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Continuing the Discussion on Accurate Recording of Time in Both Alternative Fee Arrangements or Traditional Hourly Billing


                          Continuing our series on Alternative Fee Arrangements, Todd Gerstein recently posted an interview of Ed Poll and me  concerning the relevance of time keeping in the world of Alternative Fee Arrangements.  Todd’s company has an interesting product, called Time Capture, which is worth taking a serious look at, not just for Alternative Fee Arrangements, but for all timekeeping functions  since the product  allows for more accurate and timely recording of time and helps eliminate “slippage,” given the tendency of so many lawyers to reconstruct their time days and weeks after the time has been already been spent and the frailties of memory cause too many of us to forget what particular services were previously rendered and the time actually spent.

             Regardless of whether your time keeping needs relate to AFA’s or traditional hourly fee arrangements, Todd’s product is worth taking a hard look at.  

             As I previously mentioned time keeping as an activity in and of itself, will be an essential part of effective law firm management, regardless of the nature and terms of your engagement with a client.

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Associate “Job Satisfaction:” Why Law Firms should care


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Associate Job Satisfaction (JD)

Associate Job Satisfaction:  Should We Care?

         Jerome Kowalski

Kowalski & Associates

September, 2010

The American Lawyer recently reported the results of its annual survey of associate satisfaction and reported that law firm associate job contentment and morale dipped to its lowest level since 1994. American Lawyer concluded in its survey that job satisfaction, based on a survey of over 5,000 associates found that job satisfaction fell “from 3.897 in 2009 to 3.733 this year. That’s the lowest score since 2004. In particular, associates lowered the individual grades for their own firms, giving an average rating of 3.96 this year–less than the 4.16 rating in 2009–and the lowest score in recent years.”

This report was followed by a series of public comments and blogs that associates who complained were unnecessarily and inappropriately “whining”. Partners and unemployed or underemployed lawyers were particularly critical of associates receiving regular paychecks calling them simply “cranky”; an example of this public dialogue is contained in a recent ABA article, in which some of the nearly 100 posted comments had a rather interesting, if not at times bitter series of comments. The American Lawyer report can be exegetically interpreted and analyzed in a variety of different ways: First, “only” 25% of associates expressed dissatisfaction with their jobs. Second, perhaps cynically, American Lawyer was simply taking a tabloid and a bit sensationalist approach to its report, and the various releases describing its report were made in order to boost sales and interest. Or, perhaps, a rate of 25% of disaffected associates is not acceptable, because it significantly affects lawyer efficiency, morale and law firm profitability.

Employee dissatisfaction is wildly contagious and significantly adversely affects employee efficiency, an unacceptable result in an era in which associate efficiency is critical, in our changing law firm business model of increasing Alternative Fee Arrangements and the death of hourly billing. We have known for at least four decades the reasons for lack of job satisfaction in any work environment. In 1968, the Mayo Clinic identified the factors that lead to job dissatisfaction:  Bickering co-workers  Conflict with your supervisor  Not being appropriately paid for what you do  Not having the necessary equipment or resources to succeed  Lack of opportunities for promotion  Having little or no say in decisions that affect you  Fear of losing your job  Work that you find boring or overly routine  Work that doesn’t tap into your education, skills or interests

The cures for virtually all of these factors is largely greater transparency in law firm management and appreciably greater open and candid discussion, led by law firm management, joined in by partners regarding the state of the firm and how the firm plans to weather the continuing economic turbulence.

Interestingly, Joel Rose, a respected law firm consultant, in a recent guest column described the role of law firm managers. Mr. Rose seemed to suggest that law firm managing partners are hampered in their roles because of their needs to consult and obtain approval of other members of management. He also lists the sundry obligations of the managing partner, listing, in my view, “communications” way too low on the MP’s duties. In the current economic malaise, I frankly would list communication at the very top of the list.

I would take this issue a step further: In thirty years of being deeply immersed in the entire recruiting process, from hiring partner, to heading a legal recruiting firm to ultimately serving as a consultant to law firms on, among other things, lawyer recruiting, training and retention, by far and away, the single most often cited reasons given by lawyers who are asked why they are seeking alternative employment, is one form or another of “lack of feedback,” an absence of knowing what is “going on at the firm” and, finally, a fear by an associate that he or she will not make partner for reasons completely exogenous to the associates performance and a concomitant sense that partnership decisions are made in a fashion that is so deeply mysterious, unfathomable and enigmatic. Every lawyer involved in recruiting and every recruiting professional has heard this mantra repeated consistently and in a virtual talismanic fashion.

