Thursday, January 31, 2013

Law and economics

The New York Times has a front-page story about the ongoing collapse in the number of people applying to law school (from 100,700 in 2004 down to about 54,000 this cycle, with a 38% total decline over the last three years alone).  The story features some nice quotes from Brian Tamanaha and Bill Henderson regarding the dysfunctional economics of law school, which is important, because as any legal philosopher can tell you, in this culture the ontological status of an epistemological insight is greatly enhanced when it appears on the front page of the NYT. ("They wouldn't print it if it wasn't true." F. Nietzsche, trans. J. Jackson).

Oddly, the story fails to mention the crucial role the law school transparency movement, to which the Times gave such valuable attention in 2011 in a series of prominent stories, has had in all this. It's hardly a coincidence that most of the collapse of the applicant pool has taken place over the last two years, which happens to be when something resembling accurate employment and salary statistics have been extracted from law schools via political pressure.

The story also features this strange claim:

“We have a significant mismatch between demand and supply,” said Gillian K. Hadfield, professor of law and economics at the University of Southern California. “It’s not a problem of producing too many lawyers. Actually, we have an exploding demand for both ordinary folk lawyers and big corporate ones.” 

She said that, given the structure of the legal profession, it was hard to make a living dealing with matters like mortgage and divorce, and that big corporations were dissatisfied with what they see as the overly academic training at elite law schools.
This is a very peculiar use of the word "demand."  Big corporations have put the squeeze on BigLaw, because they've decided they will no longer subsidize the training of junior associates to do work people trained to be lawyers should do.  Even more problematically for the Cravath model, they've also decided they won't pay BigLaw rates any more for essentially clerical work.  So firms can't bill out a lot of what first and second year associates do, and a lot of other work that such people did is now outsourced to the document review mills and to non-lawyers.

In other words, client demand for various services that used to fatten the bottom lines of the big firms has imploded, not exploded, because it has been shifted to other service providers, or is no longer billable when performed by the firms themselves.  This is a structural not a cyclical shift: it's not as if GCs are going to decide that when and if more deals are being done it'll be OK for firms to bill out monkey work at $300 an hour again.

 The "overly academic training" at law schools has nothing to do with this.  That's an issue about failing to train people to do legal work. The collapse in demand from BigLaw clients is a product of the realization that a large amount of work traditionally done by lawyers can be done by non-lawyers with either no loss of quality, or not enough loss to make it worthwhile to pay the added cost of having lawyers do it.

The claim about "ordinary folk" is even stranger, but it's one that's being made a lot these days by legal academics desperately searching for a raison d' paycheck.  The argument goes something like this:

(1)  Many people in this country who could benefit from legal services aren't getting those services because they're too expensive.

(2) Those services are too expensive because law school costs too much.

(3) If future lawyers could go to law school without incurring so much debt, they could afford to offer legal services at a price that far more people could afford to pay.

(1) is certainly true.  (2) and (3) are just wrong, and obviously so.

The cost of legal services has almost nothing to do with the cost of law school.  Why would it?  No client cares about how much it cost you to get a law degree, which means that no client is willing to pay more for legal services because a lawyer has a lot of educational debt.  This theoretical claim is confirmed by empirical observation: there are literally hundreds of thousands of lawyers in America who went to law school when it was radically cheaper than it is today, and it's not as if they charge lower rates than recent law graduates (if anything they charge on average more more, because clients will to some extent pay for experience as a proxy for competence).

There are also hundreds of thousands of people with law licenses who are barely making a living by practicing law (A 2009 survey of Alabama lawyers found that 23% of the respondents with active law licenses had an income of less than $25,000 in the previous year).  Such people are charging the absolute minimum they can charge while still maintaining an ongoing business.

The notion that the hundreds of thousands of lawyers in solo or very small practices in this country could somehow operate by billing out their services at X dollars per hour (with X being a figure that lots of "ordinary folk" currently priced out of the market for legal services could pay) if only law school didn't cost so much is one of those ideas that sounds intuitively plausible until you actually think about it for three minutes, which is apparently why people in legal academia don't.

The reason ordinary folk don't pay for legal services even when in theory they could benefit from them is exactly the same reason they don't pay for a lot of things they could in theory benefit from: because they don't have any money for those things after paying for more pressing needs like food, shelter, clothing, medical expenses, transportation to work, etc.

Comments such as Hadfield's indicate the lengths that legal academics will go to in order to talk themselves into believing that the basic problem isn't really the basic problem. And that problem is that the economic demand in this country for people with law degrees will employ (at best) half the people who are paying us to grant them law degrees.



225 comments:

  1. Eyes on the Prize. First!

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  2. Preach on campos!

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  3. Yeah, when I read Hadfield's comment it was a true "Wait, What...?" moment. The cognative dissonnance produced by (1) law professorships historically being a sweet deal, clashing with (2) recent economic reality leads some people making strange assertions, as evidenced by the last six months or so.

    Just goes to show that it's hard to be objective about things when the person on the line is "you."

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    1. Did you read Hadfield's bio? It's like a parody of real accomplishments. Lots of articles that were probably read by somewhere between 5-10 people, including the journal editors. It looks like her entire experience with actual lawyering consisted of watching other people do it while she clerked on the D.C. Court of Appeals.
      In her defense it's very hard to speak intelligently about something you have never done. What frustrates me is that the "paper of record" can't parse the difference between professors who spend their lives talking out their ass and filling up journals read by nobody, and people who actually have some understanding of the real demand for legal services in the United States. I understand why that article needed people from the legal "academy" weighing in, but if you are going to touch on the demand for legal services in society you might want to talk to people who have actual insight into that issue.

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  4. "Actually, we have an exploding demand for both ordinary folk lawyers and big corporate ones.”

    Without question, "folk law" is poised to explode. There will be huge demand for lawyers who can decipher the lyrics of Dylan, Guthrie and Mitchell. And that's not even including those who can specialize in freak folk!

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    1. And, it is well known that corporate lawyers are "big," so if you want to work in corporate law, fatten up!

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    2. Note she isn't asked to provide data. Scammers just give sound bites in the hopes people will be fooled.

      She should have said she has no idea. I bet she doesn't even know what the grads of her own school are doing, suffering in the crowded California market.

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    3. Wow - she was really called out in that Atlantic article. Well down to jordon Weismann

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  5. "Raison d' paycheck."

    That term alone was worth the price of admission today.

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  6. The costs of operating a law practice, even a bare bones one, is also something that the legal academics fail to take into account, probably because they've never tried to practice alone. For many county bar advocate programs (even with incarcerated clients) you have to maintain an office reasonably near the court you'll be working out of. Then there's Westlaw/Lexis, which is at least $150/month...on top of a debt load (or even without it) there's really no realistic option to charge $10/hr, even if it's something you'd like to do. And with the general public's total, helpless inability to tell when legal services provided are actually competent.... telling new grads to solo for disadvantaged clients is a recipe for disaster for the lawyers and their clients.

    I suppose law schools could partner with state governments to fund reams of free or greatly reduced price legal services clinics, with debt abeyance and a living wage for graduates to get them past at least the first few years where they're likely to seriously compromise vulnerable clients with their inexperience if they don't have a good support structure with more experienced lawyers. That could stretch things out a few more years, but it'd cost a ton. And at the end, they might be competent lawyers, but they'd still have no way to make a living.

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    1. Engineer who did not go to Law School thanks to this blogJanuary 31, 2013 at 6:44 AM

      Generally speaking, you want to charge 3x your take home salary to cover overhead expenses such as Westlaw/Lexis.

      I wish I could hire a lawyer for what partners at my engineering firm charge for their time.

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    2. Yes. Legal overhead costs money. And most law is custom work, not mass produced work. All those pesky "facts" muddy up the waters for all but the most routine of services -- e.g., a simple will.

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    3. I am the TA for a section of the first-year course in legal writing and research. Just yesterday I told my students that I tend to favor free databases over Westlaw and such, because the latter, though currently free to us, are very expensive. They were shocked to hear how much these services cost.

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    4. Gateway Drugs... ...er, ServicesJanuary 31, 2013 at 10:03 AM

      Yes, the freebie LS accounts get them hooked young and hooked hard.

      That way, it'll be too hard to give up the habit when they graduate.

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    5. One of them yesterday looked up a statute on Westlaw. I suggested getting out of that habit and looking the thing up on a free database instead. The client, I told the class, certainly would not be happy about paying for research that could have been done just as easily for no charge.

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  7. Could Simone email her the link to the citi/ Hildebrant report which was written with knowledge of the over supply of biglaw talent, not just something a Lawprof made up.

    And maybe DjMs BLS data as well.

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    1. Someone..

      If I can find her email, I will do it myself.

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  8. I can offer my services for minimum wage. The demand is not there. The thought that if legal services were cheaper, there would be more demand from ordinary folk is nonsense.

    Let's say I have a $5,000 dispute that involves specific performance as a remedy. If I have to go to federal or state court, serve process, file papers, prepare papers, it will take me 100 hours. Lets say the total cost with fees is $1,800. Who is going to risk $1,800 to get back $5,000? My services are at mininum wage, but they are still too costly.

