Wednesday, September 28, 2011

The Changing Face of Legal Education

DWF, a predominantly northern law firm, has started a new entry track for lawyers via apprenticeship. It is a paralegal academy for school leavers run in conjunction with the Institute for Legal Executives (ILEX).

With the unbundling of legal services and the need for differentially qualified legal personnel, this move is symptomatic of the changes taking place in the profession and education. England and Wales offers multiple routes to qualification as a "legal professional". Note I didn't say lawyer.

It is no longer necessary to be a lawyer in the traditional sense to carry out legal services, even reserved (authorized) ones. So legal education is adapting to this new market. And this is even before the Solicitors Regulation Authority and Bar Standards Board have done much of their legal education review. They are already being pre-empted.

We now enable people to become lawyers by stages if they want. It might be easier for someone out of school to take an apprenticeship route and qualify as a Legal Executive, and if they want they can convert those qualifications and their experience into a "full" lawyer qualification.

With the increased role played by legal process outsourcers, private education companies, legal services and their suppliers can be viewed on a spectrum from mass production to individual construction. This fits in with new ventures like Acculaw who are going to provide legal trainees on demand and other established companies like Axiom Legal. See my earlier post on these.

If you add in the tied training programmes that educational companies like BPP are engaged in as are the accountants who are buying entire degree courses at universities, we are seeing the increased commercialization of professional education that is moving away from the academy.

Is the academy becoming redundant? I don't think so but it has not worked out how it must respond to these moves. And I am not proposing it should dumb down its offerings, but it may be that the academy will be working for elites rather than the mass. Of course there won't be enough elites to go around.


Tuesday, September 27, 2011

Do You Read the I Ching?

(thanks to New Yorker)

This is just how I feel sometimes.....

Wednesday, September 21, 2011

What Is the World Like for New Law Graduates?

Three items this week reinforce the idea that the legal world has changed and continues to change rapidly. They are all to do with education and training of professionals.

KPMG, the accounting firm, has taken 90 school leavers and placed them in accounting courses at Durham and Exeter universities on courses it effectively owns. Over four years they will divide their time between academics and working for KPMG, And they will be paid and get jobs at the end of their "studies".

A new Axiom-like clone has sprung up for trainee lawyers. Acculaw will place trainees in law firms and inhouse law departments as seconded trainees for periods of three to six months. Law firms will be spared the costs of hiring and maintaining trainees. 

For employers Acculaw says the benefits are
• reducing costs
• improving efficiency
• improving resource management
• an alternative to legal process outsourcing
 For trainees
• a truly unique training contract
• working for more than one firm throughout your training contract
• a fresh approach to trainee management
There is of course no guarantee of a job at the end of this process. It's a cheap and cheerful way of providing low cost labour to the profession. At least--in the British system--the graduating trainee will earn the title of lawyer.

The final item is a post by Brian Tamanaha--Sobering Numbers: Law Graduates Who Do Not Become Lawyer--on Balkinization. He reports that at 30 law schools (list on post) less than 50% of graduates gained employment as lawyers. And that is after three years of study with tuition costs in the region of $30,000 to $40,000 a year. Of course there is dispute over what the figures mean, include and exclude.

The assistant dean for career development at Michigan State College of Law, Elliot Spoon, reckons that an overly fine distinction between "JD required" and "JD preferred" resulted in an undercount as it would be feasible to consider JD preferred jobs as legal jobs, eg. law clerking.

Indeed it is a brave new world for law graduates. Stable careers are long gone and contract work is becoming the norm for many, even at the training level. Education it seems is transforming into training without the benefits that true education can bring. More and more the employers, as in the case of KPMG, are taking charge of selection leaving the academy as a mere processing plant. And an expensive one at that.

The current model of legal education is unsustainable in its present form. It can't make up its mind as to whether it is education or training for jobs, or, worse, some cackhanded attempt at both. This failing besets legal education in both the US and the UK and others too.

Legal education is a perverse mix of cheap delivery and expensive consumption. The academy has the present advantage of providing the only route into the legal profession, or what's left of it. I imagine it won't retain that monopoly. In the UK there are ambitious for-profit "education providers" (eg. BPP in the UK part of the Apollo Group in the US) who are muscling into the market and already forming bonds with employers such as law firms. The ABA vainly hopes by delaying accreditation of offshore law schools it will protect US law schools.

Unfortunately, the legal academy, except for a few (eg. Bill Henderson, Brian Tamanaha) refuses to recognize a problem or at least collectively reflect on it. In the UK we are seeing the unbundling of legal services and the education and training that works alongside it. Soon the academy won't be recognizable and maybe that's not a bad thing in itself. But the academy will have to face this before long. I hope they won't have held off too long.


Wednesday, September 14, 2011

Is Competition in Law Taking Off?

