'The Lawyer Bubble' critiques law school business model, large firms
January 5, 2014 12:00 AM
"The Lawyer Bubble: A Profession in Crisis" by Steven J. Harper.
Author Steven J. Harper critiques the law school business model in his new book, "The Lawyer Bubble."
By Joshua Siebert
If money is the root of all evil, greed follows close behind. So proposes longtime litigator turned law professor Steven Harper in “The Lawyer Bubble: A Profession in Crisis,” his withering critique of legal education and “Big Law.”
"The Lawyer Bubble: A Profession in Crisis"
By Steven J. Harper Basic Books ($26.99).
In “The Lawyer Bubble,” Mr. Harper joins a chorus of critics who deplore the law school business model. While new lawyers find a market able to absorb a majority of them, law schools expand enrollments and churn out more. He blames unrealistic media portrayals of lawyers, law schools that exploit candidates’ misconceptions about practice, and lenders with little incentive to vet student loan borrowers rigorously.
Contrary to the rosy claims of 80 to 90 percent employment that schools routinely trumpet, only 55 percent of 2011 graduates obtained full-time employment requiring a law license within nine months of graduation. Combine this with average student debt approaching $100,000, and crisis follows.
Mr. Harper, a retired partner with a top 10 firm, also implicates Big Law — by which he means the largest law firms — staffed by students with prestigious academic pedigrees, that serve the global elite. In Big Law, partners bill north of $1,000 per hour and associates as much as $500. Big Law is to the legal community what Goldman Sachs and its peers are to investment banking.
In the last 30 years, large law firms have grown spectacularly. In 1960, the largest U.S. law firm had 169 lawyers. In 2012, the top firm had 4,200 lawyers in 77 offices worldwide. Locally, Pittsburgh-based K&L Gates, with more than 1,700 attorneys, has added nearly 1,000 lawyers in a series of mergers since 2005.
Mr. Harper blames, among others, the American Lawyer, a monthly magazine for the profession. Beginning in 1979, American Lawyer collected jealously guarded information about firms, including revenues and profits per partner (PPP). It ranked firms in its annual “AmLaw 100.” In 2012, the top 10 firms earned between $2.7 million and $5 million per partner, compared with six-figure PPPs as recently as the early 1990s. Amid a tempestuous market, nine of the 10 firms saw PPP growth over 2011.
The PPP metric drove competition. To increase PPP, firms increased the ratio of associates to partners, escalated billing rates and demanded more billable hours. The more associates who bill more hours at higher rates, the greater the PPP. Simultaneously, firms reduced the number partners, further concentrating wealth among those who remained.
Mr. Harper argues that Big Law is partnership in name only, trading the shared sacrifice and success associated with traditional partnership for a corporate model. With everyone a free agent, the driving incentive becomes profit at whatever personal and institutional cost.
Entire firms have folded in the pursuit of outsized profits, most spectacularly Wall Street titan Dewey & LeBoeuf, whose 2012 implosion echoed that of Lehman Brothers. His vivid account of their fall is a compelling cautionary tale.
Mr. Harper believes that “[s]olutions start with recognizing that behavior follows economic structures and the incentives they create.” He quotes legal scholar Richard Susskind, who advises firms and governments: “It’s hard to tell a room full of millionaires that their business is broken.”
It’s as true for law schools as it is for large firms. It’s hard to tell a university that it’s broken when 25 to 30 percent of law school revenues are profit and credulous law students abound, no matter market conditions or tuition rates. Mr. Harper’s prescriptions go mostly to scale: Fewer law students, their numbers reduced in response to accurate data or through stricter lending, would find a better job market. Reduced debt would free lawyers to choose less remunerative practices with underserved populations.
Smaller law firms that prize mentoring and loyalty as highly as profit might breed happier, more effective lawyers. Mr. Harper acknowledges that his proposals are easier said than implemented. The beneficiaries of concentrated wealth hoard it jealously, and none of the blameworthy parties has reason to change. Pressure must come from outside — students, young lawyers and clients who view high billing rates with concern rather than as marks of prestige.
Mr. Harper plainly loves the profession, and he is not alone. Many of us entered the profession with eyes wide open. Many of us were not driven by the elusive promise of a big payday, although its siren song beckoned when the loans came due. His passion and varied experience make “The Lawyer Bubble” an engaging, persuasive read.
His analysis is as complex as his most critical point is simple: Would-be lawyers must ask themselves why they want to be lawyers, what they expect to gain and at what cost. Mr. Harper says it best: “Anyone who uses law school to buy three years of time is writing an expensive check to avoid a decision about the future.”
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