Friday, November 1, 2013

The Brass Ring Is Hollow: An Overview of the Biglaw Mess

Biglaw is in trouble. When law students are wooed by law schools with promises of $160,000, Biglaw is the promised land that provides this bounty. But, the  Biglaw of yesteryear is quickly receding into history. Partners are trying to keep their AmLaw profit per partner numbers up. Many corporate clients are now unwilling to underwrite Biglaw training for new associates at exorbitant prices. As a result, the industry is in a panic. Once venerated firms are folding or desperately pursuing mergers. "Stealth" layoffs are becoming a regular occurrence as partners try to protect their bottom line. Firms are embracing the move of "back office" operations to lower cost cities in flyover country. All of this frenzy is akin to a rhino staggering and struggling after having been shot by a hunter.

The dynamic within law firms is changing, and not for the better. Partnerships are now split between equity and non-equity partners, with the non-equity partners receiving those titles mostly to mollify them into continuing to work under oppressive conditions. For some lawyers, partnership is not even an option. "Staff attorneys" are now a permanent underclass in most firms, doing the scut work that associates and partners feel is beneath them. But Biglaw is no stranger to technological innovation. Document review software is growing increasingly sophisticated and starting to replace contract attorneys at a fraction of the cost. The document review projects that do remain are a race to the bottom, with lower and lower hourly rates as the newly minted attorneys compete with attorneys who have been out of law school anywhere from one to twenty years long. It is a sad state of affairs.

If law school is a scam, Biglaw is its older brother. Equity partners are operating the biggest Ponzi scam in existence today. They make millions of dollars while farming out the actual legal work to lowly associates. Witness the stories of Mayer Brown and Dewey LeBoeuf. In this excellent article, the venality of the partners is on full display. The genteel image of a group of partners sipping scotch and talking eruditely about the law is a far cry from what was going on at Dewey. Just like with the law schools chasing prestige through an improved US News ranking, Dewey wooed partners with multimillion dollar contracts. When the economy began to turn, they put the blinders on and doubled down. More superstar partners were brought in to burnish the firm's image. In the end, the firm went crashing and burning. All of the superstar partners simply packed up and moved on to their next firm, staying one step of the legal industry's destruction.

Law schools need to look at Dewey and make substantive changes to prevent a similar outcome. The student loan well is quickly drying up for some schools, as undergrads are beginning to see through the fog of law school marketing and the profession's self aggrandizing image. It is very likely that some law schools will begin failing in the next few years. People like Brian Leiter are lashing out at anyone willing to tell the truth, hoping against hope that they can impede the bleak future that awaits them in the new world order. The legal education complex is no longer the impenetrable fortress it once was. We have an opportunity to slay the dragon once and for all.

36 comments:

  1. I remember talking to recent hires at IP BigLaw events (you know, the whole "hey, you're a STEM undergrad and grad, you should do patent law!!!11!!1," as if it was as easy as falling off a log) during 2003-2004. These folks were K-JDs, and they readily admitted to "not knowing anything." I appreciated their candor, as a lot of K-JDs at other firms acted like after three months of BigLaw they were Masters of the Universe or something.

    Anyway, I remember at the time thinking "how can BigLaw afford this?" No disrepect to the K-JDs, but I knew engineering managers that had 25-30 years of experience before they reached the $160-200k mark, and they knew a hell of a lot about the technical side of their field. I know BigLaw is/was loaded, but still...how could this be a viable model? It just didn't make any sense to me.

    Now we know. It was a house of cards, just like the subprime mortgage crisis.

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    1. I graduated in 04. I had worked a few years before LS so the K-JD kids always seemed a bit young and silly to me. I still remember hearing one of these kids say, after a whole 3 semesters of law school under her belt, that she wasn't interested in a firm that didn't pay "at least $120k." She thought she was worth significantly more than that to start, as she apparently ranked high in the class.
      As much as I hate the scam, and find most professors and deans to be utterly loathsome and worthless, one positive byproduct of the profession's implosion will be that idiot kids like this with no real skills and no understanding of what work is actually like will no longer have this unearned sense of entitlement, all because they did a good job scribbling bullshit into blue books a handful of times.

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  2. This garbage "profession" is obsessed with prestige. Everything is about appearances. In the end, the billable hour scam was bound to collapse, as economic heavyweight clients would sooner or later catch onto this mess.