    It is like that with a lot of things. There are divorce lawyers, bankruptcy lawyers and real estate lawyers who operate at minimumum wage. Many of these lawyers do not make a living. People just will not pay for these services. Either they can just as easily be done by non-lawyers or the cost of getting a lawyer is not worth it even at minimum wage because there is a big risk of the client getting nowhere and throwing out the legal fees.

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    1. Your state doesn't make the loser pay the court costs/filing fees?

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    2. "Your state doesn't make the loser pay the court costs/filing fees?"

      Majority rule is to make each side pay their own fees absent a statute (like some civil rights stuff). Even then, you have to move for fees and the judge will scrutinize every line item and question billing entries from 2 years ago for being vague, and regardless of your billing practices, he most likely will assume work wasn't done and you'll get like 2/3 of what you asked for.

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    3. Not responsive to my question. Court costs/filing fees don't include attorney fees.
      7:48

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    4. The OP included total costs and fees.

      Let's assume you can get both back after a victory. Any victory isn't going to happen for a while. So in effect, even with a guaranteed victory, someone has to loan $1800 on the chance to recover a contingent right to payment of $5000. If it were certain that you could collect the full 6800 at the end of the day, banks would be all over this, but given the litigation risks involved, no one in their right mind would make an interest-free loan of 1500 to possibly get back 6800.

      Litigation is a loser's game. That's why the only really-coveted cases are with large corporate entities with big pocketbooks and PI cases where the verdict breaks 6 figures. Even a 20k personally injury claim isn't worth it if the insurance company digs its heels in.

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    5. I was simply suggesting that the equation should be spending $1,800 to get back $5K plus court costs which, at least in NY can be easily north of $300.

      At any rate, if it's only a $5K matter why wouldn't someone just handle it in small claims court? Even if the limit was $3K in small claims court better to get something than nothing and one can do small claims court themselves.

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    6. Your hypo involves the work of a plaintiffs' attorney, who should be working on contingency. Your hypo is dumb.

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    7. Asking for specific performance so no small claims court could award that. Suppose it is a billing dispute where the other party claims the individual owes the bill. What plaintiff's attorney would take this? The attorney could get legal fees perhaps but the maximum recovery would be the amount of the bill and a judgment that the client does not owe the bill.

      This is an actual matter we faced, and it literally took us 40 or 50 hours to dispute this outside court. Would take a lawyer much more than that to litigate because the facts are complex and it involves several legal issues. I do not know how it would be cost efficient for any lawyer to take this on. Furthermore the billing party likely has complete discretion to do what it wants in our case - it was a university.

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  9. Engineer who didn't go to Law School thanks to this blogJanuary 31, 2013 at 6:40 AM

    I think the problem is that Law Firms feel that they are somehow different from other professional service firms. I'd argue that the other than the specific service provided, Law Firms are no different from Accounts and Engineering Consultants.

    Like lawyers, accountants and engineers have specialized degrees and professional certification. The big difference being that their degree is merely an undergrad degree with $25,000 in debt and not a graduate law degree with $150,000 in debt.

    Clients see these professional services as a necessary cost of doing business, whether it is making sure the books are straight, a building is built to code, or that the legal liability of action is minimized. The clients are under pressure to minimize these costs, it has always been the case for Accounting and Engineering, but it has just recently also affected Legal services.

    Engineering and Accounting firms suffered from the recession as did everyone else, but are not undergoing a structural change like the one law is seeing right now. Medium sized and smaller firms (i.e. ones not competing for $140,000/year associates) would do well to copy the staffing and pricing model found in these other services.

    As to drop in applicants for law schools, this really is a great example of capitalism at work.

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  10. This is a straight-up fact. Law professors would do the job for 60,000 dollars per year. The alternative is the crushing stress of practice, which they can't handle because 1- they don't like the stress even of turning in grades on time, and 2- most professors are socially stunted and don't know the first thing about sales. They become professors because they want a high-prestige way to opt out of the stresses of the marketplace. And we've given it to them. These types of people were bound to become either judges, priests/pastors, or professors. Seriously, I just wish one law school would call their freaking bluff and slash payrolls across the board. Would you lose a prof or two? Maybe, but where are they going to go? Is demand for law profs really that high? And are they really willing to uproot their lives? I'd be happy even with a school putting a hard cap of 90-100,000 dollars on salaries. They'd never move. They're worms.

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    1. And drop tenure as well. Why should law professors get guaranteed employment when almost no one else does? Don't feed me any line about "academic freedom": very few law professors do anything controversial enough to require protection.

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    2. That's what the deans and senior people in these schools fear - that the people running the universities realize that 90% of the faculty are in the same supply/demand situation as liberal arts Ph.D.'s.

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  11. Hadfield has an endowed 250,000++ at minimum salary. talk about being in denial but at some point if applications keep collapsing people like here will be taking a haircut.

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  12. Cause and Effect.

    Cause - (Pre-2011) Law schools able to print BS statistics showing > 95% for almost every law school.
    Effect - Record Enrollment

    Cause - (Today)Law schools required to put out REAL employment data, which shows only 55% get a FT JD job.

    Effect - Record drop in enrollment


    This is the only thing that matters. All the other discussions about improving legal education or lowering the tuition come in far behind the fact that getting a job in law has the same odds as flipping a coin.

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    1. This would be a great business school study -- if they weren't going through the same pain right as law schools right now too.

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    2. No, I don't think it is close to the same . Business schools didnt lie about employment the way law schools did. Though they may have increased tuition just as much.

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    3. career services at most top b schools also work very hard to make sure their graduates get jobs to keep their employment stats up, make good money and donate said money back to the school. i don't think you have anything even close to that at law schools.

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    4. Career "services" at my law school doesn't do a goddamn thing. They won't even answer e-mail from me. Recently I sent the administration a letter stating that I'd prefer just to close that office down and collect a refund for the fees that I have to pay to support the worthless thing.

      I can't wait for the chance to chew the head off the first person who has the gall to hit me up for donations to the law school.

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    5. The person who hits you up for a donation will most likely be a recent grad in a law school funded position. Don't be too hard on her.

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  13. re: Attorney incomes, LawProf says the economy has undergone a permanent restructuring; that's definitely true.

    This affects everyone. So who will have to permanently restructure as a result?
    *Law Schools?
    *Higher Ed?
    *Boomer Retirees?
    *The YOLO (you only live once) kids?

    Will the entire crony-capitalist, Neocon socio-economic model be forced to permanently restructure too? I sure hope so.

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  14. Ordinary people also can't afford legal services because they are financially crushed when they try to take on a fight over their mortgage for example. The legal system is no longer about justice or fairness. The judges all come from Big Law and favor the financial services and insurance industries. Those industries learned a long time ago it is cheaper to crush a consumer than doing right. Meanwhile, law is time intensive. A doctor can go room to room billing $80 a pop for five minutes to an insurer. An attorney can just hear the clients problem without actually solving it and has to hope the client can pay.

    Some of these experts should try to actually make a living practicing law some day.

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  15. Translation: Law professors deserve six figure salaries while everybody else should be happy offering their services for a pittance (or maybe the gov't should subsidize lawyer services more).

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  16. LawProf, I'm puzzled by your disagreement with statement 2) in the OP. Certainly legal services are only provided, in the long run, if the income from them more than covers the costs of providing them, and debt service is clearly part of the cost structure. But you seem to be saying that in aggregate, law school debt is actually not that big a factor compared with the total amount of legal services provided.

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    1. (Replying to my own post)

      Regarding the differences in debt between generations, the younger lawyers charge what they HAVE TO, the older ones charge what they CAN. They find an equilibrium to some extent. If law school were free, the younger lawyers wouldn't have to charge so much, and the older ones wouldn't be able to.

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    2. What evidence is there that legal fees are affected by lawyer debt levels? There are huge numbers of private practice lawyers in this country who have mid-five figure incomes. They can't charge less than they do and stay in business, and their law school debts (many of these people no longer have any debt) have nothing to do with this.

      If lawyer A and B are identical except lawyer A has debt and B doesn't, are you going to pay A more because of A's debt? How plausible is it that lawyer B can get away with charging more than he would otherwise because lawyer A "has" to charge more because of the debt he carries? The economics of service industries don't work like that.

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    3. This is like LSAT 101, if you can't figure this out you should not have gone or been accepted to law school

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    4. Basically:

      1) People don't need to use lawyers with huge debt because there are still many who graduated before prices were high or who got scholarships.

      2) There's so much competition that price-cutting and debt-payment comes mainly at the expense of the lawyer's lifestyle.

      3) The real pressure is on lawyers to move out of the profession to find work that can pay off the debt, not on their customers to pay more to cover their debt. As long as lawyers are prepared to work for low remuneration, this will continue.

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    5. LawProf, thank you, this is 7:01/7:04 here. If you're telling me that large numbers of lawyers have no debt, but also no room to lower their fees because of other expenses, then yes, I understand what you're saying. But these facts are not at all obvious to an outsider as you seem to imply.

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    6. Wait, I thought companies with less leveraged balance sheets necessarily charged less for competitive products!

      -no one with any microeconomic knowledge, ever

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    7. Fundamentally clients will pay for the services of a particular lawyer what those services are worth for them. If the legal services are too expensive they will look for a cheaper lawyer or go without legal services.

