Monday, April 23, 2018

It's Future Shock All Over Again

"A Nickel ain't worth a Dime anymore..."

The problem isn't the way the legal industry has been historically handled over decades...the problem is, apparently, that it is now 2018 and the legal industry has failed to innovate:

It is no secret that the legal profession is not serving a large portion of society. However, the delivery of legal services is evolving rapidly to try and meet this need. Technology is providing new ways of communicating, collaborating, and organizing our work to better serve clients, the profession, and ourselves. Nowadays, many people seek legal representation in other ways besides the typical in-person model. Alternatives are readily available, fueled in large part by advanced technology. In addition, those without JDs increasingly operate in the space that previously was the exclusive province of lawyers.  (emphasis added)
There is a new normal in our profession. To adapt and thrive, we need to think like true innovators. Many are in agreement that the more efficient delivery of legal services is a win-win for everyone – lawyers and clients alike. How we get there is the topic of this critical industry conference.
In other words, legal services are too expensive.  We have heard the clarion call from the Law School Cartel for years now, and it is finding its way into the private sector also - many are underserved, there is not enough pro bono, other kinds of non-JD degrees need to be offered, etc. etc. etc.
The answer?  Gig the legal economy.  TaskRabbit-ize the already-stretched army of underemployed attorneys trying to scrape out a living.  Because the unaffordability of legal services is clearly the Lawyer's Fault(tm).
And the reason lawyers can't work for peanuts, in most cases, is due to the extreme cost of law school and the attendant student loans.  PSLF and other semi-loan-forgiveness programs like IBR are increasingly in the crosshairs due to growing rates of default and use of these programs.  Because no one saw this coming, even though the Higher Education Act was originally passed in 1965.
Part of the reason legal services are "too expensive," of course, has to do with stagnant wages for decades.  True, legal services have probably never been cheap on a relative-percentage basis compared to middle-class incomes.  Then again, I must have grown up on the wrong side of the tracks, because the only experience I had with the legal industry was when my folks set up a Living Will.  Never had any cause to retain legal counsel prior, but then again we were hardly Magnates of Industry or Descendants of Aristocracy, so maybe that's why.
Regardless, the "new normal" of the legal services industry has arrived, and it involves clients paying less due to a buyer's market.  According to the Georgetown Law(!), the Legal Executive Institute, and Peer Monitor's 2018 report, the legal industry is stagnant, law firm profits are on the decline, and clients can demand and do obtain significant reductions in price.  Legal outsourcing and contract legal work is on the rise as a consequence.  The charts and graphs in the attached report are worth a look in and of themselves.
Into this declining market, the Law School Cartel continues to manufacture twice as many graduates as the market requires while continuing to blithely raise tuition.   And the brunt of that will fall on you, the mid-range law graduate.  In years prior, law graduates did not have jobs because they did not "network" enough.  Today, law graduates do not have jobs because they failed to "innovate."  In either case, the "fault" lies with the party least able to institute major change in a declining market.  An amazing coincidence, to be sure.
Don't go to law school kids, unless you have excellent backing and "immediate connector" status.  Otherwise, the failure of the legal industry in general, and your declining paycheck in particular, will be All Your Fault for some reason. 


  1. I feel sorry for the firms we use as outside counsel. 8 years ago we used top-notch Biglaw firms and as our legal budget shrank, we squeezed our firms. Then we went to set-price billing and got basically fired from the huge firms.
    Now we get cut-rate work done from Indianapolis and the quality of the work reflects it. So sad. The associates have to put in Sundays routinely. And these are the winners in the Law School game!

  2. My employer, a mid sized law firm that is not in a big city, set up a 1920 billable hour requirement for lawyers to achieve full-time pay recently. They also need to be able to collect on those billable hours for a lawyer to get paid for the billable hours on any consistent basis.

    When the practice involves representing mostly individuals in small matters, good luck getting to even 1,200 hours that the firm can bill to clients. It is very hard to get enough work.