    Common sense dictates that the billionaire pigs and indu$trie$ were aware of the nonsense, but chose to overlook it since they were making a killing. Now that everyone has to tighten their belt a little, those same clients are no longer willing to pay a Biglaw firm a king's ransom - in order to train new associates.

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    1. I, the lawland prophet, The Infamous John Bungsolaphagus, exposed and detailed the existence of the lawland scam bedrock that is now known as the billable hour scam. I fact, I coined that phrase. And you are right. The cat is out of the bag and it ain't going back in. Clients are hip to the billable hour scams and they are not taking it any more. God bless.

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  3. Even in the best of times, big law gigs were beyond the reach of the vast majority those who graduated from non-elite schools, which is to say, the vast majority of graduates. But at some point beginning perhaps 15-20 years ago, law schools of all ranks and tiers ignored this basic fact and began raising their tuition to the point where you needed a big law salary in order to pay back your loans and justify going to law school in the first place. It was, and continues to be a recipe for disaster for the thousands of law school grads who end up buried in debt with few job prospects. And ultimately, this disaster will be visited upon many of the law schools themselves. Indeed, the cracks in the damn are already visible - the most ominous of which is the simultaneous and significant decline in both enrollment numbers and admission standards at so many schools.

    Also, for those who do grab the brass ring - big law is a hellish existence. Endless hours of toil and abuse. And after a few years, you are shown the door. If you are lucky, you managed to repay your loans and find some stable in-house or government job. But many are not lucky.

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  4. No one should go into BigPigLaw expecting to last more than 4 years (of indentured hell).

    BigPigLaw never releases any information on the odds of making partner, but it appears that at best about 1 in 25 associates makes partner. In other words, there's at most a 4% chance that someone will make partner.

    And of the remaining 96%, only another 6-15% survive past the 4th year. And when they too are 'passed over', they're shown the door just like all of those who did not make it that far.

    The gold ring that law students are trained to reach for is simply not there except for about 1% of them.

    And the non-dischargable debt the other 99% incurs in the process wrecks the lives of around 60% of them.

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    1. Keep in mind that it is especially hard for minorities to make that leap. The jump from employee to partner is where the meritocracy takes over from the affirmative action-ocracy. While 10-20% of Big Law associates might be black, according to what I have read, only 2% of partners are. Combined with the 96% attrition noted above, this would suggest that a black associate's chance of making partner is well under 1%.

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    2. "The jump from employee to partner is where the meritocracy takes over from the affirmative action-ocracy."

      It's not "meritocracy", really - it's that growing up summering in Maine, wintering in Palm Beach, and having gone to the right prep school are an enormous advantage in bringing in the level of business you need from your buddies who now control large corporations.

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    3. never heard or seen of any 10-20% biglaw associates being kneegroidian. Sounds like a Rush Limpdick fantasy. God bless.

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    4. I don't have any figures right now, but you might take the percentage of Af-Am graduates from Top 6 or Top 14 JD factories, and use that to estimate their Big Firm presence as associates.

      That method is much better than spouting off and being an idiot, even though it's easier just to be an idiot.

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  5. Off topic: The number of LSAT takers for the October sitting was down 10% over last year. . . . Good news, but here's the last paragraph of the National Law Journal's article:

    "A continued and dramatic decline in applications may finally force law schools to lower their admission standards en masse—a move they have been loath to pursue out of fear of falling in the U.S. News & World Report rankings. But if virtually every school takes that step, damage to their rankings would be relative, Filler said."

    Read more: http://www.law.com/jsp/nj/PubArticleNJ.jsp?id=1202625977136&LSAT_Numbers_Decline_for_Fourth_Straight_Year#ixzz2jPDDCOKY

    Can standards drop any lower?

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    1. "Can standards drop any lower?"

      As Campos has noted, a number of law schools are already basically open admissions.

      That number will only grow with another 10% drop in the applicant pool.

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    2. There's a nice point there, that rankings are comparative, and you can keep your ranking even with reduced standards. But the opposite side of the coin is that rankings don't mean anything if Number One has a median score of 162 or whatever.

      I'm waiting for that day, and it's going to mean the end of prestige as we know it. Yes!