Law firms are theoretically well aware of this. Recruiting literature prepared by virtually all law firms for law school graduates consistently cite the firm’s regular feedback and open communications. Similarly, lawyers involved in the recruiting process, upon hearing the gripes of an interviewee of the absence of adequate communications by partners at their former law firms, recite, by rote, as it were, the firm’s open style of communications and regular feedback, with all associates being fully informed about matters affecting their careers. If so many partners hear and say the foregoing, how could so many associates consistently experience a diametrically opposite sense?

More crucially, as law firm economic pressure rise, the level of communications and transparency declines. As candid communications and transparency decline, so too does associate morale and efficiency. A material portion, if not all of these maladies can be mitigated with open and relatively full disclosure of the impact of The Great Recession on the firm, its economic performance as well as the firm’s strategic business plans. Associates (and I daresay the partnership) want to know and are entitled to know how the firm plans to get through these challenging times.

The bickering among associates largely caused by uncertainty of continued employment, in a continuing era of associate layoffs (openly acknowledged or through “stealth layoffs), “accelerated” reviews, deferral of start dates and reduced law school recruiting must be addressed in open forums with associate participation in which the subject is addressed and the subject is put on the table for associate input on the question.

On September 23, 2010, Hildebrandt Robbins Baker casually added substantial fuel to the fire and heightened associates uncertainty of continued employment by issuing a report which speculated that during the next 5 to 7 years 17,500 (out of a total of 65,000) “partner track” associates at AmLaw 200 law firms, amounting to some 27% of the total of such  associates could simply be “eliminated” (http://www.hbrconsulting.com/blog/archive/2010/09/23/chipping-away-at-the-traditional-model.aspx )  While, a reading of Hildebrandt’s report show that it is based on a series of assumptions and speculations,  largely not supported by any facts, the result is clearly heightened concern about associates’ job security.   Hildebrandt’s speculations, while widely correctly criticized, see for example, http://abovethelaw.com/2010/09/consultant-says-17500-non-partner-biglaw-jobs-at-risk/#more-37294 , the mere report sent an unnecessary and unwarranted shock wave among at least the 65,000 “partner track” associates at AmLaw 200 law firms and surely trickled down to a significant number of other large law firms below the AmLaw 200.  The Hildebrandt report, suggesting, among other things a completely unsupportable prescience, certainly had the consequence of sending a shock wave through associate ranks around the nation, who doubtless spent unnecessary time fretting and discussing the foreboding “news.”  I daresay that if Hildebrandt had the ability to predict employment statistics seven years hence, its crystal ball surpasses that of any other economist in the nation.

Thus, in addition to the irresponsible conflagration Hidebrandt ignited and the concomittant increase in associate disaffection, partner time is now required to douse these flames.

Issues like this must be the subject of open discussion by and among partners and associates.  Associate concerns simply must regularly be allayed.

Several recent case studies illustrate the point: The London office of Delloite Touche confronted the fact that incoming work was insufficient to keep all of the professional staff employed. Management and had an open dialogue with its professional staff openly discussed the subject; it proposed a number of alternatives, including layoffs or reducing compensation by approximately 20% and concomitantly reducing by the same percentage the time the professionals were required to work. The professional staff openly discussed these and other alternatives and expressed to management that the latter alternative was the far more desirable alternative. The result: enhanced employee morale and despite the reduced number of hours required, most of the professionals had no hesitation in working beyond the 20% reduction for clients, marketing efforts, mastering new skills and writing professional articles. More recently, Norton Rose of England took the same approach to similar effect.

Perhaps an even more insightful analysis appears in Above the Law, in an essay written by a lawyer who “switched sides”  and moved in house to Aon from Sullivan & Cromwell: http://abovethelaw.com/2011/01/inside-straight-human-resources-and-the-law/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+abovethelaw+%28Above+the+Law%29&utm_content=Google+Feedfetcher

Associates observe the obvious fact that many partners increasingly “hoard” work, partially because the AFA model requires quality legal work to be efficiently delivered by experienced lawyers and, quite frankly, sometimes “hoard” hours for their own job security. These factors, again, need to be discussed openly, with associates invited to openly discuss these issues and suggest alternatives, including ways they can contribute substantively to the firm, even in the new era. Acquisition of new skills (not simply in other practice areas, but also in marketing and project management), pro bono work, accepting the fact that they will necessarily take a step back in matter involvement as they endeavor to improve their own efficiency are obviously areas for open discussion.

