The Legal One Per Cent

law school

After every recession since the Second World War, the legal profession swiftly and robustly recovered. Not this time. The market for lawyers shrank following the post-2008 recession, and no one thinks that it’s coming all the way back. What’s happened in the legal world represents a twist on developments in the larger economy. In law, as in the nation, the rich are getting richer and the poor are getting poorer. With lawyers, though, it’s the system of professional education that’s directly contributing to inequality.

In the legal world, the haves are doing better than fine. In 1985, average profits per partner in The American Lawyer’s list of leading law firms was $309,000 ($623,000 in current dollars); today, the profits per partner for roughly the same group is about $1.5 million. These numbers hide an even greater disparity. Those at the very top of the pyramid—firms such as Wachtell, Lipton, Rosen & Katz; Quinn Emanuel Urquhart & Sullivan; Cravath, Swaine & Moore; and a handful of others—are thriving as never before, with annual profits per partner in the multimillions.

But those at the bottom of the pyramid—recent law-school graduates—are struggling. A recent article in The Atlantic recited the grim numbers: “­More than 180 of the 200 US law schools are unable to find jobs for more than 80% of their graduates.” Median starting salaries for those who do find work are down by seventeen per cent, and more than a third of graduates cannot find full-time employment.

The rational response to economic developments of this kind would be straightforward: in light of the plunging demand for new lawyers, there should be fewer law students attending fewer law schools. And, indeed, the number of people taking the LSAT has dropped by nearly forty per cent in just four years, as have law-school-application rates. The number of students starting law school has fallen by about fourteen per cent over roughly the same period. In other words, many of these prospective students are behaving as rational economic actors—steering away from a business with grim employment prospects.

But here’s where the perverse economics of legal education come in. Law schools continue to exploit the shrinking numbers of students whom they can persuade to apply. During the pre-recession glory years, law schools were profit centers, on their own or as part of larger universities. They expanded. The number of law degrees awarded annually grew, from thirty-eight thousand, in 2001, to more than forty-four thousand, in 2011. The number of schools accredited by the American Bar Association has increased, from a hundred and seventy-five, in the nineteen-eighties, to two hundred and one today. (See Steven J. Harper’s 2013 book, “The Lawyer Bubble,” for more of this story.)

Incredibly, though, law schools have continued to cycle students through their doors and load them up with debt, in spite of the reduced demand for legal education (and for lawyers). Eighty-five percent of graduates now carry at least a hundred thousand dollars in debt. Even dubious operations, like the Thomas Jefferson School of Law, in San Diego, have kept their doors (and palms) open. According to a report in the Times, Thomas Jefferson ostensibly has a better chance of paying off its creditors, at least in part, by staying in business than by going under. That the school’s students have little chance of paying back their own six-figure debts apparently figured little into the calculations made by the school’s administration or its creditors.

It’s clear that the nation needs fewer law schools, for many that remain are only offering their students false hopes of employment in exchange for big debt. These students are getting the legal-education equivalent of the subprime loans that helped sink the national economy. In this case, though, the risk to the broader public is small, while the indebted students may struggle with the burden for the rest of their lives. (The vast middle of the legal academy—at the big state schools, for instance—is doing only a little better than the schools at the bottom. For a full view of the depressing facts, see the superb Law School Transparency Web site.)

As with law firms, the top law schools are doing fine. Graduates of the most highly regarded institutions may not have the cornucopia of options that their predecessors enjoyed a few years ago, but few, if any, will go jobless. These students have large loans, too, but they’ll be able to repay them. As in days past, they will migrate to the big firms, where, by and large, their prospects are bright. And the cycle will continue: the rich (in credentials, at least initially) prospering, and the poor struggling. So it goes for lawyers—and, it seems, for everyone else.

Charity calls for action over legal high dealers

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A homeless charity in Lincoln says a ban on legal highs in the city centre has pushed the problem underground.
The UK’s first city-wide ban on people taking legal highs in public came into force last April.
Breaking the order became a criminal offence, with police given powers to issue on-the-spot fines.
The YMCA’s Malcolm Barham said he welcomed the order, but said more needed to be done to “stop the supply” of psychoactive substances.
More on this and other stories at Lincolnshire Live
“I guess for the general public they are seeing less issues with legal highs, but for those of us who work with people who use these things, nothing has really changed.”
Mr Barham said: “They are awful things that mess with people’s heads and make them do things they wouldn’t normally do.”
One homeless women told the BBC legal highs “are still very easy to get hold of” in the city centre.
A new law making it an offence to supply psychoactive substances is expected to come into force on 6 April.
The Psychoactive Substances Act makes it an offence to produce, supply, offer to supply, possess with intent to supply, possess on custodial premises.
It provides police powers to stop and search people, seize and destroy substances.Lincolnshire Police’s Pat Coates said the force recognised legal highs were still “a significant issue in certain pockets of the community”, but said the ban and forced closure of two “head shops” have had a “significant impact”.
“Prior to the ban, we were getting reports of children becoming ill during the school day having taken these substances,” he said.
Police said new powers would make enforcement easier, and help the force to target dealers.

Tech Will Force Lawyers to Do More for Those Billable Hours

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SILICON VALLEY ENTREPRENEURS and venture capitalists have deployed digital tech to change the ways we live, eat, and shop. They’ve aggressively moved into crucial industries like healthcare and finance. But the practice of law is one area of expertise that has remained stubbornly resistant to disruption.

That is slowly changing. Recently, Andreessen Horowitz led an investment round of more than $8 million in Everlaw, a startup that helps lawyers sort through documents, emails, and other evidence with the cloud-based service ahead of trials. It was the venture firm’s first investment in legal tech. Other startups such as Clio, Judicata, and RocketLawyer have cropped up in recent years seeking to make the practice of law more efficient and less expensive. And several angel investors, at least, have started to take notice.“We’re really at the beginning of a phase where technology is going to begin coming, where’s it’s really having a significant impact,” says Justin Hectus, the director of information at Keesal, Young, & Logan, a full-service law firm based on the West Coast.

Yet to understand how legal tech could have a significant impact on the venerable practice of law, it’s important to see why the sector has, in many ways, been a challenge for entrepreneurs. The legal industry, for one, is much smaller than say the financial services one, and, like healthcare, it requires a high degree of expertise. But most crucially, the lawyering business itself is set up in a way that resists efforts to move fast and break things—even though, and perhaps because, such innovations could help make the law more accessible for everyone.

The Way Things Work
The legal sector is largely driven by law firms—and law firms function differently than hospitals, banks, or individual consumers do.

“The primary delivery of law is through a law firm,” says Daniel Martin Katz, an associate professor of law at Illinois Tech at the Chicago Kent College of Law. But law firms can’t raise capital and they’re not allowed to share the profits of their firms with non-lawyers—which means lawyering itself is not conducive to investment.