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  6. A long long time ago, I told my boss (partner) that the firm should pursue another model. Identify superstars and help them succeed in other businesses. When they do, there will be some feeling of affection/gratitude that the firm can build on for business development. Nobody listened. So I went off and did my own thing -- went to technology. In tech, it is exactly this. Communities will form, and we'll eventually call on each other to say, "hey, you in on that deal? Can we get in?" Law firms, by their emulation of operating models, do not get this.

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    1. A lot of Biglaw castoffs end up with in-house jobs for major companies. That's when multiple Biglaw companies wine and dine them in hopes that they will get future business. But they remember how badly Biglaw treated them and will get their revenge when they refuse to pay Biglaw for certain things and take forever to pay the bill.

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    2. This is true. I work in-house and we beat the piss out of our outside counsel. I go home every day at 5:00 PM, secure in the knowledge that some burnt-out associate will be working for the next 5 hours to produce an office action response or draft a set of patent claims for my review the next morning. And they had better have all the angles covered or they'll lose out the next time we need some work done.

      And you know what? I might make less than half of what they make but they're losing their late twenties, are making less than me per hour, and will likely end up getting let go because some partner doesn't like then. They chose this life.

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    3. You sound like a wonderful peron...just another dirtbag lawyer eating its own

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    4. I wouldn't call myself a dirtbag - I'm more of a sadist.
      These young associates are just so clueless about what's important in life. I feel it's my job to educate them. To accelerate their understanding of the cruelty of the path they willingly chose.
      So really, I'm actually doing them a service.

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    5. The thing in housers do not understand is how unstable their position is and how small a probability there is of having a career. Once you hit age 45 or 50, either you are promoted to the top legal slot - or a managerial legal slot in a large legal department - or you are un/ underemployed, with just a few exceptions for older lawyers still working in non-promoted slots.

      Good luck holding your job till you want to retire - you are going to need it. If you lose that job, you are on the temp market - no one hires fired in housers unless you have a good story to tell. That a 35 year old was promoted and you are not/ no longer a fit in the legal department - it is NOT a good story, and you will not get another full-time permanent legal job. Those are reserved for the youngsters coming out of biglaw.

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    6. There's no shortage of sadistic attorneys eager to teach newcomers who's in charge, that's for sure. It's just another part of the Ponzi scheme. They get their kicks not from fair competition with experienced attorneys, but from tricking the newbies who want to become attorneys.

      Cowards.

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    7. 10:44 is a psychopath. I enjoyed my inhouse gig for a few years largely in part because I partnered up with great lawyers all over the country who were nice human beings. The job was fun because we respected each other.

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    8. You have to beat up outside counsel and keep them in fear of losing business or they might get lazy and start doing a bad job. As it is, they charge $750 for a 1/2 hour interview at the PTO and that's already ridiculous in my book. If the associate gets 1/3 of that they are making a ridiculous amount of money. They signed up for that. They actually like being treated like dirt, like curs being tossed a handful of scraps.

      Yes, and it's true that no one's job is secure. That's why you make yourself indispensable, keep honing marketable skills, and keep one eye open for a better opportunity. It's a harsh world people. You have to look out for number one. You do what it takes to survive, and if you need to get dirty, you do it and forget about the "nobility of the profession."

      What was "noble" about all y'all getting fleeced by the law school establishment?

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  7. The problem with law "superstars" is that they are not necessary for 99% of the work and the clients have learned this fact. And the lawyer AV peer review rating system, which is the most prevalent system, is just a circle jerk anyway. Lawyers actually know very little about the quality of other lawyers' work and certainly cannot evaluate client satisfaction.

    In most cases, a law student can have a much better career at a mid-sized firm.

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  8. At any law firm, the only partners who really count are the few equity partners on the Compensation Committee.

    Non-equity partners get to be on the Holiday Decorations Committee.

    Staff Attorneys have the privilege of being on the Clean Office Committee.

    Document Review attorneys serve on a special committee that will assist equity partners if the Staff attorneys have failed to supply the office bathrooms with sufficient toilet paper. I will not describe in detail what they have to do but will leave for Nando.

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    1. You're a c!ever devi!, you.