Law firm management in this new era also must swallow the fact that associates and partners can no longer be assessed by the number of hours billed, but rather, the new metric is efficiency of delivery of quality work product. Applying these basic principles, associates need to educated that making these contributions will eliminate conflicts with supervisors. Dissatisfaction with compensation should also be openly discussed. Associates need to be inculcated with the plain fact that rather than unfavorably comparing their own compensation with that being paid at other firms, they should be comparing the fact that they are receiving compensation and have meaningful employment with the unfortunate throngs of peers not as fortunate.

Reading the commentaries of the articles I cited above, the fact is that most associates do “get it.” Associates should also be encouraged to devote their own time to various programs conducted by virtually every bar group (such as the New York State Bar Association’s Committee on Lawyers in Transition) which provides counseling to lawyers who are unemployed or underemployed. The essence of all of the foregoing is that transparency in management, open and regular communications and dialogue eliminates or, at least tempers) virtually all of the known reasons for employee dissatisfaction.

Interestingly, Professor Steven Harper of Northwestern University School of Law and a former Kirkland & Ellis partner, in a very recent article notes that associate dissatisfaction leads to lawyer inefficiency and adversely affects a law firm’s profitability. Professor Harper argues, quite correctly I believe, that all of a firm’s partners owe a duty to the firm in assuring associate satisfaction and that a metric which should be considered as partner compensation is determined should include the measure by which individual partners contribute to associate satisfaction, or, on the negative side, associate disaffection.

Surely, these concepts are completely revolutionary, as is so much the profession has been going through recently, such as AFA’s, value billing, the death of hourly billing and legal project management. Informed management, as well as each partner, if they do have some measure of concern for enhancing morale and efficiency by the firm’s professional staff needs to step away from the smoke and mirrors of the Wizard of Oz and the secret huddling of partners behind closed doors. But the fact is that the continued management styles that were widely used in the past, treating associates (and indeed, lower level partners and counsel) as mere mushrooms (being kept in the dark and fed muck) and elevates insecurity, job dissatisfaction, fear, inefficiency, morale, rumor mongering, attempts by associates to spend late nights to rifle through partners’ trash bins, email boxes, hack in to the firm’s computer system, seeking any grain of fact or hypothesis, embellish on it or make unwarranted assumptions and conclusions, spread these among associate ranks, which only escalates in the child’s game of “telephone”, and diminish morale, certainty, confidence and efficiency.

© Jerome Kowalski, September, 2010

Is There a Crisis in Legal Education?


What if they built a law school and nobody came? Chapter II

Yet a Little More on Legal Project Management


Legal Project Management – Jerry Kowalski interviewed on the importance of Recruiting and Building Legal Project management Talent.

 Legal Project Management  Interview of Jerry Kowalski on the Importance of Recruiting and Building Legal Project Management Talent. August 27, 2010

What if They Built a New Law School and Nobody Came?


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Jerome Kowalski

Kowalski & Associates

July, 2010

 

In 1990, the New York Attorney General and the New York City Department of Consumer Affairs began a series of investigations and other proceedings aimed at chains of various health and beauty schools, largely, if not exclusively in underprivileged neighborhoods.  These schools were all licensed by the New York State and City agencies responsible for granting such licenses. The schools advertised broadly, primarily on subway posters, in various newspapers largely directed at underprivileged communities, posters pasted on the walls of these communities, as well as on wrap-around posters on the lampposts in those same areas.

The come-on was simple:  The advertisements pitched the fact that beauticians, cosmetologists, hair stylists, make-up artists earned commendable salaries.  The posters went on to note that many of those positions required both state licensing and a degree of training.  The schools offered the requisite training and assisted the students in obtaining those licenses.  And, then, the real hook in this come-on:  Federally guaranteed student loans for tuition were available for attendance at these schools and, in essence, as far as the students were concerned, tuition would not impose any costs to the students:  all they had to  do was show up, sign a few pieces of paper, attend the program (often a year in duration) and after graduation and licensure, a career in one of these fields would provide a financially more rewarding career than was otherwise to these denizens of underprivileged areas.

The “hook” was exceptionally alluring:  One would simply show up at the school, sign a few forms, fork over not a buck, take the classes and a more financially lucrative career lay ahead of them. Of course, among the stack of papers signed was the student loan applications.  The lending institutions would then advance the entire tuition to the school.