      The client does not care whether the lawyer is in debt and servicing that with the fees, or keeping a mistress, or a (though they might resent it) a Porsche. The problem is that there are not enough clients willing to pay enough to support 50,000 law graduates with a median debt of over $100,000.

      My clients pay a lot for my time - I don't deny it. But they are willing to pay that much because my time is worth that to them - I get results that are worth my fees. But there are not many clients that will pay my sort of rates - globally, and it took me a long time to become the sort of lawyer who could seek those sorts of fees. A new law graduate is not there now, and chances are most won't get there.

      It is fundamentally unfair to law students to lead them to believe that the current legal business model supports the possibility of large numbers of lawyers charging fees of $500-900 per hour - because it cannot.

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  17. "Law professors would do the job for 60,000 dollars per year."

    This post really hit home. I am a professor and I do make 60,000/year.

    Your whole post was actually pretty dead-on for me. I hated practice and I probably would have taken even less just to get out of there. I also suck at sales.

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  18. I do not have sympathy who any law students who feel they were scammed by TTTs. Law students are sophisticated consumers and should have known employment stats published by schools were bogus. Several of our finest jurists have concluded such.

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    1. Most law students are too dumb to deserve admission to law school. By admitting them, the law schools are in part responsible for the problem.

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    2. That's right! The schools lack of ethics and basic dishonesty in posting those employment numbers should have been evident to anyone.

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  19. Much like the NYT, The Economist has a story titled "How to reform America's lawyers" printed on its cover for the coming week. No online access to the story yet, but I am willing to bet this is going to be a trend among major news publications this week. Can't wait to see if they provide an economic analysis as air-tight as Hadfield's.

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    1. You have to read the article. I think they nail almost every point
      I don't know why, but seeing all this truth starting to surface slowly, I feel happy.

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  20. One thing getting overlooked here, is that a law degree isn't just limited to the practice of law. It is a successful and versatile degree that qualifies holders to do countless jobs in other fields.

    - law school troll.

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  21. Article quotes Leiter and not Campos? I guess they could not quote both because it would be like matter and anti-matter touching.

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    1. Personally, I would go to tremendous lengths to *never* touch Leiter...unclean, unclean!!

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    2. True. You might get an infection.

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    3. "Brian Leiter of the University of Chicago Law School, who runs a blog on the topic, said he expected as many as 10 schools to close over the coming decade, and half to three-quarters of all schools to reduce class size, faculty and staff."

      LOL.

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  22. I'm confused by your post, Law Prof. If I am a new lawyer and I owe $200,000, it's highly unlikely that I can walk down to City Courthouse and tell people I am open for business. This is true regardless of whether I have malpractice insurance, office space and the like. My monthly payments are in the thousands. How could I start a business?

    But suppose law school's tuition was more related to the actual cost of operating a law school. Suppose U of Minnesota cost $14,000/year instead of $39,000 per year and my loan payments equaled $500/month. I suspect I could drum up enough work to make a decent living as a new lawyer. I could charge less -- say, instead of taking a third on a PI case, I took a quarter; or instead of charging $4,000 for a DUI, I charged $2,500 -- and generate more clients.

    I think the cost of tuition is a huge hinderance to the practice of law. Yes, there are too many of us. But, assuming people are willing to move to smaller towns, that should create lower cost structure

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    1. No, it doesn't. Cost is determined by the market, which has nothing to do with how much debt the individual lawyer has. Now, the debt load might prevent you from making a business viable, but that doesn't affect cost at all. And if you're competing against multiple attorneys who have zero debt, the existence of your debt isn't affecting price because their prices will already be at rock bottom.

      There are already debtless attorneys competing for small-town business.

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    2. This ^^^.

      I know of scores of lawyers aged 45 to 60 who are underemployed. They have no student loan debt (unless it's for their children). They have tons of experience. They make between $40k and $85k per year, and struggle to do that.

      Could they defend a complex accounting fraud case? Or advise on pension obligations after a merger? No, of course not. But they could defend a DUI or pot possession charge as well as anyone and do a house closing in their sleep. Ditto for divorce and custody arrangements.

      You can't undercut them, because there's already a highly competitive market for low skilled legal services. Insurance defense rates in my community are now in the $90 to $110 per hour rate, and some insurers will discount your hours and refuse to pay for legal research. You read that correctly, some insurers refuse to pay for your hours spent doing legal research on cases without pre-approval.

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    3. "You read that correctly, some insurers refuse to pay for your hours spent doing legal research on cases without pre-approval."

      Not paying for one of the most complex, time-consuming, and individualized services would normally be grounds to tell someone to piss off. But in law? Oh, no - the client has you handcuffed, slave. You can't operate an office without them, so as long as they pay your hourly on going to court, you'll bend over for master, because if you won't, someone else will. Sue them for breach of contract? No, son, not even an option. Even withdrawing would be a pain because in this business, you need third-party approval to dump a non-paying customer.

      So if you charged $120/hour to write that brief, you now made $60/hour.

      Actual collection of the fees you charge is an underrated hurdle of this business. Getting clients is only a moral victory. Try getting one to actually pay you at the back end.

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    4. @8:13 am: If you think about it, the insurers are perfectly justified in refusing to pay for legal research, considering they're paying for legal expertise in the first place.

      How would you react if you went to your doctor, she charged you $150 for the visit but couldn't figure out what was wrong so asked you to come in again in 2 weeks, at which point she presents you with a bill for $1500 for "medical research"?

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    5. Law students have no idea about the realities of the legal practice. Law faculty certainly do not either.

      Your bills will be scrutinized. They will be slashed.

      Newbie's "I'm hungry and I'd undercut them but for student loans" attitude is not based in reality.

      Suppose you have a family friend who is an insurance adjuster and will throw you some crappy cases for $75 per hour. Unless he is a very, very good family friend, he will cut your hours and restrict your bills. You won't bill and collect 2,000 in hour or $150,000 in revenue. Maybe you'll do half that, but you'll work 60 hours a week to do it.

      So we're at $75k in revenue for you on your insurance defense files, newbie, plus the few grand that you can make on divorces, evictions, duis, etc. Let's call it $90k in revenue to be generous. Now there's overhead. Computer, Westlaw, copier, postage, rent, telephone, utilities, part-time secretary/paralegal. You just dropped at least $35k on "overhead."

      Welcome to the profession, son. You're one of the 'successful' lawyers and you just netted $55k pre-taxes after breaking your back working 60 hour weeks in a stressful profession.

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    6. Andy, that's an apples and oranges comparison. Law isn't about establishing objective truth or answering a problem, as medicine is. If it were, most lawyers would be able to tell a client at an initial consult whether they're right or wrong. Law is about representing a client's interests. To do so, it isn't enough to be an expert in the field and tell your client who should be at fault under the facts presented. You have to do due diligence and scan the case law to make sure they are presenting the best argument possible. Law is not providing "expertise." It's providing competent representation in the courts. Legal research unique to one's problem should absolutely be billable.

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    7. Andy,

      Legal research is what lawyers do to serve their clients. You get a motion (or you want to move to dismiss a case). It will be opposed. You need to persuade a decision-maker what the law says given this set of facts. That's what we do.

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    8. @7:41

      I am very sorry that you owe this much money. I am also very sorry that you don't understand the huge oversupply of lawyers.

      If you think you could earn enough in a small town to make a living, if only you didn't have debt, what do you think the lawyers that are already there are doing?

      I am currently in a very small town in upstate New York. There is one Main Street and there are many lawyers offices, lawyers who have been practicing here for decades. Do you think you can strt a business in competition with them?
      Here is anothe question: for many matters, people think the lawyers here are not good. They would rather hire an immigration lawyer from the city because they feel that if you were a good lawyer, you would be working in the city.

      I'm sure there is a small amount of work in basic local stuff, but I have no idea how you think there aren't already lawyers in place who will do that work.

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    9. Proof yet again, lawyers `don`t do math`!January 31, 2013 at 10:23 AM

      8:47 AM: "Welcome to the profession, son. You're one of the 'successful' lawyers and you just netted $55k pre-taxes after breaking your back working "

      Um, actually according to your setup you've been overly generous. Sonny boy gets $40K net pre-tax after breaking his back.

      Delete
    10. 90 - 35 = 55 - or are you trolling?

      Delete
    11. He wasn't good at math, so he want to law school.

      Delete
  23. Great post LawProf. I wish you would make a detailed post about how ridiculous it is to think that some of these law professors could just go over to Wachtell or Davis Polk if they really wanted to. What a joke. These administrators honestly believe that elite firms would hire someone who has never practiced law a single day in his/her life for six-figure salaried positions. These professors would be lucky if they can get a paralegal job at the big firms.

    ReplyDelete
    Replies
    1. Depends I guess, some of them do. A prof from one of the NYC area schools just got tapped to be a judge. Another one either left or is now working part time while being a partner doing some kind of arbitration practice. I agree it's not the norm, particularly at TTTs, but there's at least a few at the higher level schools that could.

      Delete
    2. There's always going to be that one or two, just as there'll always be that one or two rinky-dink lawyers who gets and wins the surprise big-money case and pulls 35% of a multi-million dollar award.

