New Grads, Technology, and the Law

A Practice Life 

I Can Hardly Imagine

Yesterday, in the context of discussing new grads working in legal temp jobs, I said:

Many of these document review jobs have begun disappearing as they move offshore or get done by computers that can scan, analyze, and report the data in ways not possible for easily-bored, human brains.  

This shift is a small part of the commoditization of law jobs that Richard Susskind discusses in his book Tomorrow's Lawyers. Commodity work will continue to lose value in the marketplace and the price for it will move towards $0.  

When I read that book this summer, I realized that a recessionary economy was just one of the challenges new grads will face over the life of their careers. But, I will save that discussion for a later posting.

This December 5, 2013 blog posting by Rohit Talwar discusses some of the "disruptive" legal technologies that new grads may face during their careers.  I look forward to reading the full report expected in January.

I especially like the notion of uploading the contents of our brains to the Cloud.  I wonder what new levels of self-awareness that might give each of us.  Could we get Big Data reports showing the frequency of certain thoughts? We apparently have some 60,000 thoughts each day.

If I had gotten a Big Data report about my thoughts during the document production I described yesterday, the report would have shown that at least 25 percent of my daily thoughts were about creme brulee.

P.S.  This morning, I looked up the recipe for a ginger and vanilla bean creme brulee, and I plan to make some today.  For a very cool TEDtalk on how cooking, as a technology, allowed the increase in human brain size, see here.

Dec. 10, 2013 Update:  This new analysis of BigLaw staffing is a must read: Did the Market for Law Firm Associates Peak 25 Years Ago, by Bill Henderson of The Legal Whiteboard.  In the referenced monograph, the author notes:

[T]he relentless increase in the complexity of business and regulation has caused many clients to strain under the weight of a tradition [BigLaw] time-and-materials billing model  This pressure is fueling the urgency for alternative billing arrangements that would incentivize efficiency and innovation.  It is also opening the door to various types of legal vendors who use process, technology, and labor arbitrage to perform a wide variety of legal work formerly handled by junior lawyers in law firms. 

Survey Reveals Flexibility of Passionate Pre-Law Students Pursuing a Law Degree

Here's the headline:

Adapting to the Current Realities of the Employment Landscape for Lawyers, Half of Pre-Law Students Say They Plan to Use their Law School Degree in a Non-Traditional Legal Job

So started an April 11, 2013 news release published by Kaplan Test Prep.  It goes on to report:

The employment stats don’t paint a pretty picture for pre-law students looking ahead, but flexibility about their future career and their passion for it is driving them forward. According to a recent Kaplan Test Prep survey of more than 200 pre-law students, 50% say they plan to use their law degree in a non-traditional legal field. Of that 50%, nearly three out of five (58%) said the current job market for lawyers factored into this decision. 

Forty-three (43%) percent of survey respondents overall said they plan to use their law degree to pursue a job in the business world rather than in the legal world—which helps explain why 42% said they’d likely pursue an MBA if they weren't already pursuing a JD.

The growing interest in non-traditional legal jobs comes on the heels of the latest report from the American Bar Association which shows that just 56% of 2012 graduates secured long-term, full-time jobs that required bar passage—a 1% increase over the class of 2011.

I reported on this aspect of the job market for law grads in my recent posting here.

The historical NALP data shows that 55 to 58 percent of law grads obtained or sought jobs requiring bar passage, typically law firm jobs.  Thus, up to 42 to 45 percent of law grads historically pursued "JD preferred" (or "JD advanatge") jobs out of law school.  I am cautious about this last statement because remaining grads could fall into other categories on the NALP reports, including "other professional job" and "non-professional job." But the percentages of law grads falling into these latter two categories tend to be below 10 percent -- when taken together -- even in the 2012 job market.

By comparison, one-third to one-half of established lawyers pursued careers outside of law firms.

The April 2013 Kaplan Test Prep survey of pre-law students also found:

Most students say they’re motivated to go to law school by passion, not money: 71% say the primary reason they are applying to law school is “to go into a career I am passionate about.” Only 5% listed salary potential as the primary reason.   