There were only a couple of problems with the entire scheme:  The fact was that there were not sufficient jobs available to the schools’ graduates.  Many students, after graduating from the schools, could not find any jobs in these fields (there was simply a dearth of such jobs) and most of the schools’ students,  after attending the schools and not obtaining any of those so-called well paying jobs, gave up after their job searches and simply found lesser paying jobs and abandoned their job searches. Word also spread from the graduates to the generation that followed and still attending the schools and large numbers of those students just simply walked away from the schools. None of these school graduates or attendees repaid their loaned, quite likely because they felt snookered (which they obviously were), and they simply otherwise lacked the funds.

Of course, the various institutions which either advanced the tuition loans began collection proceeding.  A sufficient number of the victims complained about being hoodwinked and filed various complaints with regulatory agencies, which, of course, served as the catalyst for the commencement of these proceedings.

The question that nobody wants to ask is whether the recent crop of law school graduates, those currently attending law school and the thousands of current law school applicants are victim of a similar scheme, intentionally or not,  created by the profession and the law school community.  I have found very few who have raised or publicly discussed the issue. An absolutely outstanding exception is the blistering report by noted law Professor, Brain Tamahana.

Another interesting question (in the horses are already out of the barn category) is whether a rule recently proposed by the United States Department of Education, 34 CFR Part 668 (http://www2.ed.gov/legislation/FedRegister/proprule/2010-3/072610a.html ) would be applicable to law school tuition loans.  Under the proposed rule, the Secretary of Education is mandated to establish measures for determining whether certain post secondary educational programs lead to gainful employment and if they do not, among other things, if the Secretary determines that they do not, federally guaranteed loans would not be available to students of such schools.

In June of this year, the United States Bureau of Labor Statistics reported that the legal profession lost a total of approximately 30,000 jobs during the preceding year; these numbers are actually misleading, as we shall see. Law Shucks, a blog site which maintains a tally of law firm layoffs, reported  that as of April, 2010 the AmLaw 100 alone lost 14,000 jobs for the preceding 12 month period. Law Shucks acknowledges that its figures do not reflect accurate numbers for the AmLaw 100 alone. The Law  Shucks numbers only include layoffs which AmLaw 100 firms publicly acknowledged and does not include law firms that engaged in stealth layoffs, of which we now there are many. Nor do these numbers reflect law firms, notably Heller Ehrman, which had simply gone out of business, or law firms below the AmLaw 100, of which there are literally thousands. In our work, we found not a single law firm of 50 or more lawyers which had not engaged in some form of reductions in force.

The problem with the BLS statistics is that they are similarly misleading in that they do not include lawyers who became underemployed, for example, lawyers who turned to some form of public service jobs, government jobs, joined smaller firms, all at drastically reduced compensation. The BLS statistics also do not include 2009 graduated who have yet to find employment, nor do they count the armies of lawyers who have descended to the purgatory of staff or temp lawyering positions, where seasoned lawyers and young lawyers, who sit cheek by jowl in these often sordid purgatories.

In short, there are tens of thousands of both unemployed or underemployed lawyers nationally.  There is no accurate metric by which to measure these numbers.  Anecdotal evidence suggests that the total may be anywhere from 30,000 to 100,000 lawyers.  More significantly, law.com reported on July 20, 2010 that employment levels for lawyers as a whole has declined to 1991 levels.

In the face of all of this, law firms, as is widely reported and similarly publicly acknowledged by virtually every law firm in the country in the country, predict that hiring of 2010 law school graduates will be sharply reduced. These same law firms predict continued reductions at least through 2011.

In the face of all of this, our nation’s currently accredited law schools, of which there are now approximately 194, insist on adding at least 45,000 new graduates to these armies of unemployed or underemployed lawyers.  Add to this mix the facts that (a) ten additional  law schools are in a queue to receive accreditation; (b) law school applications have risen dramatically in the last year and a record number of students have enrolled in law schools for the classes of 2013, when, barring an historically and unprecedented event or series of events (perhaps a federal mandate that every municipality hire and compensate a lawyer for every 1,000 of its residents), there will certainly be a pool of at least well over 150,000 lawyers who will be looking for jobs;  (c) economic realities are lowering the demand for lawyers and law firm revenues are in decline and (d) a number of universities announced plans to create new law schools.

With regard to the foregoing, let’s, for example, look at the rather odd recent events in Dallas:

Quixotically, in early 2009, The University of North Texas announced that it planned on establishing a public law school in the Dallas-Fort Worth area as part of its university.  Those plans seem to continue apace in 2010 in spite of the dwindling job market for law school graduates.  Adding to the enigmatic and rationally inexplicably plans of this University is that Houston hosts three law schools (one not yet accredited by the ABA) and 11.5% of the graduates of those law schools were unemployed nine months after graduation; the two existing law schools in the Dallas area, with equivalent post graduate employment results.