      Delete
    3. "These administrators honestly believe..."

      Nah...law school administrators are *incapable* of "honest belief" - that lack of moral compass is essentially a prerequisite of their job.

      How else do you live with yourself luring generation after generation of motivated young people to their financial ruin for your personal gain?

      Law school deanships are essentially occupied by moral and ethical vacuums.

      Delete
    4. There might be some specialty practice that would take a professor, but mostly no way. Not to mention the hatred they would get from all the blood thirsty associates fighting for partnership.

      Delete
  24. Destruction of the myth that law professors are somehow qualified and in-demand to make huge salaries at big law firms is one of the most satisfying parts of this transparancy movement. I wonder how many of them truly believed it.

    No, you would not be hired to do that kind of job today. No, you would not be a millionaire partner today but for your decision to leave Biglaw after 2 years. Maybe the "top 10%" of you would, the rest would be unemployed. Every dollar in your paycheck is a gift, and you don't deserve it.

    ReplyDelete
    Replies
    1. Come on man, you don't think Kirkland and Ellis in Chicago would start a NIETZSCHE AND THE LAW practice at its premier office for a highly esteemed professor like Leiter?

      Delete
    2. The funny thing is when they finally confronted with this fact many law professors will raise a detrimental reliance defense: they'll argue that had they entered (or stayed in) the private sector they would have accumulated experience and would be making millions today, and therefore as a matter of fairness they should be kept on at law schools no matter what happens to students or enrollment. One of the main philosophical tenets behind the law school scam is that everyone should be subject to market forces except law schools.

      Delete
  25. The claim of a huge unmet need for legal services is an urban myth. The reality is that, for the vast majority of the working and middle classes, they will need a lawyer when they buy or sell their home or do a will. And the demand for those services is declining. In some jurisdictions, lawyers don't do closings and simple wills are available on line.

    The most likely reasons a random member of the middle class might end up in civil court -- divorce, bankruptcy -- can usually be handled without an attorney through various DIY services. In most of these cases, there's just not enough money at stake to justify hiring a lawyer, even at a minimal rate.

    For serious criminal matters, the court will appoint a lawyer. For routine misdemeanors there are [at least in my area] plenty of $50-per-appearance attorneys, so it's not like any real need is going unmet.



    ReplyDelete
    Replies
    1. If the law schools were serious about meeting unmet demand, they'd hold seminars to self-educate the urban poor on simple divorce/child custody law, debt collection defense, eviction defense, and basic employment law. Cover those areas, and you've hit like 96% of so-called "demand" for legal services, and aside from child custody and some employment litigation, it's not hard stuff.

      Instead, the law schools want pump out more more more Penney-suit lawyers to clog the courthouse aisles begging for juicy PI cases.

      Delete
    2. At one point I wanted a lawyer to help me collect owed child support and expenses. They wanted an $8,000 retainer and this was 10 years ago.

      I went through family court myself, though the process was brutal and stressful. I'm sure I left some money on the table, but I just couldn't justify that much as a retainer.

      Delete
    3. lol, stressful? DSCE does almost the entire process administratively.

      Delete
    4. No, this was for more than simple child support, it was for a lot of other expenses for school tutors, testing, etc. Not the simple form that they use.

      Delete
    5. It's a no-win. Just met with folks who did a Legal Zoom quitclaim deed. The deed was perfect, but the tax and legal consequences, which Legal Zoom kinda-sorta forgot to mention, are huge and they will have to eat them because they cannot pay a lawyer to try to extracate them. Some lawyer lost a small fee for telling them not to do it, and nobody gets a fee for cleaning up the mess.

      Meanwhile the chief justice of my state's supreme court has made facilitating do-it-yourself divorce a high priority.

      Delete
  26. Even more problematically for the Cravath model, [big corps have] also decided they won't pay BigLaw rates any more for essentially clerical work. So firms can't bill out a lot of what first and second year associates do, and a lot of other work that such people did is now outsourced to the document review mills and to non-lawyers. ... [I]t's not as if GCs are going to decide that when and if more deals are being done it'll be OK for firms to bill out monkey work at $300 an hour again.

    I think this is an oversimplification of a very complicated dynamic that has developed in legal practice.

    The question "Given [a complex set of facts], is this document from a company's files responsive to a particular document request, and if so is it subject to any claims of privilege or immunity?" cannot be answered by a secretary. Indeed, it is comparable in difficulty to a law school exam question. Large scale document review projects, in which an attorney must address that problem again and again with hundreds or thousands of documents, may not be wildly interesting, but they involve difficult work, not "monkey work."

    If so, why is it that over the last 10 years, we see more and more of that work outsourced to "document review mills"? Part of it is necessity: thanks to e-mail and electronic retention of documents, there are so many more documents that there is no choice but to use a less expensive, lower-quality option. That alternative is viable, in part, because courts hearing discovery motion practice are less and less able to make reliable qualitative evaluations of document review procedures. If you aren't going to be penalized for doing document review badly, and you aren't going to be benefited for doing document review well, you might as well go with cheap document review and take your chances.

    At the same time, I'm not suggesting that the solution is for judges to require premium-quality document reviews and for law firms to hire scores of junior associates billed out at hundreds of dollars an hour to do those reviews (basically, the model up through the mid-1990s). In an age where terabytes of documents are retained, the old Rule 26 model of "you show me your file and I'll show you mine" is just broken. I'm not sure how we can fix it.

    ReplyDelete
    Replies
    1. I think you greatly overestimate the amount of training it requires to understand (1) what a conflict is about and (2) whether a document is relevant to the conflict.

      They have made computer programs that are as effective as trained attorney reviewers. I have no doubt, a group of generic workers trained in the field could do no worse.

      Delete
    2. Agree with 8:23.

      The 8:10 post is exactly what needs to be dropped before any real law firm reform can happen: That the challenges in law have no equivalent in other businesses, and lawyers are somehow different, "special snowflakes" if you will.

      In the end, law is not drastically different than any other skill that requires specialized training.

      This is what law school teaches I imagine.

      Delete
    3. I'm not guessing. I've been in the complex litigation business a long time. I've seen the output of computerized and contract attorney document review and it's not particularly impressive. Is it unusable? No. But there is a difference, and that difference sometimes has consequences. If you blow a privilege call, or if you provide a seasoned plaintiff's attorney with documents irrelevant to your case but that might give rise to some other kind of lawsuit, that's a problem.

      In that respect, I'm definitely not arguing that law is unlike other businesses. Rather, I'm arguing that law is like other businesses, in that there are cost-benefit tradeoffs: the quality of a more expensive document review and privilege review conducted by high quality junior associates is typically going to be better than the quality of a cheaper review outsourced to contract attorneys here or abroad.

      The move towards price over the last decade or so was not driven by GCs suddenly realizing that they had been scammed all along into paying big bucks for work that a "monkey" could do. It's more complicated than that. It has to do at least in part with technological change and how that bears on the volume of documents to be reviewed. Another part is that courts aren't very good at evaluating challenges to large document reviews, and so there's no benefit for paying more for quality.

      As I explicitly said, I'm not arguing for moving back to the old model. I'm just saying that the issue is more complex than "document reviews are monkey work."

      Delete
  27. Immediately below the article on the Times website is an ad for Cooley Law School ("Ample Aid & Flexible Scheduling; We Make Law School Work For You!"). Don't the Times' editors read their own articles?

    ReplyDelete
    Replies
    1. I doubt the times had anything to do with the placement of that ad. It's Google or some other robo internet ad firm that placed it there because YOU visit lots of law school-related websites.

      Delete
  28. "Cost is determined by the market," I keep hearing this. It's like the student loan companies are all advocating for the notion that their practices have nothing to do with the glut of unemployed lawyers.

    Cost is determined by the market, except that in this case, the cost of the legal education is distorting the market. It's shutting out lawyers -- those with the $200,000 in student loans -- who cannot compete with the existing crowd of us who don't owe $200,000 because they cannot open a practice with their debt load.

    ReplyDelete
    Replies
    1. Not to mention they don't have the experience or the contacts.

      Delete
  29. The New Mantra:

    "If you're smart enough to go to law school, then you're smart enough not to go to law school."


    If you are intelligent enough to get into all but the worst of the law schools, then you are already intelligent and competent and educated enough to earn the same amount of money (or more) that you would if you went to law school without the debt and bullshit of the legal profession. Use your brain.

    ReplyDelete
    Replies
    1. I love this.

      Can you also add the mantra: no one should go to law school next year. In the middle of transformation it makes no sense.

      Delete
  30. Some thoughts on *another* outstanding entry by LawProf -

    1) "They wouldn't print it if it wasn't true." F. Nietzsche, trans. J. Jackson - *too friggin' good to check...*

    2) Why blogs rock and law reviews don't - In the time it would take to assemble half a pointless legal citation for a throwaway observation in a law review, LawProf delivers this timelessly lethal bon mot - "legal academics desperately searching for a raison d' paycheck"

    3)In terms of the LawScam Movement(TM) breaking through into the general public consciousness, there are few pinnacles more valuable than the front page of the NY Times.

    But there remains one peak to be scaled.