    The law firm provides health insurance to only a few lawyers because they don't have to.

    I get calls or emails from recruiters about virtual law firms. That has to be the worst deal going. There is really nothing there.

    Basically, the private practice of law is for many lawyers a lousy business unless the lawyer is with one of the big profitable firms in some professional capacity.

    A senior paralegal at a big firm may be better off financially than many private practice lawyers.

    1. To understand what 1920 billable hours per year means, consider the following:

      There are only 8760 hours in a 365-day year, so 1920 billable hours represents almost a quarter of the year.

      The year contains 2000 working hours if we assume the conventional 40-hour week, with two weeks of holidays but no vacation. If we throw in two weeks' vacation, exactly 1920 hours are left; thus 1920 billable hours means the entire working year. Realistically, we can count on at least half an hour of non-billable time for every hour of billable time. Thus we're at 60 hours per week, with only two weeks' vacation. And no provision is made for professional development, illness, bereavement, or other absences.

      If lawyers are responsible for collecting their own bills, add even more time, week in and week out.

      And 1920 billable hours is far from unusual. I've heard of 2300 billable hours.

    2. I can tell you how it worked when I graduated mid 80s and worked a mid-tier firm. There was an unwritten rule that lawyers had to bill 2000 hours per year...if you did, you got really nice bonuses. If you didn' not only go low bonuses, but minimal pay raises (I think starting salary right out of law school was about 40K back then at my firm...but good bonuses could easily be 20K or more)...There were lawyers who therefore became very adept at "billing". They worked normal hour weeks...forty plus hours but through creative billing, double billing, etc, routinely were able to bill more than 300 hours per week. Every bill was a potential Rico action against the firm as I see it. I also note all of the game playing in the law these days that we didn't have back then...super lawyer this and best lawyer that...journymen lawyers who were competent, but hardly stars, held out to be the best lawyers in the country in their fields. All gamesmanship.

    3. 1920 hours made a lot of sense 20 years ago when the legal profession was more robust and it was not so hard to achieve that goal. Today that is an unrealistic goal in most law firms because it is a challenge getting legal work. Not a challenge for a law firm to get lawyers of course.

      The problem with this is that with a sharply reduced workload comes a poor income that no one would go to law school for. Poor income is measured as being less than half of what a similarly situated public employee would earn in all.

      I have many other colleagues with elite resumes in the same position.

      What looks on the internet like a great law firm job is often in actuality a place holder for a lawyer who is very much struggling and underemployed. The firms add bodies paid based on their billable hours to look bigger, but the bodies don't add much work for the firm.

      The lemmings do not want to understand that most of them will be unsuccessfully fighting unemployment and underemployment for the rest of their working lives with this degree.

    4. I'm curious how in the days before ubiquitous PCs, people got away with such billing and for how long?
      These days, in healthcare, the whole system is based on billing, not patient care, almost impossible to evade the system, more easy to evade proper patient care.

  3. Sure..sure. The problem is not adapting to technology. Not the FACTS that tuition has increased much faster than the inflation rate:

    The problem surely could not be that there are 2x as many graduates in a given year than jobs available, or worse, depending on the state:

    Nope. The problem is not adapting to new technology.

    I'll tell you the Real Answer(tm). America is the Land of Blowing Bubbles. Credit bubbles. Housing bubbles. Education bubbles.

    Early college degrees had a lot of worth. Early law school degrees as well. The early entrants from the Common Classes had some measure of success. In this way, these bubbles are a lot like pyramid schemes. Now that the education bubble has been fully blown out, it's collapsing - like all bubbles eventually do.

    Finally, as an aside, we will soon be seeing the Million Dollar Student Loan debtor, since starting debt (college + law school) is commonly around $300-$350k.

    A portion of these people will default, even with repayment programs, as they are kicked off for reasons x,y,z and we will soon see the rise of the Million Dollar Student Loan Debtor.