West Texas’ rationale: (1) There has not been a law school established in Texas since 1967; and (2) the Houston area had only 538 law school seats available;  (3) the ratio of bachelor degrees in Houston to law school enrollment was 10:1, while the ratio in Dallas was 35:1 and (4) while the Dallas-Fort Worth area purportedly generates 1,400 new legal jobs annually, these lawyers were hired from other regional law schools and schools located in other states.

Obvious flaw in this otherwise inexplicable logic is that all of the positions for lawyers in Texas (including each of the 1,400 new openings for lawyers in Texas)  are quickly filled and there are already multiple applicants for each such position; there certainly is no dearth of job applicants in Dallas.  Another obvious defect is the presumption that Dallas jingoism would somehow favor the employment of students schooled locally by a law school with no track record, while lawyers already employed in the area and those seeking employment there are already drawn from top tier law schools, in existence for many years. Additionally, this new law school does not seem to limit enrollment to residents of the Dallas area; in fact it will likely draw applicants from the rest of the country.

Rather obvious additional questions come to mind:  (1) what’s the point? (2) Why add to the enormous pool of unemployed and underemployed lawyers?  (3)  How can one reasonably expect a faculty and university administration with such patently unsound judgment be entrusted to educate aspiring lawyers in logical thinking, careful analysis and honesty and candor demanded of lawyers?  (4)  How does the fact that a growing metropolitan area has an entitlement to establish a new law school simply because it hasn’t had a new law school created in forty years make any sense?

It might be a cheap shot to call this proposed law school as Texas’ version of a bridge to nowhere. The fact is that there now exist 194 other bridges to nowhere.

Jim Leipold, the director of The National Association for Legal Placement, whose crystal ball is as good as anyone’s, announced last week that the earliest he sees an “uptick” in legal employment for new law school graduates is 2012. Any simple analysis of the facts on the ground ineluctably leads to several conclusions:  The current graph shows a complete vertical decline in unemployment and underemployment of lawyers; that straight down vertical drop may move in 2012 to a drop that may move a few degrees to the right in 2012; there is no possibility that the total number of unemployed and underemployed lawyers will ever be absorbed in to the market.

Far more significant is the press release issued on July 22 by NALP, frankly one of the most opaque reports I have ever read and in which at least the second paragraph quoted, may have been inspired by Lewis Carroll,  reads in part:

“The national median salary for the Class of 2009, based on those working full-time and reporting a salary, was $72,000, unchanged from that for the Class of 2008, and the national mean was $93,454. However, because some large law firm salaries cluster in the $160,000 range while many other salaries cluster in the $40,000–$65,000 range, relatively few salaries were actually near the median or mean, as the Jobs & JDs report details. The national median salary at law firms based on those reporting a salary was $130,000, compared with $125,000 the prior year, and the national mean at law firms was $115,254.

With the Class of 2009 report NALP introduces the concept of an adjusted mean as an additional way to provide a broad measure of salaries for full-time jobs as a whole and for full-time jobs in law firms. Essentially, the adjusted mean compensates for the fact that the distribution of reported full-time salaries is not the same as the distribution of reported full-time jobs, particularly when it comes to law firm jobs. Whereas salaries for most jobs in large law firms are matters of public record and reported, fewer than half the salaries for jobs in small law firms are reported. The calculation of adjusted means is accomplished by giving more “weight” to the mean or average salary in small firms and less “weight” to the mean or average salary in large firms to calculate the overall law firm mean and also the adjusted mean for all full-time jobs. In other words, adjusted means are based on estimates that account for the unreported salaries. The adjusted mean for all full-time jobs reported was $85,198 (in contrast to the unadjusted national mean of $93,454), and the adjusted mean for full-time law firm jobs was $102,959 (in contrast to the unadjusted mean of $115,254).”

I do not mean to impugn Jim Leipold, NALP’s dedicated executive director, previously trained and having served with distinction as a tax lawyer at DLA Piper,  but  you may want to try and pierce the opacity of the entire report, particularly the quoted text.  The simple meaning appears to be that since NALP does not include compensation figures for small law firms, which employs the largest number of lawyers in the nation and similarly excludes staff or temp lawyers, the reported median salary for 2009 graduates of $72,000 per annum is largely a wild assed guess and the actual median salary is probably much lower.  The newly coined phrase, “adjusted mean,” as Mr. Leipold explains (it may take a few readings to comprehend), results in lowering the previous blindfolded shots at the dartboard hitting, which previously, quite fortuitously, I suppose, hit higher numbers.