    Let Dr. Hook (GP) show us the way:

    "Rolling Stoooone...
    wanna see my picture on the cover
    wanna buy five copies for my mother
    wanna see my smiling face
    on the cover of the Rolling Stooooone..."

    Only then will the Movement's triumph be complete...

    4)As every reader of the MSM has wondered since time immemorial, just *how* do outlets like the NYT manage to conjure up "sources" like Gillian "It’s not a problem of producing too many lawyers" Hadfield on demand?

    Is there a "MSM's Big Book Of Exceptionally and Questionably Convenient Sources"?

    ReplyDelete
  31. In the past, I've found Hadfield to be pretty bright and on the side of improving things. I wonder if she will be called upon to explain in detail what she meant by that odd quote.

    ReplyDelete
    Replies
    1. "It’s not a problem of producing too many lawyers. Actually, we have an exploding demand for both ordinary folk lawyers and big corporate ones."

      What do you need explained? These are bald-faced, knowing, self-serving, fist-in-the-butt lies.

      Delete
  32. Hadfield argues for non-lawyer equity in legal services, meaning lawyers in Walmarts.

    http://works.bepress.com/ghadfield/49/

    That seems to be the context of her quotes on "mismatch of supply and demand" and "structure of the legal profession."

    ReplyDelete
  33. Kind of ironic that Hadfield is supposed to be a land and ECONOMICS professor, eh?

    ReplyDelete
  34. While I agree the money isn't there I'm not sure it's an affordability problem. When I worked at legal aid I saw a lot of "poor" people come in that were smokers or that had iphones, etc. So, it becomes a prioritization / value perception issue where people would rather have these extras than certain legal services. It's actually worse than an affordability issue because many people don't see a value add for these legal services.

    ReplyDelete
    Replies
    1. What the frack are you babbling about? So by your incredibly moronic estimation, being able to purchase a pack of cigarettes and a cell phone indicates that a person is not actually poor, and can in fact afford a lawyer at $250/hour, but they simply choose to feed their $250/hour smoking and cell phone habits instead? You're stunted. I sincerely hope you no longer offer "legal aid" to any one. God knows anyone needing free legal advice probably has enough problems without the likes of you screwing up their case.

      Delete
    2. 9:45,
      It's how they choose to spend their money. Obviously they couldn't afford to pay a lawyer for a complex litigation matter but for a routine will or no contest divorce? Absolutely.
      9:08

      Delete
    3. Right, so the poor must forgo cigarettes and cell-phones in order to be prepared to afford a divorce attorney? After all, since they're poor, divorce should be completely foreseeable, right? Divorce is the kind of thing you save for when you're living below the poverty line? In other words, what you're saying amounts to: "how dare they smoke cigarettes and own cell-phones and claim to be "poor" and in need of my "legal aid". Does Marie Antoinette ring any bells for you, you miserable twat?

      Delete
    4. Bug up the bee-hind?January 31, 2013 at 10:37 AM

      9:45/10:22, who put the bug up your backside?

      Nothing the other guy said was remotely controversial. People decide where to spend their money.

      Depending on state taxes, your "poor" smoker may well smoke away 6-8K per year.

      If they did not choose to do so (yesyes, I do understand it's a tough habit to break), they could spend that money elsewhere.

      For example, if once in every 5 years that person DID happen to need legal services, they could easily afford same even at $200+ per hour.

      So get off yer high horse, please, and spare us the histrionics and hissy fits.


      Sheesh.

      Delete
    5. 10:22,
      Actually, I specifically referenced the iphone so as to refer to the data component.
      For what it's worth, I don't really care how they spend their money, that's their choice. The bigger point is the low value people assign to legal services.
      9:08

      Delete
    6. To 10:37, since you also insist on referring to people in need of legal aid as "poor" (emphasis on your use of scare quotes), you seem to be implying that it is impossible to be poor and to also be a smoker, or a user of cell-phones. What is the correlation between smoking or using a cell phone, and not being poor? Your premise seems to be based on the absurd notion that if one smokes or owns a cell-phone, one is precluded from being below the poverty line. If that isn't your premise, why use the scare quotes, you jejune freak? Why imply, through the use of quotations, that a person with cigarettes and a phone couldn't possibly be as poor as they're pretending to be. That's precisely the kind of presumptuous, snot-nosed, teat-sucking attitude that I take offence to. Neither of you are making a sophisticated economic argument. The allocation of short term expenditures for things such as cigarettes, and even fixed monthly costs such as cell phone service have absolutely nothing to do with the ability of a poor person to afford legal costs. Your idiotic argument is akin to one saying: " if I forego smoking cigarettes for one year, I will then have amassed enough financial clout to hire a decent lawyer, should I at that moment happen to be in need of one". Seriously, who, poor or otherwise, thinks like that? Not even prosperous people plan the need for an attorney and budget for it as if it were some type of inevitable expense that begs a rainy day fund. Dumbass.

      Delete
    7. 11:49, spending money now has no effect on how much you can spend later? That's an earth shaking insight, thanks for stopping by to explain to all of us dumbasses how the world works.

      Delete
    8. Next up on Bloomberg Law-- Case Western Dean Lawrence Mitchell on how poor people should stop smoking and making phone calls when they could be hiring his law school graduates.

      --Lee Pacchia

      Delete
    9. You're quite welcome. If you're poor, you stuttering imbecile, any expense you forego, such as for cigarettes, etc. is likely to be dedicated to better food, or perhaps new clothing, or something of that nature. A poor person quitting smoking, or turning off their cell phone service is not going to then earmark those saved funds for a rainy day attorney account. It follows then that whether a poor person smokes, or uses a cell phone has absolutely no bearing on whether they can afford legal service or not. Thus, the notion espoused by the half-wits above, that "if only the poor didn't squander the pittance of disposable income that they may have on tobacco and cell phones, they may be able to afford to hire an attorney" is incredibly shallow and misinformed.

      Delete
    10. I suppose that some idiotic lawyer could start a legal service where she or he will work for smokes and a cell. Perhaps there some client out there in the inner city, out in in the mobile home community, or out in the country who can for the dollar value equivalent of a subsidized Iphone ($300) + monthly cell service with Metro PCS unlimited plan ($50) and two packs of cigarettes per week ($11) can afford the finest lawyer in town. In a year this adds up to $1428 in a year--just enough to subsidize gross malpractice.

      Delete
    11. Actually, I think savings are used as a reason to cut benefits. Or maybe that was an old rule. I remember a case about it in New York.

      Delete
  35. Where will the scam move?

    As long as the federal money is on offer, the scam won't stop; it will change shapes.

    The other pre-conditions of the scam are: (1) a large annual cohort of non-mathematically inclined liberal arts graduates with no clear career plans but (2) a desire to earn a higher salary than their peers in what is preferably (3) a high-status profession.

    Will schools of art and design rush to fill the gap? Will guild-like bodies lobby to allow the federal money to come straight to them? Schools of hotel and food administration?

    So long as water flows through the well . . . .



    ReplyDelete
  36. I stil think it is a big admission to say that law is not the staircase to wealth it was 30 years ago. And for the in between period it wasn't a path to wealth, it is just that schools lied about it.

    ReplyDelete
  37. There are plenty of unscrupulous people out there.

    If you could get limitless federal dollars for teaching yoga, there would be far more yoga schools.

    If a system existed whereby I could gladly pay you Tuesday for a Hamburger today, everyone would demand hamburgers. This is doubly true if taxpayers backstopped the repayment of hamburgers and my payments were capped at a percentage of my income.

    Buy now, pay later is very, very popular. It is also very, very dangerous and unstable.

    ReplyDelete
  38. The educational establishment needs to come out with a list, at least every year, detailing which undergraduate majors from which schools have led to good employment offers. Yes the list might be a little out of date as the year wears on but is there really a need to graduate one more anthropology, sociology, or psychology major, which is where a lot of these hapless law students come from.

    ReplyDelete
  39. http://www.abajournal.com/news/article/massive_layoffs_predicted_in_law_schools_due_to_big_drop_in_applicants/

    ReplyDelete
  40. In manufacturing land, the model that Professor Hadfield described is called "cost-plus" pricing. IE, we spent $100 to build a widget...so we should tack on $40 because we want a $40 profit margin.

    This type of thinking is:
    a) stupid
    b) disastrous

    Cost-plus ignores the concept of "pricing to the market." IE, charge what someone is willing to pay you for your widget. If that's $140, $210, $900...great. You made more money. If it's less...$120, $85...then re-evaluate your process to see if you can make it cheaper, or stop selling it.

    General managers who are trapped in the cost plus method of thinking should be changed or fired--they are shortchanging themselves by adhering to a false understanding of pricing.

    Hadfield misses the boat completely on this, and Prof Campos hits the nail on the head. An increase in the number of solos and small firms would (and already does) drive down the pricing of legal services that "ordinary folks" would buy, simply based on supply/demand. Furthermore, those solos and small firms should be charging whatever clients are willing to pay for their services...the cost of law school never enters into the pricing model.

    Of course, profit would be higher if law school were cheaper, but that has no impact on price of services.

    ReplyDelete
  41. exploding demand for big corporate lawyers!? What the unholy hell?

