted for about 51% of reported salaries. The right-hand peak shows that salaries of $160,000 accounted for about 16% of reported salaries. However, more complete salary coverage for jobs at large law firms heightens this peak and diminishes the left-hand peaks — and shows that the unadjusted mean overstates the average starting salary by about 7%. Nonetheless, as both the arithmetic mean and the adjusted mean show, relatively few salaries are close to either mean. For purposes of this graph, all reported salaries were rounded to the nearest $5,000.

The scambloggers are correct in criticizing marketing that suggests that most new law graduates will earn six-figure salaries straight out of law school.  Only the very large law firms pay this premium salary.

NALP reported that BigLaw firms (500 plus) hired 3,600 new associates in 2012, down from 5,100 in 2009, but up from hirings in 2011. Employment opportunities at BigLaw rose 27 percent over the last two years.   

Here is the employment trend at these BigLaw firms. For a graphic depiction of the partner to associate ratio in BigLaw, see here. 

In pre-recession 2007:

• 4,745 (23%) of new law grads joined BigLaw (501+).

In 2008, 

• 5,193 (25.3%) joined BigLaw (501+).

In 2009:

• 5,156 (25.6%) joined BigLaw (501+).

In 2010:

• 3,750 (20%) joined BigLaw (501+). 

In 2011:

• 2,856 (16.2%) joined BigLaw (501+). 

In 2012 (based on preliminary data):

• 3,600 (19.1%) joined BigLaw (501+).  

So, prospective law students must keep this possible salary range in mind as they choose law schools, negotiate tuition and scholarship packages, and consider published employment data for each school to which they plan to apply.

Dec. 19 Update:  Just found this on the ABA webpage.  It's an excerpt from the November 2013 report from NALP:

NALP Issues Press Release on Associate Salary Findings 

Starting associate salaries at large law firms have remained essentially flat since 2007, despite some erosion of the prevalence of $160,000 as the norm. "The story is really one of no change, or at least not much change," noted James Leipold, NALP's Executive Director, in a press release issued recently by NALP on the findings of the 2013 Associate Salary Survey. "Compared to the period of 2006 through 2009, when associate salaries were rising year on year at a steady clip, in the period since the recession we have seen associate salaries remain more or less static," he added. "At the largest firms in the largest markets, a starting salary of $160,000 remains the norm, though its prevalence has ebbed and flowed a bit over the last several years." Read the full press release at http://www.nalp.org/associate_salaries_sept2013.

Interesting that NALP talks about the spike, even suggesting it is the norm, without talking about the bell curve.   

Are Law School Success Stories Really that Rare?

Law School Success Stories

Elie Mystal, of Above the Law, which I would characterize as one of the leading "scambloggers,"  made a posting yesterday entitled:  The Lack of Law School Transparency Claims Another Victim.

Here is the lead in paragraph:

Some guy on Twitter was complaining that Above the Law focuses too much on the negative side of going to law school. Apparently this person mistakes us for a law school admissions office — people who ignore facts when they don’t fit their happy-clappy narrative. We do bring you some law school success stories when we hear of good ones. Do you know why those stories are “news”? Because law schools are so effective at leading people down a path of career frustration and financial ruin that when somebody beats the odds, it’s mildly noteworthy.

This blog tends to focus on graduates from top-ranked schools who had expected to join BigLaw. They routinely paid $40,000-$50,000 per year in tuition at the top schools.

As some of my posts here, here and here have indicated, the largest percentage of job loss during the recession came in large law firms of 500+ lawyers. Hiring at smaller firms (2 to 10 lawyers), to which most of ASL's graduates head, has increased, even if salaries at these firms fall in the bell curve described here, with most new graduates earning between $40,000 to $65,000 to start.

So, I am putting these questions out there to our ASL alums:

• Are you some of the law school success stories?  
• If so, how and why?  
• Are you happy you made the decision to attend law school?   
• If you had not attended law school, what would you have otherwise done with your college education?  

I expect our unhappy graduates to respond first. But, I would like as many points of view as possible.