And, whether we do not address the 12% of 2009 graduates completely unemployed still.  In fairness, it does include, apparently those 11% of 2009 graduates who are employed in positions for which a law degree is not required (“would you like fries with that?”)

Certainly, using a “median” or “mean” or “adjusted mean” is simply Orwellian.  Using a median number simply begs and avoids the single most important  question:  “What is the average salary of a 2009 graduate?”

The fact is that even the reported “median salary” of $72,000 is less than many, if not most, legal secretaries earn at large law firms.

Herwig Schlunk, a professor at Vanderbilt University Law School in an article published in 2009 entitled “Mamas Don’t Let Your Babies Grow Up to be Lawyers” ( http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1497044 )performed an investment analysis  of the monetary value of a law school education. He determined that the cost of attending a second or third tier law school ranges from $201,000 to $280,000. Graduates of such law schools require average compensation of between $80,000 and $150,000 to justify the expense of law school, while the average compensation of those graduates is below $65,000, although some top of the class graduates do earn up to $145,000. In all cases, Schlunk determined that the expense of law school simply does not yield a reasonable return on investment.

More interesting and indeed perhaps even scandalously shocking is a document published in late 2009 that first surfaced and was only widely reported in January 2011 from some deep catacomb of the ABA entitled “The Value Proposition of Attending Law School.”  This paper was authored by the ABA Commission on the Impact of the Economic Crises on the Profession and Legal Needs.  The paper notes:

            Although many factors may influence one’s decisions about whether and where to attend law school, a proper understanding of the economic cost of a legal education is vital for making an educated decision. Far too many law students expect that earning a law degree will solve their financial problems for life. In reality, however, attending law school can become a financial burden for law students who fail to consider carefully the financial implications of their decision. ….

Many prospective law students are already familiar with the steep price of a legal education. What many do not know, however, is that these costs often exceed the expected return on their investment in the job market.  Prior to the recession, starting salaries for associates at large law firms stabilized around $160,000 a year, and many prospective law students expect to be able to earn a comparable amount. In reality, however, only 23% of the graduates of the class of 2008 started with such a high salary, including only 37% of those who went into private practice.  Shockingly, most of the rest of the graduates, about 42%, started with an annual salary of less than $65,000…..

The combination of the rising cost of a legal education and the realities of the legal job market mean that going to law school may not pay off for a large number of law students. Dean David Van Zandt of Northwestern Law School estimates that to make a positive return on the investment of going to law school, given the current costs, the average law student must earn an average annual salary of at least $65,315.  As the data above show, however, over 40% of law school graduates have starting salaries below this threshold. Thus, many students start out in a position from which it may be difficult to recoup their investment in legal education. Even students who do ultimately prosper over the course of a career face difficulties from high debt loads during the beginning of their career. High debt can limit career choices, prevent employment in the public service sector, or delay home ownership or marriage.  In short, going to law school can bring more financial difficulty than many law students expect. [Footnotes omitted]

I frankly cannot fathom why this four page report was not delivered to every prospective law school applicant after its rather clandestine publication by the ABA, nor why the 979 word report was never prominently posted on the NALP web site nor why this critical warning is not contained in every law school catalogue.  It could be easily argued, I would suggest, that the report is a veritable “smoking gun” evidencing the fact that critical material information was being withheld from law school applicants.

The fact that data released and distributed (and withheld) by both law schools and NALP are obtuse, misleading and, a group of law school graduates recently formed a group known as Law School Transparency, whose mission statement is:

[I]nform prospective law students about the value of a law degree by providing open access to ABA-approved law school employment information. To this end, our website functions as an employment information and data clearinghouse. We aim to help prospective law students sort through employment information to understand some aspects of beginning a career post-graduation. We have also begun an initiative to collaborate with law school administrators and the ABA in the creation of a new reporting standard.

Towards that end, the project, in July, 2010 sent out requests to 199 law schools asking for meaningful data, which, among other things, would demonstrate more meaningful information than that which is currently available from both law schools and NALP. As of mid-September, 2010, 10 law schools responded and with the exception Northwestern and Ave Maria) the balance said no, thank you. Ultimately,  Northwestern and  announced that they will instead rely on data Forbes Magazine will purportedly be releasing in its ranking in its ranking of law schools, which will include some as yet undefined “return on investment.”  The only source I have found for the proposition that Forbes will include or report on such data is a blog maintained by some law school professors, which merely noted that Forbes will “reportedly” will include data, in its maiden law school ranking, information concerning “return on investment” based, in part  on employment data for both recent graduates and graduates five years after graduation. Notably, on September 16, 2010, Ave Maria law school, ranked By US News and  World Report  in the fourth tier (the lowest tier).  While Ave Maria is to be much commended, the obvious question is what do the other law schools have to hide?