    Also, Ms. Hadfield, a "mismatch" between desire (what you call demand but you do not use it in its strict economic sense) and supply is called "oversupply." If Exxon produced 5B gallons of gasoline per year, every year, and Americans continued consuming only 4B gallons, that is called oversupply. It is a much clearer and more intuitive description than "mismatch between supply and demand."

    ReplyDelete
  42. From today's ABA Journal Poll: Is the current law school model sustainable?

    RESULTS
    No. Schools must adapt or they risk failure.
    40 votes (93.02%)
    Yes. Just wait, things will turn around.
    3 votes (6.98%)
    Total Votes: 43

    ReplyDelete
    Replies
    1. Who gives a shit, only 43 people voted?

      Delete
  43. Law is a really a 7 year degree. I was a defacto pre-law liberal artist. By the time I was applying to law school in 2009, I knew about the law school scam and the over-supply problem, but I was already defacto four years invested in it and found it difficult to change directions. I really had very few other options with my UG degree. I know that the middle class is in decline and that legal demand is in decline and there is an oversupply of lawyers.

    So for applications to be dropping this much, 5 or 6 years after the scam has been on the radar, clearly people are making different decisions as undergrads and taking up useful majors, I would presume. If I had known about the scam as a freshman, sophomore, or junior, I certainly would have changed majors and avoided law altogether. I think that is what is happening now.

    People know there is no demand for attorney work and they are now changing course much sooner than I was able to.

    ReplyDelete
    Replies
    1. So instead of re-doing 2 years of undergrad (the first two are gen ed classes everyone takes) you instead opt to spend a multiple of the undergrad tuition rate on 3 more years of law school?

      Delete
    2. Sunk Cost

      http://en.wikipedia.org/wiki/Sunk_costs

      Quit while you are behind.

      Delete
    3. "Sunk costs are sunk."

      I wonder is Professor Hadfield ever taught this to liberal students thinking about law school.

      Delete
    4. What's interesting is that Professor Hadfield has a PhD in economics from Stanford. Any idiot can get a JD from Podunk U., but you have to be pretty darn talented to get a PhD in economics from Stanford.

      Nevertheless, her logic shows that she has sunk so much into the law professor mentality that supply and demand don't come into the discussion.

      Delete
    5. 11:53 OP here.

      Yes 11:01, I graduated UG in 2008, right after the bubble burst, but before the SCAM really became known. I had an inkling of it, but I did not know as much in 2008/2009 as applicants know today. Undergrad students today have an easier time making the decision to change course early on. I have completed law school at substantial expense and I am one of the 50% who do not yet have a bar required job.

      Delete
    6. I can sympathize with anyone who entered law school prior to 2009. But anyone who matriculated subsequent to that is either a very sophisticated consumer or an idiot

      Delete
    7. That's nice, but the transparent numbers improved in 2011, when I was a 1L, after I spent a year in between my liberal arts degree and law school working 60 hours a week at a grocery store. The numbers weren't there yet. Luckily I don't have debt, but I still don't know what kind of future I'll have in law

      Delete
    8. What are the educational pathways for the liberal arts graduate who finds his BS/BA degree essentially economical useless and how much additional education would it take to make him employable?

      Everyone doesn't have the aptitude for engineering and that field has it's own problems as well. One guess would be to go back to school to get a degree as a physician's assistant.

      Delete
    9. Well its great to be a monday morning quarterback. I have the skills to be a lawyer, and 10, 20, 30 years ago I could have been. Now, I'll be an unemployed JD in May. I grew up thinking I'd be a lawyer, I've spent the last 7 years (counting undergrad) thinking that way too. I go to a middling law school, its not great, but its not New England Law either. Law is no longer a viable option for BA's without a specialization before law school under the current job market / cost of school

      Delete
    10. He, `Coulda Beena Contendah!`January 31, 2013 at 8:16 PM

      "I have the skills to be a lawyer, and 10, 20, 30 years ago I could have been."

      Delete
  44. This is a remarkably uncharitable reading of Professor Hadfield's comments. No where in this article (or any where else that I am aware of) does Prof. Hadfield argue that Lawyers cannot exploit demand for legal services because of their high debt burden. Her argument is about the structure of the legal profession, not debt. On her account, antiquated and self-serving ABA regulations require that anyone who provides "legal" services must have JD (which must be earned at a traditional 3 year law school). If these regulations were relaxed in certain respects, we could train people much faster, much more cheaply, and with a more focused and market ready skill set. The result is a much more dynamic labor market, which helps create economies of scope and scale, allowing legal service providers to serve "ordinary folks" much more cheaply than they can now (and much more cheaply than they could when a JD education did not require so much debt). The model that Prof. Hadfield imagines, as I understand it, would DISPLACE much of the current legal academia establishment, not support it. It is hardly self-serving

    This is plainly stated in the article (a few paragraphs down from the one quoted here), although not with this level of detail. I am surprised that LAWPROF was so quick to rag on Professor Hadfield given how he just recently took offense to others who allegedly took his statements out of context.

    ReplyDelete
    Replies
    1. I read it exactly the same way. I didn't see it plainly stated in a quote from her. Where was it exactly?

      Do you mean the part where non-lawyers should be trained to take jobs that are now being done by lawyers?

      These are the paragraphs I read as being quotes from her, please point out where she says that oversupply is a problem or otherwise conveys an idea that demand is not booming for corporate or folk business. I don't see how it is remarkably uncharitable.

      “We have a significant mismatch between demand and supply,” said Gillian K. Hadfield, professor of law and economics at the University of Southern California. “It’s not a problem of producing too many lawyers. Actually, we have an exploding demand for both ordinary folk lawyers and big corporate ones.”

      She said that, given the structure of the legal profession, it was hard to make a living dealing with matters like mortgage and divorce, and that big corporations were dissatisfied with what they see as the overly academic training at elite law schools.

      [and then after a few other paragraphs]

      Some, including Professor Hadfield of the University of Southern California, have called for one- or two-year training programs to create nonlawyer specialists for many tasks currently done by lawyers.

      Delete
    2. I disagree with Hadfield's claim that there's an unmet demand for legal services, if "demand" means "services for which people would be willing and *able* to pay with some tweaking of the labor market."

      Hadfield's argument is premised on the assumption that legal services for routine matters could be delivered significantly more cheaply than they're delivered now, because of unauthorized practice of law statutes and ABA accreditation standards.

      But the cost of legal services is already low relative to other services. In many places you can get a lawyer to do a simple will or a standard DUI or a straightforward bankruptcy case for $1000 or less. How much landscaping or plumbing or other home repair does $1000 buy these days?

      The problem is that "demand" is limited by how much discretionary people have, and most people don't have any, at least not for those sorts of legal services. Licensing people to do wills after one year of post-undergrad training won't change that.

      Delete
    3. "Some, including Professor Hadfield of the University of Southern California, have called for one- or two-year training programs to create non-lawyer specialists for many tasks currently done by lawyers."

      To echo LawProf a bit, I don't really see this as a solution. Not sure what "tasks" these would include. Most legal "tasks" not done by attorneys are done by paralegals or legal secretaries already (by LegalZoom and the like). And even many of these tasks could be done without a paralegal degree/certificate anyway. Ideally, attorneys write briefs, try cases, write contracts, argue in court, and negotiate in and out of court (leaving admin and very simple legal tasks to non-lawyers). I don't envision specializations in these areas (e.g. 1 year program for brief-writing specialists). So the only "specialization" left after that would be by subject matter (i.e. criminal law, personal injury, and so on). A couple foreseeable problems with this: (1) if I am a criminal defendant, or any other client for that matter, am I going to go with a "lawyer" that went through 3 years of law school (of which there is and will be an oversupply for at least a generation) or a "specialist" by whatever label who is not a lawyer, but rather some new creature without a name? I would go with the lawyer--as I am sure most would (compare with decision between having a Dr. Surgeon replace your knee or a nurse-knee-replacement-specialist or something like that). Calling them "non-lawyer specialists" would be a kiss of death, because as LawProf points out, student loan debt is not the problem with affordable legal services. "Great, Ms. Non-Lawyer Specialist, you have less debt than Attorney Smith over there. Now tell me why I should pay the same amount to retain you when I can pay the LAWYER the same amount?" And the only way to make specialization by subject matter any use is if it is jurisdictional, not survey. My criminal law class did not cover any basics of Michigan criminal law/practice. You know how many times I have had to distinguish between specific and general intent since starting?

      (2) The other problem is that this solution is not even really a novel one. For example, in Michigan, a non-lawyer can represent people in worker's comp matters before a magistrate. But fees are contingent and capped anyway, so non-lawyers and lawyers charge the same. The same type of thing is present with SSD and SSI.

      Health care administrators often write and review contracts. HR people do compliance work in the employment context (e.g. COBRA, FLSA, etc.). There are already non-lawyer legal specialists, which is part of the lawyer oversupply problem to begin with.

      Delete
    4. The problem is people don't "need" legal services in the same way they "need" the services of a physician or a mechanic or a plumber.

      When it comes to legal matters for most people it makes more economic sense to go without for a lot of things. Have to defend against foreclosure? In most cases all a lawyer will be able to do is prolong the foreclosure process longer. Have to write a will? Download a form and do it yourself; it might not be a brilliant work of legal draftsmanship but it will in most cases get the job done and not be challenged. Get cheated on a contract? Get mad, then just accept the loss.