I am especially curious about this issue because I have now profiled twelve ASL graduates working in lower paying public service jobs in postings beginning here.  I have two more profiles in draft.  Based on my conversations with these alumni, admittedly about 10 percent of our graduates, they all seem happy in their careers and with the personal and professional opportunities their law degrees opened for them.

I am certain that their expectations about law practice have changed from the expectations they held as incoming 1Ls.  But, would they call a "do-over" and not attend law school?  Would you attend another graduate school even though the bubble may be bursting for graduates of vet, dental, pharmacy, and optometry schools -- and even some practice areas of medicine?

$100,000 in Debt? Would I go to Law School Today?

Appalachian School of Law is one of the most affordable private law schools in the U.S.  Based on the data I have, it is one of the most affordable private law schools east of the Mississippi River.  Even so, our tuition this coming year is about $31,000 per year. Living expenses in excess of tuition -- of about $20,000 per year -- make law school a significant investment in a student's future.

If a college graduate asked me whether to go to law school today, I'd say "yes."  But, here's how to do it.

Do not apply to a school that is likely to admit you to fill the bottom of the class. You will pay full tuition to claim that spot. Instead, apply to law schools that will happily admit you to fill the top ten percent of their classes -- they will be one or two tiers lower than your stretch school.  Look at the LSAT quartiles for each school for a hint at how you fit in each school's entering class profile.  Disclose the admission package offered by the better school to the admissions office of the lower-tiered school.  Use it to get the lower-tiered school to sweeten the scholarship offer they've made to you.

By the end of the recruiting season, if you are a skillful negotiator, you could get a 50-, 75-, or 100- percent ride at a good school.  You will graduate with less debt and still find a decent job at graduation.  Often private schools offering good scholarship packages can be price competitive with state schools.

I have three other pieces of advice.  First, be cautious if any of the schools admitting you have not posted --as required by the ABA -- current data on scholarship retention rates.  That school may be employing a bait-and-switch tactic.  If so, you may get a great deal during your first year of law school, but then lose the scholarship and face paying the regular tuition rate for the remaining two years of your education.  Or, you may need to transfer to a more affordable school.

Second, if the school does post its current scholarship retention rate, be cautious about going there if the rate falls below 50 percent.

Third, also be cautious if a school tells you it will give you a nice scholarship, but if you disclose it to any other school, you face the risk of losing the scholarship.  Clearly, the school is hampering your ability to negotiate a better deal at another school.  In the end, is this the kind of school you really want to attend?  

Students graduating with $100,000, or more, of educational debt have bought the equivalent of their first house.  The decision to attend law school involves many factors, as I have discussed in many recent postings on the economic value of a law degree.  A student must ask:  "What else would I do if I don't get and use a law degree in my career planning?"

Similarly, when I bought my first house, I asked:  "Do I want to pay rent for the rest of my life?  Do I want to live with the limits my landlord imposes in a lease?  What are the benefits of owning my own home?"

When I bought my first house, I was in my mid-30s.  I immediately painted the interior walls in bright colors of yellow, green, and coral.  I got two dogs. I replaced the wood flooring. I had laundry facilities in the basement, a dedicated parking spot, a nice deck, a covered front porch with a porch swing, and a fenced yard.  I quickly added a perennial garden and then dramatically landscaped the front yard.  As a renter, I would not have had many of these features or freedoms.  Without my law degree, I would not have had the income to live so independently.

When I sold my house -- even in the down market following the 9/11 attacks -- I made enough profit to live very comfortably for a year in a two bed-room condo during graduate school.  Later, I put a $20,000 payment down on my second house in Grundy.

My second house -- also in the $100,000 range when I bought it --  has the same features my St. Louis house had.  I can't imagine living without them in the same way I can't imagine my life without a law degree. In fact, I now have three dogs!

If I were making the decision to attend law school today, I suspect I would still find a way to do it.  Then, I'd pay off the student loan just as quickly as I paid off my 15-year mortgages.

Nov. 27, 2013 Update:  Last week-end I finished reading Brian Tanamaha's book called Failing Law Schools.  He devotes several chapters to student loan debt.  I strongly recommend that students considering law school read those chapters to appreciate the risks they assume by accumulating too much student debt.