Passion only goes so far, without financial assistance: 43% say they are likely to postpone or alter their plans to attend law school if they don’t get the financial aid package they were hoping for. That line of thinking aligns with advice proffered by graduating law school students: in a separate Kaplan Bar Review survey** of third-year law students, 87% say a law school’s financial aid package should play a significant role in helping pre-law students determine where to enroll."

So, appropriately, students are looking at the big picture and letting the realities of a recessionary economy and the cost of tuition -- after scholarships -- help them decide whether to invest,-- at this time, and in this particular way -- in themselves and their future careers.

Students should have access to complete and reliable information about each law school of interest to them. As a mediator, I hold as a core value informed decision-making based on high-quality information.

For prospective law students and law grads, they are making their next career decision, and certainly not the last one.

Nov. 3, 2013 Update:  Another law professor commented on this survey here in a much more opinionated way.  

A Perfect Storm for Reform, Part 1

Richard Susskind, in his new book, Tomorrow's Lawyers: An Introduction to Your Future (2013), describes the fundamental shift occurring in the legal field.  The 2008 economic downturn accelerated that shift.

His theme is simple: To respond to client needs when they seek more value for the money; when technology can perform routine tasks more cheaply, quickly, and accurately than attorneys; when well-trained lawyers live in Asia and can work globally; when most people still have no access to affordable legal services, the legal profession will "dispense with much of our current cottage industry and re-invent the way legal services are delivered."  He calls the situation a "perfect storm" for reform.  

He begins by discussing the business model based on hourly billing.  Typically, a firm uses a large number of associates per partner on an assigned project.  Those associates, in earlier times, worked months on document reviews for litigation and due diligence projects for acquisitions and mergers.  Susskind describes this work as "requir[ing] more process than judgment, procedure instead of strategy or creativity."  

As an associate at Skadden Arps in the mid-1980s,  I worked months on both types of projects.  Even in those ancient times, the firm billed my time at $200 per hour, as I recall.   Was my time worth that?  Let me say, I thought that billing rate astronomical then.  

Now, a tech-based company can do the same job using computer analytic tools to achieve more efficient, arguably more accurate, and certainly less costly e-discovery.  But, who works at those jobs now?  Companies fill them with leased or contract attorneys, who typically accept lower status, fewer benefits, and no path to promotion within the traditional law firm.  Even so, a new graduate can earn $52,000 per year or about $25/per hour in these positions. 

When I joined Skadden Arps in 1985, I made about $65,000 per year in salary.  To stay even with inflation, in 2012, I would need to make (as a three year associate) $136,506 per year.   These numbers alone should indicate the savings clients get from moving this type of routinized work to more cost-effective providers.  However, what the client gains in savings, the associate loses in salary and the firm loses in profit.   In addition, law firms arguably need fewer of these entry level associates. 

Increasingly, corporate clients are seeking and getting billing arrangements that jettison the hourly fee for a fixed-cost/project-based fee or a capped fee.  Law firms, in turn, hire financial experts who can prepare a fee responding to this client demand while ensuring the firm's profitability.  Based on my experience, you would need an expert to help you balance the tensions in that billing model.   

But clearly, a change in billing practices was long overdue.  The hourly billing model had built-in incentives to be less efficient in delivering legal services, not more efficient.   Projects expanded to fill the time available, and each new hour of time billed fattened an equity partner's purse.  

To trim fees to clients, law firms increasingly outsource back-office functions, like technology, marketing, and human resources. Alternatively, clients in similar industries are coming together in collaborative ways to get their legal needs met more efficiently and at lower cost.  He cites regulatory compliance in the banking industry as ripe for this approach to legal services.  Companies could also develop an online service, like one called Rulefinder, that helps clients discover and apply rules relating to international shareholder disclosure.   Similarly, a group of Virginia towns -- or small businesses, or individuals -- could come together and share the costs of common legal work.  

I'll discuss other shifts he predicts in future posts.