      Delete
    5. Eventually problems go away.

      Delete
    6. The Atlantic article shows how changing education might help a bit at the margin, but the drop in demand means most lawyers won't get jobs.

      Delete
  45. I wonder if it'll will come to a point soon where schools start having a 100% acceptance rate?

    ReplyDelete
    Replies
    1. Or greater than 100% if you count accepting people who didn't even apply.

      Delete
  46. I attended a Washington State Bar Association "state of the profession" townhall meeting this week. The hosts were the WSBA's executive director and the dean of UW Law School. The following were two gems:

    1. One of the major crises that will hit the law in the next 10-15 years will be the lack of lawyers because of all the baby boomer retirements. And the reduction in law graduates will only make this worse! There was nary a comment about the reserve army of unemployed lawyers that continues to grow by thousands each year. I am sure some of them can fill this mythical "gap" if it ever does happen (which is extremely unlikely). I think Law Prof needs to nip this idiotic argument in the bud nefore it gains any traction.

    2. One unemployed attorney asked how she could get a job when most (all?) employers now want 3-7 years experience. The response: Go solo and represent the people in the "Moderate Means Program" or flat out do pro bono work. Yes, we all can practice law out of our apartments to get that 3 years of experience,while eating Top Ramen, and then we will get that great job.

    ReplyDelete
    Replies
    1. Shameful. Why do the law schools have such stature?

      Biglaw, regional biglaw, and law schools dominate bar associations. They know nothing about the actual practice of law, and these are the ones who ostensibly represent the bar??!!

      Why, damn it, do practicing lawyers not have a real bar association? An effective spokesman for practitioners. A Practitioners Bar Association?!

      Delete
    2. Because for working lawyers Bar Assn meetings are typically a waste of time and hardly the best place to find clients. They were once decent resources for client and job referrals, but that was during greener times.

      Delete
    3. One of the main problems with integrated bars is that since they are guaranteed membership, they have no incentive to cater to the lawyers they are supposed to represent. Most integrated bars see their role as solely to protect the public. I have no problem with a state bar maklng public protection its main goal, but it then it should not be an integrated bar. Unfortunately, every state bar I belong to is integrated. I am curious if those of you out there who do not have an integrated bar, like NY, get better service from the bar association (like NYSBA).

      The ABA should be the leading organization to support lawyers, but we all know what a crock that is. When the ABA approved offshoring, on the rather absurd ground that a single licensed lawyer in the US can effectively manage thousands of non-lawyers in Bangalore, it revealed its true colors.

      Delete
    4. This^^^

      Paul, how about a scathing torch directed at bar associations. Lawyers need a better guild. It should be us versus them. Us practicing lawyers against Them in the ivory tower.

      Delete
  47. Re: 12:23 - "One unemployed attorney asked how she could get a job when most (all?) employers now want 3-7 years experience."

    One way to get your foot in the door that some unemployed law grads may overlook is clerking AFTER graduation for small and mid-sized local firms. Even if it's part-time, at least it's real legal experience (the firms I did this for simply used me like a first-year associate but paid me less).

    ReplyDelete
    Replies
    1. Yeah, because there's so much work available at "small and mid-sized local firms." I'm sure most of the unemployed JDs posting here have never thought of that. Thanks for the awesome advice!

      Delete
    2. Those jobs - and firms willing to hire a licensed attorney to do clerk clerical work - are much more rare than people would think. Practicing attorneys are already applying for/holding law clerk positions at low-rent firms. It's only a shade better than doc review at getting a foot in the door.

      Delete
    3. And there's that lawyer in Connecticut who is proposing to charge recent graduates for the privilege of working for him.

      Delete
  48. Your first point is pretty much exactly what they said about PhDs 20 years ago, ie "massive retirements will lead to job openings." Didn't happen because

    1) people DIDN'T retire (no mandatory professorial retirement age any more).

    2) if profs did retire, tenure track positions often became adjunct part-time positions (contingent, low-wage, no benefits)

    This is more wishful thinking on the part of law professors/school being used to justify the supply of lawyers being churned out (and of course of the supply of law school tuition loan money coming in).

    ReplyDelete
  49. Similar story, better analysis.

    http://www.theatlantic.com/business/archive/2013/01/law-school-applications-are-collapsing-as-they-should-be/272729/

    ReplyDelete
    Replies
    1. Thank you for that link. The article is brilliant.

      Delete
  50. I just don't get why the price of Lamborghinis is so high when there is so much demand for them!

    (Lawprof)

    ReplyDelete
    Replies
    1. Whoops. Not you Lawprof, but law professors in general.

      Delete
  51. And. Boom. Goes. The. Dynamite.

    Congrats, Campos. The scam is now "mainstream" knowledge. In less than 5 years, there's been a complete turnaround in the conventional wisdom. Now, only a damned fool would think of law school as a ticket to the upwardly mobile.

    I can't wait until the schools start dying. Maybe in 10 years time, the dramatically reduced number of graduates will be able to obtain employment and piece together something that resembles a living in something that resembles a profession.

    ReplyDelete
  52. In terms of business expenses, law school debt is a sunk cost. You have already spent that money and no decision you make in the future will change that money spent.

    Your future decisions on how you price your legal services are not going to be affected by how much debt you have or don't have.

    Your pricing decisions for your legal services are going to be 100% determined based on what the market will allow you. If you can charge $250 per hour and are billing (and can collect) that much, then you will do so.

    If your legal business will only allow you to bill $100 per hour for the service you provide, then that is your business.

    Law school debt from years past does not play any role at all in the legal pricing decision.

    If you cannot make enough money as a lawyer to service your law school debt, then there are only a few options.

    1) IBR
    2) Default and ignore the collectors
    3) Find another line of work that pays more
    4) Leave the country or live off the grid

    ReplyDelete
  53. There are more than 500 comments on the NYT. All of America knows This Ship Be Sinking!

    ReplyDelete
    Replies
    1. And the cluelessness of most of those comments underscores that 0Ls should NEVER take advice about law school or the practice of law from persons without direct knowledge of and experience in BOTH.

      Still, you're right, it's great news that the word is finally getting out.

      Delete
  54. I read the article and was surprised at Hadfield's comments.

    Vis-à-vis what client will pay for. Part of the boom in big law revenues in the 70s-90s grew out of leverage - i.e., lots of associates, few equity partners. But the dirty little secret is that a lot of the way in which so many junior lawyers were billed out was by eliminating the clerical support and transferring the work to time-keepers. So in the 20s-60s and even early 70s law firms employed a lot of secretaries and clerks, and file room clerks, messengers, etc. All of these people were overhead and their pay was rolled into the rates charged by the law firm - which until the 60s and 70s were generally not hourly. The advent of hourly rates drove a new phenomenon - if you could bill someone hourly, why give them clerical support. So slowly the clerical support went away - associates did their own typing and filing and photocopying. Then senior associates got junior associates to do essentially clerical tasks - and partners did the same. Then paralegals came along to do a lot of the work the secretaries and clerks used to do - and the money just rolled in.

    And then the clients wised up - and started to ask - why am I paying an associate $300 per hour or $200 for a paralegal to do clerical tasks. And slowly the firms started to hire struggling young lawyers to do document review in the basement - and before long the clients also said "and don't mark up the charges."

    But in that period between the billing games starting in the 70s and 80s and the early 2000s, the huge incomes the firms were making kicked off a culture where everyone thought this was a gravy train that they should jump on - and the law schools wanted some of the gravy too.

    ReplyDelete
    Replies
    1. How did firms bill if not hourly?

      Delete
    2. And yet somehow revenue continues to rise.

      Delete
    3. Well - and we still do this for some clients.

      1. On some matters they agree a fee upfront.

      2. In one big firm I know they had a committee - the billing committee, that met at least once a month. They would go through what they were working on and say "well, that was a difficult matter, and that associate - he did a pretty good job - and the client is happy - what do we think - $20,000 - sounds about right."

      3. Other clients simply put you on a retainer - say $100,000 per month for the whole firm - if it is very light you cut it, if is heavy you raise it. We do this a lot - and clients really like it because it means fees are predictable.

      Delete
    4. Thanks for the reply. I've only known of hourly billing.

      Delete
  55. I just got back from a court conference in which my client brought along her boyfriend who was sitting in the back with a BarBri review book. One of the other parties spied the book and asked him if he'd seen today's NYT piece. He said he couldn't bear to read it. When the other party started talking to him about the sad state of the legal profession, the law grad barked "Don't talk to me about law unless you have a job for me!"

    And that, was that.

    ReplyDelete
  56. Law is a dead profession. I'm glad the word is out.

    ReplyDelete
  57. Straight dope....man what a great read.....not sure who said this, but this is a great line: "I just wish one law school would call their freaking bluff and slash payrolls across the board. Would you lose a prof or two? Maybe, but where are they going to go? Is demand for law profs really that high? And are they really willing to uproot their lives? I'd be happy even with a school putting a hard cap of 90-100,000 dollars on salaries. They'd never move. They're worms."