ABA Law Practice Management Section

I recently joined the ABA's Law Practice Management Section in an effort to support our graduates who will start solo practices because of the lack of opportunity in law firms and other traditional employers of lawyers in this recessionary economy.  I blogged about the day-long solo practice workshop the Appalachian School of Law offered this past spring here.  I blogged about the employment prospects for new grads here, here, and here.

This past week, I received the section's welcome packet and its May/June 2013 issue of the Law Practice Magazine.  The section focuses on the following four core areas: marketing, management, technology, and finance.  It provides section members with six issues of its "award-winning" hard-copy magazine, a monthly webzine, a bimonthly e-newsletter, and a legal technology blog.  It also focuses on the challenges women face as rainmakers and sells an impressive collection of books.

The May/June issue of the Law Practice Magazine provided excellent content.  I plan to read nearly all the articles.  The ones I have read so far were well written and covered very timely topics in a thoughtful and clear way.  This issue includes the following articles:

• Accelerated Strengths Development (riffing off Tom Rath's "Strengths-Based Leadership" concepts)
• Helping New Grads Be Better Lawyers Faster
• Alternatives to the Partnership Track
• Can we Talk? (about communication in law firms)
• Millennials: What Other Generations Say About You (and What You Can do About it)
• Solving the Multimillion-Dollar C Player Problem, and
• The Secret to Writing Persuasively

The issue also covered "rainmaking circles," engagement letters, promoting the professional development of others, the latest version of a voice recognition technology called Dragon, the use of apps to support courtroom evidentiary presentations using an iPad, tips for teleseminars and webinars, managing receivables, "future-proofing" your law firm, and your firm's governing structure. 

I am especially impressed with the diversity of covered topics and the expertise of the authors.  These folks are keeping up with the important trends in the profession.  I have to say, I look forward to picking it up, when possible, to digest the next bit of advice it offers.  

New grads:  I strongly recommend that you find the money to join the ABA and then this section, if at all possible.  This section can keep you from making many mistakes.  It can also help you become a firm innovator, which will propel your career.  I will post on that topic next. 

Supply-Demand Gap in Lawyers When Boomers Retire

Most of the news these days focuses on the alleged over-supply of lawyers.  I say "alleged" because the market considered by these journalists does not cover the needs of our rural populations or anyone who can not afford legal services at current prices. But, I'll leave that topic for another post.

Today, I want to focus on the potentially odd likelihood that we will have a lawyer shortage in another five to ten years.  Here's why.

The Washington state bar surveyed its lawyers asking about retirement plans.  The survey found that nearly one-quarter of the state's lawyers planned to retire in the next five years or about 1,440 per year.  Another 32 percent of its surveyed lawyers planned to leave the profession or cut back their practices.  See story here.

The Washington bar report noted that a whopping 71 percent of the state's lawyers were aged 50 or older, with 21 percent being 61 or older.

On the other hand, admissions to the state bar had not kept pace with retirement projections.  Admissions dropped by 13 percent between 2007 to 2011, with about 1,200 new lawyers added each year to the rolls during that time.

I sent the report to friends that work in the administration of the Virginia Supreme Court and to friends in leadership positions in the two state bar associations.  I asked whether Virginia should be doing a similar survey of its lawyers.

The data suggests that the need for lawyers will outstrip supply in the next decade, but few incentives exist in the current legal market to encourage college graduates to pursue a career in law.  Data shows that, on average, about 50 percent of recent law grads will find jobs in traditional law firms.  At the same time, many law grads accumulate over $100,000 of debt.  The high cost of the education coupled with poor current job prospects has reduced applications to law schools by another whopping number: about 50 percent since 2004.   See story here.

As noted in earlier posts here and here, changes in the legal market are propelling changes in law firm staffing models, first-year hiring, and technology use.  Law firms are considering other deeply structural changes in the way they offer legal services to clients.

Oddly enough, if the current generation of law students and recent grads can tough it through the current market downturn, their mid-career options could be diverse and plentiful.  However, the overall situation screams for strategic planning of your own legal career.  On top of everything else that new grads must master, they must also understand the changes happening at a macro level in our profession.   We are calling the situation the "New Normal."  

9/19/13 Update:   The National Jurist covered this story in greater depth here.