Friday, April 3, 2009

The crisis and law firms

The NY Times has an article about how the economic crisis is affecting law firms. As someone employed in a law firm, I have a professional interest in this. The Times points out that

The silver lining, if there is one, is that the legal world may be inspired to draw blueprints for the 21st century.
That would be a good idea. I think some of the downsizing that we have seen is going to be permanent. There simply will not be as many deals in investment banking going forward, which means less need for lawyers. I'm also in favor of reining in excessive lawyer salaries, although I don't think my own salary is excessive (I'm not a lawyer).

The Times article also points out that the crisis may force a change in law schools. Again, a welcome possibility. Law schools, like, I suspect, many professional grad schools, enjoyed some benefits from the recent economic boom times. They could charge higher tuitions, and ask for more money from alumni. All without having to rethink their fundamental value proposition.

But do students really need to stay in law school for three years? I didn't go to law school, but why should they? Isn't that just tradition? Would it be possible to start studying for a law degree as an undergrad, and continue studies in law school with just a year or two of study? Why not? My grandfather was a successful lawyer, but he didn't even have a bachelor's degree. He was working as a clerk at an insurance company after graduating from high school, when someone suggested he go to law school (this would have been the 1920's or thereabouts). He said "What's that?" because he had never heard of law school. But he found out what law school was, went to one, became a lawyer, and sent all three of his daughters to college.

Law schools haven't had much incentive to try to provide better value for their students because they haven't had to. They could charge insane tuition because students were willing to take on massive amounts of debt, knowing that they would be making good money as soon as they graduate. If your starting salary is $150,000, you don't mind debt of $80,000. But that also means that you aren't going to be taking a job that only pays $50K. Like, say, as a government prosecutor.

I suspect the layoffs we are seeing are going to result in an imbalance of supply and demand. There are a lot of laid-off lawyers out there, and a lot of them are very good. If I were one of those, I would band together with some other lawyers recently laid off, and undercut the prices charged by the higher-end firms. That would be a great silver lining for this crisis.

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