    Finally, take a last look at this - and weep:

    1. Yes, college degrees used to be worth a lot. Now that they're handed out to every dolt and her goddamn goldfish, however, they're not worth much. They're little more than receipts for fees paid.

      When Old Guy was a babe in arms (hard to imagine that that time existed), only half of the adult population of the US had a high-school diploma, and only 10% had a college degree. Now about 30% of the population has a college degree—at once undeserved, monstrously expensive, and nearly useless.

      In the 1970s and 1980s, teenagers were urged not to drop out: "Finish high school. Maybe your father got a good job despite dropping out, but you won't be able to." In the 1990s, high school was passé; a bachelor's degree had become de rigueur. And now a bachelor's degree inspires a yawn.

    2. This happens occassionally in mmed school. If someone changes residency or there is a delay in getting work, the loans often become impossible to pay off.

  4. Hey Old Guy,
    Teens were urged to go to college in the 1990s and 2000s too. Then most of the entry-level white-collar jobs the kids were hoping to get after graduation either disappeared due to pervasive computerization of office-type work, or were outsourced to cheap labor countries like India and the Philippines. All that the next generation of my family got from college, was an unmarketable degree and a humungous pile of debt they will never be able to pay off.

    1. First the blue-collar jobs disappeared. (Young people today may not know that as late as 1980 or so it was not hard for an able-bodied man—not necessarily a woman—to find well-paid blue-collar work without even finishing high school.) Then everyone scrambled for a high-school diploma, and soon enough a bachelor's degree. But there weren't enough entry-level white-collar jobs to go around, and even such as there were were drying up. What to do? Go for another degree! Nice option if you're the only one pursuing it, but again it doesn't work when scads of other people are doing the same thing.

      Of course, with everyone clamoring for a degree, the "education" racket raised prices to the skies. That wasn't possible forty years ago, when there was a ready and attractive alternative—blue-collar work—to getting a bachelor's degree.

  5. So what is the recommendation? As hard as it is for those with non-stem college degrees, it is a lot harder for those who just have high school degrees. State government jobs are drying up too...everything is drying up. We have a false economy... sure lower employment, but all of those jobs out there are lower paying service jobs...somebody needs two of them to make a living....and speaking of bubbles... the Stock Market is just waiting for a huge deflation. Amazon a 300 plus PE ratio? Are you kidding me?

    1. Well, it's neither chic nor cool, but there is a shortage of workers in the skilled construction trades-i.e. electricians, plumbers, carpenters, masons
      Yeah, it's tough work, but you can build a good life. And if you're a hot-shot tech whiz, probably not for you. But if you've got entrepreneurial skill, you'll learn the trade and then build your business.
      Again, it's not glamorous-no TV shows except on PBS-but you can make an honest living.

    2. If I could turn the clock back, I would become a physician. Failing that, I would take up a trade.

  6. Numerous industries have been impacted by technology. Wall Street relies on computer algorithms to make trades. Most of our banking transactions are done online these days. Patients are going to WebMD and other medical websites to check their symptoms and obtain information.

    Despite the advances in technology, most industries have not been decimated. In fact, they are growing. According to the latest BEA data (which is publicly available), the real GDP of the finance and insurance industry grew 1.03% in 2017. Since 1997, that industry has grown 81.75%. Remember, finance took a huge hit during the financial crisis but has significantly rebounded. The tech sector continues to grow faster than the pace of the U.S. economy (which grew 2.27% in 2017). Computer systems design and related services grew 5.41% in 2017. Data processing, internet publishing, and other information services grew 11.06% in 2017. Health care and social assistance grew 2.98%. The number of industries that grew last year are too numerous to list in this post.