    ReplyDelete
  58. In all of the discussion of law office economic above one thing that is not discussed is that as a lawyer you need to be able to wait to be paid - and clients can be 90 days or more behind. It is not unusual for a small law firm to have outstanding balances from clients, even ones who will pay the bill, of hundreds of thousands of dollars. You can also have tens of thousands of disbursements.

    If you want to set up a law firm you have to recognise that you need 6 months overhead and living expenses. That is 6 months rent, six months utilities, six months insurance, six months pay for your secretary or receptionist - and all that gets paid before you eat.

    ReplyDelete
    Replies
    1. You might want to consider that not all law practices work like yours.

      Delete
    2. I would not. All law firms need to finance their operating costs. Some are tougher about getting paid within 30/60/90 days than others, but all firms work in arrears, that is to say, they do the work, then bill the work, then wait to get paid, incur the disbursements, bill the disbursements and wait to get paid. Occasionally some lawyers seek an evergreen retainer, but apart from criminal work and very foreign clients it is not that common (and it is expensive because malpractice insurers hate lawyers to have lots of client money in a firm/client account.)

      Now our firm may be a little different in that our billing rates are pretty high - but the arrears issue is pretty common to all law firms. We have a cash reserves cushion we built up, but a new firm needs to come up with about 6 months minimum operating costs - even if it has pretty blue-chip clients, and even an established firm needs to have reserves for a few months (or a hard to get line of credit.)

      Delete
    3. I know of some bad lawyers who give terrible advice but make sure they are paid in cash upfront before they do anything.

      Like immigration or DUI people who give false hope as long as they can get a check or cash upfront.

      Delete
    4. Yes, although to be fair to the immigration and DUI lawyers - if they lose even after doing a good job, it is kind of tough to get paid - and the same goes for criminal defence.

      There are clients for which is wise to be paid up front - most of our clients are not like that (but we have had a few.)

      Delete
    5. Many criminal defense lawyers take an upfront retainer and that's it.

      Delete
    6. Also, our firm has a practice where for almost all third party disbursements (corp filings, lien searches, etc.) we have the client invoiced directly so we don't have to deal with it if they don't pay.

      Delete
    7. Because of our practice a lot of these charges are other law firms in different countries - or Barristers - etc. or patent or trademark offices - and we need to pay these fees. You also have court reporters for depositions, rooms for arbitrations, etc.

      When a client is paying several hundred thousand a year, you don't make them go through all of the issues of making these payments - we do it and bill them. A new client that we might wonder about, we look for them to pay up-front (or wish we had.)

      Delete
    8. I call that - getting stiffed by a client - "working pro malo."

      Delete
  59. Just FYI -

    1) LawScam story #1 most emailed at NYT

    2) #7 most read at The Atlantic.

    Now all we need to do to get the word out is have PSY talk about "Law School Ethical Practices" on Youtube.

    We can call it - "Gangland Style"

    ReplyDelete
  60. I read these articles, and then I read TLS. It is culture shock to me.

    Why are any of these kids going to go to law school?
    How can there be threads about attending schools like NotreDame or American or GULC, not to mention all the lower ranked schools.

    I don't get it. Are they so focused on the admissions process that they can't read these articles and understand what it means? The Atlantic article flat out says legal employment is a shambles and schools have done nothing. And they clearly say that the best outcome requires top grads at a handful of school with a huge amount of debt to repay, or no job and a waste of 3 years and 26 years of indebtedness.

    Atlantic also points out how IBR is propping up this entire scheme. Without IBR the downside would be too risky for most- though they don't mention how IBR makes the taxpayer pay.

    Anyway, I want no one to go to law school next year. Not even Yale or Harvard- just kick the existing system to the ground until they have to come up with reform.

    ReplyDelete
    Replies
    1. Make that 25 years

      Delete
    2. The worst part: there are posters at TLS who will see this and think, "Awesome! My chances for admission will be great next year!"

      Delete
    3. "I don't get it"

      A certain fair sized number are graduating into a horrific employment environment with no serious way to pay off their undergraduate loans (or even meet living expenses).

      So *more* student loans (at law school, graduate school, etc.) are a socially acceptable way of going on "temporary" welfare-by-another-name.

      It buys them time at the expense of deeper, more certain financial ruin.

      But they (probably incorrectly) feel they have little to no choice.

      But, it *is* widely unknown *just how sh*tty* the new entrant labor market really, really is.

      Here are some fairly under-reported specifics:

      1) In the last ten years, the US population has grown by about 20 million people.

      2) *Not a *single* net new job was created during that period.

      3) The employment-to-population ratio of 25-to-54 year olds has fallen dramatically - back to levels seen 15 to 20 years ago.

      Technology and rapidly-bankrupting-welfare-state aside...we are in a US labor market depression that is within shouting distance of the Great Depression.

      And we have been, Fed/RE bubble aside, for the last ten *years*.

      (The DC/NYC government/media/finance nexus is not eager to have things so bluntly stated.

      So they aren't.)

      China has been kicking our ass for that long and DC/NYC papered it over/bought votes with gutted interest rates, bullsh*t loans, the auto-erotic asphyxiation of a dying reserve currency.

      Delete
    4. 6:48, what are you smoking? The leader of the Senate tells us that "we are in a recovery."

      http://thehill.com/blogs/floor-action/senate/280307-reid-we-are-in-a-recovery

      Delete
    5. "Top" Law Schools makes a mockery of itself by even allowing discussion of the Notre Dames, to say nothing of the Barrys and the Cooleys and the Touros. If indeed it had anything to do with "top" law schools, it would define that group and disallow discussion of other law schools.

      Delete
  61. I do understand that there is a bad labor market. But people have to understand that law should not be an option because they will be making their lives much worse in the long run. People need to erase law as an option and figure out something else.

    Law is a mirage; there is no oasis there.

    ReplyDelete
  62. I just want to congratulate Paul Campos, DJM and all the scambloggers for their tireless efforts. In particular, Mr. Campos, both you and DJM took professional risks to speak up about something that you saw as wrong. You were not silenced initially, even when some of the criticism came from the people you were trying to help. (Law students/grads who treated you like the enemy simply because you worked for a law school.)

    These past few years, I imagine, have not been easy for you Mr. Campos. Yet, you continued and persevered. And because of this, an awful practice that would have been perpetuated and that many people would have been more than happy to sweep under the rug was brought to light - a practice that benefits a few greedy people at the top while damning the next generation of future attorneys to perpetual debt servitude simply for having the audacity to dream.

    It is not now a bed of roses - there is still a long road ahead. But we are on that road mainly because a few people had the courage to stand their ground, even when it would have been much easier to look the other way.

    Thank-you for your courage.

    ReplyDelete
    Replies
    1. I have heard profs speak bad of Law Prof, but when the shit really hits the fan they will all say they stood with him. All law students know that Prof. Campos is the catcher in the rye. His image should be hung in every student lounge in every toilet law school.

      Delete
  63. God damn I love watching the legal "profession" collapse.

    ReplyDelete
  64. As 7:13 PM well put it, "Law is a mirage; there is no oasis there." I speak from what I have observed over 20 years as a patent lawyer. Patent law was a great field, not yet flooded, 20 years ago when I entered, still a veritable ladies and gentlemen's club where professionals treated one another largely with respect. That is perhaps the way the practice of law generally was 50 years ago. Patent law has changed as the field became flooded. It is now not civil, cut throat, mean spirited, filled with lies and deceit as people stumble over one another looking for paying clients.

    Law is a mirage. It has been an illusion that you could long term make a decent living as a lawyer for at least 25 years. I know. I have seen what happens in the long term even to those who get a good start. Moreover, that mirage and illusion has been kept alive by the untruthful, deceitful lies of the law school industry regarding employment statistics. Only a complete fool would buy a law degree at any price these days. The work continues to decline, and the competition for what exists continues to increase.

    ReplyDelete
  65. "6:48, what are you smoking? The leader of the Senate tells us that "we are in a recovery."

    I did mention auto-erotic asphyxiation, didn't I?

    Harry Reid is the David Carradine of US fiscal and monetary policy.

    Well, he and "Zimbabwe Ben" Bernanke.

    It is thought that telling anything remotely resembling the truth loses elections in America today.

    So DC has become little more than a whited sepulcher of decayed liars - the graveyard of the first United States of America (America 1.0 )

    ReplyDelete
  66. "Zimbabwe Ben" Bernanke

    LOL

    ReplyDelete
  67. FWIW a company called Baker Hughes, an oil services firm in Houston, has an opening for a 2nd year law student graduating in 2014.

    Halliburton has an opening for an experienced attorney in their contracts divison. Worldwide travel required and fluency in Spanish helpful.

    ReplyDelete
  68. Anyone else see the cover of the ABA Journal this month? was that a joke? "Why lawyers love working for free"..what?

    ReplyDelete
  69. Prof Campos in light of the award season I was wondering which school is the biggest scam in the country. I know there are so many contenders, but which school is the biggest scam, deserving of special recognition, possibly an award . . . they Scammy?

    ReplyDelete
  70. to Anonymous at 7:51 pm

    how many patent lawyers from 20 years ago have financially profited from their career change and earnIng a JD?

    how many try to transition back into engineering from patent law?

    ReplyDelete

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