[Update:  On February 23, 2011, Ave Maria reneged; so much for commendation].

On November 17, 2010, The Law School Transparency project, issued a second rather polite revised request for data.  Don’t hold your breath waiting for any responses.

The smoke and mirrors continue.

Add to that the fact that the nation’s law schools inexorably add 45,000  new lawyers in to the gaping and growing canyon of unemployment and underemployment lawyers every year.  What we have here is the equivalent of  BP oil relentlessly spewing out tens of thousands of barrels of oil, with no possibility at the current time that anybody has any interest in sealing this annual eruption.

There are an additional series of bizarre enigmas that must be added to the equation:

1.    Law school tuitions are rising well above the rate of inflation annually.

2.  As the hordes of new graduates are added to the kettle, simple rules of supply and demand will likely reduce Professor Shlunk’s suggested average compensation of $65,000 and even NALP’s optimistic and speculative $72,000.

3.  These facts are well known to law school administrators, particularly deans and admissions personnel.

4.  Although these facts are presumably ascertainable by those extremely bright college graduates who apply to law schools, law schools which are replete with (a) lawyers of presumably the highest moral integrity; (b) professors who are charged with imbuing law students with the ethical mandates required of lawyers; and (c) every law school has a passel of securities and corporate professors who spend their time drilling in to law students about the legal requirement of making full disclosure of all material facts while also being obligated not to make any omission of material facts; and that failure to do so would result in severe civil and criminal penalties.

5.  All of the nation’s law schools are extremely well served by selfless alumni, hard working lawyers of accomplishment, who dedicate their time and service to the leadership and guidance of their alma maters.  They well know the score.

Illustrative of these inexorable facts is a lovely glossy full color 64 page brochure I received from my own alma mater, New York Law School, just yesterday.  The first eight pages contain a one page encouraging note from the law school’s extremely well regarded – and highly compensated new dean, Richard Mastagar —  a distinguished legal scholar, with an outstanding biography.

When I attended that school, 35 years ago, tuition was $1,200.  Today, with the creep of inflation, it is $67,000. Yet, a significant number of 2009 graduates of are still unemployed and the majority who actually have found employment are likely earning starting salaries less than that amount.

Dean Mastagar’s brief  one page introductory message was “the [current] economic crisis continues to hit our profession hard.” (a) That he was proud of the fact that New York Law School’s graduates are flexible [emphasis in original].in terms of jobs they have taken.  I may be improperly projecting, but I read that as saying that the school’s graduates are taking jobs that are either low paying or completely outside the profession; (b) The school’s graduates are innovators  [emphasis in original] “Where other see problems, they see solutions.” Isn’t that the hallmark of any successful lawyer? And (c) the school’s graduates add value [emphasis in original] “in countless ways.” That reminded me of William Shakespeare’s oft quoted “damning with faint praise” from Twelfth Night. And, I must confess, while I do not intend to impugn any of the school’s graduates,  my barista, Tony, describes himself as having all of these three attributes.

Not a word about the actual employment gained by the school’s recent graduates.  Not a word about their average income.

Dean Mastagar’s cheerful introduction was followed by a mere three page article punctuated by handsome photographs (remember, this is a 64 page glossy brochure) entitled Navigating the Legal Job Market,  stating (a) the virtues of patience, the history of the recession and its effects on the profession, (b)  finding a job will be prolonged, (c) “The wait may yield unexpected rewards” ( I guess so would winning the lottery, (d) the “need to see the “big picture,” (e)  “the need to interview effectively,” (Wow, I didn’t know that), the need to develop a network,  (f) consider employment opportunities at small and medium sized firms (with no mention of the fact that tens of thousands of graduates are doing the same thing nor that the compensation offered at these firms often do not provide enough money to repay student loans, while simultaneously eating or paying for housing, and for at least 50 years, most NYLS graduates wound up practicing at small firms; in 1977, for example, there was only one NYLS graduate who obtained a job in the then equivalent of an AmLaw 100 firm: me ), (g)  consideration of temp jobs (same problems as the preceding suggestion only worse working conditions) coupled with a daily fear that the temp job can abruptly end and the young lawyer will then look for another open casting calls), (h) starting your own law practice, citing the example of one graduate who successfully did so; and, finally the need to “think strategically.” (Clearly another innovative thought).