    The real GDP of the legal services industry declined 0.81% in 2017, dropping from $186,906,000,000 in 2016 to $185,399,000,000. Nevertheless, ABA law schools churned out tens of thousands of more lawyers, increasing the total number of licensed attorneys by 1.6% in 2017. The real GDP of the legal industry is down 3.37% since 1997 and 23.51% since 2008! But since 1997, the number of licensed attorneys increased 40.1%. And since 2008, the year the legal industry began its precipitous decline, the number of licensed attorneys increased 15%. The decline in the legal industry was not a one-year drop following the Great Recession. The real GDP of the legal industry declined in 2009, 2010, 2012, 2013, 2014, and now 2017.

    Law school graduates continue to struggle to find jobs despite a national employment rate below 4.5% for over a year now. Grads struggle to find work because employers do not value their skills. The annual report from Georgetown, mentioned in the post, has noted for years now that the legal industry has been stagnant. The problem with the legal industry is not the failure to innovate, or whatever corporate speak the ABA and law schools are trying to sell these days. The problem is there is much less demand for legal services.

    It’s not hard to figure out why the demand for legal services has declined. To purchase virtually any product or service now requires you to agree to mandatory arbitration. You can’t open a checking account, purchase a new cell phone, or even obtain auto repairs without agreeing to mandatory arbitration. After the Wells Fargo scandal, there was an issue of whether or not those ripped off consumers could even sue the bank because of the arbitration clauses they signed. In response, the consumer financial protection bureau tried passing regulations that prevented financial companies from requiring arbitration clauses. Those regulations were quickly overturned by Congress and the president. There is much less need for lawyers to resolve disputes. The doctors even managed to convince politicians that lawyers are to blame for rising medical costs, necessitating caps on awards in medical malpractice cases. Don’t expect law schools or the ABA to push for more consumer protections that would increase demand for legal services. They just care about enriching law schools through the student loan system.

    To all the lemmings enrolling in law school this year, good luck trying to compete in a declining, oversaturated industry. Your ambitious friends going into the growing tech sector and business will make more than you. Your social justice friends will help far more people working as social workers or for nonprofits. While you will be stuck with hundreds of thousands of dollars in student loans, hustling for any legal business you can get.

    1. The statistics posted above ought to be damning, but they aren't. The schools continue to crank out thousands and thousands of JDs onto a market already saturated. And it's not just technology/arbitration clauses, etc. The bar is doing its best to sabotage lawyers, especially the new graduates/small practitioners. There is now mandatory pro bono in many states, and in some areas(e.g. Washington state) it is allowing and encouraging non-lawyers to practice law.
      (key sentence: Washington is the first state in the country to offer an affordable legal services option to help meet the needs of those unable to afford the services of a lawyer.).
      It makes no sense to attend law school, but enroll they do. In light of the poor job stats, and the fact that it's clear that the law establishment doesn't give a damn about law students or new attorneys or small time lawyers, the schools ought to be collapsing. But they aren't; tens of thousands enroll every year. The information is out there, but it's clear that few are listening.

  7. At this point just about all of higher education is a scam, and it has spawned additional industries whose only goal is to futher scam those with student loans.

  8. This is about as depressing an article as you will read today:

    1. Law school took the last of my youth. It took my health. It took my financial present and future. It took my ability to have children or a spouse or a home. It took everything. I literally have nothing left to live for.

      I was scammed. I believed the fake employment stats and fake salaries. My school's real stats were horrible. It's now notorious trap school that has sunk too low publicly to even really be that anymore.

      Fuck every last living scammer. They should be in jail. Their lives are not worth a bullet. They are the worst scum I've ever met and that includes insane, con artist, bottom-of-the-pit huckster lawyers. All law professors, deans, admins are real pieces of shit. Not one is innocent or good.

  9. The problem is that these long unsuccessful job searches are becoming the norm even for experienced graduates of elite law schools and big law. If you need a job after age 50, good luck. You are not likely to get hired to do full-time permanent work as a lawyer at that age. Contrast that to doctors who can usually find work as a doctor in their 50s and 60s.