Sunday, June 20, 2010

Hamburger Theory of the History of the Legal Profession

This is the McDonalds Hamburger U class in the History of the Legal Profession. Listen up class--everything you need to know is that picture above.

Let's start at the bottom of the burger. That piece of bun is the 19th century, a time when the yeast of capitalism was raising expectations and creating a free for all atmosphere. Lawyers in the City were as much entrepreneurs as professional lawyers. They were writing the limited liability statutes and promoting the stock of the new railways they were putting together all around the world--Britain, Canada, Argentina, South Africa, and the US.

Law firms were small but employed many managing clerks. The need for formal ethics was slight. Gentlemen's club rules and family strictures were sufficient in most cases. Perhaps Charles Dickens would disagree but Max Weber realized how the craft tradition of the British legal profession was superior to that of the continent's academic inclination. In the many booms and slumps of the 19th century lawyers (and accountantts) thrived.

During the 20th century we encounter the meat, the burger. This is what we know as the typical professional law firm: partners and associates jousting in their tournaments. Lawyers become less entrepreneurial and more technical. Although they sit on company boards, they aren't quite as enthusiastic about promoting stock as they were.

This is the heyday of professional ethics. Bar Associations everywhere start to compose them. In some cases to exclude blacks, Jews and women; in others to stimulate better professional conduct. This becomes the golden age (depending on how well done you like your burger) of the professional, secure in their compact with the state, able to withstand incursions from outsiders. Remuneration is high.

But change is inevitable and so we come to the cheese and tomato--the late 20th and early 21st centuries. Capitalism, in its financial sense, is now at its most cutthroat. Extracting surplus (sorry "value added") becomes the highest expression of commercial art.

The lawyer is subsumed within the law firm, a cog to work and bill hours so that partners can score the best PEPs in the AmLaw 200. The tournament becomes more like Rollerball, and associates are dropped by the wayside, shunted into professional support, or given the consolation prize of a salaried partnership.

Lawyers, investment banks, and credit rating agencies collude to create hitherto unknown levels of debt. The ethos of professionalism is replaced by morality of business. Ethics seems less relevant as states investigate professions restrictive practices and eventually compel them to open up to external competition. Lawyers hold out for the longest but eventuall succumb.

All is not lost, however, as we rise to the lid, the final piece of bun, the capstone of the burger. Mine in the picture has eyes. These are the eyes of the state's regulators, local, national, and increasingly global. We enter the period, in the 21st century, of the alternative business structure, the limited disciplinary partnerships, the supermarket law firm, the legal process outsourcer--a free for all redolent of the 19th century.

Equity partnerships, post-recession, are shrunk and remain so. Associates are expendable with few opportunities of partnership, just like the seeds on the bun. Finally, law firms and businesses as entities are regulated instead of the individual lawyer. Even the regulators get their own regulator.

So there you have it class. In as much time as it takes to eat a burger, you have the history of the legal profession over the last three centuries.

Class, please ensure you eat all your burger.....It's your profession after all.

Based on a revised paper, "From Ethics to Regulation: The Re-Organization and Re-Professionalization of Large Law Firms in the 21st Century" available at SSRN.
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1 comment:

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