All of the parentheticals are mine.

The next 55 pages in this glossy handsome brochure are about the joys of photographing wonders of nature (you can’t make this stuff up), the school’s admirable bar pass rate and on campus activities and little bits about the faculty and school graduates.

I certainly have no particular gripe about New York Law School. It provided me with an excellent education and the skills necessary to have a wonderful career at the law.

But the fact is that more than 150 law schools regularly issue similar blather.  What they should be saying, as loudly as possible, is “OMG, our hair is on fire! Run for your lives!”

A quick note about another vice in which law schools have recently been engaging, particularly third and fourth tier law schools: Most graduating college students, when applying to post graduate programs, apply to both “safe schools” and schools at the height of their grasp.  Third and fourth tier school in recent years, in order to improve the employment reports of their graduates,  have been inducing and recruiting top college graduates (in campaigns similar to that engaged in by NBA teams for LeBron James) to enroll in their schools with expansive and enticing scholarships, which are extremely difficult to decline.  These students tend to do well and most often do wind up with far better jobs than their peers; not great jobs, just better jobs or  at least get a job.  The direct consequence is that students below the top quartile, those least likely to gain meaningful employment, are actually subsidizing the education of students who are far more likely to do well professionally.

So, you may wonder, what’s the point of all of the foregoing?  Here it is:

  •  Law schools owe a duty to make full and fair disclosure to all applicants.
  • The nation’s law school student population must be reduced by at least one-half, probably two thirds, for the near term, probably at least three years.
  • The nation’s bar owes a duty of every nature to demand these changes and shepherd through the inevitable resistance of the academic community.

I must confess that my conclusions, which are seem beyond dispute, are not mine alone.  At least four law firm managing partners, a number of other prominent lawyers and several law school professors have shared these thoughts with me.  However, they openly expressed fear about making public statements supporting these obvious conclusions because they all felt they would be seen as pariahs, shunned by the profession, insofar as the practicing lawyers were concerned, they expressed the fear that their firms’ recruiting activities would be hampered at important schools; the academics also expressed the concern of being shunned by their colleagues, since, in effect, they would be encouraging significant unemployment among the academic community.

Analogous defenses to a securities fraud lawsuit brought on the grounds of failures to disclose or omissions of material facts, would certainly not fare well. An issuer could not defend his non-disclosures because investment bankers would shun him, non-disclosures or omissions would be viewed as contrary norms by issuers or that making honest disclosures would result in a reduction in force at his or her own company, without meeting with loud guffaws from judges, juries and prosecutors.

If you have reached this point in this note, in the unlikely event you haven’t already come to these other rather undebatable conclusions, here they are:  (a) law schools must stop behaving like the beauty schools of 1990 and (b) law schools should make full, fair and candid disclosure to every law school applicant (before they even remit the application fee) and have each applicant sign a document that he or she has read the disclosures and understands them.

Finally, law school graduates, law school administrations and law professors might take a look at 16 CFR Part 254 and speculate whether these rules apply to law schools directly or by extension and if there is any private right of action thereunder.  The recent spate of class action lawsuits brought against trade schools ( http://www.usatoday.com/news/education/2010-09-27-1Aforprofit27_ST_N.htm?loc=interstitialskip ) , asserting claims against trade schools based on the fact that students at these trade schools were defrauded by the trade schools regarding their employment prospects following graduation should give the legal academic community some serious pause.

A glimmer of light is now appearing at the end of the tunnel:  On December 13, 2010, US News and World Report announced that it intended to publish more detailed information regarding actual employment figures for law students nine months after graduation.  In addition, an ABA panel is considering requiring law schools to make fuller disclosure and at least a handful of law school deans are displaying some pangs of conscience and are advocating greater disclosure of actual post graduation employment prospects.

It is sometimes said that historical events do not exist unless they have been reported in the New York Times. Thus, for better or worse these matters were covered by the Times On Sunday, January 9, 2011 in a feature first page article in the business section entitled “Is Law School a Losing Game?” by Times reporter David Segal.

You are invited to read much more on the subject in my book, “Navigating the Perfect Storm,” to be published by Ark Press of London.  You can order by contacting me or Anna Shaw at Ark at ashaw@ark-group.com or Daniel Smallwood at Ark at dsmallwood@ark-group.com

(c) Jerome Kowalski, 2010.  All Rights Reserved.

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