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  9. I have survived in this pitiful excuse for a profession for 20 years. I just want to highlight that as bad as the initial employment statistics are, they get worse over time. A biglaw gig lasts only 1-4 or 5 years for the vast majority. I cite to some prior sources from CITI Accounting Group that suggest 80-85% of biglaw associates are gone within 5 years. My anecdotal experience confirms this as true. About half of my former coworkers from 10 years ago are unemployed, and most were graduates of elite schools or at minimum very near the top of the class (well within top 10%) at non-elite schools. A significant percentage of the employed half are underemployed, and a majority of the employed half have had multiple jobs in the last 10 years, i.e. moving around like a migrant worker to remain employed. These sad statistics apply to partners,associates and in house lawyers alike.

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    1. "...survived in this pitiful excuse for a profession"...Law is what supposedly creates and maintains our civility but there are too many laws, too many lawyers and too many law schools. Of course, there is not enough money for everyone and then it's not even a profession, at best, a hobby, because it's unsustainable to earn a living at the standard of a profession.

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    2. The instability is the real problem in the legal profession today. Everything in law is unstable - law firms, in house. Lawyers who hold a legal job for years are few and far between and are very lucky. That goes no matter what school you went to. Harvard or Yale does not protect you from unemployment or underemployment down the road.

      The problem is extreme oversupply of lawyers, and law is very risky today - even from elite law schools.

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  10. @9:39. Totally agree with everything you say. What aspiring 1L's fail to realize is how unstable the legal profession is as a whole. You might get lucky and land a biglaw position, however, you might only hold that position for 2 to 5 years before being shown the door. Some people don't even make it past the first year, esp. if they have difficulty passing the bar exam. The issue that lemmings fail to appreciate is what happen AFTER Biglaw? You may not have enough marketability or experience to lateral over to another large firm. Most in-house positions require at least 4 years of experience before they will even consider you. I was shown the door after 2 years, and so was shut out of in-house positions. I wandered aimlessly for 6 years doing document review in a meager attempt to pay down my law school loans. I'm now in a JD-preferred position in a large company. Getting out of the law firms was the best decision in my case. I don't have to worry about billables, the people are friendlier and team-oriented, hours are better, pay is slightly lower, benefits better. law firms are run by tyrants who view you (staff or associate) as money out of their pockets. In corporate America, particularly a publicly-owned company, no one cares - the money is publicly-funded through stock offerings.

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    1. Even biglaw PARTNERS aren't stable unless you're an equity partner with a name on or near the front door.

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    2. You are lucky you got out of doc review and into a non-legal position in a big company. Not everyone makes it there, and not everyone keeps the non-legal job longer term.

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    3. Yes, I am lucky. I finally got a break, but it took me the better part of 8-9 years of struggling before I was able to get out. Doing the doc review is a going nowhere proposition. Once you're on that hamster wheel, it's hard to break into anything else because you are viewed as damaged goods. Add on the JD-stigma and you are just asking for problems. BTW, my benefits are great, I have a career path now, and hope to be making a salaring exceeding my mid-law salary in a couple years. No more screaming partners, high stress, poor benefits. I recently just deleted all my doc review contacts because I am convinced I will not be doing that crap ever again. No more slimey legal temp agencies, either. Update Legal - Kiss my ass!

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  11. I hope that one of these days "profits per partner" take a huge hit.

    It has to happen. Those equity partners are pigs.

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  12. http://blogs.wsj.com/law/2013/10/31/number-of-lsat-test-takers-is-down-45-since-2009/

    "October LSAT takers numbered 33,673 versus the 37,780 who sat for the test the year before. It’s the fewest number of October test takers since 1998..."

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  13. anyone have a link to the full New Yorker article?

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  14. The OP is execllent but I believe we should differentiate between the problems most professionals can expect to have in the modern economy from the problems that are particularly applicable to lawyers, especially lawyers just embarking on their profession.

    Yes, BigLaw is suffering but in a large part this is due to recent global economic adjustments which have affected a lot of white collar industries. A significant number of professionals have found themselves un- and under employed and to that extent, the unemployment figures for the legal profession is just a matter of degree. However, young lawyers who become unemployed face much bleaker prospects because:

    1. The amount of debt they have;

    2. The fact that whatever skills they have acquired are not readily marketable ("JD preferred" is largely a myth and generally, their skill set is especailly narrow if they have worked in BigLaw);

    3. Legal market saturation due to law schools accepting many more students than jobs available, and

    4. the high cost/high barriers of relocating outside of the jurisdiction where one is licensed.

    From anecdotal evidence, getting hired after losing a job depends a lot more on the candidate being young, thin and good looking than on the CV when everyone has a stellar CV.



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