Ken Clarke, the British Justice secretary, is giving a speech that praises Tesco Law and external investment in law firms according to the Financial Times. Increased competition will improve services for consumers. Around 30% of the top 100 law firms in the UK are considering taking external investment or going for an IPO.

Not everything is going to plan. Stephen Mayson pointed out that the road towards the Solicitors Regulation Authority permitting alternative business structures (ABS) on October 6 has been chaotic and won't be happening until "early next year", which is a little vague and will upset many investment plans.

Still, these changes put the UK and Australia in the vanguard of regulatory liberalization in the world today. It was interesting therefore to see a recent report by the Canadian Competition Bureau assessing Canada's steps towards professional services liberalization. One can perhaps, tentatively, generously, call them baby steps. Or maybe that should be crawl.

In 2007 Canada issued a review "Self-regulated professions: balancing competition and regulation". Out of the 53 recommendations covering five professions, it recommended lawyers justify how long it took to become a lawyer, increase mobility between provinces as well as international mobility, free up advertising, abolish tariffs, and allow multidisciplinary partnerships or ABS.

In four years there is some increased inter-provincial mobility, some advertising and marketing's it. The Federation of [Canadian] Law Societies said "We've done as much as can be done." Oh dear. How can they be so parochial?

Adam Dodek, of Ottawa University, claims the report has skipped over the most salient issues and that the legal profession is hoping all this horrible ABS stuff will go away, which of course it won't. This where the forces of globalization will come into play and compel the Canadian professions to face a grim reality--adapt or die. There are plenty of examples of both choices.


Tuesday, September 06, 2011

The Bonus Culture

Bonuses are all the rage now. Rupert Murdoch was given $12.5 million in his $33 million pay package from News Corp. this year which is up 47% on last year. And his son James was awarded $6 million. The difference is that James seems to realize that the Murdochs might not have actually deservedly earned these bonuses. He has declined his but Rupert is keeping his. With an extended family he probably needs it.

At a slightly more mundane level it has been spring bonus time for associates in big law firms. Amy Kolz has written an incisive article, "A Waste of Money: Spring bonuses didn't help retain associates during the boom times, so why did almost 50 firms dole them out again this year?" (H/T to Peter Lederer)

The upshot is that as one or two firms published that they were paying associates between $2,500 and $20,000 bonuses then the others joined in and to cap it a further couple of firms then decided to award more. Justification? Hard to discern unless you have the mentality of a sheep or lemming (in the old but discredited Disney sense of cliff-jumping).

Kolz argues convincingly that these bonuses achieve nothing. Associates like them but they won't persuade them to stay with a particular firm. Why should they? Everyone does it. It all cancels out.

Kolz writes
"Clients are watching, and we all have to be careful that we're operating in a way that gives clients value for what they're paying," Milone, chair of Morgan Lewis, says.
It's a reasonable concern. Though general counsel may not resent the spring bonuses per se, they are wary of any development that could lead to higher costs, says Frederick Krebs, the recently retired president of the Association of Corporate Counsel. "If these bonuses result in increased rates and increased costs, then it will be a problem," he says.

Of course, the risk of alienating clients and increasing compensation costs in an uncertain economic environment might be worth it if it was clear that these bonuses helped to retain or attract associates. But it's not. An examination of the results of our 2011 Midlevel Associates Survey shows that there is no statistically significant relationship between associates' ranking of their compensation and benefits and their expectation that they will still be at their firm in two years. (For statistics wonks, the r-squared in our linear regression analysis was only 0.026.) Our finding echoed a 2007 study that Indiana University Law professor William Henderson did based on our 2004 Midlevel Associates Survey—he also found that the relationship between compensation ratings and the expectation that associates would stay two more years at their firm was close to zero. (emphasis added)
The danger is that these costs will be passed on to clients who are already angry over law firm billings.  The alternative is that partners take less which is most unlikely. Some years ago Mark Chandler, general counsel of Cisco, said he was looking to law firms reducing their costs year on year, not raising them.

Law firms have no institutional memory to speak of nor are they smart about how they organize their businesses. That's not to say they aren't clever people, they are. But the herd mentality among law firms is startling. Forget what we've done in the past, and let's do it again, again, again.

It doesn't matter whether it is pay, bonuses or mergers, the result is the same. They did it so must we. Without asking if it is a good course of action. Law firms aren't going to cover themselves in glory with this one. And finally associates know exactly what the game is: they are not fooled by these tactics. Here's one
Associates also understand that there can be an implicit trade-off between money and quality of life at a firm. "I'm not thrilled that we didn't receive a [spring] bonus, says one associate at Baker & McKenzie. "But the work I do is phenomenal, and the clients are phenomenal, and if I want to play at this level [of practice], you sometimes have to go along with certain things, whether it be a [slightly] lower compensation level or [if I were somewhere else, perhaps] the requirement to work 2,600 hours," he says. The associate says he has no plans to leave Baker.